Impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation on its tourism...

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Impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation on

its tourism industry: An exploratory study

Stanislav Ivanov

Professor, Varna University of Management, 13A Oborishte Str., 9000 Varna, Bulgaria, tel: +359

52 300 680, e-mail: [email protected]

Kateryna Idzhylova

BA (Hons) International Hospitality Management, Varna University of Management, 13A

Oborishte Str., 9000 Varna, Bulgaria, e-mail: [email protected]

Craig Webster

Assistant Professor, Ball State University, Muncie, Indiana, USA, e-mail: [email protected]

Abstract:

In a very unique political scenario, Crimea was integrated into the Russian Federation in 2014,

making the legal, political, and economic environment in which the tourism and hospitality

industries in Crimea very different from what it had been. In this research, we surveyed the

managers of 60 hotels and 31 travel agencies in Crimea to learn about how their businesses were

impacted by the Crimea’s entry into the Russian Federation and how they have responded to the

changes in the macroenvironment. The findings indicate that travel agencies and hoteliers have

responded differently to the crisis and have very different concerns regarding the way in which

this political event has impacted upon their industries.

Key words: Crimea, Russia, secession, sanctions, politics, impacts on tourism, travel agencies,

hotels

Reference: Ivanov, S., Idzhilova, K., & Webster, C. (2016). Impacts of the entry of the

Autonomous Republic of Crimea into the Russian Federation on its tourism industry: An

exploratory study. Tourism Management, 54, 162-169

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1. Introduction

After World War Two, the world witnessed many secession events – the Soviet Union broke

down into 15 countries, Yugoslavia – into 7, Czechoslovakia, Yemen, Sudan, Ethiopia – into 2,

etc. In all of these cases, one or more of the republics/provinces/territories constituting the

country declared independence. However, the world also witnessed the unprecedented situation

in which one province of a country declared independence and then joined another country – after

the referendum on 16th

March 2014 the Autonomous Republic of Crimea left Ukraine and entered

into the Russian Federation a few days later. The referendum and the subsequent entrance into

the Russian Federation were largely considered illegal by Ukraine and the international

community, while local residents and Russian citizens hailed them as the historical return of the

peninsula to the motherland. As a result the EU, USA and other countries imposed various

sanctions on citizens and companies from Crimea and Russia, which are still active as of today

(September 2015). This research note aims at evaluating the impacts of this political event (the

entry of the Autonomous Republic of Crimea into the Russian Federation) on Crimea’s tourism

industry. The legal issues of the referendum and its international recognition remain out of the

scope of this research note.

Since the 2014 crisis in Crimea is rather recent, there is little academic literature on the topic and

its impact upon the tourism and hospitality industry in Crimea. Much of the literature that is

directly relevant to the crisis includes analyses in newspapers or magazines that look into the

economic and other costs of the crisis. For example, the Financial Times (Alushta, 2014) and the

New York Times (MacFarquhar, 2014) report on how the crisis has had a negative impact on

tourist flows to the Crimea. While the popular media outlets have reported widely on the

political, military, economic and human side of the conflict, there has still been some notice of

the linkage of the continuing crisis with tourism.

Apart from the idiosyncratic aspects of the crisis, the crisis has some parallels with other

situations in which there are significant political, economic, or natural occurrences that impact

upon the tourism and hospitality industries. For example, Neumayer (2004) found that tourism

arrivals suffer from a negative impact of many political factors (human rights violations, conflict,

and other political/violent events) that many tourists would like to avoid. The findings may be

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somewhat intuitive (that tourists avoid unpleasant political situations/violence) and Llorca‐Vivero

(2008), looking at 134 destinations, largely verified what had been found by Neumayer (2004).

There are also a number of publications that investigate the external shocks like terrorist attacks,

the perceptions of political risk, or other political issues and their impact upon tourist flows and

behaviour in a particular destination or in response to a particular political/terrorist event (see, for

example, Aimable and Rosselló, 2009; Araña and León, 2008; Björk and Kauppinen-Räisänen,

2011; Causevic and Lynch, 2013; Ingram et al., 2013; Larsen et al., 2011; de Sausmarez, 2013;

Solarin, 2015; Wolff and Larsen, 2014). Most of these findings indicate that tourists are risk-

averse, although Wolff and Larsen (2014) find that tourists in Norway see violent attacks as an

anomaly that do not seem to have a substantial impact upon perceptions of the location as a

tourist destination. In general, these events negatively influence the number of tourists and the

performance of tourist companies in the destination. Moreover, Saha and Yap (2014) reveal that

the effect of political instability on tourism is far more severe than the effects of one-off terrorist

attacks and countries that experience high levels of political risk witness significant reductions in

their tourism businesses. There is also a significant literature that deals with crisis management.

