ECONOMY

Turkey sees its revenues from tourism decline in the year’s first six months

ISTANBUL – Revenues from Turkey’s vital tourism sector fell slightly in the second quarter as concerns over bird flu and regional instability discouraged foreign visitors. The Turkish Statistics Institute said revenues dropped 1.8 percent between April and June to $3.693 billion (2.931 billion euros), compared with $3.761 billion in the same period in 2005. Tourism officials and analysts blame the slowdown on an outbreak of bird flu, which killed four people in Turkey last winter, protests over cartoons of the Prophet Muhammad and a series of bombings by outlawed Kurdish guerrillas. Foreign currency earned from the tourism sector is key to reducing Turkey’s high current account deficit and the sector is an important source of employment. In the first half as a whole, tourism revenues amounted to $5.695 billion (4.52 billion euros). Bear Stearns economist Timothy Ash said the fall in revenues was not a big surprise, given the worries earlier in the year over bird flu, violent protests in the mainly Kurdish southeast and concerns over regional stability. «Pre-bookings were down earlier this year on the back of bird flu concerns, but the tourism industry has been working hard on advertising and pricing to try and get people in hotels,» he said. However, spending by tourists within Turkey rose 10 percent during the second quarter, Ash noted. Total tourism income includes revenues from pre-booking. The revenue figures gave a better picture than the first-half data on the number of foreign tourists visiting Turkey, which showed a fall of 8 percent to 7.876 million. Economists said the expenditure data gave some encouragement for the second half, which includes the busiest months of the summer season. Moreover, a weakening of the lira, which lost as much as a quarter of its value in May and June before recovering partially, is expected to boost interest in Turkey in the second half. «Tourism revenue in the first half is just 28.5 percent of the government’s $20 billion (16-billion-euro) 2006 target. But the latter half of the year remains more important. Of the $18.2 billion (14.4 billion euros) in revenues in 2005, just 31.7 percent was booked in the first half,» said 4CAST analyst David Ross. Economists say the conflict between Israel and the militant group Hezbollah in Lebanon may discourage foreign tourists. Another unsettling factor has been Turkey’s warnings that it may carry out a cross-border incursion into northern Iraq in pursuit of several thousand Kurdish guerrillas based in the mountains there. The United States opposes such an incursion. Turkey’s Aegean and Mediterranean beaches and the historic city of Istanbul are the main attractions for tourists. Its main rivals are Spain and Greece. In a separate development, tourism arrivals to Cyprus were down 2 percent from the beginning of the year until the end of June, the statistics department said in Nicosia yesterday. In June alone, arrivals were down 0.9 percent, a decline local operators have attributed to the World Cup tournament. Greeks obtain better rates Greek hoteliers are reported to have obtained better terms in the contracts already signed with foreign tour operators for the 2007 season, a strong indication that Greek tourism, projected for double-digit growth in 2006, will maintain its momentum into next year. According to industry sources, after a number of lean years in which Greek hoteliers struggled to maintain business by offering even lower rates, in the 2007 contracts they have obtained increases generally in the order of 3-5 percent, and even higher raises for supplementary services at top hotels. The sources report that UK tour operators, who began negotiations with proposals for raises of up 3.5 percent over this year’s rates, finally agreed to hikes of up to 5 percent. Separately, German tour operators are said to have already planned more flights to Greece in 2007. A number of strong hotel groups have managed to obtain a series of further improved terms, expected to boost their profitability, such as minimum charges (about 10 euros) for children, and lower discounts for pre-season bookings.