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BARANER TALK
Turkey´s Tourism Minister Ersoy: ‘The contribution by the hotels will be deducted from taxes’
Hüseyin Baraner talked with Turkey´s tourism minister Mehmet Nuri Ersoy about the new PR Agency and its future impact on Turkey´s tourism. Mehmet Nuri Ersoy is a well-known and very experienced tourism professional managing his own tour operator along with hotels and airlines. He was appointed Minister for Culture and Tourism of the Republic of Turkey in July 2018.
Turkey´s Tourism Minister Ersoy: ‘The contribution by the hotels will be deducted from taxes’

I started to work as a tourism professional 44 years ago. When we started almost half a century ago, our concern was providing guests with clean beds and warm water from the faucet. Now we provide our guests with countless hotels offering their guests the best service all over the world and a very good infrastructure.

When we started Turkish Airlines consisted of abou 20 of the oldest airplanes available, now it is the seventh biggest international airline with the most modern airplanes to be had.

If we talk about airport operation, we started to sell our know-how to the most developed countries worldwide.

We possess the best-trained and best-informed guides all over the world.

With respect to tour operators and travel agencies we are among the first five in relation to business volume.

The Destination Management Companies in Turkey are increasing their international market shares steadily.

Only a few professionals are aware of the fact, but it is true that we are ahead of most of the world with our digital software created for tourism.

Our aims and objectives in sports and health tourism.

Turkish hospitality companies are doing now what Spain has done for fifty years and expand with their own brands all over the world.

With these facts in mind I visited the Turkish Minister for Culture and Tourism in Ankara. Mehmet Nuri Ersoy impressed me as being very comfortable and sure of himself. I immediately asked him:

“The Turkish Association of Travel Agencies (TÜRSAB) and the Federation of Turkish Hotels (TÜROFED), and also some hotel owners I talked to are very much upset. How did you arrive at the decision to found an Agency for the Development of Tourism and Tourism PR?”

Ersoy: “If you are Minister for Culture and Tourism of the Republic of Turkey you have to see the whole picture, you have to act fairly towards all dynamics and you have to embrace all representatives of our sector without any exceptions. We want everybody to be elected and to represent all the sector. In Turkey there are many associations founded all the time, and all of them will start to ask to be represented in the future as well. As the number of these associations increases, it seems to be the most democratic way to have the representatives elected and to increase the number of members of the board along with the increasing number of associations. If we had decided to appoint the presidents of the associations, this would not have been fair. We want all candidates to go through an election process. We do not want to exclude anybody. Besides of those elected members there are 9 members of the board which will be appointed by the seven geographic regions of Turkey. They will be picked amongst the owners of companies registered with the Ministery of Culture and Tourism in the region in question.  

Anybody who is registered with the ministery will be able to become a candidate. This will help us to have a democratic executive board. We only used positive discrimination towards the regions of Marmara (Istanbul) and the Mediterranean (Antalya), by taking two persons each from these very important regions. The reasons are that the Marmara Region comprises about 40 percent of all hotels, and the Mediterranean about 35 percent of all hotels in Turkey, so we wanted them to be represented by more persones than the other less important regions. With this law to found the Tourism Development Agency we handed over the overwhelming majority to the private sector.

Baraner: How will you manage this new institution?

The Executive Board will consist of 15 members who are elected for three years. The Minister for Culture and Tourism, his deputy, the General Director for Tourism PR and the Chairman of the Board of Turkish Airlines will be appointed members of the Executive Board, whereas 11 members will be elected as representatives of the private sector. One representative of the two airport management groups with the highest business volume, İGA and TAV, will be members in turn.

The travel agencies will vote for a travel agency owner as their representative. We asked them to put on a second ballot box during their presidentship election, to be used to vote for the representative to be sent to the agency. There are so many associations and unions that we have to use a method like this. Some of the associations and unios have very few members. They elect their presidents and members of their boards, but they do not represent their branch. New associations are being founded each year.

Baraner: But is it a good decision to ask for a contribution based on business volume? Will this not scare investors, for example hotels will have to pay their contribution even if they do not break even. Who had this stupid idea? To take a contribution of seven per mill may amount to up to 14 percent of the net profit in some companies. How will you manage this?

Ersoy: If you think of all price reductions which are offered in the middle of the season, of all the loss because of rooms which couldn´t be sold, this contribution is nothing against them. Even the price reductions offered by the hotels amounts to more than this contribution. If a hotel offers a price reduction of 5 percent in July, this amounts to a loss of 1 percent throughout the year. So the people who complain about a contribution of 7.5 per mill are ready to offer price reductions of up to 30 percent as soon as there is a small shortage of tourists. We have to be aucacious in order to find solutions. We have to take all the steps our competitors did take 50 years ago in a hurry, in order to arrive at the place our tourism has a right to be in.

Some call this a “new tax”. If it was a tax, the state would decide on what to do with this money. But here the Agency will decide upon this. Besides, this contribution can be shown as an expenditure and be deducted from taxes. We have to consider this fairly: The Turkish tourism sector has become a big business. Even the smallest mistake, a small obstacle in PR and marketing are bound to reduce our profits in a big way. We all experienced this in the past and most of us do remember these mistakes well.

This is exactly the point where the agency will act. We will raise the net profits of our hotels by PR and proactive marketing and, which is even more important, we will raise profit expectations steadily. In 2017, our revenues per night and person was 65 USD, now it is 69 USD. Our aim is to arrive at 100 USD per night and person. In order to achieve this, we all have to make a contribution.

Tourism in Turkey has a lot of opportunities offering themselves, but from time to time we are going in a circle and lose many opportunities, because we don´t use them.

We want to break those vicious circles. Concepts like product diversification, branded destinations, branded products, culture, art, sports and tourism investments in all of our 82 provinces will lead us to very special visions and projects.

At this point we concentrate our efforts on potential tourist who never visited Turkey before, and therefor we plan and design or PR activities in a way to attract new visitors beyond the mass of people who already know our country.

Our agency will become the most important instrument to use in order to turn the products we have created into profit. The agency will open up much wider markets for our hotels abroad, and it will find new guests for our hotels.

Everybody should keep in mind that global tourism is changing very fast, and international competition is getting more aggressive day by day. Hotel investments are increasing in all the Mediterranean region. New means of transport are threatening some of the classic holiday destinations.

If we have a look at the structure and the organigram of the agency, we see that we plan to get into action all the vast tourism potential of our country from digital topics to sports and thermal tourism. And we shall secure them economically speaking with active marketing.

We know that we have to stop using the method to act focussed on minimizing expenditures in order to focus on revenue. The way to increase revenues is to create well-known brands, and in order to create brands you have to use consequent and incessant marketing.

Our coffees were finished, and after having talked for more than an hour, Mehmet Nur Ersoy saw me off with this words: “With my own hotels I will be one of the hotel owners paying one of the biggest contributions. I am convinced that we will see within about two or three years that this decision was the right decision, and with the confidence our agency will give us, along with better profits, we will look at new goals.”


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