Turkish travel firms and hotels are on the verge of bankruptcy and are begging officials for financial support to deal with the negative impact of sanctions aimed at Russia but having a direct impact on businesses in Turkey. According to the Turkish opposition publication Ahval, the debts that tourism has been carrying since the acute period of the pandemic, hoteliers expected to pay off in 2022 due to the high number of bookings and the recovery of the sector to optimistic values. However, the sanctions wedged into the plans, and the Turkish tourism sector was again on the verge of disaster.
Turkey is in dire need of income from tourism. In pre-Covid 2019, the sector earned $34.5 billion. In 2020, due to the pandemic, this amount was reduced to $12.6 billion, which led to an increase in the country's already unhealthy current account deficit. Last year, the tourism industry brought in $24 billion to the Turkish economy. Against the backdrop of tough sanctions and ongoing events in Ukraine, Turkish tourism could get worse this year. At the same time, the future also looks vague. Tourism revenues dipped sharply between late February and mid-March, with at least $10 billion more needed to cover debt and other expenses, Serdar Karcilyoglu, head of the association of hotel managers in the resort town of Bodrum, told Cumhuriyet newspaper on Tuesday.
“This year, domestic tourism cannot save the sector. Many hotels will be auctioned off because their owners will not be able to repay their debts,” the head of the association complained.
The situation in Ukraine threatens the Turkish tourism industry: Russian and Ukrainian tourists accounted for more than a quarter of all foreign tourists last year, and this year, if a compromise is not found, there will be no need to wait for at least last year's level of tourist flow – tourists frightened by sanctions, special operation and economic instability.
Turkey is looking to increase tourism revenue to help stabilize the national currency, which has lost 44% of its value in 2021, spur economic growth and finance the current account deficit. Prior to the events in Ukraine, the Turkish government predicted that tourism revenue this year could equal or exceed the record $35 billion earned in the exemplary 2019.
Previously, the main opposition Republican People's Party recently released a report stating that a shortage of Russian and Ukrainian tourists could cost the Turkish tourism sector about $5 billion. About 4.5 million Russians and 2 million Ukrainians visited Turkey last year, according to the Ministry of Tourism.< /p>
Debts of the hotel sector in the form of outstanding loans exceed 8 billion lira (almost 60 billion rubles), and it is already clear that companies will not be able to repay this amount due to the events in Ukraine, said the head of the association of hoteliers Kargioglu.
“Urgent credit support is needed so that the sector can pay off its old debts and get through the current period,” said Korhan Alshan, CEO of Nirvana Hotels of Kilit Group, which owns three hotel brands – Nirvana Lagoon, Crystal Hotels and Amara World Hotels. Each of the brands is a network of hotels located in the most picturesque corners of Turkey – Side, Belek, Kemer, Antalya, Goynuk, Kusadasi.
“Insurance companies refuse to insure planes departing from Russia, and people will not be able to come even if they want to,” professional tourist Fehmi Kefteoglu was quoted as saying by the publication. According to him, Turkish banks have already sold 271 hotels to pay off the unpaid debts of their owners during the pandemic.
The sector could be in danger of extinction if the government does not provide the necessary financial support and incentives,” the founder of the center concluded Turizmdatabank analyst Erol Akbulut.
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