Some of which looks at repairing or managing images of places tarnished by something that

tourists will likely find unattractive (Avraham, 2015; de Sausmarez, 2013) or looking at national

strategies to recover from economic shocks impacting upon tourism flows (Purwomarwanto &

Ramachandran, 2015), while some looks at particular strategies that firms have during or

following crises (Alegre & Sard, 2015, Jallat & Shultz, 2010).

In this research note, we look into how the Crimean crisis has made an impact upon the

hospitality and tourism industry in Crimea, as previous research indicates that there is an impact

upon tourist flows. This research also enables us to gain insight into how the industry reacts to

radical changes in the inflow of tourists and in the political and economic macroenvironment it

operates in.

2. Methodology

Data collection took place in February-April 2015 by distributing questionnaires to two

respondent populations – hotels and travel agencies in the Autonomous Republic of Crimea. The

authors contacted the statistical office of Autonomous Republic of Crimea (CrimeaStat) with a

request to provide data about the number of hotels and travel agencies and other statistical data.

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The number of hotels in Crimea in 2014 was reported by CrimeaStat to be 194 accommodation

establishments with 13967 rooms. The database of the Unified Interdepartmental Statistical

Information System of the Russian Federation reported that the licenced travel agencies in

Crimea for 2014 were 94 (UISIS, 2015). The authors developed a database with the contact

details of 178 hotels and 120 travel agencies in Crimea, constituting the two sampling frames,

through extensive internet search and utilising industry contracts. It should be noted that the

authors identified more travel agencies than the number of agencies reported in the UISIS (2015),

meaning that either the UISIS register was incomplete or that some of the agencies were working

in the shadow economy. Unfortunately, CrimeaStat did not provide statistical data on the number

and share of Russian tourists in Crimea before and after its entry into the Russian Federation.

Furthermore, the Ukrainian statistical authorities (UrkStat) did not publish the breakdown of the

number of tourists that visited Crimea by nationality when Crimea was still part of the Ukraine.

That is why the authors were not able to determine the level of dependence of the peninsula on

Russian tourist before and after its entry into the Russian Federation, which is a limitation of this

research.

Two questionnaires were developed and sent to all hotels and travel agencies in the two

respondent populations from the sampling frames. Of these, 60 and 31 questionnaires were

returned completed by the hotels and the travel agencies, respectively, yielding a 33.71%

response rate for the hotels and a 25.83% response rate for the travel agencies. The samples’

characteristics are presented in Table 1.

INSERT TABLE 1 AROUND HERE

The questionnaires consisted of several groups of questions. The first group measured the

dynamics of selected operational statistics in 2014, when Crimea joined the Russian Federation,

compared to 2013, when Crimea was still part of the Ukraine. The second and the third groups

included questions related with the importance and the impact of various factors influencing the

tourism business, resulting from the entry of the Autonomous Republic of Crimea into the

Russian Federation. The fourth and the fifth groups evaluated the level of agreement with

statements related to impacts of the entry on company’s business and the ways to mitigate the

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negative consequences of the international sanctions on Crimea. The last question measured

respondents’ expectations about the duration of the sanctions.

Due to the small sample sizes (60 hotels and 31 travel agencies) and the results of the

Kolmogorov-Smirnov z-test, showing that the distributions of the answers were statistically

different from normal, the differences in respondents’ opinions were analysed with non-

parametric tests (Baggio and Klobas, 2011). In particular, the Kruskal-Wallis χ2 test was used to

identify the differences in the responses of hoteliers on the basis of the category, location and size

of their properties. The Mann-Whitney U-test was adopted to identify the differences in the

answers of travel agency managers on the basis of the licence type, main market segment and

IATA certification of the agency. The Mann-Whitney U-test was also adopted to identify

differences in the opinions of the hoteliers on the basis of the chain affiliation of the hotels, and

between the responses of hoteliers and travel agency managers. A paired samples t-test was used

to identify the differences in respondents’ answers to some questions.

3. Discussion of findings

3.1. Hotels’ perspective

Table 2 presents the responses of the hoteliers. Findings indicate that the hotels’ performance in

2014 was worse than in 2013 (Section A in Table 2) – decreased number of tourists, rising total

costs and employee costs, and shrinking revenues. This was expected, considering the loss of the

Ukrainian market which was one of the main sources of tourists until 2013 and the international

sanctions. The impacts were not uniform across the properties: 2-star hotels experienced much

larger drop in the number of tourists (-7.5%) than the other hotels, the prices of hotels with over

100 rooms increased by 6.88% on average, while prices for smaller properties remained relatively

constant or slightly decreased. Chain affiliation influenced the operational results significantly, in

particular: chain hotels experienced greater impact of the entry of Crimea into the Russian

Federation (m=3.24, p<0.05), lost less Ukrainian tourists (-1.67%, p<0.05), and increased the

total number of overnights (2.78%, p<0.01) and the overnight of tourists from the Russian

Federation (1.11%, p<0.05) compared to the independent hotels. The better performance of the

chain hotels we could attribute to the advantages of the chain affiliation – hotel chains have

strong brands that attract demand to the affiliated properties (Ivanova and Ivanov, 2015).

