Let's prepare for new competitors like Egypt and the UAE

Expressing that the successful performance of Turkish tourism in recent times and the six-month tourism data announced by Minister of Culture and Tourism Mehmet Nuri Ersoy reveal the growth trend in the sector, Turkey Tourism Investors Association (TTYD) President Oya Narin highlighted the successful performance of Istanbul and Antalya compared to last year. Narin noted that the occupancy rates in July-August were slightly below expectations, but per capita spending met targets and tourism revenue continued to increase.

Speaking on a television program, TTYD President Narin said that comprehensive new planning is needed in the sector until 2030. Emphasizing the importance of increasing Turkey’s competitiveness in the tourism sector, Oya Narin pointed out the need to be prepared for new competitors like Egypt and the United Arab Emirates (UAE). TTYD President Narin stated, “About half of our 2 million bed capacity dates back to before 1999. As a sector, to develop our potential, maintain our competitive edge, and create new destinations, it is essential to both transform our existing bed capacity and increase our total bed capacity.”

“Trying to balance cost increases”

Narin stated that a decrease of around 2.5% was observed in the number of domestic trips in the first quarter, which might have occurred due to economic fluctuations. “Unfortunately, there is a perception in the public that prices have risen significantly, and local tourists cannot afford vacations, which saddens us and affects the tourism industry negatively,” said TTYD President Narin. “Our sector, serving 60 million tourists and generating 60 billion dollars in revenue, is labor-intensive. It will continue to contribute to the current account balance and budget balance in the coming period. We are experiencing cost inflation in the accommodation sector, particularly due to increases in food, beverage, and energy prices. We are trying to create a pricing structure by balancing these cost increases, but it is not fully possible to reflect them,” she said.

Noting that profitability in the accommodation sector has decreased, and there is a need for a macrostructural economic program to better control costs, Oya Narin said, “In an environment with suppressed exchange rates and high inflation, we are seeking a solution by balancing costs. In TÜİK’s inflation calculations, restaurants and hotels are published together in the main expenditure group. However, looking at the breakdowns, we see that accommodation service prices increased by 52% and food service prices by 95% compared to the previous year. The coming months, September, October, and November, are critical for the tourism sector. Careful financial management and strategic planning are needed during this period,” she said.

“REITs can be used for financing problems”

Narin noted that they need to overcome financing problems to make these investments. She continued: “Considering the seasonal nature of the sector, there is also a need for working capital. We have a credit portfolio of 12.7 billion dollars. Our sector constitutes only 2.9% of the total credit distribution. For the sector to invest, it should benefit not only from conventional credit access but also from alternative financing sources. We are conducting comprehensive studies on transforming tourism’s financial management side to benefit from appropriate and advantageous setups in capital markets, supporting asset financing, and developing financing models for new business projects. These studies include making the Real Estate Investment Trust (REIT) system more functional and developing financing models for the sector, which is affected by many regulations such as zoning, special tourism protection areas, and coastline boundaries. In line with these studies, we plan to share the results and recommendations we achieve with all relevant institutions and organizations, primarily the Capital Markets Board and Borsa Istanbul. Our goal is to implement the best practices in the sector through these collaborations and offer more attractive opportunities for investors.” TTYD President Oya Narin stated that to achieve these goals, they would hold the 4th Tourism Investment Forum in Istanbul on November 26-27 to bring together international investors and operators with Turkish investors and operators.