Turkey's tourism industry faces challenges despite record arrivals

Turkey's tourism industry faces challenges despite record arrivals
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The rental properties sector in Turkey is booming due to an influx of foreign property buyers taking advantage of the exchange rate crisis. However, hotels have been negatively impacted by untaxed income generated from these rentals.

By Deniz Wilson

Despite a remarkable resurgence in global tourism following the challenges posed by the COVID-19 pandemic, Turkey, a prominent tourism destination, faces an unexpected predicament. While it has welcomed an impressive influx of tourists, a growing trend of foreigners buying homes and renting them out has left many hotels needing help to fill their rooms. This article explores the factors behind this unique challenge and the government's efforts to address it.

The global tourism industry, severely affected by the Covid-19 pandemic, has started to rebound in 2022 and 2023. Turkey, being a key player in the world of tourism, has also experienced the effects of this recovery. Official figures indicate a substantial increase in tourists visiting Turkey this year. Tourism, particularly foreign exchange income, plays a vital role in the country's economic recovery efforts as it grapples with a financial crisis and foreign exchange shortages that began in 2018 and peaked in 2021.

However, despite the surge in tourist numbers, a peculiar situation has emerged where many hotels need help to fill their rooms. The reason behind this phenomenon lies in several factors, including the increasing trend of foreigners purchasing homes in Turkey and renting them out. Turkey faces a unique tourism challenge this season unlike any it has encountered before.

Rising Tourist Numbers

Turkey's western Aegean and southern Mediterranean coasts are perennial favorites among beach lovers worldwide. Every year, millions of tourists flock to Turkey's shores to bask in the sun and sea.

According to the official data, Turkey welcomed 26.7 million tourists in the first seven months of the year, marking a 16% increase compared to the same period in the previous year. In 2022, the country hosted 44.5 million tourists, an impressive 80% increase compared to last year, when the COVID-19 pandemic had a significant impact.

According to the 2022 United Nations World Tourism Organization report, a staggering 963 million tourists traveled worldwide. In the global rankings, France secured the top spot with 80 million visitors, followed by Spain with 71.66 million, and the USA with 50.87 million. Turkey secured the fourth position globally, with 50.45 million tourists, following closely behind the USA. Other countries in the top 10 list of the most visited tourist destinations include Italy, Mexico, England, Germany, Greece, and Austria.

Why Are Hotels Empty?

Despite the record-breaking number of tourists this year, hotels nationwide are experiencing low occupancy rates. Minister of Culture and Tourism Mehmet Nuri Ersoy has identified four main reasons for this trend. First, the early reservation period coincided with an earthquake disaster and elections. Second, unseasonably cool weather persisted until June. Third, citizens of Russia and Russian-speaking countries are increasingly buying houses in Turkey and using them for their holidays or renting them out to others. Finally, the global economic recession and reduced purchasing power have impacted people's travel choices.

Kaan Kavaloglu, Chairman of the Board of Directors of the MEDITERRANEAN Touristic Hoteliers and Operators Association (AKTOB), acknowledges the positive aspects of foreigners investing in Turkish real estate. However, he points out that the sale of 108,000 flats doesn't necessarily mean 108,000 separate buyers. Sometimes, one person has purchased numerous properties and is renting them out to fellow citizens. This trend has significantly affected hotels, especially those in the mid-range segment.

Kavaloglu emphasizes, "The numbers are clear. There is a 23 percent increase in overnight stays, but hotels are not full. Why? Because this year, approximately 19 percent of accommodations were in homes."

Antalya Chamber of Commerce and Industry (ATSO) President Ali Bahar raises concerns about foreign property owners purchasing multiple flats and engaging in illegal hotel operations. This issue is particularly pronounced in the Hurma region of Konyaaltı district, Alanya. While tourists can buy apartments in Antalya, when the number of purchases reaches 60-70, it becomes a problem known as "underground tourism." This raises concerns about tax evasion and security issues.

Minister of Culture and Tourism Mehmet Nuri Ersoy has recently commented on daily rental practices and mentioned plans for new regulations. He stated, "We are looking at examples from around the world on this issue. It should be the same in Turkey as it is elsewhere. We are not against daily rental practices. How do we incorporate these practices into our framework? Our preparations for new regulations are ongoing and will be ready by the end of the year."

In conclusion, the influx of foreign property buyers, especially Russians, taking advantage of the exchange rate crisis in Turkey has led to the rental of these properties. Hotels have been negatively impacted by untaxed income generated from these rentals. These issues, combined with the ongoing economic crisis and record inflation in Turkey, have created a series of challenges for the country. Addressing these concerns through regulation and oversight will be crucial to ensuring the continued success of Turkey's tourism sector.