Tallying the Tourists

Projections of a record-breaking year for Turkey's tourist industry appear to have already been realised, following the recent release of data on tourist inflows from the State Institute of Statistics (DIE). With growth and confidence up, the tourist industry is already looking to 2005 to smash records once more. Yet, ensuring a continuation of the trend over the coming years also necessitates a certain amount of change.



In the meantime though, dwelling on success remains more of a priority for members of the Turkish tourism community these days. Tourism revenues reached $12.6bn from January to September, according to data from the DIE, translating into 15.8m visitors for the period. Quite a feat given that official tourist revenues for 2004 were initially projected at just $9.8bn. Now, thanks to an unabated inflow of tourists over the course of the summer, visits are expected to top 17m by the year's end, according to the Turkish Ministry of Culture and Tourism. This, according to Prime Minister Recep Tayyip Erdogan, would provide an income of over $13bn by the end of 2004.



Comparisons with the figures from 2003 illustrate this year's success more starkly. Data from market watchers ISI reveal a 14% year-on-year increase for the month of September, representing some 2.1m visitors for 2004. Unsurprisingly, a similar trend occurred for the month of August, with an 11.6% hike. With robust growth registering on a monthly basis, Turkey has clearly reached a high level of performance. Statistics from January to September testify to the fact, revealing a 28.3% year-on-year boost, with 14m foreign visitors entering the country for the period this year.



Turkey's main tourist destinations have thus enjoyed something of an influx. The number of tourists visiting the south-western Turkish provinces of Mugla and Denizli saw a boost of 27%, year-on-year, according to Mugla's governor, Huseyin Aksoy. Year-end figures are expected to reach 2.5m, versus the 2.072m achieved in 2003. Equally, the number of foreign tourists entering Anatolia has increased 30% - to 5.69m - since the beginning of 2004, according to Provincial Directorate of Culture and Tourism.



This positive trend has found equal expression in tourist income inflows. Tourism expenditures increased by 5.7% in the third quarter of 2004, compared to the same period in 2003, based on DIE figures. This has translated into an impressive $734.3m for the July, August and September period.



Good news then for Turkey's current account deficit. Depreciation of the Turkish lira, along with the unabated inflow of tourism revenues is expected to alleviate some of the pressure from the current account deficit in 2005. But high oil prices, coupled with rising global interest rates, might yet offset the benefits associated with a booming tourist industry.



"World oil prices are seen above $40 a barrel for next year, and I do not see a significant easing in general domestic demand," according to Baturalp Candemir of the investment bank HC Istanbul.



Indeed, Turkish economists are more than aware of the dangers associated with high oil costs and a domestic consumption of imported goods that threatens to widen the current account and trade deficit still further. But the contribution that tourist revenue has so far made in addressing economic imbalances has been noteworthy. For the month of September, the current account registered a surplus of over $60m, down by 90.3% from last year. This only highlights the potential offered by tourist revenue in clawing back much needed revenue and lifting the books from the red. That is of course, if domestic and international conditions permit.



Debate about debt aside, Turkey is already looking to enter the 2005 season with a bang. The Turkish Culture and Tourism Ministry promises to attend 87 tourism fairs in more than 40 countries in 2005. These include the all-important Berlin Fair scheduled for March 2005, with over 10,000 hotels and tour operators from over 180 countries attending the event. Equally important is the Moscow Tourism Fair, the London World Tourism Fair as well as the Arabian Travel Market Dubai, scheduled over the course of the year.



Such concerted marketing efforts should pay off, tourist authorities hope. The number of tourists visiting Istanbul is projected to reach 6m by the end of next year, compared to 5m in 2004, according to Timur Bayindir, chairman of the Union of Turkish Hotel Owners (TUROB). In a similar vein, Bayindir estimates that Turkey should expect 20m tourists in 2005, up from the 17m anticipated by the end of 2004. This by implication would inject as much as $15bn into the Turkish economy.



True confidence in the sector though is reflected in long-term projections. Prime Minister Erdogan himself has estimated that Turkey will receive 30m foreign visitors annually by 2010, equivalent to $30bn in tourist revenue per year. This is more than twice the projected revenue earnings for 2004.



But for unabated growth to continue over the years, Turkey must look to address certain issues that could prevent the country from realising its full potential. One such issue concerns flights from the Gulf. Tourists from the region spent 10 times more than European tourists in 2004, according to Hasan Erdem from Turkey's Association of Travel Agents (TURSAB.) With just two flights a week between Turkey and Kuwait, the Turkish flag carrier THY - along with the tourist industry at large - risks losing out on some big bucks. A point to note, considering that half the Gulf Cooperation Council (GCC) tourists visiting the north-western city of Bursa, for example, are Kuwaiti citizens.



Closely linked is the question of internal flights. The exorbitant fares on these charged by THY when it enjoyed an internal monopoly acted as something of a deterrent to air travel within Turkey. Yet the situation continues to improve thanks to the end of this monopoly and the recent emergence of competition. Onur Air and Atlas Jet in particular have placed downwards pressure on the prices of internal flights.



Another challenge has been cultural tourism, which presents further scope for development. Such markets as America, China and Australia would welcome a higher number of cultural tours in Turkey. But this also requires further assistance from the authorities in improving access and infrastructure so that Turkey's historical sights become more accessible to visitors.



This is not to deny efforts by the tourism authorities to develop and restore historical sights. The government has put $300m aside in 2004 for projects designed to protect Turkey's cultural inheritance. This is complemented by the channelling of revenue obtained from admission to tourist sights back into the system. Noteworthy projects include the preservation of the Ankara citadel and the upgrade of the Anatolian Civilisations Museum. Meanwhile, historical sites will now be opened to investors through a build-operate-transfer (BOT) model - bringing private capital into the preservation, renovation and marketing of these attractions.



Harnessing Turkey's true potential as a destination for historical and cultural tours will require considerable future investment - whether from private or public means.
But with the tally of tourists swelling, the outlook looks to be for more sunshine. The chief concerns remain tourist confidence and the health of the global economy. Yet stable conditions may not prove enough on their own to sustain long-term record-breaking growth.