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Turkey's weak lira affects the tourism industry

December 8, 2022

Tourism in Turkey made a comeback in 2022. The low value of the Turkish lira has attracted tourists, yet citizens are struggling due to inflation.

Tourists wait in line in front of the Hagia Sophia mosque in Istanbul.
Image: Sarah Hucal/DW

In the Istanbul neighborhood of Kadikoy, even a tourist can't help but notice the price of a cappuccino has gone up 25% from one early November morning to the next due to the country's high inflation. But it's still affordable for many tourists from abroad, considering the Turkish lira has taken a nose dive in the last year. In September 2021, $1 was worth around 8 Turkish lira, and now it's worth around 18.

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

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

Lukas Growe in Istanbul with Hagia Sophia mosque in the background.
Lukas Growe from Berlin said the low value of the lira allowed them to do more than usual on his vacation to TurkeyImage: Lukas Growe/DW

Little luxuries

For jazz musician Lukas Growe from Berlin, the weak lira meant he and his girlfriend could worry less about how they spent their money. "We are doing things we wouldn't normally have done on vacation," he told DW. "Taking taxis often, eating out, even taking inland flights just to go to another city." The pair had planned a two-week trip to Iran in October but canceled it at the last minute, feeling it was not the right moment in light of protests in the country. Instead, they headed to Turkey, traveling to the Kurdish regions, hiking along the coast in the south, and exploring Istanbul.

"We even hired a taxi for a day to bring us to other places, which is something I would never do in Germany," Growe explained.

Tourists walk through the Eminonu Spice Bazaar in Istanbul.
Tour guides in Istanbul say 2022 has remained busy well into the fallImage: Tolga Ildun/Zuma/picture alliance

Better value than Paris

"Tourism is very strong this year in general, and we are very happy about this," says independent tour guide and filmmaker Mustafa Efelti, who has been guiding tours almost non-stop this season, making up for the lack of work during the pandemic. "We are very happy about this and also have many tours from Latin America — even in November, it's unusual for us."

In the end, the weak lira has helped to attract tourists, especially from countries with weaker economies than those in northern Europe, says Efelti. "Many people for example, from Bulgaria or Romania, where the economy is not super strong, can spend a really good week in Turkey with €530 ($550), for example. In Paris, it might only last them a couple of days.”

Citizens struggle under inflation

However, the once-strong domestic tourism industry has been hard-hit by the economic policy under Turkish President Recep Tayyip Erdogan. For many living in Turkey, the weak lira is devastating. Inflation is at a 24-year high, up 85% from October 2021, according to the Turkish Statistical Institute. But experts at the Independent Research Group in Turkey say it is actually much higher, around 185%.

According to a recent survey by Yoneylem Social Research Centre, more than two-thirds of people in Turkey are struggling to pay for food and make rent payments as a result.

A store selling shoes in Istanbul.
Inflation is at a 24-year high in Turkey, while the Turkish lira is weak compared to the euro or US dollarImage: Tolga Ildun/Zuma/picture alliance

A positive sign for 2023 

Most tourists will take their vacations without noticing the economic turmoil. Turkey has long been a popular all-inclusive vacation destination, and according to German travel operator TUI, this is unlikely to change, despite challenges to the global travel industry, including high energy and fuel costs in Europe, in part caused by the war in Ukraine.

"The devaluation of the Turkish lira makes the destination even more attractive to our guests, who are looking for good value for money," said TUI spokesperson Evangelos Georgiou. The country's tourism revenues climbed 27.1% from a year earlier to $17.95 billion in the third quarter according to recent data from the Turkish Statistical Institute. Yet they are still well below the $34.5 billion the industry earned in 2019.

Tourists wait in line outside of the Topkapi Palace grounds.
Turkey's tourism revenues climbed 27.1% from the previous yearImage: Sarah Hucal/DW

In the seaside town of Antalya, a popular destination for Russian tourists, Serdar Akaydin, executive partner of aQuasun Tourism AG, points out the challenges of rising costs for businesses like hotels in light of the inflation. "For next year, at least for my region of Antalya, the hotel prices for next summer are between 15% and 25% higher." With airfare prices increasing, too, trips to Antalya will more expensive than in the summer of 2022, he predicts.

"The big question is whether tourists will accept these prices." While it's too early to say, Akaydin says the booking figures are looking good already.

Matryoshka doll statues stand in the city of Antalya.
Antalya in Turkey's South has long been popular with Russian touristsImage: Diego Cupolo/NurPhoto/picture alliance

Barriers for Russian tourists?

Politics is also at play when it comes to tourism. The war in Ukraine has meant there are far fewer Russian visitors this year. With Turkey's strategic position as both an ally to the US and NATO and a friend to 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, the trade volume between the two countries reached $26.3 billion (€25.07 billion). 

At the end of September, Turkey's three central banks stopped accepting Russia's Mir payment system, the Russian equivalent of Visa and Mastercard. It was the result of the US cracking down on countries accused of helping Moscow skirt sanctions in light of increased economic ties between the two countries.

Ukrainians meet Russians on holiday abroad

In theory, the elimination of Mir could make it more difficult for Russian tourists to vacation in Turkey, as they would have few payment options. Yet Serdar Akaydin does not think it has acted as a serious deterrent. "Russian tourists can still bring cash and even pay for some transactions in Bitcoin," he says. "All-inclusive holidays are also purchased and paid for before the trip anyway." 

The low value of the lira helps to make such trips possible, too.

Edited by: Benjamin Restle

Sarah Hucal
Sarah Hucal Freelance Multimedia Journalist