The state of inbound tourism to Turkey, market analysis for the last ten years
Turkish tourism industry has witnessed a steady growth in the last two decades, according to Association of Turkish Travel Agencies. In fact, it is considered among the fastest growing sectors of Turkey (Association of Turkish Travel Agencies 2015). The industry professionals observe that the number of inbound tourists to Turkey has increased since 1980s at an incredible rate. Nevertheless, the growth is not steady because of several external factors influencing the sector.
Turkey has therefore witnessed growth in tourism revenues as well as foreign arrivals. In the year 2012, for instance, the number of international tourists to Turkey reached over 31 million reflecting 104% growth.
It is generally acknowledged that Turkey has greater opportunities for tourism development. The country boasts of vibrant natural resources, tourist attractions and cultural heritages. Association of Turkish Travel Agencies notes that Turkish tourism sector will continue to thrive at a significantly higher rate relatively to the global average and the EU average towards the year 2020.
According to Oxford Business Group (n.d), between the year 2004 and 2014, Turkey recorded a growth of 115.7percent, representing an increment from 17.08 million to 36.84 million. Today, Turkey is ranked sixth in the global popular tourist destination. The country is now focusing on become the fifth through its Vision 2023, but it must first topple major destinations like France, the US, Spain, China and Italy (Oxford Business Group n.d).
Germany has been the most significant source market of inbound tourists to Turkey. In the year 2014, for example, there were about 5.1 million tourists from Germany. Russia and the UK also provided many tourists, about 4.4 million and 2.6 million respectively.
although Turkey has enjoyed a steady growth, in the same period, there was a slight decline of inbound tourists because a slight growth of 5.52 percent was recorded relative to the previous years (2012 and 2013) in which the growth rate was 9.84 percent. Nevertheless, Turkey still aims for its Vision 20123 on tourism objectives. On this note, Turkey prepares to receive about 50 million inbound tourists every year. The country has invested on support services, including promotion to achieve these goals.
Deloitte Turkey also confirms that Turkish tourism sector is robust and grows beyond the global average (Deloitte Turkey 2013). Government has realized TL 57.5 billion annually in its GDP as a contribution from the tourism and travel industry (Deloitte Turkey 2013). In the year 2015, the contribution is predicted to reach TRY84.4billion based on a growth rate of 2.8% (World Travel & Tourism Council 2015).
Turkish government’s commitment to tourism
Turkish government has created several support services and incentives to demonstrate its commitment to the growth of tourism. First, Turkey has Small and Medium Enterprises Development Organization (KOSGEB), which offers support to organizations, conducts marketing, supports international trade, finance, human resources and management for SMEs. It can provide up to TL 150,000 for three years (Deloitte Turkey 2013).
Second, Turkey has well-coordinated investments guided by the decree issued through the Council of Ministers. These investments focus on regional investments and any other massive investments. Third, Law No. 2634 is the major regulation that directly promotes incentive systems in the travel and tourism. The Ministry of Culture and Tourism issues license for investments in the industry. Fourth, Turkish government has a provision under Law No. 1319 that exempts tourism organizations from both income and corporate taxes within the first five years of business. Finally, organizations involved in tourism activities can get loans from EXIM Bank to promote the growth of the industry in Turkey.
Turkish government has created six regions to guide allocation of incentives, and promote investment in the tourism and travel industry. The least developed regions receive the more support from the available resources.
Turkish government has created Vision 2023 specifically for the development of the tourism sector. The blueprint provides management and implementation of strategic plan to boost the tourism industry. It accounts for alternative tourism that covers coastal tourism, health, thermal, cruise ship, golf tourism and plateau tourism among others. In addition, the plan contains managing drivers of tourism; investment in land, transport and infrastructures; promotion and marketing; research and development; good governance; education; diversification; rehabilitation; destination improvement; and quality of services. These are diverse long-term activities to attract the projected 63 million travelers by the year 2023 (Minstry of Culture and Tourism 2007).
A resource audit of key attractions, tourism products and access
From the Vision 2023, Turkey has identified several tourism products, major attractions and access points.
For instance, the so-called alternative tourism focuses on health, cruise ship, coastal thermal, winter sports, mountain climbing, adventure trips, plateau tourism, ecotourism, conference and expo tourism, and golf tourism among others. The government intends to use these drivers of tourism to create corridors, cities, and ecotourism areas. It is imperative to observe that these drivers account for cultural, natural, historical and geographical assets to develop tourism.
In addition, major resources are currently available or being developed to support the tourism and travel industry. For instance, Turkey continues to invest in accommodation facilities, including hotels, which have experienced an increment in investment by 48 percent between the year 2005 and 2013.
An analysis of the regulatory, legal and business environments for developing tourism
Turkish government has realized it massive opportunities in tourism development. Consequently, the country is now working on creating favorable governance, legal and regulatory business environments to develop tourism.
Turkish government has legally created Tourism Bank Inc. to support investment in tourism activities. Foreign funds can be loaned to investors.
Investors focusing on tourism can rent public land for a period of 49 years based on specific investments, location and intended capacities.
The government is also promoting employment of foreigners, including artists. Foreigners can constitute ten percent of all employees in a given establishment. However, the Ministry of Labor and Social Security must approve such arrangements. Foreigners can start working within the first three months after employment.
Government has made it a top priority to provide communication facilities to all certified tourism organizations.
