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In Turkey, hotels started having problems

By August-September, the Turkish tourism industry can expect a lot of unpleasant surprises: the hotel started having problems related to indebtedness, which grew to incredible proportions – by the end of the year, the increase in hotel debt on loans will reach 100 billion Turkish liras. By the end of the season, this may threaten hotels with bankruptcy, and mainly large hotels are at risk – Turizm Ajansi reports.

Among the causes of the crisis, the Turks cite “the pandemic, the earthquake, elections, high inflation and the fact that the daily rent of housing has become cheaper this year” – all this has caused a lot of trouble to hotels. Chief among them is that rising costs, staffing costs, and shorter hotel stays are “disrupting hotels’ cash flow” and forcing them to resort to borrowing.

As the founder of the tourism data bank and economist Erol Karabulut stated in the media, there are 10,000 large and small hotels in Turkey, but mostly the hotels that borrowed money are large hotels with a large capacity.

“The debt of hotels on loans increased by an average of 64 billion Turkish lira in the first 6 months of 2023. At the same time, only 41 billion Turkish liras were paid out in June. If this continues, by the end of this year the growth of loan debts will reach 100 billion Turkish liras. There has never been such an increase in credit during the last 4-5 years,” said the Turkish expert. According to his estimates, if the decrease in occupancy continues in the last months of the tourist season, then a crisis is inevitable.

According to his estimates, on average, about 700-800 hotels with a large number of places need loans, and it was they who became the “generator” of the rapid growth of sums. In small hotels, the amount of loans does not exceed 2-3 million lira. “Is this a wake-up call for the industry? We will see it in August-September. According to my estimates, from 5 to 10-15% of hotels will face the inability to pay. At the same time, it should be taken into account that last year the hotels had a good turnover, and they took out loans, counting on the best – at the same time, many have debts that have not been paid for 3-4 years, there are accumulated loans,” he said.

His assessment was supported by the Vice President of the Association of Professional Hotel Managers (POYD), Hakan Saatcioglu: according to him, due to the increase in inflation, there are interruptions in income. “If a large hotel group has made or is making investments or started renovation works in recent years, it will need a loan that will have to be returned,” he said. At the same time, the hotels could not attract as many tourists as they needed — the 25% increase in tourist traffic had almost no effect on the hotels.

Bugra Artik, chairman of the board of the Association of Tourist Hoteliers and Operators of the Southern Sea of Marmara (GUMTOB), also added that the problem of lack of funds and financing of hotels was relevant last year and persists. At the same time, he added that banks are already trying to protect themselves, obviously, from potential bankrupts, and it is increasingly difficult for large hotels to get a loan. “At the same time, the increase in food and energy prices was almost 100%, hotels have extremely high input costs, this is reflected in prices. It is even more expensive here than in some European countries,” he added.

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