The dollar blow to Turkey with the entry of the tourism season in the sand

In the resort of Marmaris, nestled between turquoise waters and pine-covered mountains on Turkey’s southwest coast, hotelier Mustafa Dilivli is preparing for a summer he fears will drown out the city’s tourism sector.

He said reservations at Deliveli’s Emre Hotel are at 15 per cent of capacity for June, one of the “hottest months” of the season, when its rooms are usually full. But the spring coronavirus wave prompted Russia, Germany and Britain, Turkey’s three biggest tourist markets, to impose onerous travel restrictions – threatening a sector that provides millions of jobs and vital hard currency.

“We’ve had our share of crises in tourism over the years, but it’s never seen before,” said Delively, who has laid off a third of his staff and closed half of the hotel to cut costs. “We kept our heads above water last year and had high hopes for this season. It was a huge disappointment.”

A collapse in tourism would spill over into the broader economy. Turkey relies on foreign exchange inflows from visitors to finance its foreign debt and current account deficit of 5 percent of GDP, as well as for restocking. Forex reserves Drain to support a weak currency.

Tourist cash has become more important since President Recep Tayyip Erdogan sacked the central bank governor in March, prompting foreign investors to dump a net $1.8 billion in Turkish stocks and bonds.

In an effort to attract visitors, Erdogan ordered the country closed for most of May to curb the pandemic. Most visitors are now exempt from PCR tests for the virus, and the government’s “Safe Tourism” program has prioritized vaccinating tourism workers and accrediting 10,000 hotels and other operators that adhere to strict hygiene standards. The Daily reports that Covid-19 cases have fallen to around 6,000 from 63,000 in April.

With a 5,000-mile coastline filled with Greek and Roman antiquities, Turkey was the sixth most visited destination in the world before the coronavirus outbreak, attracting 52 million tourists and $35 billion in revenue in 2019. Revenues fell nearly 70 percent in 2020 compared to the previous year.

The Department of Tourism has targeted 30 million tourists and $23 billion in revenue in 2021, but that may already be out of reach, with fewer tourists arriving by a third in the first four months than in the same period last year.

The pandemic has caused a swing in the numbers [but] Tourism Minister Mehmet Nuri Ersoy told the Financial Times: “Tourism maintains its serious place in Turkey’s balance of payments and provides two million jobs.”

Tourism, directly and indirectly, accounted for 13 percent of GDP before the pandemic. Without a meaningful recovery this year, up to a percentage point of economic growth may be curtailed in 2021, said Roger Kelly, an economist at the European Bank for Reconstruction and Development in Istanbul.

Income from tourism also reduces Turkey’s trade deficit and supports the lira, which has lost 14 percent of its value this year as concern grows that Erdogan’s pressure on the central bank to cut interest rates was fueling double-digit inflation.

Life in Turkey would be much easier if tourism revived. “If it doesn’t, it means another year for the economy to struggle,” Kelly said. “It is not a magic wand, but it will relieve a lot of pressure on the Turkish economy.”

In Marmaris, nine out of ten hotels remained closed in late May, Deliveli said. Most of them have survived the 2020 meltdown through loans or cost cuts, but “now is the time to pay and if things unfold like last year, many operators will go bankrupt or have to sell,” he said.

About 2.6 million Britons traveled to Turkey in 2019 and they usually make up about half of Deliveli’s guests. No bookings have been made from Britain this season because the UK government has asked arrivals from the country to stay in a quarantine hotel and take a PCR test at their own expense. Erdogan said he would discuss tourism with Johnson at next week’s NATO summit, and also sent Ersoy to Moscow and Berlin to push for an end to their restrictions.

Germany, which sent 5 million tourists to Turkey in 2019, said returnees no longer need to be quarantined if they are vaccinated or tested negative. Russia, Turkey’s largest source of tourists, has extended the ban on most flights between the two countries until June 21, Ersoy said, “Once air traffic resumes, Turkey will receive a rush because guests do not cancel reservations but rather postpone them.”

But Bhatin Yucel, a former tourism minister, said it was already too late for this season to “be better than last year, and we have to attribute that to the lack of success in managing the coronavirus.”

One recent afternoon, a few tourists roamed the sprawling ruins of Perge, a 3,000-year-old archaeological site once ruled by Alexander the Great and decorated with impressive mosaics.

Ali Shekla walked the old Berg Trails “a thousand times” during his four decades as a tour guide. Since the pandemic broke out, he’s only led five groups and his income has fallen by 90 percent. However, he is optimistic that Turkey’s blend of sun, sea and history will prove irresistible.

“It may take a few years,” he said, “but people will come back.” “The epidemic won’t last forever, but Berg will.”

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