Monday, March 28, 2011

Hurriyet South Weekly Editorial: Nothing quiet on the (south)western front

Today was a double-header: In addition to my regular weekly Economics column, I had another editorial, aka The Southbound, for Hurriyet Daily News & Economic Review's weekly supplement South Weekly, which appeared in today's issue.

As for title, I refer to paying homage to my favorite books and movies. I know it is kinda cheesy and even lame, but it actually quiet tame compared to what I pulled through with today's Econ. piece.

As a personal note, I was expecting to be sent to Silivri as an Ergenekon casualty with this thing. I even packed and waited for the cops in the hallway all night... Well, not really:)... I kind of knew that nobody cares about me and my beloved newspaper but this was still yet another tamer for my inflated ego. But this invisibility is good, not only for me (after all, I am still here, posting this, rather than share a cell with Mustafa Balbay or Cetin Dogan), but also for my beloved newspaper.

Anyway, without further chit-chat, on to the column:

Since my last South Weekly editorial “southbound” in January, it has been anything but quiet on the Marmaris front.

First, we were visited by a U.S. aircraft carrier. For a couple of days at least, I felt like I was in Santa Barbara during my daily jogs. Then came the Libyan refugees, that is, the Turkish workers who were evacuated from Libya. With people camping outside, it began to feel like Afghanistan.

At the same time, I was busy discovering the (un)ease of doing business in Turkey. After about a hundred trips to a dozen offices in Marmaris and Muğla, we managed to obtain permission to build a small dock in front of our beach.

As a footnote, I should mention that such docks are, by law, open to the public. Since I am doing a public service, and paying rental fees to the municipality in the process as well, I would have expected the procedure to be easier.

But maybe the fault lies with me, as a huge hotel is being built in the nearby village of Turgut, in a supposedly protected area. The villagers claim that one of the owners is the prime minister’s son, a Harvard graduate. He could just be cleverer than I am, or maybe, as George Orwell said, “All animals are equal, but some animals are more equal than others.”

By the way, the hotel is supposed to be based on Islamic principles, meaning that men and women would have separate beaches. And if you want to cool down with an ice-cold beer, you should head next door. I am all for multiculturalism and so applaud the bold newcomer.

However, speaking of alcohol, I have received several questions over at the blog, from readers who know about my moonlighting activities, about the effect of the most recent alcohol taxes on tourism.

To begin with, alcoholic beverages make up about 15 percent of the total costs of a large deluxe all-inclusive hotel. You may think this is not much, but for hotels already working with tight margins, it means a lot.

As for the effect on tourism: Make no mistake, the tourist arrivals figures that Culture and Tourism Minister Ertuğrul Günay loves to boast about will not be affected. Neither will the revenues. However, the profits of the all-inclusive hotels, which long ago negotiated their room rates with the travel agents, will be squeezed.

Not that it would have made a difference if they hadn’t already signed the contracts. As I argued in an earlier southbound, the tour operators have much more bargaining power than the hotels and therefore are able to dictate their prices at will.

Things are not rosier on the other side of the supply chain either. We teach economics students that the producer and the consumer share the cost of any tax, except in extreme cases where one carries the entire burden.

If there are only two beer producers serving Marmaris, they will be able to completely pass on the tax to the hotels. Not surprisingly, the entry of a third, low-cost producer this season has led to more competitive prices from the two big guys.

As readers of my weekly economics columns would know, I have been suffering from the same asymmetric power problem in my relationship with our bank. This predicament is a byproduct of the imperfect competition that characterizes many sectors in Turkey and is not specific to alcoholic beverages. But somehow, I increasingly feel that services are more subject to it than industry and among services, seasonal hotels suffer more than others.

Despite all this, everything will turn out well this tourism season. In case you are wondering how: I don’t know. It is a mystery

*** Emre Deliveli is a freelance consultant and columnist for Hürriyet Daily News & Economic Review and Forbes as well as a contributor to Roubini Global Economics. Read his economics blog at

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