ISTANBUL — Weakened by a series of terrorist attacks, including a shooting at a popular nightclub that killed 39 people on New Year’s Day, Turkey is banking on wealthy tourists from the Middle East to shore up its battered retail sector.
ISIS claimed responsibility on behalf of the assailant, who was still at large on Thursday despite a nationwide manhunt. Victims included 25 foreigners from countries including Saudi Arabia, India, Israel, France, Belgium, Germany, Russia and Canada.
Turkish President Recep Tayyip Erdogan highlighted the impact of the terrorist attacks on the country’s economy.
“As a nation, we will fight to the end against not just the armed attacks of terror groups and the forces behind them, but also against their economic, political and social attacks,” he said in a statement on Sunday. “They are trying to create chaos, demoralize our people and destabilize our country with abominable attacks which target civilians.”
Tourist numbers have fallen to a decade-low after a series of countrywide terror attacks in the last two years that have killed hundreds and deterred Westerners, especially, from coming. Turkey’s tourism revenue fell 8.3 percent year-on-year to $31.46 billion in 2015 and is expected to decline to $27 billion in 2016, which would represent a 14 percent drop, according to the Ministry of Development.
In the first 11 months of 2016, the number of German tourists fell 22 percent versus the same period a year earlier, according to statistics from the Turkish Culture and Tourism Ministry. British tourists were down 30 percent, Americans 44 percent, French 22 percent and Italians 53 percent, it said. At the same time, tourism from the Middle East rose, with visitors from Saudi Arabia up 16 percent, Jordan 21 percent and Kuwait 3 percent.
While nearly 600 shops in and around Istanbul’s grand bazaar and dozens on the city’s main shopping streets have closed, others have attempted to cater to the cultural profile of visitors from oil-rich Gulf nations to reverse the downturn.
“When Westerners had cold feet after terror attacks, or Russians no longer traveled with an economic crisis at home, Arabs filled the gap, spending lavishly,” said Huseyin Kirk, chairman of the Istanbul-based Middle East Tourism and Travel Agencies Association. “This last attack will surely have an effect on us and we’re going to see losses, but we will struggle against it,” he added.
At least six of the 16 dead from Arab countries in the nightclub attack were clients of companies belonging to the association, including two men taking advantage of Turkey’s highly competitive medical tourism segment.
OTSAD has attempted to mitigate the effects of past attacks by promoting package tours to other destinations, such as Turkey’s Black Sea coast, and limiting the Istanbul leg to just shopping, which has softened Gulf tourists’ apprehensions but has dented their spending potential.
“One Arab is worth 10 European tourists when it comes to spending,” Kirk said. “They enjoy the scenic geography of the Black Sea but when it comes to shopping, they want to spend in Versace, Hugo Boss or seek V.I.P. clubs and restaurants that the Black Sea coast doesn’t have.”
Foreign visitors spend around $820 per visit on average, according to the Tourism Ministry figures. Arab nationals spend around $1500, multiplied by at least seven in a typical Middle Eastern family. That doesn’t include extravagant buys like a $1.6 million villa that Kirk recently sold to a visiting Saudi couple.
“It’s not only about travel agents, but all economic players that would benefit from a better policy aimed at more Arab visitors,” he said. “For that, officials have to work on quality branding for Turkey that would surpass security concerns, just like in Paris or in New York, where you see the military wherever you go, but you still go.”
The association estimates that 25 million Arab travelers leave their countries for international destinations every year, and Turkey receives around 3.5 million of them. It is working on a strategy to increase its market share and entice new visitors instead of relying on repeat business.
Travel agents hope Middle Eastern visitors could help improve tourism revenues, which accounted for nearly $5 billion of Turkey’s gross domestic product in the second quarter of 2016, down 35.6 percent compared with a year earlier.
But others believe the fragile Turkish economy requires much more than tourism campaigns for it to heal.
A failed coup in July, followed by a crackdown on the government’s opponents from all walks of life, rattled foreign investors and ratings agencies, which had once hailed Turkey as a robust economy and a democratic state.
Domestic instability under a state of emergency, which the government extended for another three months on Tuesday, coupled with the U.S. Federal Reserve’s recent rate hike, have sent the Turkish lira into a downward spiral.
Erdogan last month called on his supporters to convert foreign exchange into lira to help shore up the ailing currency, but the measure was ineffective. Consumption also shrunk by 3 percent in 2016, casting a pall over growth expectations as GDP decreased for the first time since 2009.
“Consumption habits are likely to change as manufacturers will now seek to produce at the lowest cost to meet buyers expectations,” said Sinan Oncel, head of the United Brands Association of Turkey, which represents more than 500 brands across various sectors.
“Having said that, we do not stop consuming. Despite coup attempts and terror attacks, Istanbul has such a strong healing dynamism that helps us hold onto our lives and continue as is,” he said.
A group of businessmen and politicians gathered in front of the Reina nightclub on Tuesday to commemorate victims of the New Year’s Day massacre and broadcast their resilience.
“The aim in these attacks is to silence Istanbul, so the issue here is bigger than containing our financial loses,” said Kaya Demirer, president of the Istanbul-based Turkish Restaurant and Entertainment Association. “We have to stick together, work shoulder to shoulder, not yield to provocation, so that the veins of economy will start filling again,” he said.
The association, which represents more than 500 establishments that generate $1.2 billion in annual revenue and host more than 8 million foreign visitors per year, aims to keep Reina open to deliver a strong international message.
“Reina is a highly symbolic place of what Istanbul represents: a cohesion of different lifestyles, a trend-builder in gastronomy and entertainment, so we need to keep it alive,” Demirer said. “If we stand in solidarity and attend a glorious reopening of Reina, this outcry can create a new opportunity for the future of tourism and generate support for Turkey throughout the world,” he added.
In the short-term, however, concerns and fears are jeopardizing planned events.
Organizers of the Mercedes-Benz Istanbul Fashion Week, an upscale event with dozens of foreign visitors each year, said they were reluctant to go ahead with the opening press conference on Friday.
“We are having troubles,” said one of the event’s coordinators, who asked not to be named. “Everyone shares a bit of concern and fear, not to mention a breakdown in our morale and motivation, but then life continues.”