The Tourism Industry of Turkey
Until recently, tourism has been one of the most flourishing economic sectors of Turkey. Turkey’s tourism industry has mainly been dependent on the abundant historical sites and numerous seaside resorts on the Mediterranean and the Aegean Sea coasts that it enjoys (Moaveni, 2014). People also visit Turkey for its renowned spas, popular culture, and health care tourism (Ozden and Hacikoglu, 2015). In 2014, Turkey attracted 42 million tourists and was ranked the sixth most popular tourist destination in the world (Moaveni, 2014). Nevertheless, the tourism market in Turkey has been on a downward trajectory, majorly because of terrorism, regional uncertainties, and political tension between Turkey and Russia and its immediate neighbors. Therefore, this paper presents an analysis of the policy recommendations that can help tourism companies in Turkey such as Argeus Tourism and Travel to survive market scares like the ones that have led to the aforementioned downward trajectory in the industry.
European countries are, by far, the largest source markets for tourists who visit Turkey. In 2014, Turkey received five million German tourists (Akkaya, 2016). The UK ranks as the third most important market source for the Turkish tourism sectors with up to 2.5 million of its citizens touring Turkey in 2014 alone (Akkaya, 2016). Similarly, Georgia ranks as the fourth most important tourist source for the Turkish market with approximately 1.9 million Georgians visiting Turkey in 2014 alone (Akkaya, 2016). Bulgaria is the fifth most important player in the Turkish tourism industry with about 1.8 million Bulgarians visiting Turkey in 2014 (Akkaya, 2016). However, these numbers have changed over time as most European countries continue to advice their citizens against travelling to Turkey.
Besides, Turkey has been described as a favorite tourist destination for Russians. As of 2014, Russia ranked as the second most important source of tourist arrivals to Turkey (Akkaya, 2016). In 2015, Russia accounted for 10% of all tourists to Turkey (Akkaya, 2016). Before political and diplomatic issues arose between Turkey and Syria, Turkey and Russia enjoyed good diplomatic ties and a good trade relationship. However, the state of terrorism in Syria has led Russia to place trade sanctions on Turkey and cancel chartered flights from Russia to Turkey – events that have led to extreme shrinkage in the number of tourists who visit Turkey from Russia (Akkaya, 2016). Indeed, the withdrawal of Russia as a key player in the Turkish tourist market has played a big role in the decline witnessed in the Turkish tourist market in recent times.
Turkey’s successes in the tourism industry has been influenced greatly by the country’s geography. First, the country is in close proximity to Russia, Germany, Georgia, and Bulgaria, which provides her with a ready market for her tourist attractions (Eboch, 2003). Secondly, the country has two beautiful seashores – the Mediterranean Sea and the Aegean Sea (Eboch, 2003). On these seashores are attractive resorts that attract many tourists to Turkey. Moreover, the landscape of Turkey has many truly breathtaking landforms that attract many people to the country. Towering mountains and the beautiful scenery around the mountains near the Turkey-Greece border also attract tourists (Timothy, 1995). Additionally, waterfalls, lakes, lake vegetation, and other lake wildlife are also important tourist attractions in Turkey. The weather of Turley, which is between the tropical and temperate weather also contributes to the beautiful scenery of the country. Thus, geographical sites come only second to historical sites in ranking the most important tourist attractions in Turkey.
Turkey has been ranked as one of the countries with the fastest growing economies in the recent past (Akkaya, 2016). One of the sectors that were seen to be contributing to this rapid economic growth was tourism. Since 2011, Turkey’s earnings from the tourism industry steadily increased and peaked in 2014 with the East European country receiving 41.2 million tourists and, as a result ranked the sixth most popular tourist destination in the world (Akkaya, 2016). In 2015 and 2016, the earnings dropped rapidly following regional instability, especially the situation in Syria, and many countries cautioning their citizens against visiting Turkey (Akkaya, 2016).
Many factors influenced the tourist inflows and the revenue earned from the tourism sector in Turkey. The main factors are those determining the suitability of Turkey as a tourism industry. Turkey has continually developed the sector, becoming more suitable for tourists over the years. However, regional factors like political instability in Syria, terrorism and the rise of Islamic State, and diplomatic differences with Russia have significantly decreased the number of people willing to visit Turkey (Ozden and Hacikoglu, 2015). Moreover, travel based policies made in the other countries have also influenced the success of Turkey in the tourism industry (Feridun, 2011). Steps taken by some countries to deter their citizens from visiting Turkey following regional instability in 2016, for instance, greatly affected tourism in Turkey. Besides, macroeconomic factors like the currency exchange rates are also known to greatly influence the revenue earned from the tourism industry (Feridun 2011).
