This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ISTANBUL 001872 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EUR AND EB 
TREASURY FOR U/S TAYLOR AND OASIA - MILLS 
NSC FOR QUANRUD AND BRYZA 
 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL TU
SUBJECT: TOURISM'S POSTWAR REBOUND FACES TERROR CHALLENGE 
 
 
REF: ISTANBUL 294 
 
 
¶1. (SBU)  Summary: Tourism industry executives are again 
wondering what the future holds for their sector following 
November's suicide bombings in Istanbul.  The attacks 
interrupted a strong sectoral recovery that saw visitor 
figures surpass last year's level by the end of November, and 
tourism revenues exceed the government's postwar estimates by 
over a billion dollars.  Though cancellations are estimated 
to have hit 40-50 percent of late-November and December 
bookings, their impact has been cushioned by the fact that 
this is Turkey's low season for tourism.  But a wave of 
cancellations of conferences and congresses threatens to 
deprive the oft-beleagured sector of an important source of 
income, and worries persist that the new security environment 
will lead major cruise lines to drop Turkey from their 
itineraries next year.  Many industry executives note their 
sense of "betrayal" at the decision of many of Turkey's 
allies to warn their nationals against travel to Turkey, and 
express hope that the warnings will be speedily lifted.  End 
Summary. 
 
 
¶2. (U) Rebound: After the quick end to combat operations in 
Iraq in early April, tourism in Turkey posted a surprisingly 
strong and healthy recovery.  Visitor numbers passed last 
year's total at the end of November, and industry leaders 
expect the year's total to be somewhere between 13.5 million 
(according to the Tourism Investors' Association) and 14 
million (per the Hotel Operators Association).  While overall 
revenue will not approach last year's, as a result of the 
discounts that operators offered to entice visitors back to 
Turkey, initial rough estimates are that the sector will earn 
9.8 billion USD in 2003, well above the Turkish government's 
postwar forecast of 8.7 billion USD, and nearly equal to 
2002's 10 billion USD level.  The season was particularly 
strong in Antalya, a favorite beach destination of European 
travelers, which accounts for up to 45 percent of the 
national industry.  (Istanbul-based tourism represents 20 
percent, Aegean tourism 25 percent, with the remainder 
divided among specialty "cultural" destinations such as 
Cappadoccea.) 
 
 
¶3. (SBU) Another blow: Coming at a time when Turkey had had 
some success in differentiating itself from its dangerous 
neighborhood and luring visitors back to the country, the 
November blasts in Istanbul had an immediate chilling effect. 
 Hotel operators in Istanbul ranging from small boutique 
hotels to large five-star luxury properties report 
cancellations of 40-50 percent of their late-November and 
December reservations.  The impact swiftly trickled down to 
other businesses that depend on the tourist trade: Istanbul's 
famed Grand Bazaar has been unusually quiet for the holiday 
season, with many merchants reporting little to no business. 
Of even more concern to the industry is the decision of many 
organizations to defer or cancel planned conferences and 
programs in Istanbul.  Ustun Ozbey, a senior executive at the 
Koc Group's SETUR travel agency, pointed to the decision of a 
major medical group to cancel its planned May congress in the 
city and move it to Western Europe.  The congress had 
represented years of work, he noted, and would have brought 
thousands of high-income tourists to the city with 
expenditures well above those of an average visitor.  It will 
take years, he suggested, for Istanbul to recoup such losses. 
 Nedret Koruyan, Secretary General of the Tourist Investors' 
Association, noted that private sector and government 
officials plan to meet to discuss the crisis in the industry 
resulting from the bombings.  She held out little hope that 
there is a magic solution, however. 
 
 
¶4. (SBU) Betrayal: Ozbey expressed particular concern with 
the decision of major Western nations to warn their citizens 
against travel to Turkey.  While conceding the need for 
countries to ensure their citizens' safety, he argued that 
countries should have stood by Turkey rather than handing a 
"victory to the terrorists."  Mehmet Kutman, head of Turkey's 
largest securities firm, told us on December 11 that the 
Turkish government is also very preoccupied with the travel 
warning issue, especially because of its potential impact on 
cruise ship visits.  He noted that cruise lines are now 
making out their 2004 schedules, and many are cancelling 
planned port calls in Turkey.  With each ship disgorging 
thousands of passengers, such cancellations threaten that the 
industry's difficulties may persist into next year.  (Note: 
Princess Cruise lines went forward with one port call in 
Kusadasi after the November 17 bombings; no Istanbul port 
calls are planned during the winter.) 
 
 
¶5. (SBU) Low season: For now, most industry executives are 
putting a brave face on the situation.  And some are 
genuinely sanguine about the industry's ability to recover. 
Koruyan noted that with the attacks occurring in Turkey's low 
season, there are grounds for hope that the sector can 
recover in time for next year.  Key tests will come at winter 
fairs in Turkey's major markets, including Germany and 
Russia.  (Though as last year's experience shows, the sector 
can pick up again even when advance reservations are 
limited.)  In addition, resort destinations such as the 
Turkish Aegean and Mediterranean coasts are likely to bounce 
back more easily given their appeal to niche "beach-going" 
markets.  Ozbey noted that Turkey retains its price advantage 
relative to other Mediterranean and Aegean destinations in 
Europe, and should benefit from that fact. 
 
 
¶6. (SBU) Comment: More challenging will be the task of luring 
visitors back to Istanbul.  The fabled city on the Bosphorus 
has always represented a bridge between diverse cultures, 
mixing a European sophistication with the mystery and 
"otherness" of the Middle East.  With terrorism rearing its 
head in Istanbul, that latter element has undoubtedly assumed 
heightened and less favorable prominence in the eyes of many 
potential visitors.  End Comment. 
ARNETT