Turkey sees silver lining in strong euro

By Delphine Strauss in Istanbul

Published: February 24 2009 22:41 | Last updated: February 24 2009 22:41

Turkish businesses are used to lamenting their country’s volatile currency and snail’s pace progress towards European Union membership. This year there may be one advantage from these realities – at least for the tens of thousands who rely on tourism.

Over the last year the lira has fallen by about a third against the dollar and nearly a fifth against the euro. Tourism officials hope that, even in a year of recession, the currency advantage will tempt holidaymakers to Turkey.

“To be out of the eurozone is an advantage for us,” said Ahmet Barut, chairman of the Turkish Hotels Federation, which represents about 2,000 members.

No one expects a repeat of last year’s growth, when tourism revenues leapt 18.5 per cent to nearly $22bn. The number of foreign visitors in fact fell 4 per cent in January, the first decline in more than two years.

But despite a slow start to bookings for summer, ministers and analysts still forecast visitor numbers will grow this year.

Turkey is set to receive a stream of British tourists, spurning eurozone beach resorts where their spending power in sterling is severely reduced. British-based tour operators TUI Travel and Thomas Cook both report strong growth in Turkish bookings.

UK bookings for Turkey this summer had jumped 25 per cent year on year, compared with a drop of 10 per cent for the business as a whole, according to Ian Derbyshire, chief executive of Thomas Cook independent travel.

He said Turkey was now benefiting from a strategy of using its lower land and labour prices to develop big four- and five-star hotels offering all-inclusive holidays.

But for many small businesses, the big question will be whether visitors are willing to leave their hotels and spend extra cash.

In Istanbul’s Grand Bazaar, shopkeepers adept at quoting prices in several currencies watch the lira’s fluctuations constantly. For those who rely on sales to tourists, its latest slide could be a lifeline.

“It’s helpful for us. We can sell at much more normal prices,” said Ozgur Bilgili, offering tea in his family’s leather shop. Pulling a jacket from the rack to demonstrate, he said, “This would have cost $300 in the bad days. Now I can ask $250.”

“I’m not very worried, but I’m a little bit nervous,” said Sefer Savran, manager of an adventure activity company in the Mediterranean resort of Kas, who thought European tourists would come for shorter breaks not too far from home.

He had already offered travel agents a 15-20 per cent discount on his usual euro prices, but said agents did not yet know whether they would need to offer it.

Anatolian Balloons, which runs flights over the twisted rock formations of Cappadocia, is not cutting prices – it has just bought 17 hot air balloons, and paid in foreign exchange for the imported gas and equipment.

Numbers taking the €150 flight were lower than normal this winter, but the company said bookings for summer from tour companies were already promising.

But the currency advantage over eurozone resorts will go only part of the way to soothing the nerves of Turkey’s restaurateurs and hotel owners.

They worry that Israeli tourists, who numbered some 500,000 last year, will stay away after Ankara’s criticism of the Gaza offensive. And Russia, the biggest source of visitors after Germany, has its own troubles.

One shopkeeper summed up the feeling in the Grand Bazaar.

“The currency is good but there is no money. We’re all very worried.”