What will Turkish tourism do for 2017?
KAYHAN TANER ÖZENWith the 2016 tourist season now largely over, it is known that the Turkish international tourism sector’s revenues have dropped by over one third over the previous season. While the consensus among many is that the main reason for this unexpectedly large drop is due to the travel ban Russia imposed on Turkish holiday destinations, the data shows this ban to be only one reason among several for the drop in revenue, and is far from being the main contributing factor.
The total number of Russian tourists visiting Turkey peaked in 2014 at 4,479,049 people. In 2015 it fell to 3,537,428, and was only 766,871 for the most recent season.
But despite a more than 80 percent drop in the number of Russian tourists from the previous year, the market impact of the reduced number of Russian visitors only account for 10 percent of the total 35 percent revenue drop, which is less than one third of the total. The Russia-Turkey political spat may have grabbed the headlines, and certainly cost the Turkish tourism sector about a lot of dollars, but further analysis shows these headlines are masking a larger problem.
The remaining larger loss, costing the tourism sector an additional 10 billion dollars, is due to the loss of tourists from countries besides Russia. Perhaps the loss of visitor numbers hasn’t been as steep as with Russia, but the losses have been across the board, affecting many countries including Germany (down 30 percent), Great Britain (down 32 percent), the Netherlands (down 26 percent), France (down 35 percent) and Italy (down 59 percent).
These markets have fed the tourism sector for decades, going back to the first investments made in the 1960s. So while the political conflicts impacting Russian tourism have been largely addressed this year and there is optimism for a recovery in 2017, a much larger and possibly more stubborn problem remains.
Looking back in time, below is an illustration from 1986 showing the business expectations for the tourist sector. The Development Bank of Turkey prepared this map to show the main streams of tourists that were expected, which were primarily from Europe and the Middle East. Russia, then part of the Soviet Union, was not even imagined as being a significant market at the time. Since then, the Turkish tourism sector has served these markets with great success, managing to climb to become the sixth largest tourist market in the world.
Among Western markets, Germany has always been the largest for Turkish tourism, making up 15.4 percent of the total incoming foreigners. German citizens spend approximately $100 billion annually on international tourism. This expenditure has not declined over the years and is expected to consistently increase for the foreseeable future. Having this main market suddenly drop by a third is a big problem for the tourist sector.
The problem in the Russian tourist market was obvious; a ban had been placed on that market. This led to the search for a straightforward solution which was recently achieved; better relations between Turkey and Russia, which ended the ban. Unfortunately, the problems with the German market are not so easily solved. There is no analogous agreement that could be signed to wipe away the problems in the German tourist market.
This complexity, combined with the fact that the average German tourist spends more than the average Russian tourist, means the problems in the German tourist market (and other large markets) demand greater analytical scrutiny, as well as a stronger resolve to implement solutions to identified problems.
One way to analyze the situation would be to look at the public statements of German travel agents doing business in Turkey, who are impacted by a downturn in spending by German tourists in Turkey. They want to increase their sales of packages to Turkey sales, so they largely share the same interests as the Turkish tourist industry.
TUI is a German travel agency serving many international destinations, with annual revenue of over $35 billion. The Deutscher ReiseVerband (DRV) is the name of the German Travel Agents’ Association. Recently, the DRV held a meeting in Antalya on Nov. 24, which was one day before the sixth International Resort Tourism Congress, also held in Antalya.
DRV head Norbert Fiebig and TUI head Friedrich Joussen delivered speeches at this meeting, which were heard by representatives in the congress that met the next day. In these speeches, it was explained that Turkey is in large part a holiday destination for families, and families tend to buy their holiday as a package from travel agents instead of online private buying. They explained the positive reasons for families to choose Turkey, including its climate, good value for money spent and high food quality.
The bad news in their reports is that the German market for tourism in Turkey is still slipping. Problematically, travel agencies explained that the majority of German family travelers buy their summer holiday before Christmas. For this year, sales of packages to Turkey are down 58 percent, which portends to a very lean 2017 for the Germen segment of the tourist market. Extrapolating to other European markets, the upcoming year may not be good at all.
While this is bad news, and there may be a reflexive impulse to avoid such information or deny it, the sales figures don’t lie, and denial only prevents the possibility of addressing problems. In their reports the reasons for this huge loss were explained unequivocally: security problems, Turkey’s foreign policies and standards of democracy.
Regarding security, no family would spend their holiday where they don’t feel safe. Turkey’s portrayal in the Western media is not helping to sell holiday packages to families who save up for a year to travel abroad.
While the portrayal of Turkey in the media may be unfair, it was noted in the speeches that the media has a short memory, and that if conditions improve, it could be expected that the media’s portrayal will quickly improve, too.
Turkey’s foreign policy should be more communicative and constructive. Virtually everyone in developed countries, including those in markets important to Turkey, care about international politics and events around the world. At this point, many Europeans do not understand, much less appreciate, Turkey’s role in the case of Syria and other regional conflicts. Turkey should do what it can to show that it understands the concerns of other countries, and that it shares the goals of peace and prosperity in the region.
Citizens of Europe are concerned about democratic institutions all over the world. Let’s look at an example from Thailand. After a coup in the country, tourism from Europe dropped. In Egypt, government changes in recent years have had a very bad effect on the tourism sector.
Whether it is appreciated or not, European tourists expect the countries they visit to uphold democratic standards similar to their own. To give another example, Dubai suffered from its criminal law differing from European law. A tourist couple were seen kissing in a restaurant, which caused a complaint to be filed and resulted in the couple’s punishment. If Turkey wants to encourage tourism from Europe, it should show the Western public that human rights are protected and legal standards are not below those in Europe.
In closing, while the data above as well as other indicators paint a bleak picture for tourism from Europe in 2017, the good news is that Russian tourists are now booking for Turkey and their number are expected to be about 3 million, similar to 2015. Based on this, it is predicted that tourism from Russia will offset some of the expected the loss from the West. Unexpected developments like homicide attack to Russian Ambassador to Ankara may ruin the developments in Russian market. With a bit of luck, 2017 will be a similar year as 2016 for Turkish international tourism, but will remain below 2015 levels.
These numbers are not cast in stone, however. They are subject to both the conditions in the countries where tourists come from, as well as the conditions within Turkey. While there is little to be done about the conditions in other countries, there are many things within Turkey’s control to restore the tourism sector to previous numbers and then increase it to new record levels.
*Kayhan Taner Özen is a senior financial analyst for tourism loans at the Development Bank of Turkey.