Syrian refugees may offer chances for Turkey’s tourism industry
Kayhan Taner Özen*The Turkish international tourism business has suffered badly due to regional political developments. The unrest and civil war in neighboring countries including Iraq and Syria have had a spillover effect on Turkey, which as a tourist destination is no longer perceived to be as safe as it once was. These concerns have resulted in a loss of millions of tourists and approximately $15 billion of annual revenue which they would have brought to Turkey.
However, there are strong reasons for optimism. The number of Russian tourists is expected to have increased markedly over the last year due to the improved relations between Russia and Turkey. To see a similar rebound in the European sector of the tourist economy, Turkey will need to continue to resolve security concerns. But in this sector there are reasons for optimism as well, with regional conflicts moving in the right direction toward resolution.
More broadly, international tourism on a global scale is growing at approximately 3.5 percent per year, and the U.N. World Tourism Organization expects 1.8 billion international tourists by the year 2030. This would be a 52 percent increase over current levels.
Turkey’s tourist plan targets 100 million tourists bringing in $100 billion in revenue by 2023. To reach this target Turkey must continue to address the above mentioned problems, as well as provide the necessary investment in tourist infrastructure so the needed capacity will be available when needed.
The plan calls for three main geographic regions for investment. First, the newly developed Tarsus destination on the East Mediterranean will be expanded for European and Russian tourists. Second, the Black Sea destination between Trabzon airport and Ordu-Giresun airport will be expanded for hot climate country tourists, mostly from Arab countries. The third investment area is the cultural tourism corridor from western to inner eastern Anatolia, which is envisioned to address cultural tourism demands from all over the world.
Creating a new international tourism destination in areas not traditionally visited by tourists is a costly investment. At the start, approximately 150,000 hotel beds are required. These hotel beds will not exist in a vacuum, so a wide range of infrastructure is required as well, including transport such as airports, highways, marinas and railroads - as well as buildings to support the hotels, such as worker housing, hospitals, market places, shopping malls, etc. Taken together, the price tag for these projects can be quite large indeed.
According to the Development Bank of Turkey’s figures, each of these regional development projects can cost $18 to $20 billion. This translates to the price of building one five star hotel bed at around $60,000 with all costs factored in. While this is a high number, it must be kept in mind that an international tourism destination capable of attracting big tour operators can only be realized if investment is made on such a massive scale.
As Turkey moves forward with development plans in Tarsus, 24 parcels of land have been distributed, but construction has yet to begin. The main reason for the delay is because two dozen hotels are not enough to attract big players. Also the government has yet to allocate sufficient funds for infrastructure.
The three new destination areas listed earlier have a total investment requirement of approximately $50 billion, but neither public authorities or private finance groups have put up sufficient funds.
Also, unlike the developed tourist areas such as Antalya and Dalaman, where projects were successfully carried out by the Development Bank of Turkey, no similar management authorities have yet been set up in the new tourist regions.
Now is the time for Turkey to renew its commitment to these three project areas if it wants to be able to take advantage of the future growth in international tourism. One way it could do this would be to take advantage of funding from areas not normally thought of as funding for tourism. One source could be EU funds of up to 3 billion euros for Turkey’s use to help Syrian refugees in Turkey.
These funds are required to be spent on discrete projects, not merely given to the government, but there is nothing prohibiting these projects from being focused on development of permanent jobs and infrastructure in the tourist industry. Indeed, the EU would most likely look favorably on projects that provide sustainable improvements in the lives of refugees.
The Tarsus region is very close to Syria and the climate and lifestyle are very similar to what Syrian refugees are used to. In Tarsus, most refugees are already settled in big towns like Adana, Mersin, Antakya and Gaziantep, where new tourism infrastructure will be developed. They can be employed in these development projects which will in turn create 300,000 sustainable jobs.
Many Syrian refugees could also be employed in new Black Sea tourism destinations. Most of the incoming tourists to this region are expected to be Arabic speaking, making Syrian refugees a good match for long term jobs. Up to 50,000 Syrian refugees could be sustainably employed in this region, which would provide lasting support for up to 250,000 family members.
The initial investment of 3 billion euros from the EU will accelerate development projects directly, and will also act as a catalyst for additional, hopefully much larger sums to be invested too. Once the ball starts rolling, private banks and other investment corporations will not want to miss out on the opportunity presented. If development is properly managed, they would happily join in support of these projects, as has happened before in established tourist destinations like Antalya and Istanbul.
* Kayhan Taner Özen is a Senior Financial Analyst for Tourism Loans at the Development Bank of Turkey.