By Ceyda Caglayan
ISTANBUL (Reuters) – Tourism in Turkey is expected to return to near pre-pandemic levels this year, boosting the crisis-hit economy with the help of a recent currency crash that has made it a more attractive tourist destination than ever, they say industry representatives.
Despite high hopes, hotel and tourism officials warned that sharp increases in utility, food and labor costs will limit profits and broader benefits for an economy reeling from inflation soaring to a 20-year high.
The high season starts in May for Turkey‘s Mediterranean and Aegean beaches and historical treasures.
Europeans in particular are already booking trips, which is good news for President Tayyip Erdogan‘s government, which has introduced sweeping new economic policies that rely heavily on foreign revenue to stem the current account deficit.
“Early bookings started at high speed. We have strong bookings, particularly from the UK. They are almost at the level of 2019,” said Bulent Bulbuloglu, vice-chairman of the Turkish Hoteliers Association.
He said early bookings traditionally start with Brits and are seen as a benchmark for the season, with strong demand also expected from other European countries, Russia and Central Asia.
Foreign arrivals in Antalya, one of Turkey’s most popular holiday destinations, totaled 117,818 in January, matching 2019 levels, the data showed.
However, further escalation of the Russia-Ukraine crisis could pose some risk to the season, Bulbuloglu added.
“We are also getting good signals from Germany, Belgium, the Netherlands and the Scandinavian market…Turkey has become a destination where visitors can have the cheapest vacation using their own currency. It is now a paradise for foreigners.”
The lira weakened 44% against the dollar last year and all-inclusive deals make Turkey even cheaper.
“SERIOUS PROBLEMS” WITH COSTS
“The average price per night for a five-star hotel in Turkey is around 70 euros, while in Spain it is around 200 euros,” said Oya Narin, chairman of Turkey’s Association of Tourism Investors.
Finance Minister Nureddin Nebati last week forecast tourism revenue of $34.5 billion this year, up from $24.5 billion in 2021. In 2019, it was $34.5 billion.
Erdogan’s new economic policy aims to bring down inflation by creating a current account surplus, with tourism revenues being a key driver.
“It looks like we’re on track to hit the $34-$35 billion target. But income alone is not enough. Then there is the cost aspect,” said Narin.
She said foreign arrivals will be close to 2019 levels, or just 10% below, but turning a profit matters more to the industry than how many millions come.
“We have serious problems with the development of our costs. We are faced with galloping cost increases in terms of electricity, gas and other costs,” Narin said.
Annual inflation in Turkey reached 48.69% in January.
Ulkay Atmaca, general manager of Innvista Hotel Belek in Antalya, said he had to raise prices by 42% for this season but still couldn’t compensate for the rising costs.
Turkey Hotel Association head Muberra Eresin said sharp cost increases are eroding industry margins, with costs rising 60% to 65% in just one month.
“We have already signed contracts with operators and fixed our prices. It’s not possible to reflect all of these additional costs in our prices now,” she said.
(Writing by Ceyda Caglayan; Editing by Jonathan Spicer, Daren Butler and Nick Macfie)