Turkey’s tourism firms saddled with debt as hopes fade for visitor revival

Turkish tourism companies are among the worst affected by the COVID-19 pandemic and hopes for a revival in the financial fortunes of the industry are being dashed, Patronlar Dünyası reported on Tuesday.

Debts in the sector are soaring and plans by the government to open the tourism season this month have fallen by the wayside, the business news website said.

Tourism firms owed banks 136.4 billion liras ($16.8 billion) at the end of 2020, an increase of 43 percent from the previous year. Employment in the sector has dropped by 19 percent to 1.38 million, Patronlar Dünyası said.

In January, Tourism Minister Mehmet Nuri Ersoy predicted a V-shaped recovery for the sector. He said the government hoped to double visitor numbers to 31 million this year and for the country to earn $23.3 billion.

But a resurgence in the COVID-19 pandemic - Turkey reported record daily cases of more than 60,000 at the end of last week – and a decision by Russia, the biggest source of visitors, to cancel charter flights to the country until the start of June, has dashed hopes for a strong revival, Patronlar Dünyası said.

Germany, the second biggest provider of tourists to Turkey, designates the country as a high incidence area for COVID-19, requiring its citizens to quarantine for 10 days upon their return. Turkey has announced a vaccination programme for its tourism workers to try and alleviate concerns.

Tourism is the biggest source of foreign exchange revenue for Turkey, helping to spur economic growth and to finance its gaping current account deficit, the widest measure of net inflows and outflows of capital and goods. Without the income, the country’s financial obligations to the rest of the world must be met through other means, exposing the lira to selling pressure. The currency hit successive record lows in 2020.

Turkey attracted 7 million tourists from Russia in 2019. But a diplomatic crisis over Turkey’s support for Ukraine is reviving memories of 2016, when visitors from the country sank to 870,000 due to a bilateral crisis over Turkey’s downing of a Russian military jet over its eastern border.

This time round, the ability of tourism firms to deal with financial pressure is much reduced, Patronlar Dünyası said. No more so than in the tourist hub of Antalya, which attracts by far the most Russian visitors.

In Antalya, where borrowing is equal to 39 percent of the nationwide total for the industry, tourism companies owed 14.7 billion liras in 2016. That number has risen by 259 percent since and by 46 percent in 2020 alone, the news website reported.