US embassy cable - 05ANKARA3058

UNCLAS SECTION 01 OF 03 ANKARA 003058 
 
SIPDIS 
 
STATE FOR EUR/SE AND EB/IFD 
TREASURY FOR INTERNATIONAL AFFAIRS-CPLANTIER AND MMILLS 
NSC FOR BRYZA AND MCKIBBEN 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, TU 
SUBJECT: DREAMS OF DISNEYLAND ON TURKEY'S MEDITERRANEAN 
COAST 
 
1. (SBU) Summary.  Turkey,s tourism numbers continue to 
sky-rocket, with the first quarter forecast showing that 2005 
will more than likely be a record-breaking year for the 
Turkish tourism industry.  So far this year, 3.8 million 
tourists have visited Turkey*a 27 percent increase from the 
same period in 2004.  Antalya is the destination of choice 
for the majority of tourists and there is still unexploited 
tourism potential in the region, which also supports 
agriculture and construction industries.  Yet the sector 
continues to see a lack of interest from foreign investors. 
Tourism entrepreneurs hope the government can do more in the 
future to build a positive country image of Turkey and 
attract greater foreign investment to support the sector. 
End Summary. 
 
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2005: Record-Setting Year 
-------------------------- 
 
2. (U) The Ministry of Culture and Tourism expects the 
tourism industry to have a record-breaking year in 2005. 
Turkey has already welcomed approximately 3.8 million 
tourists in the first 4 months of 2005 and it has seen a 27 
percent increase in the number of tourists visiting Turkey 
compared to the same period last year.  Tourism revenues 
reached $2 billion in the first quarter.  By year,s end, 
Turkey expects to generate $18 billion from tourism, with the 
bulk of the revenue coming from the peak tourist summer 
season.  Last year,s revenues totaled close to $16 
billion*exceeding the GOT,s projected $13 billion target 
for 2004. 
 
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Tourism in Turkey 
----------------- 
 
3. (U) In 2004, approximately 32 percent of tourists visiting 
Turkey came from Germany and Russia.  The rest came 
principally from Britain, Bulgaria, the Netherlands, Iran, 
Israel, France, Greece, Austria, Belgium, Azerbaijan, Italy, 
Ukraine, and the United States.  For foreign tourists, the 
number one destination is Antalya*located on Turkey,s 
Mediterranean Coast.  Out of the 17 million tourists who 
visited in 2004, 6.5 million visited Antalya.  Other popular 
destinations include Istanbul, cities on the Aegean Coast, 
and Cappadoccia.  Officials told econoffs that most of 
Turkey,s visitors enjoy &sun-sea-and-sand8 vacations, and 
the GOT is hoping to develop other forms of tourism along 
Turkey,s coastline including diving, yachting, hot springs, 
and golf.  The GOT would also like to take advantage of 
Turkey,s cultural tourism potential, but so far there has 
been less interest from foreigners in historical tours of 
Turkey. 
 
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Investing in Turkish Tourism 
----------------------------- 
 
4. (SBU) Econoffs met with officials at the Ministry of 
Culture and Tourism International Relations Department who 
help promote Turkish tourism abroad through advertisements, 
tourism fairs, and marketing campaigns.  There are currently 
thirty-five Turkish tourism offices abroad in Europe and 3 in 
the United States.  Though the GOT is putting forth 
increasing efforts to support Turkish tourism promotion, 
there is still surprisingly little foreign investment in the 
sector, especially in name chains. 
 
5. (U) Turkish officials said that despite efforts to attract 
foreign investment in Turkey,s tourism industry, foreign 
interest and investment in the sector remains low.  The GOT 
is trying to facilitate more foreign investment by offering 
land allocations with 49-year leases, granting tax 
reductions, and allowing companies to be established with one 
hundred percent foreign capital.  (The GOT owns valuable 
seaside property and does not have the authority to sell 
state-owned land.  Instead, it offers 49-year leases.) 
Officials said that it is not difficult to establish a 
company in the sector and the process can take as little as 
one day to complete.  These incentives are part of the GOT's 
Tourism Incentives Law which was enacted in 1982. 
 
6. (U) The Ministry of Culture and Tourism issued the "Public 
Land Allocation Announcement and Specification for Tourism 
Investors8 in February 2004 as an effort to reach out to 
foreign tourism investors but there was negligible interest 
from foreigners.  Nevertheless, there was good interest from 
local entrepreneurs.  Generally, the most attractive pieces 
of land for investors are located on the Aegean or 
Mediterranean Coasts.  However, the Ministry is also working 
to develop winter tourism in the eastern parts of Turkey 
along with cultural tourism.  Given the rise in tourism in 
the past two decades and with Turkey holding the number eight 
spot on the list of the world,s top ten tourism countries, 
the Ministry is bullish on Turkey,s tourism future.  When 
the 1982 law was enacted, there were only 30,000 beds 
certified by the Ministry.  Today there are 600,000 beds. 
The GOT is allocating money to local administrations to 
invest in environmental restoration, transportation 
infrastructure, and water treatment to mitigate the effects 
of increasing tourism development. 
 
