Turkey Tourism Industry Update Quarter 3 2012

• Publication date: July 2012
• Report size: 65 pages

The Turkey Tourism Report examines the latest performance of the tourism segment and looks at its longterm potential. The rate of growth in foreign tourism broadly slowed during 2011, after an impressive start earlier in the year (probably boosted by the Arab Spring, which affected tourism rivals in the region such as Egypt and Tunisia), but remained strong at just under 10% compared with 2010. In the short term, BMI anticipates a sharp slowdown ...

The Turkey Tourism Report examines the latest performance of the tourism segment and looks at its longterm potential. The rate of growth in foreign tourism broadly slowed during 2011, after an impressive start earlier in the year (probably boosted by the Arab Spring, which affected tourism rivals in the region such as Egypt and Tunisia), but remained strong at just under 10% compared with 2010. In the short term, BMI anticipates a sharp slowdown in the segment, mainly due to extremely weak economic conditions in the eurozone – a major source region. Also, regional political instability, particular the situation escalating in Syria, which has a border with Turkey, is likely to deter visitors. This represents a reversal of fortunes for Turkey, as BMI believes that the segment benefited from the regional instability in 2011. Provisional figures for January-April 2012 show a decline of just under 6% year-on-year (y-o-y) in foreign visitor arrivals. (It should be noted that during the base period in 2011, there was significant growth of over 21% y-o-y in arrivals). Notably, out of the top-10 source industries, there was a substantial fall in arrivals from Iran and Syria (-42% and -32% y-o-y respectively), while the key source industry, Germany, provided a 6% fall. Visitors from Europe as a whole fell by 5% y-o-y, though there was slight positive growth in the number of arrivals from the Commonwealth of Independent States (CIS). In the hospitality segment, provisional data for Q112 show a 7% y-o-y fall in room nights sold. Foreign tourist nights, accounting for 65% of the total, fell by a sizeable 11% compared with Q111, but domestic tourist nights were up slightly.

Over the last quarter BMI have revised the following projections and views: - Although BMI expected growth in foreign arrivals to slow this year, poor data for the first four months of 2012 have contributed to a revised growth projection of 2.5% for 2012, down from 6.1% previously. BMI has also reduced the projection for 2013 from 7.8% to 6.0%. - BMI’s eurozone real Gross Domestic Product growth projection for 2012 has been lowered slightly to -0.6% from -0.5%, rising to only 1.0% growth (down from 1.2% previously) in 2013. For Russia, the second most important source industry (and of growing relative importance), BMI has revised up the growth projection for 2012 to 3.4%. - Domestic political violence remains a threat to tourism. In March, in a large-scale operation by Turkish forces against the Kurdistan Workers’ Party (PKK) in the province of Sirnak, seven Kurdish rebels and six Turkish police officers were killed. In May, a police officer was killed and more than a dozen civilians were injured in an explosion outside a police station in the central province of Kayseri. - Turkish Airlines (THY) continues to record strong growth in passenger numbers. In January- April 2012, it achieved a nearly 19% y-o-y increase in passenger traffic. In 2011, growth in revenues revenue was robust at over 40% but operating profit was down sharply.

Hotel And Lodging Industry

Executive Summary 5
Industry SWOT Analysis 7
Turkey Tourism SWOT .. 7
Turkey Political Environment and Risk Analysis . 8
Turkey Economic Environment and Risk Analysis ... 8
Turkey Business Environment SWOT 9

Market Projection Scenario ... 10
Arrivals 11
Data : Arrivals, from 2009 to 2016 . 12
Accommodation ... 14
Data : Hotels Data, from 2009 to 2016 (‘000, unless otherwise stated) .. 14
Expenditure .. 15
Data : Tourism Expenditure And Economic Impact, from 2009 to 2016 .. 16
Inbound Tourism .. 16
Data : Inbound Tourism, from 2009 to 2016 . 17
Outbound Tourism ... 18
Data : Outbound Tourism, from 2009 to 2016 18

Industry Analysis – Travel .. 20
Commercial Airlines 20
Data : Key Turkish Commercial Airlines 22
World Oil Products Price Outlook . 24
Data : Oil Price Projections (US$/bbl) . 24

Industry Analysis – Hospitality .. 31
Accommodation Developments 32
Health Tourism 33
Tourism Infrastructure . 34
Regional Case Study: Accor 35
Data : Accor Hotel Business In Selected Middle East And Africa Countries, December 2011 36

Environment Overview Outlook 37
Data : Central And Eastern Europe Tourism Risk/Reward Ratings. 37
BMI’s Security Ratings 37
Data : Europe Security Risk Ratings .. 38
Data : Europe State Terrorism Vulnerability To Terrorism Index ... 39
Turkey’s Security Risk Ratings . 39
Europe Security Overview ... 41
Europe In A World Context 41
Europe’s Key Security Issues Over The Coming Decade 41
World Assumptions . 48
Data : World Assumptions, from 2011 to 2016 .. 48
Data : World And Regional Real Gross Domestic Product Growth, % change y-o-y ... 49
Data : Developed Industry Exchange Rates, from 2010 to 2013 .. 49
Data : Emerging Industry Exchange Rates, from 2010 to 2013 50
Developed States . 50
Turkey Tourism Report Q3 2012
© Business Monitor International Ltd Page 4
Data : Developed States, Real Gross Domestic Product Growth Projection, from 2010 to 2013 (% change y-o-y) . 51
Emerging Industries .. 51
Data : Emerging Industries, Real Gross Domestic Product Growth Projection, from 2010 to 2013 (% change y-o-y) ... 52
Data : BMI And Bloomberg Consensus, Real Gross Domestic Product Growth Projections, from 2012 to 2013 (%) .. 53
Company Profiles .. 54
Dedeman Hotels & Resorts International ... 54
Turkish Airlines .. 55
Demographic Outlook ... 57
Data : Population By Age Group, 1990-2020 (‘000) .. 58
Data : Population By Age Group, 1990-2020 (% of population) . 59
Data : Key Population Ratios, 1990-2020 .. 60
Data : Turkey’s Rural And Urban Population, 1990-2020 . 60
BMI Methodology .. 61
How We Generate Our Market Projections .. 61
Tourism Market . 61
Tourism Ratings – Methodology . 62
Data : Tourism Risk/Reward Ratings Indicators 63
Data : Weighting Of Components ... 64
Sources ... 64