In first five months, tourism sector broke all-time record in number of visitors exceeding 11.4 million. Numbers show that the targeted 40 million visitors is no longer a dream. If you say ‘what about the revenue?’ Here is the target: Still 2-3 billion dollar below the reached peak of 32 billion dollars.

After the heavy crisis in 2016, the tourism sector had to draw ‘price weapon’ but now it’s getting up the room prices step by step to avoid cutting the demand. The average room price in Istanbul was 79.9 euros in May 2018 while it was 143 Euros in May 2015. A fall of 44% in euros is not so high in terms of TL. “euro is not how it used to be but neither is the inflation” according to the industry.

THE TOURISM SECTOR achieved a great success in 2014-2015 with 41 million visitors and more than 34 billion dollars of revenue. But in 2016, incidents like increasing terror attacks and plane crisis with Russia tumbled down all targets and expectations. The industry first insisted on the price but could not resist and reduced the prices especially in 2017 to keep the demand stable. Hence with the help of promotion campaigns, the reduced prices and mending relationship with Russia provided a recovery in 2017.

The year 2018 started with records. First, the target of 38 million tourists is revised to 40 million when all-time record was broken with 11.4 million visitors in January- May term. The tourism revenue expectation is announced as 32 billion dollars.

We, as Strategy Magazine, have interviewed the pioneers of the industry, who have been in this business for many years and survived dozens of crisis, about their expectations for 2018 and the following years. Our first guest was the president of Turkish Hoteliers Federation (TÜROFED) Osman Ayık who considers 2017 as ‘comeback’ year and 40 million tourists in 2018 target is not high. He said that, 2018 and 2019 will be the ‘reparation’ years and they are establishing the supply-demand balance. “It is not possible to rise the prices at the speed they fell down. There has to be a step by step increase. Our priority now is to recover the lost demand and increase the number of tourists without compromising the service standards and use price motivation if necessary” he said.

Ayık said that, first of all, they have run an active promotion with the Ministry of Tourism in Russia, UK and EU countries which they consider as classic markets. He stated that: “We endeavored to attend every organization mainly fairs at Middle East countries, China and India which are under our scope. Turkish tourism sector has always developed an active promotion system.”

President of Turkish Hoteliers Federation (TÜROFED) Ayık, lays emphasis on the success of Turkish tourism sector by stating: “We are a very dynamic industry that can make quick decisions. The most important thing here is price/standard relationship. Now we are trying to keep our prices at a reasonable level but we do not make concessions about our standards.

‘WE ARE STILL PRETTY FAR BEHIND IN PRICE’

President of the Hotel Association of Turkey (TUROB) Timur Bayındır is still cautious about 40 million target. Nevertheless he admits that there is a serious increase in the number of visitors even if it is over or below 40 million. He points out that to keep this demand permanent, necessary steps has to be taken in the process.

Bayındır explains that the congress and cruiser tourisms has to bounce back especially in Istanbul, the world’s culture capital. “The things that will really fill Istanbul with tourists are congresses and giant tourist ships. There are good news from cruise ships; they added Istanbul on their list again. But sadly there are problems in the ports that those ships will dock. Right now, there is only Harem port in hand. I believe Kuruçeşme shore should be used if the depth is suitable. There is also an activity in congress tourism. We should work for 2020 and beyond without losing any time” he tells. Pointing out that the sector works ‘miracles’ on such hard times, Bayındır said: “We had a very troubled couple of years. We did not die, we are not knocked out. Yes, now we have higher occupancies but we are far behind in price. Dollar exchange rate is higher than in 2015 but we should not forget the increasing inflation. Tourism professionals seem to have earned from the increase in exchange rates but inflation melts that money. After the incidents in 2016, we had to cut prices very hard in order to survive and keep the demand. Now that we increased the demand, we need to place the price where it deserves to be step by step.”

When we talk about the sector players and price/occupancy ratios, the numbers of STR, which is a worldwide research and analysis company, help us. According to STR May 2018 Report, the hotels in Istanbul have achieved a 69.2% level of occupancy in January- May term. In 2016, which is the year of the crisis, this number was 51.1% in the same term. In 2015, we can consider as the best year of tourism, the occupancy levels were at 66.4% which means Istanbul is now better than the best year in terms of occupancy.

44% FALL IN TERMS OF EURO

What about the price?

