Turkish government takes steps to pare hotel debt

Turkey
In January, Denizli Colossae Thermal Chairman Abdurrahman Karamanlıoğlu said hotels in Turkey's resort towns were "on the brink of bankruptcy."

Turkey's hospitality industry is struggling as worry over terrorism keeps guests away and as tensions with Russia—formerly a top source of international visitor traffic—continue to grow. 

In light of this, Turkey's government is taking steps to help out businesses directly tied to hospitality, specifically; helping ease their debt load.

Under a new government proposal, industry businesses would be allowed to postpone repayment of 288 million lira of credit. Without going into specifics, Prime Minister Ahmet Davutoglu said that Turkey will offer an additional 255 million lira of support to the industry as well as give tourism companies with annual sales of $700,000 or more access to benefits currently available to exporters.

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Financing of hotels and restaurants accounted for 2.85 percent of total loans as of the end of December, the highest since at least 2003, according to data compiled by Bloomberg.

"Stocks of companies in the tourist industry erased this year’s losses on Monday, with the Borsa Istanbul Tourism Index rising as much as 3.9 percent before trading 1.9 percent higher at the close in Istanbul," Bloomberg wrote.

The debt relief would come on the heels of a grim fourth quarter, and—thus far—an unpromising first quarter 2016. According to the Turkish Statistics Institute, tourism revenues dropped by 14.3 percent in the fourth quarter of 2015. Worse yet, forecasts are predicting that a best-case scenario would see numbers from 2016 match those of 2015.

Ongoing violence in the country's southeast, known as Northern Kurdistan, including in the main city of Diyarbakir, has crippled the region's tourism industry. The head of the tourist union in Diyarbakir, Mehmet Akil, told Rudaw that a year ago, the area's hotels were sold out. “We had over 3,500 rooms [occupied]," he said. "At the moment, maybe less than 10 percent of the hotels are occupied,”

Late last month, as many as 1,318 hotels were on the market along the Aegean and Mediterranean coasts with the resort town of Antalya hit the hardest with 410 properties for sale. The provinces of Muğla (349), İzmir (203) Aydın (162), Balıkesir (139), Çanakkale (35) and Denizli (20) follow, according to Zaman.

The total sale price of the 410 hotels in Antalya amounts to 30 billion lira, while the remaining 908 have a total sale price of 8.8 billion lira.

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