Nonetheless, the main factor that has influenced the Turkish tourism sector in the recent past, which led me into conducting a risk assessment on behalf of Argeus Tourism and Travel, a tourism company in Turkey, was the attempted but failed coup de tat in the country. This risk analysis paper will be presented during the next Argeus Tourism and Travel’s bi-annual shareholders meeting. Apart from the political instability and massive insecurity that was seen in the country in the aftermath of the attempted coup, it also tended to affect Turkey’s image. People from many European countries now see Turkey as a dictatorial and insecure country, hence, negatively affecting tourism. Moreover, as earlier alluded to, a country with attempted coups, whether political or military, is always a country with insecurity. For instance, the number of Polish tourists to Turkey decreased by 63% after the military coup and rise in terrorism (Atasoy and Wendt, 2015). As such, although terrorism had already made Turkey insecure, an attempted coup just proved the state of Turkish’s insecurity to the world.
Challenges Faced by Foreign Tourism Companies in Turkey
Many socioeconomic and political factors influence the tourism industry in Turkey. In the recent past, terrorism has been a major concern for local and foreign tourism companies like Argeus Tourism and Travel in Turkey (Yaya, 2009). Mete Feridun (2011) establishes a negative causal relationship between the prowess of the tourism industry in Turkey and terrorism in the country. The increased number of terrorist bombings in Turkey’s major cities make the country unsuitable for visits by Tourists who fear being attacked. As such, terrorism is one of the major reasons behind the fall in the number of tourists that have visited Turkey in 2015 and 2016. An attack on German tourists in January 2017 made the situation worse considering the fact that the Germans make the largest proportion of people visiting Turkey.
Human trafficking and sex tourism are also major challenges for the tourism companies operating in Turkey, especially for the foreign companies. The vice of human trafficking and sex tourism has been globalized and deep links have been formed (Zhidkova and Demir, 2016). These links are important for recruitment of suitable men and planning for them to tour certain areas where they can enjoy sex with foreign women. Turkey happens to be one of these places where sex tourism thrives and serves as a route for many human traffickers (Zhidkova and Demir, 2016). Unfortunately, Turkey does not have an anti-trafficking body who can monitor and arraign offenders. Rather, the country’s policies have made it quite easy for human trafficking to thrive, hence, the increased challenge for foreign companies.
Along with human trafficking and sex tourism, is prostitution. A good proportion of people who practice prostitution in Turkey is comprised of foreign immigrants, especially from the former Soviet Union and other countries of Eastern Europe (Zhidkova and Demir, 2016). In the past, immigrant prostitutes to Turkey have gone through traumatic experiences. These experiences have been broadcasted widely and have led to the bad reputation that Turkey has in the foreign market. Moreover, prostitution is in itself an important cause of human trafficking (Cho et al., 2013). A good number of women trafficked from many regions in the world end up as prostitutes in Turkey. As such, prostitution makes potential tourists afraid of Turkey for security and religious reasons.
Moreover, political instability in the country as characterized by the attempted coup in July 2016 is also a major challenge for the foreign investors in the country. The political uncertainty makes the country insecure and, thus, poses a major challenge to a tourism company, especially those who make travel arrangements for their customers, to ensure that everyone gets home safely on a short notice at a time when most airlines are not willing to do business in Turkey (Atasoy and Wendt, 2016; Kozak and Martin, 2012). Moreover, as earlier alluded to, this insecurity deters many citizens of other nations from visiting Turkey. This deterrence is a big challenge to foreign and local tourism companies operating in Turkey as it reduced the number of potential tourists.
The volatility of the Turkish currency, the lira, is also a major problem for tourism companies in the country. The decreasing value of the Lira following economic crises in Turkey has resulted in massive losses for tourism companies operating in the country (Ayhan, Tan, and Baydaş, 2016). The losses come due to the fixed prices for commodities and services in terms of the foreign market, which will now translate to very low rates in the Turkish market. The unpredictability of the Turkish currency poses a risk not only to the tourism sector, but also many other economic sectors in the country. As a result, many foreign investors avoid investing in Turkey because of the uncertainty that comes with such volatility.
Additionally, regional instability and diplomatic differences between Turkey and her neighbors give a picture of insecurity, hence, discouraging tourism (Kozak and Martin, 2012). The situation in Syria, which borders Turkey, has been bad in recent times. This tension has seeped into Turkey and caused many foreign investors and potential tourists to be afraid of visiting Turkey. Furthermore, Turkey’s approach to the situation has led to diplomatic differences between her and other countries, most notably, Russia. The diplomatic differences have led to a sudden and sharp reduction in the number of tourists visiting Turkey from Russia (Öniş and Yılmaz, 2016). This had been disastrous for the Turkish tourism industry considering the fact that a good proportion of the tourist visiting Turkey every year are Russian. The problem can be more serious for foreign tourism companies who are not familiar with the regional dynamics between Turkey and her neighbors.
Despite the challenges, foreign companies in Turkey have managed to survive. Close interactions with their mother countries’ missions to Turkey have helped the companies to thrive, especially considering the complexity of the Turkish bureaucracy, which presents the companies with a special challenge (Yarcan, 2007). In addition, investors in Turkey find difficulties with the complex structure of the Turkish tax system (Benzing, Chu, and Kara 2009). Secondly, the hope that there will be daring tourists who will dare to visit Turkey despite the security threats being posed have helped companies survive in times of crisis. Additionally, companies have been dealing with the highly evident regional imbalance with preferential development on the western part of the country by setting up their businesses majorly in the Western part of the country (Price Waterhouse Center for Transnational Taxation and Waterhouse, 2012). Furthermore, foreign companies in Turkey have moved to solve many issues challenging them by employing a high level of technology (Yarcan, 2007). Advanced technology makes communication much easier and aids the companies in the prediction of market trends and other significant events.