We observe a slow walking process there instead of running, as the sector describes it. Let’s go back to the report: The average price of rooms sold per day, called ADR (Average Daily Rate), in January-May term in Istanbul is 76.17 euros. There is a 6 Euro increase in comparison to 2017 which is considered as bottom. But the important thing here is at what point the prices have been cut down.

Because the average daily rate in January-May term in 2015 was 122 euros. We are talking about a price which is still 37% lower than the peak. Again in May 2015 average room price in Istanbul was 143 euros while it is 79.9 euros in May 2018. There is a 44% difference in terms of euro.

Now let’s take a look at Antalya, a destination which has a very important role in Turkey’s tourism revenue. According to STR May 2018 Report, the occupancy rate in Antalya is about 59% in the first five month of the year. This number was 49.7% in 2016 which is considered the worst year in tourism. When we look back at 2015, the year that everything was perfect, occupancy rates were at 51%. This means that Antalya has achieved the best days in terms of occupancy just like Istanbul. It is very similar in terms of revenue in Antalya, too. In January-May 2018, the average daily rate was 50.47 euros. When we look at 2015 January-May term, it is 63.32 euros. ADR is still 20% lower in terms of euro.

‘Euro is not it how it used to be, but neither is the inflation.’

EURO IS NOT HOW IT USED TO BE BUT NEITHER IS THE INFLATION

We need to underline this point now: Yes, the room revenue in terms of euro is less than it was in 2015 but we can’t ignore the increase of the currency exchange rate. In 2015, 1 euro was about 3 TL. The average euro rate in the first five months of 2018, is about TL 4.85 TL. In May 2015, the average room price in Istanbul was 143 euros equal to 429 TL at that time. In May 2018, the average room price is 79.9 Euro, which makes 387 TL. The difference is 44% in terms of euro while it is 9.8% in terms of TL. It shows us that the increase in exchange rate in 2018 has helped the sector.

It is best to conclude the sentence with the very own words of the players of the industry: “Yes, the exchange rates are high but neither the costs nor the inflation are what they used to be. The double-digit inflation and the increase in cost swallow the gains from the exchange rates. ”

2018 will be commemorated as the golden year of tourism

TÜRSAB President (the Association of Turkish Travel Agencies) Firuz Bağlıkaya points out
that 2018 will be commemorated as the ‘golden year of tourism’ in future and said “we will
show every effort to bring Turkey where it deserves to be on the international arena.”

THE TRAVEL AGENCIES

that deliver marketing and promotional activities worldwide, have an important share in the boom of the tourism sector. We asked to TÜRSAB President Firuz Bağlıkaya about how the crisis was overcome, the impact of the exchange rates on the sector and his expectations about upcoming Eid el- Adha in the domestic tourism. Here are the answers:

There is a 40 million visitor target this year in the Turkish tourism industry which is having an active season.

What are your expectations about the total number of tourists and revenue at the end of the year?

The Turkish tourism is having a successful season. The first data we received gives us hope that we will accomplish our target for the year 2018. All destinations in Turkey have an increase in the number of tourists. The industry broke an all-time record in tourism in the first 5 months. The number of foreign tourists visiting in the first 5 months of the year has increased 31% and exceeded 11.4 million in comparison to the same periods last year. The number of foreign tourists increased by 6% in comparison to the first 5 months of the year 2015 which was a record year.

Besides the increase in number of visitors, there is a significant increase in tourism revenue too. According to the data released by the Turkish Statistical Institute, Turkey’s revenue in tourism in the first quarter of this year, consisting of January, February and March, surged over 31% in comparison to the same quarter of the previous year, totaling to 4 billion 425 million 237 thousand dollars. I believe that we will surpass our end of the year expectation of 40 million foreign visitors and the revenue of 32 billion dollars. We, as TÜRSAB, will continue to do our best to close this year as successful as we can for our members and for Turkey and make every year better than the previous one. As TÜRSAB President, I believe that 2018 will be commemorated as the golden year of the tourism.

What are the factors that helped this activity in the Turkish tourism after two hard years?

What kind of measures the industry took against the crisis and reached today?

The Turkish tourism industry has gained many important experiences from Gulf crisis to bird flu, from swine flu to global economic crisis which directly weighed on the tourism over the past 30 years. But we must admit that the incidents we faced in the last couple of years have affected the sector very seriously. Our government’s supports and incentives to the tourism have contributed very much to the recovery of our industry. We have overcome the bad times together with the measures taken by our government for the sake of tour operators. With the aircraft contribution margin, 6 thousand dollars were paid for each aircraft. The special loan allocations were arranged for tour operators and hotels. There are efforts and works of all actors in the tourism sector in this recovery. With these supports, the tourism sector started recovering at the beginning of 2017. Now in 2018, we are getting prepared to break a historical record.

