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Cablegate: Tourism's Postwar Rebound Faces Terror Challenge

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ISTANBUL 001872

SIPDIS


SENSITIVE


STATE FOR E, EUR AND EB
TREASURY FOR U/S TAYLOR AND OASIA - MILLS
NSC FOR QUANRUD AND BRYZA


E.O. 12958: N/A
TAGS: ECON EFIN PREL TU
SUBJECT: TOURISM'S POSTWAR REBOUND FACES TERROR CHALLENGE


REF: ISTANBUL 294


1. (SBU) Summary: Tourism industry executives are again
wondering what the future holds for their sector following
November's suicide bombings in Istanbul. The attacks
interrupted a strong sectoral recovery that saw visitor
figures surpass last year's level by the end of November, and
tourism revenues exceed the government's postwar estimates by
over a billion dollars. Though cancellations are estimated
to have hit 40-50 percent of late-November and December
bookings, their impact has been cushioned by the fact that
this is Turkey's low season for tourism. But a wave of
cancellations of conferences and congresses threatens to
deprive the oft-beleagured sector of an important source of
income, and worries persist that the new security environment
will lead major cruise lines to drop Turkey from their
itineraries next year. Many industry executives note their
sense of "betrayal" at the decision of many of Turkey's
allies to warn their nationals against travel to Turkey, and
express hope that the warnings will be speedily lifted. End
Summary.


2. (U) Rebound: After the quick end to combat operations in
Iraq in early April, tourism in Turkey posted a surprisingly
strong and healthy recovery. Visitor numbers passed last
year's total at the end of November, and industry leaders
expect the year's total to be somewhere between 13.5 million
(according to the Tourism Investors' Association) and 14
million (per the Hotel Operators Association). While overall
revenue will not approach last year's, as a result of the
discounts that operators offered to entice visitors back to
Turkey, initial rough estimates are that the sector will earn
9.8 billion USD in 2003, well above the Turkish government's
postwar forecast of 8.7 billion USD, and nearly equal to
2002's 10 billion USD level. The season was particularly
strong in Antalya, a favorite beach destination of European
travelers, which accounts for up to 45 percent of the
national industry. (Istanbul-based tourism represents 20
percent, Aegean tourism 25 percent, with the remainder
divided among specialty "cultural" destinations such as
Cappadoccea.)


3. (SBU) Another blow: Coming at a time when Turkey had had
some success in differentiating itself from its dangerous
neighborhood and luring visitors back to the country, the
November blasts in Istanbul had an immediate chilling effect.
Hotel operators in Istanbul ranging from small boutique
hotels to large five-star luxury properties report
cancellations of 40-50 percent of their late-November and
December reservations. The impact swiftly trickled down to
other businesses that depend on the tourist trade: Istanbul's
famed Grand Bazaar has been unusually quiet for the holiday
season, with many merchants reporting little to no business.
Of even more concern to the industry is the decision of many
organizations to defer or cancel planned conferences and
programs in Istanbul. Ustun Ozbey, a senior executive at the
Koc Group's SETUR travel agency, pointed to the decision of a
major medical group to cancel its planned May congress in the
city and move it to Western Europe. The congress had
represented years of work, he noted, and would have brought
thousands of high-income tourists to the city with
expenditures well above those of an average visitor. It will
take years, he suggested, for Istanbul to recoup such losses.
Nedret Koruyan, Secretary General of the Tourist Investors'
Association, noted that private sector and government
officials plan to meet to discuss the crisis in the industry
resulting from the bombings. She held out little hope that
there is a magic solution, however.


4. (SBU) Betrayal: Ozbey expressed particular concern with
the decision of major Western nations to warn their citizens
against travel to Turkey. While conceding the need for
countries to ensure their citizens' safety, he argued that
countries should have stood by Turkey rather than handing a
"victory to the terrorists." Mehmet Kutman, head of Turkey's
largest securities firm, told us on December 11 that the
Turkish government is also very preoccupied with the travel
warning issue, especially because of its potential impact on
cruise ship visits. He noted that cruise lines are now
making out their 2004 schedules, and many are cancelling
planned port calls in Turkey. With each ship disgorging
thousands of passengers, such cancellations threaten that the
industry's difficulties may persist into next year. (Note:
Princess Cruise lines went forward with one port call in
Kusadasi after the November 17 bombings; no Istanbul port
calls are planned during the winter.)


5. (SBU) Low season: For now, most industry executives are
putting a brave face on the situation. And some are
genuinely sanguine about the industry's ability to recover.
Koruyan noted that with the attacks occurring in Turkey's low
season, there are grounds for hope that the sector can
recover in time for next year. Key tests will come at winter
fairs in Turkey's major markets, including Germany and
Russia. (Though as last year's experience shows, the sector
can pick up again even when advance reservations are
limited.) In addition, resort destinations such as the
Turkish Aegean and Mediterranean coasts are likely to bounce
back more easily given their appeal to niche "beach-going"
markets. Ozbey noted that Turkey retains its price advantage
relative to other Mediterranean and Aegean destinations in
Europe, and should benefit from that fact.


6. (SBU) Comment: More challenging will be the task of luring
visitors back to Istanbul. The fabled city on the Bosphorus
has always represented a bridge between diverse cultures,
mixing a European sophistication with the mystery and
"otherness" of the Middle East. With terrorism rearing its
head in Istanbul, that latter element has undoubtedly assumed
heightened and less favorable prominence in the eyes of many
potential visitors. End Comment.
ARNETT

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