This year’s season is set to take Turkey’s tourism industry back to pre-pandemic levels, according to industry officials, with high hopes that come amid risks such as an escalation in tensions between Ukraine and Russia, which are among its most important tourist markets.

Hotel and tourism officials also warned of soaring costs and sharp increases in utilities, food and wage costs, which could limit profits and broader benefits for an economy that is facing inflation that soared to a 20-year high in January.

The rebound after long setbacks caused by the pandemic that halted travel is seen as boosting the economy, along with the help of a recent decline in the Turkish lira that has made the country a more attractive destination than ever.

The high season starts in May for Turkey’s Mediterranean and Aegean beaches and historic treasures.

Europeans especially are already booking trips, good news for President Recep Tayyip Erdoğan’s government, which has adopted a new economic policy relying heavily on foreign income to curb the current account deficit.

"Early bookings started with high speed. We’ve got strong bookings, especially from Britain. They’re almost in line with 2019," said Turkish Hoteliers Federation (TÜROFED) vice chair Bülent Bülbüloğlu.

He said early bookings traditionally start with Britons and are taken as a reference for the season, with strong demand also expected from other European countries, Russia and Central Asia.

Foreign arrivals in Antalya, among Turkey’s most popular holiday destinations, totaled 117,818 in January, matching 2019 levels, data showed.

But a further escalation of the Russia-Ukraine crisis may pose some risk for the season, Bülbüloğlu told Reuters.

"We get good signals from Germany, Belgium, Netherlands and the Scandinavian market too ... Turkey has become a destination where visitors can have the most affordable holidays with their own currencies. It is now a paradise for foreigners."

The lira has been broadly stable since the start of the year following a 44% decline in 2021 and all-inclusive deals make Turkey even cheaper.

The currency closed last week at 13.49 against the United States dollar. It traded at 13.65 at 2 p.m. local time (11 a.m. GMT) on Tuesday.

Problems with costs

"A five-star hotel’s average price per night is around 70 euros in Turkey, whereas it is around 200 euros in Spain," said Turkish Tourism Investors’ Association (TTYD) Chairperson Oya Narin.

Finance Minister Nureddin Nebati last week forecast tourism revenues of $34.5 billion this year. The revenues doubled to almost $25 billion last year, reflecting a recovery from the initial wave of COVID-19 pandemic measures in 2020. They were $34.5 billion in 2019, prior to the outbreak of the pandemic.

The number of visitors, including Turkish nationals living abroad, jumped more than 88% to over 30 million in 2021, according to the Culture and Tourism Ministry data.

Erdoğan’s new economic policy aims to cut inflation by creating a current account surplus, with tourism revenues a key factor.

"It seems we will achieve the $34-$35 billion target," said Narin. "But revenues are not enough themselves. There is also the costs angle."

She said foreign arrivals will be near 2019 levels, or just 10% below, but making a profit matters more to the industry than how many millions come.

"We have serious problems with the course of our costs. We are facing rampant cost increases regarding electricity, gas and other costs," Narin said.

Official data for January showed consumer prices rose by 48.69% annually. The government has pledged to act and vowed to safeguard households against soaring prices.

Ülkay Atmaca, general manager of Innvista Hotel Belek in Antalya and head of Professional Hotel Managers Association (POYD), said he had to increase prices by 42% for this season but still cannot compensate for the rising costs.

Hotel Association of Turkey (TÜROB) Head Muberra Eresin said sharp cost increases were eroding industry margins, with costs rising 60%-65% in just one month.

"We have already signed contracts with operators and set our prices. It’s not possible to reflect all these additional costs on our prices now," she said.