How did the change in exchange rates affect the sector?

What are the exchange rates in the domestic and international tours?

The appreciation of the exchange rates creates a favorable atmosphere for the tourists that visit our country but brings difficulties to our member agencies that send tourist abroad which we call “outgoing” agencies. As you know, the volatility in exchange rates was very high because of the effects of the speculations and the early election. Now that the early election is over peacefully and the expectations of stability are high, the volatility in exchange rates decreases again. In the new system, thanks to the legal arrangements that will promote foreign investors, the exchange rates will decrease further. This will help the demand for outgoing tours to come back to normal levels.

How much increase do you expect in the number of domestic tourists because of the rise in exchange rates?

How much do you think the number of domestic tourists will be this year?

The early reservation campaigns led by TÜRSAB has created awareness in citizens while being one of the basic factors reviving the domestic market potential. This year about 7 million people have benefited from early reservations. In 2018, we expect more than 10 million domestic tourists mobility with package tours.

Exchange rates affect holiday plans

ZEYNEP, who works at corporate communication department at a holding, quickly took out his phone after he saw how exchange rates increased dramatically in just a few seconds. He found out that hotel reservation worth 1,350 Euro he made at the beginning of 2018, via Booking.com app, for their family holiday in Barcelona in June, surged by 1,300 TL. He was very glad he had chosen the free cancellation option.

He needed to stay calm. He called Turkish Airlines for the 3 round trip tickets to Barcelona he bought for his family in January. He found out that he could change the tickets for a low change fee. It was still better than continuing the holiday. He opened the map, it was time to choose a new holiday spot for his family with his wife and his daughter.

CHEAP COUNTRIES ARE PREFERRED

These events happened at the end of May, not in a movie but in real life. Large fluctuations in exchange rates negatively affect many of developing economies, and along with increased costs in many areas, discourage Turkish tourists from going abroad, as they’ve started to enjoy doing in the last few years. Due to increases in dollar and euro exchange rates right before summer holiday season, some of the tourists cancelled their holiday plans and others changed their preferences towards more inexpensive countries.

Due to the increase in accommodation and other costs in TL, holiday spots such as New York, London, Milan, Amsterdam, Paris, and Barcelona options were replaced by more affordable centers such as Sofia, Baku, Tiran, Tiflis, Skopje, and Lviv.

In the face of increased exchange rates, tour companies started to offer discounted packages, with less overnight stays, for which the exchange rate is fixed. However, they still couldn’t manage to draw tourists’ attention. Tourism professionals remarked that the cancellations mostly happened in the section up to 1,000 Euros and have reached a remarkable number compared to last years.

Actually, the new trend is the countries which do not use dollar or euro. However, since these countries are at remote spots, plane ticket costs are very high. Thus, the countries that are 2-3 hours of plane ride away, and where the cost of living is lower than the popular destinations, are preferred. These trends will affect tourists’ choices for the 3 month period, between 2018 summer and fall which includes 9 days of holiday for Eid al-Adha.

IDO HAS A SURPRISE FOR THOSE WHO HAVE BIHAFTASONU

IDO, beginning to apply the summer time table between 11 June – 16 September 2018, made the necessary planning to meet the high demand and completed its preparations. The number of ferries on the destinations Yenikapı-Bandırma and Yenikapı-Bursa from 12 to 26. You can take information about IDO’s campaigns, making the journeys more colorful and enjoyable for passengers, on our website “birhaftasonumvar.com” during summer months.

IDO, ORGANIZING

the ferry journeys to meet the high demand in summer season, operates at 100 per cent occupation rate at departures and returns mainly during holidays. The general average is 70 per cent. Doubling the number of cruises in summer season, IDO will offer special surprises to the passengers on its website ‘bihaftasonumvar. com’ during summer. In those days when the tourism beats record and the number of domestic travels increases after the election, Semra Erener Özalçın, Deputy General Manager in charge of Strategic Planning, Business Development, Sales and Line Management at IDO, answered our questions:

Public holidays are the most crowded days.

What are the occupation rates at IDO during these periods?