Risk Mitigation
Of the challenges that are likely to be experienced in the Turkish tourism industry are the lack of security to tourists and a reduction in the number of tourists touring Turkey for a number of reasons including political instability in Turkey and her neighbors, prostitution, human trafficking, and terrorism. As such, the number of tourists visiting Turkey has kept reducing while the number of tourism industries has kept increasing because of the promise that the industry in Turkey showed between 2011 and 2014. Therefore, for Argeus Tourism and Travel to be successful in Turkey, they must prove to the few tourists visiting the country that they are competent enough to take care of the tourists’ needs before they arrive in Turkey and during their stay in the country. Moreover, Argeus must have the ability to attract a substantial number of the few and highly contested for tourists. A policy that can be implemented to mitigate the risk of losing customers and the risk of insecurity to the customers is the employment of advanced modern technology (Parlakkaya et al., 2015). Advanced technology can help the company in communicating to tourists who are yet to arrive in Turkey and help them with their travel arrangements. Communicating with tourists who are yet to arrive gives the company an opportunity to reassure the tourist about the security state in the particular location that the tourist plans to visit. As such, communication technology gives a tourism company an edge over other companies, which might not be able to communicate directly with potential customers (World Tourism Organization (UNWTO), 2011).
Advanced technology has the double advantage of helping tourism companies to mitigate the dangers that the current security state in Turkey poses to their customers. The tourists can be given electronic gadgets that can be traced or used to communicate with the tourists whenever they visit danger zones (UNWTO), 2011. Ability to trace and keep tourists safe not only reassure tourists about the commitment of the company to their security but will also be actually effective in preventing abduction and kidnaping of the tourists and other security threats to them. As the UNWTO (2011) suggests, advanced technology can assist a company in quick response to needs of customers.
Just like any other business, the tourism sector suffers greatly from financial problems. With the competition that is in the tourism market in Turkey, for instance, financial strength for Argeus Tourism and Travel or any other company is key. However, with economic fluctuations like the ones that have been witnessed in Turkey in the past, including the risk of occurrence of a financial crisis makes it difficult for tourism companies to maintain their financial prowess (Parlakkaya et al., 2015). Lack of incentive policies in Turkey and structural problems in Turkey’s banking sector make these financial issues even worse. The difficulties seen in the banking structure make it hard for investors to receive bank loans and make bank loans in Turkey to have unstable interest rates (Klingen et al., 2013).
To solve these financial issues, it is important for investors in Turkey to appreciate the importance of financial independence and depending on one’s own resources (Parlakkaya et al., 2015). This will ensure that the company can remain stable even in times of crises, as it will not be indebted to any party. Moreover, using one’s own capital is not likely to drive one into situations where they may need to borrow cash from external sources, which can surmount to business suicide, as bankruptcy will be with them soon.
Furthermore, Argeus should have adequate financial management and use financial techniques well and adequately (Parlakkaya et al., 2015). Financial management has a big role to play in ensuring that the company is able to predict difficult financial circumstances and prepare for or avoid them totally. Moreover, proper and modern financial management can help the company to navigate through difficult financial moments that could not be avoided. Argeus should have adequate financial information and employ financial experts to advise on difficult situations. Having enough financial information can allow a company to benefit from financial players like Eximbank and Europe’s Investment Bank maximally (Parlakkaya et al., 2015).
More importantly, it is key for any company that invests in Turkey to either have a visible presence in Turkey or to establish and maintain strong links within Turkey. The main benefit of showing commitment to the market hence fulfilling a requirement by the Turkish government, a physical presence within Turkey offers, especially a foreign company many other advantages that can help them to deal with the market challenges that have been discussed before. First, operating within Turkey and near tourist destinations, a foreign company will have enhanced their competitive edge within Turkey (Department for International Trade, 2015). Customers are likely to be more reassured when they are communicating to company representatives that they can see physically.
Similarly, by being within Turkey, members of a foreign company will have the chance to experience Turkish life and understand the situation of Turkey much better. As nature dictates, it is more reassuring to be told of Turkey’s safety by a person in Turkey than a person in a different country to have perfect intelligence about the situation in Turkey (Yolal, 2016). Moreover, understanding the security situation in better detail will help a company in designing strategies for dealing with the security situation much better. An understanding of the market and the regional characteristics of Turkey will naturally give a company within Turkey or one with properly established links within Turkey the ability to tell the safe places for their customers and the danger zones that their customers need to avoid (Moscardo, 2016). As such, operating from Turkey allows the company to avoid ugly situations like abduction and trafficking of their customers or sex tourism. Finally, operating from Turkey will limit the company’s reliance on foreign exchange – consistent use of the Turkish Lira will give the company some immunity to sudden and adverse changes in the exchange rates.
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