TURGUT GÜR TURGUT GÜR Chairman

Istanbul, March 2011 Istanbul, March 2011

25th CACCI CONFERENCE25th CACCI CONFERENCE

Confederation of Asia-Pacific Chambers of Commerce and IndustryConfederation of Asia-Pacific Chambers of Commerce and Industry

Private non-governmental initiative

Established in 1988

Brings together entrepreneurs investing in the tourism sector

Board member of the Affiliate Members and Business Council of the World Tourism Organization (UNWTO)

Members from accommodation, yachting, tourism oriented transportation, tour operation, shopping and entertainment, golf facilities

300,000 beds in the accommodation 25,000 seats in passenger transportation 8,000 marina / yacht capacity Provides 400,000 direct employment Total investment portfolio US$ 24 billion Represents 2/3 of private sector tourism investment

portfolio in Turkey

TYDTYD

As the chairman of the Turkish Tourism Investors Association,I would like to emphasize on the tourism sector development and competitiveness in Turkey and also in our region.

In Turkey the share of service sector in Gross Domestic Product (GDP) has been rapidly increasing due to the growth in sectors such as transportation, communication, trade, tourism, banking, health, education, etc.

In 2010 the service sector constitutes 73 % of GDP. On the other hand, 54 % of the total labour force in the country is employed by the service sector. The remarkable achievement of the tourism industry in the past 25 years made tourism sector the locomotive of the Turkish economy. Although Turkish economy experienced many internal and external crisis during the last two decades, tourism, being resistant to all kinds of shocks, has been the only sector to grow at an annual average rate of 10 % during the crisisperiod.

REALIZED AVERAGE ANNUAL GROWTH RATES

(2000-2010)

In the past decade with regard to both tourist arrivals and tourism revenues Turkey’s growth rates are much higher than the world average.

Tourist Arrivals

Tourism Revenues

Turkey 14,0 % 15,1 %

World 3,1 % 6,5 %

Source: World Tourism Organization (UNWTO)Source: World Tourism Organization (UNWTO)

TOURIST ARRIVALS TOURIST ARRIVALS & & TOURISM REVENUES TOURISM REVENUES IN TURKISH TOURISM (1980-2010)IN TURKISH TOURISM (1980-2010)

Tourist Arrivals (million)

Tourism Revenues (billion $)

1980 1.3 0.3 1985 2.6 1.5 1990 5.4 3.2 1995 7.7 5.0 2000 10.4 7.6 2005 21.1 18.2 2010 28.6 20.8

The size of domestic tourism revenue is around 1/4 of the international tourism revenue. So in 2010, Turkey earned 5 billion US$ from domestic tourism.

Tourism receipts contribution to cover the foreign trade deficit is 86 % in 2009.

In Turkey, tourism sector stimulates overall production in the economy by creating demand for over 50 other sectors.  Tourism is the biggest net foreign currency generating sector in the economy. Last year , Turkish tourism revenue is 20,8 billion US$ that is 50 % over of its total investment portfolio, which is nearly 40 billion US$ excluding public sector investments.

I would like to express my views from different perspectives regarding the service sector specifically on Turkey and on Region’s economical growth.

In 2010, 3,0 billion US$ is invested for new beds in Turkish tourism. With regard to investment volume, tourism is in the top 5 industries invested in the Turkish economy.

In 2010,Undersecretary of Treasury issued incentive certificates for 61.575 new beds. The construction of these new beds will be completed within one or two years and create about 30 thousand new employees in accommodation.

Together with other labour force to be employed in different subsectors, it is easy to say that the tourism investments in 2010 will generate nearly 40-45 thousand new jobs.

Unemployment is one of the biggest problems in Turkish economy. As tourism provides great supplement for employment, it can be the solution of this problem. For this reason we should spread tourism all over the country.

As we all know, tourism is a labour-intensive sector. Capital / labour ratio is low and creates new employment with lower investment expenditures compared to other sectors. Number of employment in the tourism sector is 1,5 million that corresponds to 6,5 % of overall employment in the Turkish economy.

TOURISM EDUCATION IN TURKEY

NUMBER OF INSTITUTION

INSTITUTIONTYPE

EDUCATION PROGRAMME

100 University Graduate (2 years)

35 University Full Graduate (4 years)

30 University Post Graduate

10 Tourism Education Centers (TUREM)

Certificate

80 High School Vocational School

255 INSTITUTIONS

In order to increase the productivity in service sector specifically in travel & tourism;

o well-designed educational institutions, o certification programmes, o OJTs (on the job training) and cross training between our countries especially in mid and upper management level are important.

As we all know, in the last couple of years outsourcing became very popular and most of the service sector exercised this option of which end it up more qualified services through employees.

It is obvious that countries economical growth measures and privatization policies created more service sector employment within the region and elsewhere.

I would also like to pinpoint how important it is to be able to reduce overhead costs in service sector in order to increase the productivity.

We can easily list IT Technology (hardware / software) with agreat impact on reduction in transaction costs.

The World Tourism Organization estimates that Asia-Pacific countries will be prime destinations for incoming and outgoing tourist in the medium and long term period and these markets will face high investments in the sector. New emerging destinations in Asia-Pacific region will take benefit from the rapidly growing world tourism.

Tourism sector has already become a key driver for socio-economic progress in this region by creating new enterprises and new jobs.

My opinion is that joint investment projects may be one of the most fruitful areas of cooperation between Turkey and Asia-Pacific region.

In order to improve conditions of tourism joint ventures we need a communication exchange system supplying reliable and transparent information on tourism statistics and investment procedures in our region.

Before sharing the market figures and breakdown in tourist arrivalsbetween Turkey and some of the Asia Pacific countries;

I can clearly mention to you that in order to boost the intra-regional trade in the service sector, air connections should be increased and advanced to a level that it will increase both tourist and businessmentraffic which in the end will generate more employment opportunities.

When we look at tourism relation between Turkey and the Asia-Pacific region, we see that it is not so well as expected. In 2010 Turkey welcomed 28,6 million foreign visitors. European Union has a share of 55 % with 15,6 million. Russia and other Commonwealth of Independent States (CIS) take the second place with 6,1 million visitors and 21 % market share.

 Last year, 3,4 million visitors arrived in Turkey with a share of 12 % from the Asia-Pacific countries including Iran. But the majority of them are from Iran (nearly 1,9 million visitors). When we narrow down the market and focus in East Asia, Japan ranks first with 195.000 arrivals.

We had 132.000 visitors from Australia and 123.000 visitors from South Korea.

Arrivals from China and India are too low, 77.000 from China and 63.000 from India.

Long geographical distance and lack of desired air connection seem to be the main reason for low number of arrivals. On the other hand, as Turkey we have to increase our promotion activities to raise our popularity in Asia-Pacific countries. 

INTERNATIONAL TOURIST ARRIVALSINTERNATIONAL TOURIST ARRIVALS

Source: World Tourism Organization (UNWTO)Source: World Tourism Organization (UNWTO)

Arrivals (millions)

2010 2020

Share (%)

2010 2020

WORLD 935 1.561 100 % 100 %

EUROPE 472 717 50,5 45,9

ASIA & PACIFIC 204 416 21,8 26,6

OTHER 259 428 27,7 27,5

The share of Asia and the Pacific is increasing, while the share of Europe is decreasing.