Monday, August 10, 2009

Weekly Hurriyet Column: For tourism the bells toll

Below is the unedited version of my column for this week. You can read the final version at the Daily News website. FYI, there was an interesting article in the Economist that recounts Europe's tourism woes. While they are right on an absolute sense that the European tourism destinations have been hurt real bad by the crisis, Turkey has actually fared worse on a relative sense, as I argue below.

The article is the first time a graph from my friends at Turkey Data Monitor, an integral part of my blog, has been featured in Hurriyet. I do not want to spill all the beans, but you'll soon be seeing a lot of their stuff in the Daily News, a partnership that has been on the agenda for some time, but one which has been delayed due to summer vacation plans and the paper's efforts to improve the web site. So, as I always say, stay tuned...

As I will be sailing in the Aegean this week, I thought it’d be appropriate to devote the weekly column to the tourism sector.

But such a title all but ensures that you will think I have had a sunstroke. After all, the media reaction to the latest tourism statistics was almost unequivocally positive. With the world economy still at a slump, the 1.3% yearly decline in tourist arrivals for June could easily be regarded as a resounding achievement. Substitution from countries with swine flu and the weak lira were touted as the main reasons behind the strong figures.

While those factors might have played a role, a closer look does not paint such a rosy picture. For one thing, the latest figure compares less favorably to the same months in the previous two years. When compared to 2007 and 2008 June yearly figures of 17.1% and 19.2%, the 2009 turnout looks rather dismal.

Likewise, a cross-country look at the numbers reveals, at first, that Turkish tourism has been rather resilient compared to Mediterranean peers like Greece, Spain and Croatia, most of whom are seeing declines in double-digit territory. However, while the falls in these countries have been larger in an absolute sense, they have nevertheless not seen as large departures from their recent trends. In fact, the 20.5% decline from last June’s growth rate is second only to Croatia’s.

Looking at year-to-date data and world trends reveals an analogous picture. The 0.9% yearly decline in arrivals in the first half of the year is slightly better than World Tourism Organization’s forecast of a 1-2% fall in global tourist arrivals for 2009. This is really subpar performance for a country that has been increasing its share of the global pie in the last decade. To form an analogy, just think of China growing 5% in 2009; that would be perceived as devastating news, but a much larger relative decline in Turkish tourism is packaged as a success.

When you look at revenues, more disturbing signs emerge. Despite seasonal differences, revenues per tourist have been on a downward trend since 2003. As a result, the robust arrivals figures have not been reflecting as strongly into revenues for the last few years. For example, June revenues were down 8.7%, with most of the decline coming from the fall in per tourist expenditures. Anecdotal evidence puts the blame on lower prices and shorter stays, but I doubt this would be enough to explain the emerging pattern of the last few years. For now, this is an enigma that begs to be explored further.

There is one part of the tourism statistics giving me a glimmer of hope: The outgoing tourism data. While evidence is again anecdotal at best, the number of Turks going aboard, after falling as much as a half (on a yearly basis) early in the year, is back at last year’s levels. This is yet another piece of evidence that the economy is continuing with its ascent after hitting rock bottom in the first quarter.

I guess the title was a bit too strong after all. The tourism sector has not been shattered by the global crisis. But the worrying long-term trends definitely warrant attention.

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