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Numbers to Turkey rebound but hoteliers still to make up losses

Tourism to Turkey is on the rebound after 18 months of crisis caused by a combination of terrorist attacks and political instability.

The number of arrivals hit 2.9 million in May, up 16% on the same month the previous year, according to government figures.

The resurgence has come after hotels slashed prices across the country, enabling companies to at least stabilise their losses.

Osman Ayik, of the Champion Holiday Village near Antalya, chairman of the Turkey Hotelier’s Association, said only five per cent of the hotel’s 250 rooms were filled last summer.

“Everything stopped. It was like they pulled the shutters down,” he told the Financial Times.

Numbers have picked up since rates were cut and the government stepped in with more than $500 million of state support last year.

“In terms of tourist numbers, our figures are perfect right now,” Ayik said. “But in terms of income, we still need time for things to stabilise – first, we need to make up our losses.”

But he and others warn that while government support has prevented defaults and businesses closing, it cannot be sustained if the country’s interventionist policies in Syria’s civil war and in Iraq continues.

“If we keep getting involved in these political problems around the region — not only do you lose money, you end up spending money to save the businesses,” Ayik said.

Tourism was first hit when Russia banned charter flights to Turkey after one of its fighter jets was shot down by the Turkish military over the Syrian border in November 2015.

Russians, who accounted for one in 10 of the visitors to Turkey, the second-largest group behind Germans, vanished. By May 2016, the number of tourists from Russia had dropped by 92%.

The sector’s problems were exacerbated by a wave of terrorist attacks last year, including assaults on German tourists in Istanbul and the city’s Ataturk international airport.

A coup attempt then rocked the nation last July, and triggered a sweeping government crackdown that has seen more than 140,000 people arrested, dismissed or suspended.

The tourism crisis shaved nearly one per cent off Turkey’s gross domestic product last year, according to the International Monetary Fund.

The number of visitors to Turkey fell by almost a third in 2016 to about 25 million – the lowest in nine years.

That led to a drop in foreign currency into the country. The average overseas tourist in Turkey spends about $700, a crucial source of dollars to fund the country’s current account deficit. Travel services revenue fell $8 billion last year to $19 billion, according to central bank data.

The pick-up this year follows Russia lifting its sanctions on Turkey, and a fall in terrorist attacks since a gunman killed 39 people at an Istanbul nightclub on New Year’s Day.

The economy has also showed signs of stabilising after president Recep Tayyip Erdogan won a referendum on a new constitution in April.

But even if tourism rebounds this summer, the industry still faces challenges as it is burdened with about $17 billion in debt, the FT reported.

Tim Ash, a senior sovereign strategist at BlueBay Asset Management, said avoiding instability that has blighted Middle East countries and preventing further terrorist attacks will be crucial.

“They can live with a drop in tourism for a year or two, but if it ends up in a Tunisia or Egypt situation, then the brand is really lost,” he said. “But improving the security situation might mean changing foreign policy.”

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