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Antalya*Tourism Central 
----------------------- 
 
7. (SBU) Antalya, home to one third of Turkey,s hotels, is 
booming.  In Antalya, Econoffs met with Ali Tulek, the 
district manager of the region,s largest private bank, 
Garanti Bank.  Garanti Bank has over $2 billion credit in the 
tourism sector and is the bank of choice for tourism agencies 
and hotels in the region.  According to Tulek, foreign 
tourists get a bargain for their money in Turkey despite the 
strength of the lira over the past two years.  Europeans, in 
particular, find that they can vacation in Turkey for less 
money, but still get quality service and excellent 
accommodations.  Most foreigners in Antalya stay at large 
resort-style hotels for about 10-11 days and spend an average 
of $700 to $750 per person.  This limits the economic impact 
of the sector on the Antalya region since visitors may spend 
little money at local businesses outside their all-inclusive 
hotels.  Tulek also said there could be a problem in the 
industry with Turkey entering the EU because of the potential 
increase in labor costs which could, in turn, bump up tourism 
prices in Turkey and make vacationing in the country less 
desirable for Europeans.  Tulek also seemed to think that the 
potential for growth among Western European visitors may be 
tapped out. With Turkey,s blossoming tourism relationship 
with Russia, Russians may well outnumber the European 
tourists visiting Turkey in the next 3 to 5 years.  One owner 
of a resort hotel told econoff that if he did not limit the 
share of Russian guests, he could easily fill his hotel 
entirely with Russian tourists. 
 
8. (SBU) Despite the possible problems, the potential for 
growth in Antalya,s tourism industry seems to be limitless 
according to the President of the Mediterranean Association 
of Touristic Hotels (AKTOB), Osman Ayik.  The hidden 
potential goes well beyond the sun and sand tourism to 
historical/cultural tourism and eco-tourism*both of which 
have yet to be exploited in Antalya and in the rest of the 
country.  In the meantime, sports and conference facilities, 
spa centers, and golf resorts are being built to try to 
attract a different clientele to the region.  Labor is 
abundant because of Turkey,s large and relatively young 
population.  Though not always skilled, young workers receive 
adequate training to man the growing number of hotels.  In 
2004 alone, 30,000 beds were constructed in Antalya.  Ayik,s 
dream for Antalya is to bring a Disneyland-style resort to 
the region.  He believes the climate in Southern Turkey is 
suitable and said that Russians have shown interest in the 
ambitious idea. 
 
--------------------------------------------- -- 
The Tourism/Agriculture Symbiotic Relationship 
--------------------------------------------- -- 
 
9. (U) Though tourism is the number one sector in Antalya*by 
a long shot*the region's agriculture sector is also doing 
well and literally feeds the tourism sector.  The agriculture 
sector produces 4.5 million tons of agricultural products, 
exports $200 million annually, and has had 28 percent growth 
in one year.  The Garanti Bank district manager, Tulek, 
predicts a positive outlook especially for the production of 
high value fruits, vegetables, and flowers.  (Antalya has the 
natural climate to produce such high-quality items.) 
According to the Chairman of the Antalya Chamber of Industry 
and Commerce, Mr. Kemal Ozgen, foreigners are also investing 
in the agriculture sector*contributing to sectoral growth. 
Currently, there are 14 U.S. companies working in Antalya in 
the textile, food industry, and chemicals sectors, and the 
city hopes for further cooperation with the U.S. in these 
sectors. 
 
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Comment 
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10. (SBU) Tourism is a crucial source of foreign exchange for 
Turkey with which to finance its large trade deficit.  It is 
also a source of seasonal employment and strongly supports 
the agriculture and construction sectors, particularly in 
regions such as Antalya where growth in tourism is booming. 
However, the GOT maintains control of the sector and, in 
particular, prime real estate along the coasts of Turkey.  It 
has yet to open up significant areas to investors and 
currently, land that is available can only be leased. 
Private sector entrepreneurs like Osman Ayik hope that the 
GOT can do more in the future to offer greater incentives for 
investors and allot more funds in the government,s budget to 
promote a more positive and safer country image for Turkey. 
Taking such measures can hopefully pave the way for greater 
foreign investment and help bring hoteliers like Ayik closer 
to dreams of Disneyland in Antalya.  Nevertheless, tourism 
projections remain high and show no signs of slowing down. 
In the tourism sector Turkey seems to have retained its 
competitiveness despite the real appreciation of the lira. 
End Comment. 
EDELMAN