Turkey - Travel & Tourism: A market with declining revenue (Strategy, Performance and Risk Analysis)
Turkey is one of the largest economies in Eastern Europe and as such offers opportunities for investment and growth.
Although Turkish companies are very open to the adoption of new technologies, they lag behind their Western European counterparts. The ease of doing business is assessed as low due to the country's uncertain political climate. As such, Turkey is less attractive to foreign direct investment (FDI) in comparison to the rest of the continent. Due to a failed coup during the review period (2012-2016), nominal GDP declined and resulted in weak business and consumer confidence which negatively impacted tourism and export revenue.
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Car rental apps to drive fleet size growth
The fleet size of car rental firms recorded a CAGR of 8.0%, rising from 22,046 in 2012 to 30,015 in 2016. It will post a forecast-period (2017-2021) CAGR of 3.9%, to reach 35,327 in 2021. This is due in part to the advent of ride hailing apps such as Uber, Avis and Europcar’s expansion plans, and an increase in the number of domestic leisure and business trips.
Improving ties with Russia to enhance direct connectivity
Total tourist volumes recorded a review-period CAGR of -0.7%, falling from 100.9 million in 2012 to 98.1 million in 2016 due to a decline in international arrivals. However, as the industry recovers, volume will post a forecast-period CAGR of 1.5%, to reach 105.2 million in 2021. The total number of international arrivals recorded a review-period CAGR of -4.5%, falling from 29.7 million in 2012 to 24.7 million in 2016 due to terrorist attacks, an uncertain political climate, and the imposition of sanctions on Turkey by Russia. Turkey apologized and sanctions have since been lifted; combined with the country’s improving political situation and plans to enhance direct connectivity, this will ensure that international arrivals post a forecast-period CAGR of 2.1%, to reach 27.1 million in 2021.
Car rentals market value to decline
The value of the car rental market recorded a review-period CAGR of -7.7%, falling from US$176.3 million in 2012 to US$127.9 million in 2016. It will post a forecast-period CAGR of -4.6%, to reach US$96.7 million in 2021. The decline is primarily due to a reduction in the volume of international leisure tourists as a result of an increase in terrorist attacks and the deterioration of relations between Russia and Turkey.