Tourism Overview In the wake of a strong performance in the tourism sector in 2008 (but lower growth than in 2007), the trend of weaker quarterly growth in the number of foreign visitor arrivals during the course of last year turned sharply into negative growth in Q109. However, the most recent data for the Q209 record a small rise in foreign arrivals (excluding Turkish citizens residing outside the country) of just over 2% compared with the same period a year earlier. This followed a fall in foreign visitor arrivals of about 2% year-onyear (y-o-y) in Q109.

Hospitality Latest hospitality sector data for the second quarter of 2009 show the total number of foreign and domestic tourist room nights amounted to 67.8mn nights, an increase of just over 5% y-o-y. Foreign tourist room nights – almost 78% of the total – rose by 9% y-o-y to 52.6mn nights in Q209. This follows a similarly strong 10% y-o-y increase in the number of foreign tourist room nights in Q109, to 31.1mn nights. In both quarters, growth in room nights attributed to foreign tourists was particularly favourable given the weak performance of foreign visitor arrivals over the same period.

Forecast Scenario maintains the view that foreign visitor arrivals will record negative annual growth this year of 3%, which is largely unchanged compared from our previous forecast (-3.5%). Although the anticipated fall in visitors is relatively small, particularly compared with forecast declines in regional competitor countries such as Greece and Croatia, it is a sharp deterioration on the growth achieved during 2008. Modest recovery in foreign arrivals should take place next year. The background to these forecasts is the severe economic conditions this year in Turkey’s major source markets, including the eurozone – especially Germany – Russia and the UK, followed by modest economic recovery in 2010. The weakness of the Turkish lira against the US dollar and the euro, as seen in 2008, which assisted the competitiveness of Turkey’s tourism sector, is forecast to be reversed from H209 onwards. This is likely to dampen the recovery in growth of visitor arrivals from next year.

Turkish Airlines Turkey’s national airline, Turkish Airlines (THY), achieved a more than favourable performance in the first seven months of this year, with passenger numbers up nearly 10% y-o-y to 13.7mn (international business class traffic was up slightly y-o-y, while there was buoyant growth in transit passengers). As part of an ambitious expansion programme announced towards the end of 2008, THY said in June it will buy 10 planes from Airbus (A330s) and seven from Boeing (777-300ERs).