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The transportation accessibility of Crimea was considered as the most influential factor on the

hotel business – both in terms of level of importance (m=4.37, row B7 in Table 2) and as

magnitude of the impact (m=3.97, row C7 in Table 2). While we expected the importance of the

accessibility of the destination to be high, we did not expect that hoteliers would actually

consider that it was changed in a positive direction after the sanctions were imposed. It seems that

the introduction of more regular and charter flights to and from other airports in the Russian

Federation and the expansion of the Crimean airports (Koteneva, 2015; Vzglyad, 2014)

compensated partially for some of the lost accessibility resulting from the cancellation of

international flights due to the sanctions. Surprisingly, the international sanctions were

considered as moderately important (m=3.16) and with neutral effect (m=3.03), while tax levels

were considered much more important (m=4.08) and with positive effect (m=3.75), and the

differences between the responses about the sanctions and the taxes were significant (paired

samples t-test: t=5.922 (p<0.01) for their importance and t=4.101 (p<0.01) for their impact).

Hoteliers were quite uniform in their responses and only few differences in their opinions were

found. The devaluation of the ruble was of greater concern to the managers of 2- and 3-star

properties than of 4- and 5-star ones, probably because the purchasing power of the customers of

luxurious hotels was higher and they were less price sensitive than the customers of more

economic types of accommodation.

Section D of Table 2 reveals that the hotels redirected their relationships from partners in Ukraine

to partners in the Russian Federation. Some of the travel agencies and the business customers

from Ukraine had terminated the contracts with hotels in Crimea, but the hotels signed new

contracts with companies from the Russian Federation. In general, the transition to the new legal

system was considered very smooth (m=4.00, row D9 in Table 2). Looking into the details we

see that the managers of the 5-star hotels reported fewer cancelled contracts by corporate

customers and signed even more new contracts with business customers from the Russian

Federation than the lower category hotels. In a similar manner, hotels with over 100 rooms had

fewer cancelled contracts with corporate customers than smaller properties. Finally, midsized

establishments (51-100 rooms) put greater emphasis on the rest of the Russian Federation outside

Crimea as a potential source of employees (m=4.04) than large properties (m=3.25). This was

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unexpected, since larger properties were supposed to have greater human resource needs than

smaller ones and should, thus, look at the rest of the Russian Federation as a source of

employees.

Hoteliers tried to mitigate the negative consequences of the international sanctions by requiring

payments in foreign currency (m=3.83) and decreasing prices (m=3.81), but not so much by

cutting costs (2.93). These responses (cash payments) indicate that probably some of the

economic activities of the hotels moved into the shadow economy. No other major differences

were found in hoteliers’ responses.

3.2. Travel agencies’ perspective

The perspective of the travel agency managers is presented in Table 3. It depicts a picture that is

very similar to the situation of the hotels – decreasing revenues (-1.61%), decreasing number of

customers (-5.32%), and rising employee costs (5.16%). Operational results (Section A in Table

3) were very homogeneous among the travel agencies with one notable exception – tour operators

reported on average 7.61% increase of total employee costs, while travel agents reported slight

decrease (-0.83%) and the difference is significant at the 1% level.


Transportation accessibility of Crimea was considered as the most important factor influencing

the business, resulting from the entry of the Autonomous Republic of Crimea into the Russian

Federation (m=3.68), followed by the international sanctions (m=3.55), and the changes in the

currency (m=3.45) (see section B in Table 3). However, changes in the number of tourists

(m=3.57), in tax level (m=3.39) and in the currency (m=3.35) had the greatest positive impact on

the travel agencies’ business, while the devaluation of the ruble (m=2.50) and the transition to the

legal system of the Russian Federation (m=2.70) were considered as having slight negative effect

(section C in Table 3). Changes in the tax levels were considered as less important by the

managers of the travel agencies serving predominantly individual tourists (m=2.38) compared to

the managers of the agencies serving groups (m=3.08) and the difference is significant at the 1%

level. The sanctions were considered as having a positive impact by the managers of the agencies

serving individual customers (m=3.94) while those targeting the group market evaluated the

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impact as negative (m=2.57) and the difference is significant at the 1% level. This is probably an

outcome of the orientation of the agencies serving individual tourists towards the Russian market

which is now considered domestic, rather than international. Findings reported in section D in

Table 3 imply this conjecture – the managers of the travel agencies reported signing contracts

with new business customers (m=3.06) and with other travel agencies (m=3.52) from the rest of

the Russian Federation (outside Crimea). Ultimately, the managers of the travel agencies try to

mitigate the negative consequences of the sanctions (section E in Table 3) by decreasing the costs

(m=3.61), increased marketing efforts (m=3.58) and working with fewer employees (3.45). They

do not perceive the decrease in prices as a viable option (m=2.81). No major statistically

significant differences were found in the answers of respondents in this section.

