Turkey is a well-established tourist destination, with a long history of mass-market beach holidays catering to major markets in Europe, including the UK and Germany. There is a great deal of investment potential, particularly for global hotel groups. However, political unrest will deter tourists in the short term, with any escalation in regional tensions highly likely to impact on the tourism market. Despite these risks we maintain a positive outlook for the Turkish tourism market through to 2017, though with the caveat that it will be affected by continued unrest, terrorist attacks or an increase in tensions with Syria.
Political unrest remains a risk to tourism, and though unlikely to lead to a change in government in the runup to parliamentary elections in 2015, the outbreak of widespread protests against Turkish Prime Minister Recep Tayyip Erdogan marks a turning point in his decade-long stint in power. Ongoing unrest will act as a deterrent for tourists, many of whom will have been distressed by what was perceived as overly aggressive police tactics in dispersing protesters. Furthermore, in terms of foreign policy, we expect Turkey to continue rebalancing its interests away from the West in favour of closer ties with the former Soviet Union and the Middle East and North Africa. This will have a marked effect on the nationality of inbound tourists, as an increasing divide between Turkey and the EU might well result in less European tourists and more from the MENA region. Equally, a similar redistribution could occur with regards to outbound departures from Turkey, which we expect to increase from 6.2mn in 2013 to 8.2mn in 2017.
Currently BMI expects to see inbound arrivals increase in 2013 by 3.5% to reach over 32mn, further increasing to 37.7mn by 2017. This growth is largely dependent on real GDP growth in the eurozone, a key source of tourism for Turkey. Outside of the eurozone, Turkey also receives a significant amount of inbound tourism from the faster-growing CEE region and, in particular, Russia. Many of the markets in Central and Eastern Europe are experiencing significant growth, which could lead to a substantial increase in arrivals to Turkey in the medium term.
Encouragingly for the longer-term development of the local tourism industry, there is a good deal of diversification in the Top 10 source markets for inbound tourism to Turkey. Four of the Top 10 countries are from Western Europe (Germany, UK, Netherlands and France); three are from Eastern Europe (Russia, Bulgaria and Georgia); two are from the Middle East (Syria and Iran) and one from North America (the USA).
Over the forecast period to 2017, BMI is forecasting that the number of hotels and other accommodation establishments will grow to 6,420 in Turkey, reflecting the higher visitor numbers that we expect over the coming years. This will equate to some 16,000 extra rooms. The country is currently perceived as offering extremely attractive investment opportunities for hotel groups and other tourist-related industries, largely due to rising domestic tourism and regional tourism, supported by an increase in higher disposable incomes.
- In 2013, Wyndham Hotel Group opened its TRYP by Wyndham hotel brand in Taksim, and the 306- room Wyndham Istanbul Petek. Carlson Rezidor is also in the midst of a significant expansion programme in Turkey, with InterContinental Hotels Group (ICHG) also planning expansions.
- Outbound travel is expected to increase by between 4% and 8% through to 2017 to reach 8.2mn, while inbound travel is much more substantial, reaching close to 38mn in 2017.
- Turkey's recent unrest has resulted in a decrease in its risk reward rating for the tourism sector, and it is now at the bottom of the regional rankings in 25th place with a tourism market rating of 42.55.