Turkey Tourism Report Q2 2009

Tourism Overview Turkey recorded a strong performance in the tourism sector last year. Based on provisional data, BMI estimates that foreign visitor arrivals totalled nearly 26.4mn visitors in 2008, an increase of over 13% year-on-year (y-o-y). This represents a decline in growth compared with 2007 but it remained relatively strong. During the course of last year, moreover, there was a marked slowdown in the rate of growth, with our estimates showing annual growth of about 18% in Q108 and Q208, but slowing to 13.5% in Q308 and 11% in Q408. As yet, no precise data are available on source markets.

Hospitality The most recent data are for Q408 and show that the hospitality sector performed extremely favourably in terms of foreign visitors. The total number of tourist (foreign and domestic) room nights in Q408 amounted to some 86.6mn nights, up nearly 12% y-o-y. In the same quarter, the number of foreign tourist room nights - accounting for around 60% of the total - was up a considerable 26% y-o-y to 51.7mn nights. By comparison, in Q407, the number of foreign tourist room nights grew a mere 1% y-o-y.

Forecast Scenario BMI has revised down the outlook for foreign visitor arrivals in 2009 and we now anticipate negative growth of -3.5% y-o-y. Modest recovery in arrivals though should take place next year. The background to this change is the severe worsening of economic conditions in Turkey's major source markets, including Germany, Russia, the UK and the eurozone. Although recent weakness of the Turkish lira against the US dollar and the euro is expected to continue in the immediate term, assisting the competitiveness of Turkey's tourism sector, BMI forecasts long-term appreciation of the lira against both currencies. This is likely to dampen growth in visitor arrivals to Turkey over the latter part of the forecast period.

Turkish Airlines Recently released figures for 2008 show Turkey's national airline, Turkish Airlines (THY), recorded a healthy 15% y-o-y increase in passenger traffic to over 22.5mn. In a strong start to the year, the airline also achieved a 9% y-o-y increase in passenger numbers in the first two months of 2009. In February, however, a Turkish Airlines Boeing 737-800 aircraft from Istanbul crashed on approach to Amsterdam's Schiphol airport, killing nine people and injuring more than 50. According to Dutch safety officials, the aircraft was reportedly running on autopilot and stalled because a faulty altimeter prompted the plane to cut power to its engines. Turkish Airlines' last fatal crash was in January 2003, when a domestic flight came down in fog when attempting to land in the southeastern Turkish city of Diyarbakir.