3.3. Hotels vs. travel agencies

The comparison of the responses of hotels’ and travel agencies’ managers is presented in Table 4.

Findings indicate that the entry of the Autonomous Republic of Crimea into the Russian

Federation had quite a distinctive impact on the hotels and the travel agencies. Specifically,

statistically significant differences between the responses of the two groups of managers were

found regarding the importance of the transition to the legislative system of the Russian

Federation (p<0.01), changes in the number of international tourists (p<0.01), changes in the tax

level (p<0.01) which the hoteliers considered as more important than the managers of the travel

agencies, while the latter perceived the international sanctions as more important than the

hoteliers did (p<0.05) (see Section B in Table 4). Furthermore, hoteliers perceived the impact of

the entry as more positive, or more correctly – as less negative –, than the managers of travel

agencies, especially regarding the transition to the legislative system of the Russian Federation

(p<0.10), the devaluation of the ruble (p<0.05) and the transportation accessibility of Crimea

(p<0.01) (Section C in Table 4). They also reported more cancellation of contracts with corporate

clients (p<0.05) than the travel agencies, probably partially compensated by the signing of new

contracts with corporate clients from the rest of the Russian Federation (p<0.05). Finally, hotels

seemed to rely more on decreasing the prices in order to mitigate the negative consequences of

the international sanctions on their business than the travel agencies did (p<0.01), rather than

decreasing the costs, which is the preferred strategy of the travel agencies’ managers (p<0.01).

We suppose that the differences in the cost structures of the two tourism characteristic activities

determine this choice. The cost structure of the hotel business shows high share of the fixed costs

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and low share of the variable costs (Ivanov and Zhechev, 2011), which does not allow significant

cost savings, thus focusing hoteliers’ attention on the price. The situation in the travel agency

business is largely reversed, especially when the agency serves individual customers rather than

groups – most of the costs are variable, thus allowing the travel agency managers to look for cost

savings rather than price reductions.


4. Conclusion

This research note investigated the impacts of the entry of the Autonomous Republic of Crimea

into the Russian Federation on its tourism industry, more specifically – the hotels and the travel

agencies. From a managerial perspective the findings reveal that in general the performance

metrics of both the hotels and the travel agencies deteriorated in 2014 compared to 2013, but

hoteliers and travel agency managers reacted in a slightly different way to the challenges they

faced. The increase in the number of flights to/from Crimea from/to airports in the other parts of

the Russian Federation and the state-backed campaign to divert Russian tourists to Crimea might

compensate the drop in the number of tourists on the peninsula, but in the long term, the

international sanctions and the non-recognition of the entry of the Autonomous Republic of

Crimea into the Russian Federation by the international community might pay their toll to the

tourism industry in Crimea. This is suggestive of a mercantilist approach (Webster et al., 2011;

Webster and Ivanov, 2012) that Russian Federation is taking towards overcoming the tourism

challenge in Crimea, with government stepping in to encourage tourist flows to the area.

The findings may also reflect the adaptability and entrepreneurship of local businesses to the

drastic change in the political and economic environment in which they operate. Most

importantly, while it may be intuitive that tourists react in negative ways to political and other

events that may make a destination less attractive and the majority of the scholarship supports

this (Llorca‐Vivero, 2008; Neumayer, 2004), the findings illustrate that tourist companies may

respond in different ways to the changes. Indeed, the picture that emerges from the findings

illustrate that the hospitality and tourism industries respond in different ways, suggesting that

future research will have to look at political, ecological, and other substantial shocks to the

tourism industry in a location may have very different responses based upon governmental

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choices, as well as sub-sector strategies for financially either surviving or thriving from the

changed environment. The findings also suggest looking into a more sophisticated model for how

hospitality and tourism businesses react to crises and can plan to react to crises, taking into

account the not only the subsector in which the firm operates but also taking into account other

relevant factors (location, size, chain affiliation) to take advantage of any strengths or

possibilities that a firm may have. In short, being a successful business in a problematic

environment may require creativity by managers in ways that enable them to expand upon

whatever strengths they have in an operating environment that has shifted significantly,

something that has been shown in recent literature linked with crisis management in the industry

(see for example, Alegre & Sard, 2015, Jallat & Shultz, 2010).

