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Turkey, a tourism power with strong ambitions

With 36.8 million international arrivals in 2014, for a 41% increase since 2007, Turkey affirms its position as a major tourist destination between Europe and the Middle East. Economic growth in the country continues, backed in part by the tourism sector for which the government has strong hopes and whose rapid growth attracts increasing numbers of hotel operators.

Key figures

  • Population: 77.6 million
  • Surface area: 779,452 km²
  • Number of hotels (Ministry of Tourism, 2014): 2,341
  • Number of hotel rooms: 300,929
  • Tourist arrivals: 36.8 million international arrivals (2014)
  • Primary source markets: Germany, Russia, United Kingdom, Georgia, Bulgaria.

For the past decade Turkey’s economy has grown steadily, although it slowed in 2014 (3%), which may be explained in particular by a contraction of domestic consumption and private investments. The uncertain local geopolitical context and the still fragile recovery in Europe make foreign investors nervous, while the country and especially the tourism sector depend on them. The growth outlook for for Turkey remains positive, however, with the GDP expected to grow by 3.2% in 2015 and 4% in 2016. Enjoying a central geographic location between Europe and the Middle East, the country wants to become the 10th economic power worldwide by 2023, while it currently ranks 16th. Tourism growth should contribute to reaching this goal, as the direct contribution of the sector to the country’s GDP in 2014 was 4.6%, and 12.3% including direct and indirect benefits.

An attractive destination for Europeans that is diversifying

The number of foreign visitors on Turkish soil has been growing for several years. International arrivals continued to climb to reach 36.8 million in 2014, or 1.9 million more arrivals than in 2013 (+5.5%). In terms of revenues, foreign visitors spent 27.8 billion dollars in 2014, up by 9.7% in one year. Germans remain the top clientele in the country with 5.3 million arrivals, followed by Russians (4.5 million) and Britons (2.6 million); all three are up over 2013. Turkey’s border countries are among the top 5 source markets, with Georgia (1.75 million) and Bulgaria (1.7 million), which has grown significantly over 2013 (+7% on average). The Netherlands and France follow with more than one million arrivals each.

The capital is the prime destination with the province of Istanbul recording 11.8 million international visitors or one third of arrivals in Turkey. The two airports Istanbul Ataturk and Istanbul-Sabiha Gökçen saw their traffic grow in 2014 (+10.9% and +25.4% respective), with the Ataturk becoming the 4th European airport with 56.9 million passengers annually, including 38.2 million international travelers. With 11.5 million foreign tourists in 2014, the coastal province of Antalya, located in the south and nicknamed the Turkish Riviera, is the country’s second destination just after the capital. Next follow the provinces of Mugla with its capital Bodrum, and Edirne, which each welcome more than 3.1 million visitors. Turkey’s appeal lies primarily in its capital and coastal areas. Its “leisure destination” profile is revealed by the seasonality of international arrivals, of which close to two thirds are concentrated between May and September and 30% in July August. Istanbul nonetheless wins over leisure and business demand, landing in 8th place worldwide in terms of number of congresses hosted in 2013.

The country wants to diversify its tourism, particularly by valorizing its rich cultural heritage (11 sites on UNESCO’s World Heritage list and 17 applications underway), and by promoting less frequented regions. Health tourism is another of the country’s main assets, with 1,300 thermal springs attracting a high volume of European clientele. Turkey wants to further develop boating tourism, aiming at an accommodations capacity of 50,000 at 100 ports. Finally, to accompany this growth in demand, a 3rd airport is under construction in Istanbul and is expected to reach completion in 2018; its goal is to be the biggest in the world: its capacity would stand at 150 million passengers per year. On a countrywide scale, the government has a goal to increase airport capacity from 165 to 400 million passengers by 2023. It also wants to receive 50 million foreign tourists that same year, making it necessary to develop its accommodations supply.

Hotel development accelerates with the arrival of new actors on the scene

In terms of accommodations, Turkey’s classification system distinguishes properties that are certified by municipalities (which correspond to an independent unlisted and small capacity supply) from properties registered with the Ministry of Tourism that represent a total of 2,980 operational structures, including 2,341 hotels for 301,000 rooms. These properties meet international standards and are classified with stars. Their large average size may be explained by the presence of major resorts and hotels operated by groups. This hotel supply is completed by 60 thermal hotels (8,800 rooms), a hundred or so apart hotels (5,000 rooms), 70 boutique-hotels (2,500 rooms) and 3 tourist complexes (2,130 rooms).

The classified tourist supply increased by 6.6% in terms of number of rooms between 2013 and 2014, and by 19% since 2011. This development benefited higher categories, meeting international demand in particular. The 5-star segment is the most dynamic with average annual growth by 11% since 2011 to reach 141,800 rooms or close to half of the classified supply. Inversely, the economy segments have seen their supply drop by 23% since 2011 and represent only 6% of the classified supply. This low proportion is nonetheless relative within the global supply as hotels listed by municipalities correspond primarily to an entry range.

The chain hotel supply remains small although it is growing steadily. On January 1, 2015, hotels operated by groups represented 238 units for close to 49,500 rooms, or an increase in the chain supply by 2.5% with respect to 2013. The American group Wyndham became the leader in Turkey in 2015, with 38 properties and 6,612 rooms. The operator experienced recent and rapid growth in the country: after opening 5 hotels and 1,100 rooms in 2013, the group opened no fewer than 8 properties and 1,626 rooms in 2014 alone, mostly under the brand Ramada in several cities in the country and also in coastal areas with high capacity resorts. It thus ousted the German group TUI, the traditional leader on the market, while The Rixos Group holds onto 3rd place.

Several new players are also developing on the Turkish market: in 2014, Mandarin Oriental opened its first property in Bodrum and Warwick International took over a property in Ankara. In 2015, the opening of the Hyatt Regency Istanbul Atakoy, the Saint Regis Istanbul and Soho House further grew the upscale range in the capital. Alongside Western groups, Middle Eastern groups are also showing interest in the market: the Emirati group Rotana has begun building the project Tri G in Gunesli, with a 152-room Centro Hotel by Rotana set to open in 2016, and two hotel projects for Istanbul.
This growth in the supply follows an increase in demand which enable hotel chains to record sound performance. Thus if the occupancy rate is feeling a slight drop in 2014 (-1 point) due in part to the increase in supply, it remains at a satisfactory level of 64.9%. The average daily rate, meanwhile, continues strong growth by 15.2% to 137 US dollars, allowing the RevPAR at hotels to increase by 13.4% to 88.9 US dollars.

Thus Turkey’s rise in power as a tourist destination appears to be continuing along its trajectory. The country wants to give itself the means for its ambitions through its strategic tourism plan for 2023 and the projects to development infrastructures, and airport infrastructures in particular. The goal to host 50 million tourists in 2023 appears to be within reach for this tourism powerhouse that continues to affirm itself and gain market shares on an international scale.

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