Turkey could take €7bn hit to economy as tourist figures slump
The number of foreigners visiting Turkey plummeted more than 40pc in June, new official data shows, marking the biggest drop in at least 22 years as tensions with Russia and a series of deadly bombings kept tourists away.
The decline is the latest in a string of bad news for the economy as political and security concerns erode foreign investor confidence.
An attempted military coup last month has further bruised the outlook for Turkey's economy, once seen as a stand-out among emerging markets.
Some economists have forecast that tourism revenue - a pillar of the economy - could drop by a quarter this year, costing around €7.1bn, or the equivalent of 1pc of gross domestic product.
In late June, 45 people were killed in bomb and gun attacks at Istanbul's main airport, an attack authorities have blamed on Islamic State militants.
Last month, a faction of the military tried to overthrow the government, leaving hundreds dead.
Last Thursday, British travel company Thomas Cook cut its full-year profit target, after the failed coup forced its customers to change holiday plans. Turkey's Aegean and Mediterranean resorts and beaches are traditionally popular with European holidaymakers.
Tourist arrivals fell by just under 41pc year-on-year in June, with 2.44 million people arriving during the month, data from the Tourism Ministry showed. It was the biggest drop on record, according to the data, which goes back to 1994. The previous record was set in May, when tourist arrivals fell 34.7pc.
Tourism has been hit hard by tensions with Moscow after Turkey shot down a Russian jet over Syria last year. While Ankara and Moscow have recently started to rebuild ties, tourist arrivals from Russia dropped 87pc in the first six months of the year, the data showed.
The trend in the statistics issued by the Ministry of Culture and Tourism is for the decline to increase by a further 6pc monthly. This points to a fall of 47pc last month and 53pc for this month.
Thomas Cook, which is the market leader from the UK and Germany to Turkey, revealed that it had cut capacity to Turkey by 40pc, leading to a €118m fall in revenue between April and June this year. Peter Fankhauser, the chief executive, blamed the terrorist attacks earlier the year for a drop in demand.
The June figure for UK visitors to Turkey shows a fall of slightly more than one-third. In 2015, British holidaymakers arrived at a rate of 12,000 a day; this year, it's below 8,000.
Britain's Foreign Office has warned travellers that the security environment "remains potentially volatile" and is urging them to carry passports and printed copies of e-visas at all times.
One hope for the Turkish tourism industry is that the slump in sterling since the EU referendum could trigger more demand from British visitors. Costs are far lower than in Spain - which is gaining millions more holidaymakers this year as a result of the downturn in travel to Turkey and other destinations.
Greece may win over last-minute visitors scared away from tourist rival Turkey but overall growth in the sector remains fragile. Tourism accounts for about 17pc of Greece's €185bn economic output and employs one in five people in work.
"Turkey's share of last-minute arrivals will shrink and it will probably suffer cancellations," Andreas Andreadis, head of Greek tourism businesses association SETE, told Reuters. "Greece will gain a share, even if it is a small one." But Mr Andreadis said he could not exclude a spillover effect from Turkey which could impact overall arrivals.
"We don't like the fact that Turkey is destabilised, it could also affect Greece. We are not happy about this," he said. (Reuters)