The research is not without limitations. The two samples are small (60 hotels and 31 travel

agencies), but they represent more than 25% of their respective populations and, therefore, the

opinions of the respondents might be considered representative of the industry. The

questionnaires did not collect any financial data and operational statistics in absolute values but

as relative percentage changes in 2014 compared to 2013 due to confidentiality reasons. That is

why the percentage changes of the operational statistics were calculated as simple averages rather

than weighted with the revenues of the hotels/travel agencies. Future research might deal with

measuring the long-term impacts of the entry of the Autonomous Republic of Crimea into the

Russian Federation through a longitudinal study. Such research would help to identify whether

the international sanctions have any significant long-term effects on the local tourism industry in

the peninsula. Furthermore, future research may investigate the motivation of Russian tourists

visiting Crimea and the role of patriotism in the choice of destination for their holidays.

Ultimately, future research could shed light on the effectiveness and efficiency of the import

substitution strategy currently applied by the Russian Federation, which promotes domestic

tourism as a way to keep tourists’ money within the country and stimulate the economic

development and the integration of the Crimea into the federation.

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Table 1. Samples characteristics

Respondents Grouping criteria Groups Number of

respondents

Accommodation establishments

(N=60)

Category 2 stars 6

3 stars 25

4 stars 23 5 stars 6

Location Urban 31

Seaside 23 Mountain 6

Size Up to 50 rooms 28

51-100 rooms 25

Over 100 rooms 7

Chain affiliation Part of a chain 18

Independent 42

Travel agencies

(N=31)

Type of licence Tour operator 22

Travel agent 9

Main market segments Groups 14

Individual tourists 17

IATA certification IATA certified 7

Not IATA certified 24

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Table 2. Impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation:

accommodation establishments’ perspective

Differences by category, size, location and chain affiliation of the accommodation establishment

Question Coding Total

mean

Standard

deviation

Mann-Whitney

U test

Kruskal-Wallis χ2 test

Chain

affiliation

Category Size Location

A: Operational statistics

A1) How would you evaluate the magnitude of the

impact of the entry of the Autonomous Republic of Crimea into the Russian Federation on your

business in general?

1-no impact

5-extremely high impact

3.07 1.039 242.00** 4.696 1.209 0.667

A2) How would you assess direction of the impact of the entry of the Autonomous Republic of Crimea

into the Russian Federation on your business in

general?

1-very negative 5-very positive

3.70 0.561 367.50 3.127

2.533 3.194

A3) How did the total number of your guests

change in 2014 compared to 2013?

Percent -4.17 7.021 341.50 1.874 4.379 3.607

A4) How did the number of your guests from Russian Federation change in 2014 compared to

2013?

-0.75 7.637 367.00 3.640 1.453 3.819

A5) How did the number of your guests from Ukraine change in 2014 compared to 2013?

-6.08 9.347 249.50** 8.361** 5.402* 1.027

A6) How did your total revenues change in 2014

compared to 2013?

-6.69 11.470 354.50 6.972* 4.184 0.045

A7) How did your total costs change in 2014

compared to 2013?

4.08 7.729 296.50 5.121 3.706 0.416

A8) How did your total employee costs (salaries, social security payments, employee insurances etc.)


3.42 6.344 369.00 4.537 0.225 5.825*

A9) How did the total number of your employees change in 2014 compared to 2013

-0.58 2.272 291.50 7.784* 3.465 0.649

A10) How did the total number of overnights of

your guests change in 2014 compared to 2013?

-1.58 9.365 221.50*** 7.884** 0.553 2.211

A11) How did the number of overnights of your

guests from the Russian Federation change in 2014

compared to 2013?

-0.75 5.662 250.50** 0.655 1.694 4.720*

A12) How did the number of overnights of your

guests from Ukraine change in 2014 compared to

2013?

-7.00 7.602 350.00 2.467 0.282 0.609

A13) How did the average price per room per night


0.58 7.652 290.00 9.462** 6.214** 4.065

A14) How did the total average stay for your guests change in 2014 compared to 2013?

Number of nights -0.54 0.8422 283.00 0.413 0.496 1.156

A15) How did the average stay for your guests

from the Russian Federation change in 2014

compared to 2013?

0.28 0.8456 319.00 2.648 3.600 1.540

A16) How did the average stay for your guests

from Ukraine change in 2014 compared to 2013?

-0.80 1.2426 374.50 0.986 2.791 5.884*

B: Level of importance of the factors influencing the business, resulting from the entry of the Autonomous Republic of Crimea into the Russian

Federation

B1) Transition to the legislative system of the Russian Federation

1-very unimportant

5-very important

3.72 0.922 373.50 2.614 3.799 7.227**

B2) Changes in the currency (use of ruble instead

of hryvna)

3.60 0.924 293.00 1.567 0.149 0.803

B3) Changes in the number of international tourists 4.12 0.922 361.50 2.131 0.177 1.470

B4) Changes in tax level 4.08 0.869 280.50* 3.238 2.447 1.004

B5) International sanctions 3.16 0.970 321.00 3.036 2.180 2.965 B6) Devaluation of the ruble 3.12 1.136 292.00 12.594*** 2.107 2.645