The government has also introduced lowest tariffs for gas, electricity and water for all certified tourism organizations. In addition, these establishments are, to some extent, exempted from strict regulations on sales of alcoholic beverages and games. The Ministry is responsible for granting exemption.
Finally, the Tourism Development Fund specifically targets investments that focus on promoting tourism in domains of interests such as cultural heritage sites and other regions that require development. The maximum repayment period for the loan advanced is 20 years for only 15 percent of the total investment costs.
Besides, Turkey is currently working on corporate structuring and governance to streamline operations and management of tourism activities.
Key competitors within the region
As previously mentioned, Turkey is ranked sixth in the global tourist destination based on popularity. The country comes behind other major destinations like “France, the US, Spain, China and Italy (Oxford Business Group n.d).
Within the region, it is necessary to point out that governments in the region and globally for that matter have recognized the potential of their tourism drivers and economic impacts. Consequently, competition is fierce. Nevertheless, Turkey is an important link between Asia and Europe. Perhaps its civilization, history, vibrant culture and natural resources have helped Turkey to position itself as a major destination in the Asian market and therefore, it can attract many European visitors. Turkey must however compete with other countries such as Thailand, Russia, Serbia, Bulgaria, Hong Kong, Romania among others in the region.
An overview of regional agreements and global political issues influencing tourism development and flows of tourists into Turkey
Turkey currently has several bilateral agreements with several countries in the region to develop tourism. Specifically, it is vital to review the readmission deal between Turkey and the EU (Turhan 2014). In the recent past, countries such as Greece, South Africa, Australia, and Israel among others have become closer tourism partners. Under the East Mediterranean International Tourism and Travel Exhibition (EMITT), for instance, Turkey has been able to attract countries such as Greece, Syria, Egypt and several other countries from Latin America have continued to attend tourism expo. Turkey aims to use these regional agreements to establish a 12-month-long tourism destination.
It is also expected that the readmission would lead to changes on talks that touch on Chapter 24 , which deals with issues of “external migration, asylum, police cooperation, border control, and visas” (Turhan 2014, p. 1). Under this deal, the country has allowed visa-free travel to 69 countries. On the other hand, Turkey must cancel all other visa exemption deals for countries on the so-called negative list or the Schengen. Overall, such agreements promote tourism while advancing safety by control migration of people across borders.
The current refugee crisis in Europe and Turkey is therefore a major drawback to tourism because of associated risks. Economically and socially, Turkey will bear the greatest burden of sheltering Syrian refugees referred to as ‘guests’ not tourists. Meanwhile, the public hostility continues to grow towards Turkish guests from Syria.
The overall strengths, weaknesses, opportunities and threats for Turkey
Strengths
- A strong Vision 2023 to promote tourism
- Enhanced government involvement
- Favorable legal, regulatory and business environments
- Multiple tourism drivers
Weaknesses
- Although Turkey has identified several potential areas of tourism under the so-called alternative tourism, it remains unclear whether all those options have been exploited.
- Slow pace of project implementation
Opportunities
- Bilateral and regional agreements to promote tourism
- Continued massive investments in hotels and other supporting infrastructures
- Sustained focus on ecotourism and sustainability
Threats
- Governments globally have recognized the potential of their tourism drivers and opportunities and, therefore, competition has become severe.
- ISIS terrorism threats
- Syrian refugee crisis and the burden of hosting them
Turkey’s propensity to develop its current tourism product, and present strategies that the tourism authority could implement in the destination to remain competitive
The country has focused on a goal of receiving over 50 million visitors by 2023. Other tourism bodies such as the World Tourism and Travel Council (WTTC) also support this projection. Turkey therefore must work even harder to attain this vision. On this note, Turkey requires critical strategies to keep it competitive in the global market.
From the Vision 2013, Turkey has identified nearly all major tourism products that can appeal to global visitors. Effective implementation is therefore necessary for the Vision 2023.
Turkey needs to invest massively in enablers of the tourism industry. First, the transport industry remains a critical area of focus. For instance, the airline industry must continue to improve its services and global destinations to attract tourists. Second, the road network is another important area that requires investment to support distribution. It will drive the growth of railway and highway services to complement airport transport.
The country must also develop its workforce in the tourism industry to offer world-class services. Besides, human resource development is vital for the overall growth of the country.
Turkey must continuously improve support and incentives in the tourism industry. The country, for instance, can review other areas suitable for further development and focus on sustainability with incentives to investors who focus on such areas. Moreover, massive potentials exist in all major seven regions, which it can exploit to develop the industry.
Communication, information resources and construction are also major tourism drivers that must be strategically developed to support the industry.
Finally, the current movement of people, specifically the Syrian refugees, could present challenges to the tourism sector in Turkey. On this note, Turkey must work with its EU partners to control its borders to avoid influx, ensure safety and reduce threats of external attacks from terrorist and other militia groups.
Reference List
Association of Turkish Travel Agencies 2015, Inbound Tourism Today. Web.
Deloitte Turkey 2013, Travel & Tourism. Web.
Minstry of Culture and Tourism 2007, Tourism Strategy of Turkey – 2023, Minstry of Culture and Tourism Publications, Ankara.
Oxford Business Group n.d, Turkey’s expanding tourism offering driving sector growth. Web.
Turhan, E 2014, Blessing or Burden? Turkey’s New Immigration Deal with the EU. Web.
World Travel & Tourism Council 2015, Travel & Tourism: Economic Impact 2015 Turkey, WTTC, London.