By Ceyda Caglayan and Victoria Bryan
ISTANBUL/BERLIN (Reuters) – The attempted coup in Turkey last week has dealt another blow to the country’s already weakened tourism industry and will weigh on profits of the nation’s airlines and airports as well as tour operators serving the country, industry experts said.
Turkey’s tourism sector has taken a battering this year after a wave of suicide bombings. Even ahead of the attack at Istanbul’s Ataturk airport at the end of last month economists forecast that tourism revenue would drop by about $8 billion this year, equivalent to 1 percent of GDP.
Holiday rentals website Tripping.com said that searches for accommodation in Turkey dropped 37 percent last weekend compared with the previous weekend.
Market research company Euromonitor predicts that international arrivals to Turkey will drop to 32.9 million this year, from 34.7 million in 2015 and a peak of more than 35 million in 2014.
“The recent political events in Turkey will be catastrophic for its travel industry,” Euromonitor’s Nadejda Popova said.
In June alone, international air passenger arrivals dropped by 29 percent, bringing the decline for the first half of 2016 to 12 percent.
The declining tourist numbers are likely to be most painful for Turkish Airlines and budget carrier Pegasus, as well as airport operator TAV and airport service company Celebi.
Shares in those companies have fallen by between 25 percent and 35 percent already this year.
Efe Kalkandelen, airlines analyst at IS Investment, said he now expects total air passenger numbers to Turkey to drop by 4-5 percent this year, against his previous estimate of a 5.2 percent increase.
The drop in international passengers is of particular concern because they typically generate greater profit than domestic passengers, he said.
International passengers accounted for 87 percent of Turkish Airlines’ 2015 passenger revenue and 61 percent at Pegasus.
Turkish Airlines’ greater proportion of transit passengers could provide some support, Kalkandelen said, but neither of the two carriers are likely to hit year-end targets.
Turkish Airlines, which was downgraded by ratings agency Standard & Poor’s this month, aims to carry 72.4 million passengers this year, up from 61.2 million in 2015, and achieve a margin of 20-22 percent on earnings before interest, tax, depreciation and rentals (EBITDAR).
Pegasus is targeting passenger growth of 13-15 percent from a 2015 level of 22.3 million people and an EBITDAR margin of 19-21 percent.
The turmoil has already led to the insolvency of Anatolian Sky, which specialized in holidays to Northern Cyprus and Turkey. Shares in London-listed TUI and Thomas Cook, two of Europe’s largest tour operators, have come under pressure from events in Turkey as well as attacks in France and Britain’s vote to leave the European Union.
Some operators may now find themselves having to cut prices for late summer holidays, Numis analyst Wyn Ellis said.
Thomas Cook has cut capacity to Turkey by about a third this year, but Ellis said its exposure is still likely to be “uncomfortable”.
TUI had moved to focus more on exclusive hotels, which tend to be booked earlier, so its late summer bookings could be better, Ellis added.
Thomas Cook said that cancellations after the failed coup had been minimal, though large numbers of customers had called to seek reassurance.
A spokesman for TUI said that Turkey may yet prove to be a popular last-minute destination because prices were good and many other places are fully booked.
(Reporting by Ceyda Caglayan in Istanbul and Victoria Bryan in Berlin; Editing by David Goodman)