B7) Transportation accessibility of Crimea 4.37 0.758 340.00 1.765 1.818 5.281*

C: Evaluation of the impact of the factors influencing your business, resulting from the entry of the Autonomous Republic of Crimea into the

Russian Federation

C1) Transition to the legislative system of the

Russian Federation

1-very negative

5-very positive

3.25 1.027 276.00 5.071 0.302 0.436

C2) Changes in the currency (use of ruble instead

of hryvna)

3.28 0.958 373.50 2.452 0.159 1.415

C3) Changes in the number of international tourists 2.87 1.171 319.50 1.019 0.039 3.874 C4) Changes in tax level 3.75 0.975 318.50 1.734 4.429 2.605

C5) International sanctions 3.03 1.193 352.50 4.645 3.027 5.960*

15

C6) Devaluation of the ruble 3.10 0.951 295.00 6.490* 1.053 0.244

C7) Transportation accessibility of Crimea 3.97 1.082 331.50 1.785 0.075 4.330

D: Level of agreement with statements related to impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation on

company’s business

D1) After the entry of Crimea into the Russian

Federation some of our suppliers cancelled their

contracts with us

1-strongly

disagree

5-strongly agree

3.38 1.136 368.00 1.025 2.330 0.132


Federation some of the travel agencies (tour

operators, travel agents) we worked with cancelled their contracts with us

3.45 0.999 367.50 4.185 1.193 0.849


Federation some of the business/corporate customers we worked with cancelled their contracts

with us

3.67 2.084 376.00 10.474** 7.293** 0.476


Federation we signed more contracts with suppliers

from the Russian Federation (outside Crimea)

3.77 0.909 357.50 9.345** 0.412 0.044


Federation we signed more contracts with travel

agencies (tour operators, travel agents) from the Russian Federation (outside Crimea)

3.38 1.136 369.50 0.374 0.818 2.194


Federation we signed more contracts with business/corporate customers from the Russian

Federation (outside Crimea)

3.62 0.940 346.50 16.250*** 4.692* 1.816

D7) After the entry of Crimea into the Russian Federation some of our employees left the company

and moved to Ukraine

3.02 1.106 320.50 1.720 1.383 2.665

D8) After the entry of Crimea into the Russian Federation we hire more employees from the

Russian Federation (outside Crimea)

3.68 0.911 307.00 2.571 6.386** 2.252

D9) Our company adapted easily and smoothly to the legislative system of the Russian Federation

4.00 1.083 297.00 2.518 1.559 1.287

E:Level of agreement with statements related to mitigating the negative impacts of the entry of the Autonomous Republic of Crimea into the

Russian Federation on company’s business

E1) We try to mitigate the impacts of sanctions on our business by requiring more cash payments by

guests than payments by bank or credit/debit card

1-strongly disagree

5-strongly agree

3.29 1.084 293.00 9.155** 1.205 1.160

E2) We try to mitigate the impacts of sanctions on

our business by requiring more payments in foreign

currency (USD/GBP/EUR) than payments in rubles

3.83 1.060 306.00 1.592 0.358 0.242


our business by working with fewer employees

3.38 1.236 337.50 5.597 0.863 1.530

E4) We try to mitigate the impacts of sanctions on our business by paying later to suppliers

3.37 1.073 324.50 5.091 1.145 1.032


our business by increased marketing efforts to

attract more guests

3.28 1.121 376.50 0.578 2.945 0.112


our business by decreasing prices

3.81 1.152 256.00* 6.940* 2.715 2.489


our business by decreasing costs

2.93 1.163 281.00 7.706* 0.618 0.870

E8) The sanctions endanger our hotel with bankruptcy

3.53 1.400 320.00 2.343 5.179* 0.628

F: Expectations

F1) How long do you expect the sanctions to

continue?

Years 2.76 1.448 180.50 2.624 4.791* 1.914

Notes: 1. Grouping of respondents: Chain affiliation (affiliated to a chain, independent hotels), Size (up to 50, 51-100, over 100 rooms), Location

(seaside, mountain, urban), Category (2, 3, 4 and 5 stars).

2. *Significant at 10%-level; ** significant at 5%-level; *** significant at 1%-level

16

Table 3. Impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation: travel

agencies’ perspective

Differences by licence type, main market segment and IATA certification

Question Coding Total

mean

Standard

deviation

Mann-Whitney U-Test

Licence Main

market segment

IATA

certified


A1) How would you evaluate the magnitude of the impact of the entry of the Autonomous Republic of

Crimea into the Russian Federation on your business

in general?

1-no impact 5-extremely high

impact

3.74 0.815 52.00** 104.50 56.50

A2) How would you assess direction of the impact of

the entry of the Autonomous Republic of Crimea into

the Russian Federation on your business in general?

