Tourism Market Overview - EY

1 Tourism Market Overview Turkey & Istanbul 2017, 1st Half Important Notice and Disclaimer Important Notice and Disclaimer Content of this Document This document has been prepared by Ernst Young Kurumsal EY Turkey has not verified any of the information in this Finansman Dan manl k A ( EY Turkey ), it is based on the document. EY Turkey (including its partners, officers, information provided by the other sources referred to in employees and agents) does not owe a duty of care to any the document. It provides Interested People with necessary recipient of this document in relation to the information in this information about the Overview of Tourism Market in Istanbul document.

2 And Turkey. This document (and the information contained Neither EY Turkey nor any of its partners, officers, employees herein) does not constitute an offer to sell of or an invitation and agents make any express or implied representation to invest into any asset or business, nor will it form a part of or warranty and no responsibility or liability is accepted any strategic alliance decision or any decision to enter into by any of them with respect to the adequacy, accuracy, any type of cooperation. completeness or reasonableness of the facts, opinions, Interested Persons are not to construe the contents of operational, financial or other information set out in this this document as legal, business, tax or other advice.

3 Each document or any further information, written or oral notice, Interested Person should consult its own legal, business, or other document at any time supplied in connection with technical, accounting and tax advisers. it, and nothing contained herein, or therein shall be relied upon as a promise or representation regarding the historic or current position or performance of the Tourism industry or any future events or performance of the Tourism industry. 2 Tourism Market Overview , H1 2017. Contents Turkey Tourism Market 4. Istanbul Tourism Market 12.

4 Turkey Hospitality Sector 18. Istanbul Hospitality Sector 24. Tourism Market Overview , H1 2017 3. Turkey Tourism Market Turkey Tourism Market Istanbul Tourism Market Turkey Hospitality Sector Istanbul Hospitality Sector Turkey Tourism Market : Overview Overview Turkey Tourism (Total Receipts vs. Total Visitors 10 years trend). Turkey has been considered to be one of the most attractive destinations in recent years because of affordable prices and 14,6. 13,4 variety of options available for tourists. In addition to classic sun & sea vacations, the country attracts tourists for cultural and historical visits as well as for MICE.

5 (Meetings, incentives, conferences and exhibitions). Turkey offers strong cultural Tourism with a wide range of folk and traditional cultural festivals. It also aims to promote other Tourism alternatives such as golf and health Tourism in the long term. Investments in recent years in big cities such as Istanbul and Izmir were in line with the objective of developing the Tourism industry. Rationale of the investments were reflections of positive expectations regarding the number of domestic and foreign visitors in near future. Turkey remains as one of the major global Tourism markets and is recovering slowly from the downfall of Tourism sector in 2016.

6 The Market continues to face a challenging outlook considering the diplomatic and internal political issues, geopolitical tensions and terrorist attacks. Number of tourists visiting Turkey increased 10%, from 13,4 mn in H1 2016 to 14,6 mn in H1 2017. According to Turkstat, Turkey's total Tourism income for H1 2017 was US$ 8,8 bn, reflecting a decrease of 2,7% in comparison to the Tourism income in H1 2016, which was US$ 9,0 bn. Total Tourism income for 2016 was recorded as US$ 22,1bn. Accordingly, per capita average Tourism expenditure of visitors has decreased from US$ 718 to US$ 641, respectively.

7 Source: Turkish Statistical Institute (Turkstat), BMI Turkey Tourism Report Q3 2017. Tourism Market Overview , H1 2017 5. (Contd.). Turkey Tourism Market : Overview Tourism industry Direct contribution to GDP (constant $). Tourism industry's direct contribution to GDP is expected to be at a ratio of 4,1%. with US$ 26,1 billion in 2017 according to WTTC Data Gateway. In 2016, direct contribution of the industry to the GDP was also 4,1%.has produced US$ 29,1 billion. Capital investment in Tourism industry Capital investment is expected to be at the level of US$ 15,5 billion in 2017 with a decrease of 11,3% from 2016 (US$ 17,5.)

8 Billion). This capital investment includes spending by all industries directly involved in Tourism and investments by other industries on the specific Tourism assets like accommodation, passenger transport equipment, development of restaurants and leisure facilities. Source: WTTC Data gateway, World Bank and Turkstat 6 Tourism Market Overview , H1 2017. Turkey Tourism Market Istanbul Tourism Market Turkey Hospitality Sector Istanbul Hospitality Sector Turkey Tourism Market : International Tourists According to Turkstat, the number of total foreign visitors to Turkey was Average expenses per capita ($) (H1 2014 H1 2017).

9 Mn in H1 2017 as compared to mn in H1 2016. Average expenses per capita foreigners occured as US$ 592 in H1. 2017, showing a decrease of 8% from H1. 2016 ( US$ 647). The number of Turkish citizens residing abroad and visiting Turkey was mn in H1 2017 (H1 2016, 2,6 million). Average expenses per capita for citizens residing abroad was US$ 862 in H1 2017, showing a decrease of 15% compared to H1 2016. Tourism income from foreigners was US$. 6,8 billion in H1 2017, which composes 77% of the total Tourism income. Russia showed an increase of 820% with Top Ten Arrivals by Country of Origin (H1 2015 H1 2017) 1,7mn visitors and became the leader in the list after the improvement of political relations between Turkey and Russian Federation.

10 Even though the number of visitors from Germany to Turkey decreased by 17,05%. in H1 2017, Germany continued to be the second in the visitors list with 1,25. mn people, followed by Georgia and Iran with 1,07 mn and 1,00 mn visitors, respectively. In contrast to H1 2016, USA and Greece are off while Iraq and Russian Federation make appearance to the top ten list of by country of origin list. Source: Turkish Statistical Institute (Turkstat), Culture and Tourism Ministry Tourism Market Overview , H1 2017 7. Turkey Tourism Market : Current Scenario 2017 Tourism recovery underway; Boost in government International Tourism receipts investment raises hope After a failed coup attempt and terrorist attacks last year, which battered the Tourism Market in Turkey, we are seeing encouraging signs in the sector this year.