High time for tourism subsidies

There is a new excitement, a growing hope in tourism facilities that have been closed for months due to the COVID-19 pandemic. The vaccinations of 1.5 million or even more every day and the lowering of the age of vaccination eligibility to 25 led to the expectation that 50 percent or even more of the people of Turkey may have been vaccinated in the very near future. This expectation and hope are reflected in the tourism sector with the increased number of guests and hope at the touristic enterprises, which started reporting an increasing occupancy rate.

Although experts who have been managing touristic enterprises in Turkey since 1980 expect that this epidemic crisis appears “for now” will be over with far less harm than feared, they emphasize that neither Turkey nor the world has experienced a worse period in terms of contraction in the service sector or tourism industry.

Emphasizing that Turkish tourism has experienced “golden years,” such as in 1994-1997 and 2003-2008, experts also underline the necessary elements for tourism to return to its very good old days as soon as possible.
Naturally, like the global tourism sector, the Turkish tourism sector does not like crises, wars or uncertainties. After a spectacular period of 1993-1997, the threats of terrorism can suddenly plunge the industry into a serious crisis, and after disasters such as the Lehman Brothers incident in the U.S. - the great years of 2003-2008 - can suddenly be replaced by nightmare periods.

2019 is a very successful year for Turkish tourism, and expectations and pre-bookings for 2020 also held out hopes that it would be a much better season. As a matter of fact, in March 2020, both Istanbul and Ankara’s city hotels and many hotels in important tourist areas such as Istanbul, Antalya, Muğla and Aydın made reservations supporting that they would spend the year with an over 70 percent occupancy, already made connections, and entered the necessary food, beverage, social events and other engagements in order to host these guests.

Alas, in March, the country, and the world, plunged into a pandemic. A situation of unprecedented magnitude.
With the measures taken, especially the “short work allowance,” Turkish hoteliers managed to contain their losses, or appeared as if they did so, and now looking back, some of them at least say “we are getting through it with less damage than we first thought.” While some hotels and facilities have ended their up to 18 months of closures and reopened their doors to their customers, hopes ride high that a rapid recovery can be achieved if social immunity could be realized as soon as possible. After months of complaints of deficiencies in the vaccination supply, the health minister was proved right that when and if Turkey obtained vaccines might vaccinate up to one million people a day. Now, on an average 1.5 million people are vaccinated.

Herd immunity is of course important. Britain, Israel and many other countries have proven that once at least 50-60 percent of the society is immunized, return to normalcy becomes possible. Indeed, Turkey has started taking such giant steps nowadays. Of course, there are dangers. Especially large enterprises have very serious debts in confidence that things will all be the same. However, the pandemic changed all plans and they now face serious servicing of debt problems. Tomorrow their situation will be far worse if and when their debts could not be restructured by the banks. No one, of course, will be able to declare a concordat, but even one of those grand hotel groups collapse and are compelled to change hands at a price far short of its real value due to impossibility or inability to repay bank debts, or worse, if it remains in foreclosure, I fear it could snowball and there could be a serious avalanche in the industry.
My friend, a tourism investor, stressed that until now, foreign tourism investors have been active in the management and services sector rather than owning property in Turkey, but this may change as hotels start to change hands at very cheap prices in a possible post-pandemic crisis. Is that going to be a nuisance? Is ownership of hotels very important? Of course it matters.

At this highly sensitive time, it should always be taken into account how sensitive tourism is to serious political crises, uncertainties and domestic or global events that may cause future anxiety. Months later, finally this week, planes full of Russian tourists arrived in Turkey. Why now? Why not a week ago? Did the meeting with Joe Biden have an impact? Why did Russia suddenly give the green light to Russian tourists to start coming to Turkey?
It should be noted that Russia was the country that sent the most tourists to Turkey last year with 2.13 million people, but there was a decrease of 7 million compared to 2019. Likewise, the number of tourists from Germany was 1.1 million in 2020, while more than 5 million German citizens visited Turkey a year ago. Although it has been observed that Germany has taken a more positive attitude regarding Turkey, the arrival of German tourists has not yet begun. Serious and long-term approaches are needed in this regard.

The diagnosis of distress is essential for the solution. The tourism sector experienced a very bad period in 2020 due to the epidemic. Both the number of tourists coming and the tourism revenues decreased. According to official statistics, tourism revenues for 2020 decreased by two-thirds compared to 2019, down to a total of $12 billion.

What needs to be done now is to give serious incentives to the tourism sector in both transportation and accommodation in order for Turkey to remain an attractive tourist destination among the Mediterranean basin countries.