1-very negative

5-very positive

3.71 0.864 93.00 100.50 76.00

A3) How did the total number of your customers


Percent -5.32 7.409 72.00 87.50 56.00

A4) How did the number of your customers from Russian Federation change in 2014 compared to

2013?

-0.81 6.964 72.50 77.50 60.50

A5) How did the number of your customers from Ukraine change in 2014 compared to 2013?

-9.68 10.160 84.50 114.50 52.50

A6) How did your total revenues change in 2014

compared to 2013l?

-1.61 5.226 96.50 104.00 64.00

A7) How did your total costs change in 2014

compared to 2013?

-0.32 5.764 85.50 95.50 57.50

A8) How did your total employee costs (salaries, social security payments, employee insurances etc.)


5.16 7.099 36.50*** 96.50 70.50

B: Level of importance of the factors influencing the business, resulting from the entry of the Autonomous Republic of Crimea into the

Russian Federation

B1) Transition to the legislative system of the

Russian Federation

1-very unimportant

5-very important

2.87 1.231 96.00 91.00 75.50

B2) Changes in the currency (use of ruble instead of

hryvna)

3.45 1.312 70.00 107.50 74.00

B3) Changes in the number of international tourists 3.03 1.329 87.00 107.50 79.50 B4) Changes in tax level 2.69 1.004 88.50 56.50** 68.00

B5) International sanctions 3.55 1.150 90.00 85.00 52.00

B6) Devaluation of the ruble 2.86 1.125 83.50 87.00 69.00 B7) Transportation accessibility of Crimea 3.68 1.600 86.00 82.00 67.00

C: Evaluation of the impact of the factors influencing your business, resulting from the entry of the Autonomous Republic of Crimea

into the Russian Federation

C1) Transition to the legislative system of the Russian Federation

1-very negative 5-very positive

2.70 1.368 70.00 105.00 69.50

C2) Changes in the currency (use of ruble instead of

hryvna)

3.35 1.082 89.00 87.50 69.00

C3) Changes in the number of international tourists 3.57 1.006 64.00 94.50 78.50

C4) Changes in tax level 3.39 0.994 66.50 82.00 56.50

C5) International sanctions 3.30 1.264 71.00 48.00*** 68.00 C6) Devaluation of the ruble 2.50 0.938 85.50 73.00* 70.00

C7) Transportation accessibility of Crimea 3.10 1.446 86.00 114.00 69.00

D: Level of agreement with statements related to impacts of the entry of the Autonomous Republic of Crimea into the Russian

Federation on company’s business


Federation some of our suppliers cancelled their contracts with us

1-strongly disagree

5-strongly agree

3.06 1.459 79.00 115.00 79.00


Federation some of the distributors (other travel agencies) we worked with cancelled their contracts

with us

3.52 1.180 93.00 74.00* 63.00

D3) After the entry of Crimea into the Russian Federation some of the business/corporate customers

we worked with cancelled their contracts with us

3.10 1.375 97.50 71.50* 71.50

D4) After the entry of Crimea into the Russian Federation we signed more contracts with suppliers

from the Russian Federation (outside Crimea)

3.48 1.338 90.00 112.50 70.00

D5) After the entry of Crimea into the Russian Federation we signed more contracts with

distributors (other travel agencies) from the Russian

Federation (outside Crimea)

3.52 1.029 98.50 107.00 79.50

17


Federation we signed more contracts with

business/corporate customers from the Russian Federation (outside Crimea)

3.06 1.340 95.00 12.50 54.00


Federation some of our employees left the company and moved to Ukraine

3.48 1.180 75.00 114.50 59.50


Federation we hire more employees from the Russian Federation (outside Crimea)

3.26 1.064 89.50 100.00 78.00

D9) Our company adapted easily and smoothly to

the legislative system of the Russian Federation

3.68 1.107 78.00 99.50 51.00*

E:Level of agreement with statements related to mitigating the negative impacts of the entry of the Autonomous Republic of Crimea into

the Russian Federation on company’s business



1-strongly disagree 5-strongly agree

3.23 1.175 84.50 108.00 74.00

E2) We try to mitigate the impacts of sanctions on our business by requiring more payments in foreign


3.32 0.945 86.50 102.50 81.00

E3) We try to mitigate the impacts of sanctions on our business by working with fewer employees

3.45 1.362 86.00 78.50* 81.50


our business by paying later to suppliers

3.26 1.182 85.00 98.50 65.00


our business by increased marketing efforts to attract

more guests

3.58 1.232 92.00 108.00 69.00


our business by decreasing prices

2.81 1.195 63.00 111.00 71.00

E7) We try to mitigate the impacts of sanctions on our business by decreasing costs

3.61 0.955 62.50* 110.50 57.00

E8) The sanctions endanger our hotel with

bankruptcy

3.61 1.086 73.00 104.50 73.50

F: Expectations

F1) How long do you expect the sanctions to

continue?