Especially during the public holidays, the occupation rate is up to 100 per cent during departures and returns. The general average shows that the occupation rate for the passenger car transportation is over 70 per cent.

What do you do during public holidays and in summer to meet the high demand?

Our summer schedule for 2018, arranged by considering the school closing and opening dates, is valid between the dates 11 June 2018 - 16 September 2018. For the Ramadan Feast coinciding with the summer season, we applied Ramadan Feast schedule between 14 June Thursday- 17 June Sunday. Again for another crowded period anticipated for Eid- Al between 17 August Friday-26 August Sunday, we made a planning and finished our preparations. We made the necessary changes on all our destinations by taking into account the high demand during holiday on all our destinations and thus, we increase the number of cruises on fast ferryboat lines of Yenikapı-Bandırma and Yenikapı-Bursa (Güzelyalı) reciprocally to 12 and the number of cruises on the line of Yenikapı-Yalova reciprocally to 26. On the destination between Yenikapı and Yalova, we will have cruises beginning at 7.45 until 23.45 reciprocally at two-hour intervals.

With the planning made for the destination between Pendik and Yalova, we’ll run ferryboats every hour between 06.00 -12.00 and 14.00-23.00 and we increase the number of cruises to 36 reciprocally by adding the cruises at 1.00 p.m. on Friday, Saturday and Sunday. As IDO, we also increase the number of our Armutlu and Kumla cruises which are among the important domestic tourism centers at Marmara Sea. By adding Kumla to Kadıköy-Yenikapı-Armutlu Holiday Resort-Armutlu destination, we will have 8 cruises reciprocally on Fridays and Saturdays and 6 cruises on Sundays. In addition to making the necessary changes on all the lines of IDO, we increase the number of daily cruises to 14 reciprocally on the sea bus destination of Kadıköy-Yenikapı-Bursa.

Will you have a different, special application for the passengers this summer?

We attribute great importance to the travel experiences of our guests at IDO. We’ll have some surprises for them to make these experiences more positive. We look for the sightseeing places, eat and drink, culture and art and life style activities in the neighborhood to advise to our guests and we offer these opportunities accompanied with campaigns. As IDO, we’ll continue to announce the campaigns on our website “bihaftasonumvar.com” during summer, making the journeys more colorful and more entertaining thanks to our discount codes created for our guests traveling both via our inter and inner city lines. We’ll offer special coloring books and painting sets to our kid guests traveling with their families. We also plan to distribute gift checks offering discounts at market shoppings to our guests preferring IDO and additionally, promotion products by the contracted fuel oil companies to our guests traveling by their own cars.

How did the Osman Gazi Bridge, Eurasia Tunnel, Yavuz Sultan Selim Bridge affect the revenue of IDO?

How did IDO take action against this new situation?

The competition with the big projects like Eurasia Tunnel, Osman Gazi Bridge had, of course, negative impact on our revenues, contrary to the usual growth which we are used to see. The price set during the tender course of the Osman Gazi Bridge ($42 for cars), dropped to TL 88.75 soon after the inauguration of the bridge (to about $25 according to the then-currency exchange rate) and further down to 65 liras (around $18) following the discount made on January 1st, 2017; this toll fell up to 71,75 liras as of the new year 2018. Additionally, the heavy trucks banned from using Sirkeci-Harem route and allowed only to drive on the bridge, caused troubles to us. Encountering all these difficulties, as IDO, we took cost reduction measures like restructuring, cruise optimization, doing effectively maintenance-repairing works and taking steps to increase the income. As an example to the most important steps, we can state the open buffet offers, playgrounds for kids, surprise organizations, coloring books for kids, surprise activities, the fuel oil campaigns organized in cooperation with various brands and moreover, the discount campaigns for the contactless passenger car drives upon the opening of the Osman Gazi Bridge.

As of 1st January 2017, we discounted the vehicle ticket price to 45 liras for one direction and to 80 liras for round trip and soon after, we reduced the passenger car ticket price to 39 liras on the destination of Pendik- Yalova on 1st March 2017 and we set the price for the passenger in the car to be only 1 lira. All these measures are our competitive implementations as IDO. Following the hikes introduced for the bridge and highway tolls during the new year in 2018, we revised the prices for cars on the destination of Eskihisar – Topçular as 55 liras for one direction and as 100 liras for round trip. Pendik-Yalova is 55 liras and the price of the passenger inside the car is only 1 lira.