TUI Enters Russian Market – Joint Venture With Mostravel
TUI AG, Europe’s leading travel group, has entered the Russian tour operator market. TMR (TUI Mostravel Russia), a joint venture of TUI and Russian tour operator Mostravel, starts work on 1 August 2004. TUI will initially have 34 percent share. TUI can acquire a further 17 percent in a second phase from 2006, boosting its holding in TMR to a 51 percent majority. Mostravel will transfer its entire operations, business and employees, into the new company.
“Russia is an interesting growth market which promises an attractive business in the coming three to five years,” said Michael Frenzel, TUI CEO, optimistically on the prospects of the new holding, adding that the time was just right. Russia has a population of 145 million, representing an enormous potential, coupled with growing middle and upper class affluence, with more and more people being able to afford leisure travel. Experts estimate that two million package tours were purchased by Russians last year. The most popular holiday destinations are Turkey and Egypt, because of the combination of short distance, straightforward entry and competitive prices.
Mostravel is one of Russia’s leading tour operators for trips to Turkey and Egypt. The company is headquartered in Moscow, with 70 employees at present. It focuses on package tours in the four and five-star sector, with a range complemented since 2003 by Magic Life, Iberotel and Sol y Mar, TUI Group hotel brands. A further cooperation exists with Travco, a TUI Group incoming agency. The Russian airline KrasAir is Mostravel’s most important air carrier.
Mostravel products are presently available in around 3,000 travel agencies. Mostravel has five sales outlets in Moscow, operated by its travel agency companies, Atlas and Turavia. Presently Mostravel does not offer direct sales via call centre or internet. These sales channels are available exclusively for travel agency bookings.
“We are very pleased about our new partnership with TUI and are certain that we will be able to even boost our excellent position in Russia with the support of Europe’s No. 1,” said Mehmet Ak, previous president of Mostravel, about the joint venture. He forecasts around 200,000 customers in 2005, the first full fiscal year. The new TMR company will be managed by general director Rabson Mamedov, formerly a Mostravel director.
This engagement in Russia is the latest move in the TUI Group’s strategy of Eastern European expansion, being pushed forward from its bridgehead in Vienna by Franz Leitner, head of TUI Austria Holding. TUI is already active with its own tour operators in Hungary, Poland, Slovenia and Slovakia. TUI has also established sales cooperations in other countries, such as Rumania, Bulgaria and Serbia. According to Mr Leitner, tour operator activities are set to follow in other Eastern European countries in the years ahead.
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