Years 2.62 1.387 69.00 102.00 55.50

Notes: 1. Grouping of respondents: Licence (tour operator, travel agent), Main market segments (groups, individual tourists), IATA certified (IATA certified agency, not IATA certified agency)

2. *Significant at 10%-level; ** significant at 5%-level; *** significant at 1%-level

18

Table 4. Impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation:

accommodation establishments vs. travel agencies

Question Mann-Whitney U-

test

Explanation


A1) How would you evaluate the magnitude of the impact of the entry of the Autonomous Republic of

Crimea into the Russian Federation on your business in general?

556.50*** H<TA

A2) How would you assess direction of the impact of the entry of the Autonomous Republic of Crimea into the Russian Federation on your business in general?

925.50

A3) How did the total number of your guests change in 2014 compared to 2013? 844.00

A4) How did the number of your guests from Russian Federation change in 2014 compared to 2013? 796.00 A5) How did the number of your guests from Ukraine change in 2014 compared to 2013? 727.00* H>TA

A6) How did your total revenues change in 2014 compared to 2013l? 736.50

A7) How did your total costs change in 2014 compared to 2013? 639.00** H<TA A8) How did your total employee costs (salaries, social security payments, employee insurances etc.)


767.50

B: Level of importance of the factors influencing the business, resulting from the entry of the Autonomous Republic of Crimea into the

Russian Federation

B1) Transition to the legislative system of the Russian Federation 566.00*** H>TA

B2) Changes in the currency (use of ruble instead of hryvna) 872.00

B3) Changes in the number of international tourists 498.00*** H>TA B4) Changes in tax level 259.00*** H>TA

B5) International sanctions 669.50** H<TA

B6) Devaluation of the ruble 766.50 B7) Transportation accessibility of Crimea 778.00

C: Evaluation of the impact of the factors influencing your business, resulting from the entry of the Autonomous Republic of Crimea into

the Russian Federation

C1) Transition to the legislative system of the Russian Federation 672.00* H>TA

C2) Changes in the currency (use of ruble instead of hryvna) 904.00

C3) Changes in the number of international tourists 579.50*** H<TA C4) Changes in tax level 663.50

C5) International sanctions 757.50

C6) Devaluation of the ruble 627.50** H>TA C7) Transportation accessibility of Crimea 601.00*** H>TA

D: Level of agreement with statements related to impacts of the entry of the Autonomous Republic of Crimea into the Russian Federation on

company’s business

D1) After the entry of Crimea into the Russian Federation some of our suppliers cancelled their contracts

with us

845.00

D2) After the entry of Crimea into the Russian Federation some of the distributors (other travel agencies) we worked with cancelled their contracts with us

914.00

D3) After the entry of Crimea into the Russian Federation some of the business/corporate customers we

worked with cancelled their contracts with us

695.5** H>TA

D4) After the entry of Crimea into the Russian Federation we signed more contracts with suppliers from

the Russian Federation (outside Crimea)

849.50

D5) After the entry of Crimea into the Russian Federation we signed more contracts with distributors (other travel agencies) from the Russian Federation (outside Crimea)

876.50

D6) After the entry of Crimea into the Russian Federation we signed more contracts with

business/corporate customers from the Russian Federation (outside Crimea)

705.50** H>TA

D7) After the entry of Crimea into the Russian Federation some of our employees left the company and

moved to Ukraine

703.50* H<TA

D8) After the entry of Crimea into the Russian Federation we hire more employees from the Russian Federation (outside Crimea)

721.50* H>TA

D9) Our company adapted easily and smoothly to the legislative system of the Russian Federation 748.00

E:Level of agreement with statements related to mitigating the negative impacts of the entry of the Autonomous Republic of Crimea into the

Russian Federation on company’s business



877.00

E2) We try to mitigate the impacts of sanctions on our business by requiring more payments in foreign


662.50

E3) We try to mitigate the impacts of sanctions on our business by working with fewer employees 890.50 E4) We try to mitigate the impacts of sanctions on our business by paying later to suppliers 908.50

E5) We try to mitigate the impacts of sanctions on our business by increased marketing efforts to attract

more guests

784.00

E6) We try to mitigate the impacts of sanctions on our business by decreasing prices 494.50*** H>TA

E7) We try to mitigate the impacts of sanctions on our business by decreasing costs 620.50*** H<TA

E8) The sanctions endanger our hotel with bankruptcy 869.50

F: Expectations

F1) How long do you expect the sanctions to continue? 645.50

Notes: 1. H indicates the average value of the responses of the hotel managers. TA indicates the average value of the responses of the managers of

travel agencies; 2. *Significant at 10%-level; ** significant at 5%-level; *** significant at 1%-level

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