Turkey: tourism in turmoil

Battered by a rise in terrorist activity at home, cooling economies in many key markets and political controversy abroad, Turkey’s tourism industry is viewing 2016 as a lost year, with steep downturns in earnings, employment and arrivals affecting the sector and the broader economy.

Tourism has become one of the most important industries in Turkey; until recently, it contributed some 12 percent directly and indirectly to the national Gross Domestic Product (GDP), more than the country’s agriculture sector. However, over the past year, tourism’s place as the jewel in the crown of the Turkish economy has become somewhat tarnished, with little to suggest it will regain its former luster any time soon.

Following the breakdown of the two-year-long ceasefire with the pro-separatist Kurdistan Workers’ Party (PKK) in July last year and an increase in terror attacks after Ankara stepped up its support for the coalition fighting the radical group in Syria, Turkey has seen a dramatic rise in terrorist activity, with some incidents targeting the tourism industry. In the past year, more than 260 people, including tourists from Germany, Israel and Iran, have been killed by bombing incidents, the latest of which was the attack on Ataturk International airport in June. In fights between state forces and the PKK and ISIL, more than 5,500 lives have been lost, making the past year one of the bloodiest on record in Turkey’s 40-year struggle with terrorism.

One of the victims of the increase in terrorism is the tourist sector, which has seen trade plunge. According to data issued by Turkey’s Culture and Tourism Ministry in late May, the downward trend for arrivals is accelerating as the peak summer season approaches. From a six percent year-on-year fall in inbound traffic in January, arrivals dropped by ten and 12 percent over the next two months, before plummeting by more than 28 percent in April.

Over the four-month period, arrivals were down by more than 16 percent and continued to fall, taking earnings with them. Industry estimates suggest revenue could be down by $15 billion this year, more than 40 percent of the $35 billion in direct earnings the tourism sector generated in 2015.

The April result marked the ninth month in a row that tourist numbers had fallen, almost exactly coinciding with a resumption of the armed conflict with the PKK. This represents one of the sharpest declines in arrivals in almost two decades.

Russian winter, German freeze

It is not just terrorism that is undermining Turkey’s tourism industry; international politics and the war in Syria are also driving visitors away. Tension with Russia – Turkey’s second-largest tourism market – over Moscow’s involvement in the Syrian crisis boiled over last November, when a Turkish Air Force fighter shot down a Russian bomber that had strayed over the border from Syria for a few seconds.

Among the many sanctions imposed by Moscow in the wake of the downing of the jet was a ban on Russian charter companies organizing tours to Turkey, effectively closing the doors on the country’s second-largest tourism market.

Russian arrivals had already been in a tailspin as a result of the deepening recession brought on, in part, by plunging energy prices and the sanctions imposed by the West following Moscow’s annexation of the Crimea and its overt support of separatists in Ukraine. However, the curbing of charter flights and group travel turned the tailspin into a crash landing.

The Arctic chill in Moscow-Ankara relations has frozen inbound traffic, with the number of Russian tourists visiting the main resort region of Antalya in the south down by 96 percent in the first five months of the year and down by roughly 80 percent for the entire country.

Germany, Turkey’s leading market for visitors, has also seen tourism taps partly turned off, following general concerns about the deteriorating security situation, brought into focus by a terrorist attack in January in Istanbul that left 11 German tourists dead. The suicide bombing, by a Turk linked to ISIL, caused bookings to plunge by 35 percent in April alone.

Hopes of a quick recovery in German arrivals were dashed in early June when Germany’s Parliament voted overwhelmingly in favor of a resolution recognizing the killing of hundreds of thousands of Ottoman Armenian citizens during the First World War as an act of genocide. The vote sparked protests in Turkey, which were widely reported overseas, and the subsequent anti-German sentiment further harmed tourism industry prospects.

In the wake of twin terror attacks in Istanbul and the southeastern town of Midiyat in early June, which saw 16 killed and dozens injured, Turkey’s president laid the blame squarely on the West. Blaming a shadowy alliance of anti-Turkish forces backing terrorist movements targeting his country, Prime Minister Recep Tayyip Erdogan claimed the spirit of the Crusaders and those who invaded the Ottoman Empire during the First World War lived on, using terrorism rather than armies to weaken modern-day Turkey. There were even claims in the
local media, strongly rejected by Germany, that Berlin was behind the bombing of a police bus in Istanbul on June 7, which killed 11, in response to Ankara’s criticism of the Armenian resolution.

The latest round of terror attacks, coupled with the political spat between Ankara and Berlin, is expected to further erode German arrivals, with inbound traffic down by 35 percent deep into the second quarter of the year.

The government has taken many steps to support the sector, including subsidizing fuel costs for charter flights, allowing tourism operators to offer cut-price packages to foreign groups, stepping up promotional activity and providing soft loans for tourism companies and hotel developers. Though welcomed by the industry, these measures alone will not bring about a rebound, with improved security seen as the key to rebuilding demand.

While Turkey has experienced downturns in tourism in the past, Ziya Artam, the general secretary of the Association for Turkish Travel Agencies (Tursab) for the Çanakkale region on Turkey’s Aegean coast says that, this time, it is different.

“In the past, we could always see an end to the crisis,” said Artam, the owner of Crowded House Tours, which operates tours to Troy and the battlefields of the Gallipoli Campaign. “During the last Gulf War, arrival numbers fell badly, but, within months of the war ending, visitors started returning to the Turkish market. Then, there was a slow but progressive recovery. This time, it is different; this time, it is fear and there is no way of telling when the fear will ease and the sector can rebound. Even with improved security measures and increased promotional activity backed by the state, the sector will remain extremely sensitive to any shocks or adverse news for years to come.”

With arrivals and revenue still falling, the full impact of the slowdown in the sector has yet to be felt, warns economist Mustafa Sonmez. “The loss of Russian tourists, the instability surrounding the country, the worsening relations with Europe and now the Armenia Bill passed by Germany mean it is unclear how much the losses for the sector will be, how long they will continue and how far they will spread,” he said.

Jobs lost, investment down

As arrivals fall, so too does employment in the tourism sector, a downturn that swells the ranks of Turkey’s jobless, which, as it stands, has 10.9 percent of the labor force out of work.

According to some estimates, up to 300,000 jobs could be lost in the tourism sector this year, either through downsizing of staff, seasonal labor not being hired or more indirectly, through a weakening of demand in supporting service sectors, such as construction, food and beverage supplies and transport.

By contrast, officials in Spain – one of the countries to benefit most from the slump in tourism from Turkey – announced that, in the first quarter of the year, some 90,000 jobs were created in the Spanish travel and hospitality industry.

An upside for visitors willing to make trips to Turkey and for domestic tourists as well is that travel and accommodation costs have fallen dramatically, with discounts being offered across the board.

However, this can only stem the bleeding, not heal the wounds of terrorism and hard-hit consumer confidence. As has happened in the past when terrorist activity or economic woes have hit the sector, Turkey’s tourism industry will rebound, though, in this case, the recovery may take far longer, as the wounds appear far deeper, offering cold comfort for Turkish tour operators in their summer of discontent.