Turkey’s weak lira affects the tourism industry – DW – 12/08/2022

In the Istanbul neighborhood of Kadıköy, tourists don’t even notice that the price of a cappuccino rises by 25% from one early November morning to the next due to the country’s high inflation rate. But as the Turkish lira has taken a nose dive in the past year, it is still affordable for many tourists from abroad. In September 2021, $1 was worth about 8 Turkish lira, and now it is worth about 18.

However, the collapsing lira has had a positive impact on the tourism industry, an important sector in Turkey that before the pandemic accounted for 11% of GDP and about 2.3 million jobs, according to the World Travel and Tourism Council.

The coronavirus pandemic has dealt a heavy blow to the industry, but by the summer of 2022, tourists in Turkey are back — and the weak lira is — and remains — another draw for many travelers.

Lucas Grove in the background of the Hagia Sophia Mosque in Istanbul.
Lukas Grove from Berlin said the low value of the lira allowed him to spend more on his vacations to Turkey than usual.Image: Lucas Grove/DW

Little luxuries

For Lukas Grove, a jazz musician from Berlin, a weaker lira means he and his girlfriend are less concerned about how they spend their money. “We’re doing things we don’t normally do on vacation,” he told DW. “Frequently taking taxis, eating out, even taking domestic flights to another city.” The couple had planned a two-week trip to Iran in October, but called it off at the last minute in light of the country’s protests. Instead, they went to Turkey, traveled to Kurdish areas, hiked south along the coast and explored Istanbul.

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“We even hired a taxi for the day to take us to other places, which I would never do in Germany,” explains Grove.

Tourists walk through the Eminonu Spice Bazaar in Istanbul.
Tour guides in Istanbul say they are very busy until autumn 2022Image: Tolga Ildun/Zuma/Image Alliance

Better value than Paris

“Tourism in general is very strong this year and we are very happy about this,” said Mustafa Efelti, an independent tour guide and filmmaker who has been guiding tours almost non-stop this season, filling in for a lack of work during the pandemic. “We are very happy about this and have many tours from Latin America – even in November, which is unusual for us.”

Ultimately, the weaker lira helped attract tourists, especially from countries with weaker economies than those in northern Europe, Efelti said. “A lot of people from Bulgaria or Romania, where the economy is not as strong, can spend a really nice week in Turkey for €530 ($550), for example. In Paris, that would only last them a few days.”

Citizens struggle with inflation

However, the once robust domestic tourism industry has been hit hard by the economic policies of Turkish President Recep Tayyip Erdogan. For many people living in Turkey, a weak lira is devastating. Inflation hit a 24-year high, up 85% from last October, according to the Turkish Statistical Institute. But experts at the Independent Research Group in Turkey say it’s actually much higher, around 185%.

According to a recent survey conducted by the Yoneylem Social Research Center, two-thirds of people in Turkey struggle to afford food and make rent payments.

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A shop selling shoes in Istanbul.
Inflation in Turkey hits 24-year high, Turkish lira weak against euro or US dollarImage: Tolga Ildun/Zuma/Image Alliance

A positive sign for 2023

In fact, many tourists take their vacations without noticing the financial crisis. After all, Turkey has long been a popular all-inclusive vacation destination, and despite challenges for the global travel industry, including high energy and fuel costs in Europe, this is unlikely to change, according to German travel operator TUI. War in Ukraine.

“The devaluation of the Turkish lira makes the destination even more attractive to our guests looking for good value for money,” TUI spokesman Evangelos Georgiou said. The country’s tourism revenues rose 27.1% from a year ago to $17.95 billion in the third quarter, according to recent data from the Turkish Statistical Institute. Yet they fall well short of the $34.5 billion the industry earned in 2019.

Tourists wait in line outside the grounds of Topkapi Palace.
Turkey’s tourism revenues increased by 27.1% compared to the previous yearImage: Sarah Hukal/DW

In Antalya, a seaside town popular with Russian tourists, Serdar Akedin, executive partner of aQuasun Tourism AG, points to the challenges of rising costs for businesses such as hotels in light of inflation. “For next year, at least in my area of ​​Antalya, hotel prices will be between 15% and 25% next summer.” He predicts that trips to Antalya will be more expensive than in the summer of 2022, with higher airfares.

“The big question is whether tourists will accept these prices.” Although it is too early to tell, Akaidin said the booking figures are already looking good.

Statues of matryoshka dolls are located in the city of Antalya.
Antalya, in the south of Turkey, has long been popular with Russian touristsImage: Diego Cupolo/NurPhoto/Image Alliance

Obstacles to Russian tourists?

Antalya has long been popular with Russian tourists, although there have been very few Russian visitors this year due to the war in Ukraine. Politics is also at play. With Turkey’s strategic position as an ally of the US and NATO and a friend of Russian President Vladimir Putin, the Turkish government has a fine line to walk to keep both sides happy. Turkey relies on Russia for energy and trade, as well as tourism. In 2019, trade volume between the two countries reached $26.3 billion (€25.07 billion).

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In late September, Turkey’s three central banks stopped accepting Russia’s Mir payment system, the Russian equivalent of Visa and MasterCard. This comes as a result of the US cracking down on countries it accuses of helping Moscow skirt sanctions in light of increased economic ties between the two countries.

Ukrainians meet Russians on vacation abroad

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In theory, removing Mir would make it more difficult for Russian tourists to vacation in Turkey, as they would have few payment options. Yet Serdar Akaidin did not think it acted as a serious deterrent. “Russian tourists can still bring cash and even pay for some transactions in bitcoin,” he said. “Even all-inclusive vacations are purchased and paid for before the trip anyway,” he said.

The low value of the lira helps make such trips possible as well.

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