Turkey attempts to salvage tourism sector

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TRAVEL GAZETTE – Having suffered from a fall in tourism revenues recently, Turkey has launched  an emergency plan to reinvigorate its beleaguered tourism industry.

The package of incentives includes 255 million Turkish lira (about 87 million U.S. dollars) in direct government aids in the form of grants and a deferral of 288 million Turkish lira (98 million dollars) loan and credit payments for tourism firms.

Turkish travel and hospitality industry has suffered recently from tension with Russia, a series of terror attacks in several cities and ongoing turmoil in Turkey’s neighborhood, especially in Syria.

“The tension we have been experiencing with Russia must certainly not be reflected upon our dear (Russian) guests,” Turkish Prime Minister Ahmet Davutoglu remarked, calling on citizens to welcome each and every tourist with hospitality.

Russia, the second largest source of tourists to Turkey, has introduced a set of sanctions against Turkey, including urging its citizens to avoid from travelling to Turkey and to cancel their already planned visits, after Turkish jets shot down a Russian bomber near the Syrian border in late November, 2015.

The number of Russian tourists dropped to 3.7 million last year from 4.5 million in 2014, according to Turkish government data. It is expected to decline further in 2016 in the light of Russia’s sanctions.

Yet Davutoglu was upbeat on Monday, saying that Turkey is still keen to be among top three performing countries in tourism industry by 2023, the year when Turkey will celebrate its centennial.

That, however, may be easier said than done.

Didem Engin, a lawmaker in Turkish Parliament, said achieving the government’s target of 63 million tourists and 86 billion U.S. dollars in tourism revenue by 2023 is impossible with the current policies adopted by the government.

“The government failed to develop policies to prevent the negative impact of tension with Russia on tourism,” she pointed out.

Engin lamented that failure to thwart back to back terror incidents in the country has unfortunately excluded Turkey from being a safe destination.

According to the latest available data from Turkish Statistics Institute, the tourism revenues in Turkey have declined by 14.3 percent to 6.57 billion U.S. dollars in the final quarter of 2015.

The overall tourism revenues fell 8.3 percent in 2015 to 32 billion U.S. dollars.

To make things worse, this month a suspected Islamic State (IS) militant blew himself up in Istanbul, killing 11 German tourists.

Germans are the number one in terms of tourists visiting Turkey every year. Last year, 5.5 million Germans came to Turkey to spend their vacations, a six percent increase from the previous year.

TUI Group, the world’s largest travel and tourism company, announced this month a 40 percent drop in summer bookings to Turkey due to safety concerns.

The Turkish prime minister also pledged a fuel subsidy of 6,000 U.S. dollars per charter flight, export credits for best performing tourist companies, and reduced fees for water usage and waste disposal.
“The package sounds good, but we are looking for steps toward employment as well,” Timur Bayindir, the head of Turkish Hoteliers’ Association said in a statement.

Turkey’s tourism industry employs about one million people. In the light of the minimum wage hike by one third in late 2015 as part of the ruling party’s election campaign pledge, labor costs for businesses have soared, which has had a negative impact on the travel and hospitality industry.

The Aegean Tourism Operation and Accommodation Union Chairman Mehmet Isler also remarked that the industry also had expectations regarding social security premiums for employees.
“With the omission of such an incentive, the package sounds incomplete to us,” Isler claimed.

The incentive of treating businesses that earn more than 750,000 U.S. dollars from foreign sales in travel industry as exporters also drew some criticism.

Halil Ozyurt, the head of association representing hoteliers and tourism firms in Bodrum off the Aegean Sea, said it is unfair for small and medium sized enterprises.

Emre Deliveri, an expert on the industry, recalled that the government introduced a similar package in 2009 amid world financial and economic crisis but failed to return sales taxes to the companies at the time.

Tourism shares at Turkey’s stock exchange Borsa Istanbul gained around 4 percent immediately after the announcement of the package.

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