Page 72 - TURKRptSept19

Overall costs at local hotels showed a 25.8% increase on an annual basis in July, well above the headline annual inflation rate of 16.65% in the month. For instance, fresh fruit and vegetable prices surged 36% y/y, energy costs climbed 26% y/y and drinks prices rose 25% y/y. But at the same time hoteliers failed to increase their revenues from foreign tourists. Per capita tourist spending was only $625 in June, the newspaper said.
AKTOB data also showed that on average $1.8bn is invested to build new hotels in Turkey each year, creating around 21,000 new jobs. Some 47% of all new investments go to 5-star hotels. Another $4bn is spent on renovation and upgrade work—again 5-star hotels take the lion’s share of investment, at 44%.
Turkey saw a 13% increase in foreign arrivals in the first half of this year, driving a 10% expansion in tourism revenue to $12.6bn, latest official figures show. However, Turkish tourism businesses including hotels and travel agencies are discouraged by the prospect of a new levy to be introduced from October. To get back on track following a slump in visitors that occurred three years ago—caused by various factors including a series of terrorist attacks and a dispute with Russia over a shot down jet—many of the businesses had to bring in massive discounts. The levy will require the companies to pay up to 0.75% of their total revenues to Turkey’s newly founded Tourism Promotion and Development Agency and, given the significant effect it will have on profit margins, it will mark a step backward after the big effort to move forward. Latest figures show the average spend per tourist in Turkey is still down by a third from its peak of $974 in 2013. The levy is expected by officials to raise around €150mn annually for the new tourism agency.
Turkish hoteliers increasingly turning to local holidaymakers as foreign tourist revenues disappoint. At the start of the year, Turkish tour operators, tourism companies and hoteliers all positioned themselves according to official targets set for this year, but they have since come to realise that meeting those targets is unlikely and they are thus increasingly turning to local holidaymakers, Sozcu newspaper reported. The government expects at least 50mn foreign tourists visits and some $35mn in revenues this year. “Actual figures suggest that the targets set for 2019 may not be met. Hoteliers and tourism companies are now focusing more on local vacationers. Expectations were running high and hoteliers were over optimistic,” said Cenk Angin, the general manager of tatilbudur.com, an online booking company. The poor state of the Turkish economy and this year’s local elections impacted the tourism industry. Locals travelled less, Angin noted, adding that a 40-50% increase in hotel prices and other travel costs were other adverse factors. “Early bookings for the summer season were promising in the first months of the year. But as prices started to increase, we lost this momentum,” he said.
The problem with foreign tourists is that they do not spend much during their stays in Turkey.
Balance of payments data shows that Turkey’s tourism revenues stood at $10.8bn in January-June, slightly higher than the $9.7bn recorded a year ago, but foreign tourist arrivals rose more than 13% y/y over the same period.
In the first half of the year, a total of 18.1mn foreign holidaymakers visited Turkey, a 13.2% increase from the same period of 2018, the Tourism Ministry said last month.
It is also interesting to note that foreign tourist visits have steadily increased over the past 16 years but per capita tourist spending has declined. In 2003, per capita spending on average was $850 but this figure had declined to $647 by 2018. Thus, the share of tourism revenues in GDP dropped to 3.8% last year from 4.4% 16 years ago.
Wildfires have ravaged thousands of acres of land near holiday resorts
72 TURKEY Country Report September 2019 www.intellinews.com