The night after the bombing in Sultanahmet Square, Istanbul, last year, Metin Erdogdu understood that the hospitality market in Turkey as he knew it was finished.

The president of consulting firm Howarth HTL rang a few of his colleagues in the industry, canvassing their predictions for occupancy rates in the city after the attack.

“No one said under 20%,” says Erdogdu. “In reality, it was 2%.”

In 2015, Turkey welcomed more than 35 million people to Istanbul and beach resorts dotted along its Mediterranean and Black Sea coasts. But a spate of gun and bomb attacks by ISIS militants and Kurdish separatists the following year, combined with a sudden break in diplomatic relations with Russia when one of its aircraft was shot down over northern Syria by the Turkish military, saw visitor numbers drop by 30%.

[The UK] faced the same terrorist attacks in London. We faced worse than Istanbul in Paris, but Europeans have not stopped going to Paris. On the contrary, they wanted to go more to support the country.

It was a devastating fall from grace for a country where tourism was simultaneously responsible for generating a large fraction of its foreign currency and over 10% of its GDP.

The current outlook among hoteliers across Turkey remains bleak, amid stagnant occupancy rates and falling room prices. Matters have been further complicated by the decision of a court to block access to for breaking Turkish competition rules, which means tourists are now unable to obtain any information inside the country about ongoing domestic tours.

A report by STR Global revealed that in March, the average room rate was just under €70, a drop of 40% from three years ago. That same month, Deutsche Hospitality’s closed its Steigenberger Hotel at Istanbul Airport. It’s a decision that other hoteliers seem eager to take.

“I think eight in ten calls that I receive are from clients asking, ‘Are you able to sell my hotel?’,” explains Erdogdu.

Marathon men

Not everyone is so maudlin about the future of hospitality in Turkey. Mehmet Önkal, for one, sees a potential goldmine in teeth.

“Do you know how much you have to pay for a dentist in the UK?” asks Önkal, managing partner at the consultancy firm BDO. “Here, in Turkey, you can visit a dentist for half the price. This is the same for every other treatment.”

Enamoured with enamel, Önkal is not. Rather, the consultant sees medical tourism as just one of the ways in which Turkey is beginning to diversify its hospitality offering away from a reliance on Western tourists.

Along with the growth in visitors to Turkey’s renowned thermal baths and golf courses, he’s confident that the country can eventually return to the glory days that saw tourist numbers regularly surpass 30 million.

“Turkey is already a base for tourism,” says Önkal, citing the country’s enviable beaches, climate, and position at the confluence of Asia and Europe. Turkey’s wealth of historical sites also allows the country to maintain those visitor numbers throughout the year rather than just in the summer. “The history of Istanbul goes back 8,000 years, and the first settlements in Turkey go back 30,000 years.”

One major sign of a revival is evident in the full restoration of diplomatic relations between Turkey and Russia. After the Turkish military downed a Russian warplane along the Syrian border in August 2015, Moscow banned tourists from visiting Turkey. At the time, Russians were the second-largest group of foreign visitors to the country.

With relations mended, Erdogdu is already seeing evidence of Russian tourists returning to Turkey in conversations he has with hotel owners.

“They are all fully booked, especially in Antalya,” he says. “I think we are going to reach two or three million Russian tourists there in 2017. That won’t be a problem.”

Western tourists are another matter. ‘Is Turkey safe?’ remains a common search term on Google in the UK, with interest spiking during the attempted coup, and a series of attacks by ISIS and Kurdish militants in Turkey and Syria in November 2016. Erdogdu recognises that the perception of Turkey as an unsafe destination retains a powerful grip on holidaymakers’ imaginations, but, it’s still a source of resentment.

“[The UK] faced the same terrorist attacks in London,” says Erdogdu. "We faced worse than Istanbul in Paris, but Europeans have not stopped going to Paris. On the contrary, they wanted to go more to support the country. So, whether we expected the same support from European tourists to Istanbul and our other cities…” He trails off. “Of course, there are lots of other tourists.”

Önkal and Erdogdu look towards diversification as a long-term palliative to the industry’s woes: attracting new tourists from, for example, Iran or China, and sending them to new destinations will help to reduce the country’s reliance on Western visitors. Arab holidaymakers in particular have played a large part in shoring up the tourist industry in Istanbul.

According to the Turkish Statistical Institute, while the number of German visitors plunged by 30% last year, the number of visitors from Bahrain and Jordan rose by 28 and 25% respectively. Construction of several ‘village’ resorts catering to Arab tourists is already under way along Turkey’s Black Sea coast, away from the more freewheeling atmosphere of the towns along the Mediterranean and Aegean frequented by Western holidaymakers.

Land grab

These developments don’t appear to leave hoteliers in Turkey in a great position, at least in the short term. For non-branded properties, which make up the vast majority of hotels in the country, the situation remains dire. International brands like Wyndham, however, are seeing the current slump – and the desperation among many Turkish hotel owners to sell up – as an investment opportunity.

“The unfortunate reality is that terrorism has had a negative impact on our industry worldwide,” says Edwin Broers, Wyndham’s vice-president for Central and Eastern Europe. This fact hasn’t dimmed the company’s enthusiasm for the Turkish market’s growth potential.

“The travel industry is cyclical and other markets that have experienced short-term declines in inbound visitors have recovered.”

Heavy infrastructure spending by the government, coupled with other measures taken by the state to stimulate the tourist industry, have boosted Wyndham’s confidence in Turkey as a dynamic and resilient market.

“We have big plans for our growth in Turkey,” says Broers, citing the compay's aim to operate 100 hotels in the country by 2020. Wyndham plans on opening another eight hotels in the country later this year.

“The Turkish market offers real scope for flexible accommodation, which is why we introduced the Hawthorn Suites brand in the country, opening Hawthorn Suites by Wyndham Eskisehir and Hawthorn Suites by Wyndham Cerkezkoy last year,” Broers adds.

“In the future, we will continue to broaden our growing portfolio of hotels in Turkey. We intend to introduce our Days Inn brand and are evaluating opportunities for other hotel brands.

"We have recently been successful at launching the Super 8 brand in Europe, with the first three having opened in Germany, and we see potential for that brand to be successful in Turkey as well.”

The key to international operator growth lies in franchising, a relatively new model of management for Turkey that has proven popular amid the tendency for domestic investors to interfere in management decisions.

The travel industry is cyclical and other markets that have experienced short-term declines in inbound visitors have recovered.

New management

With the future so uncertain for the Turkish hospitality market, it’s becoming a more attractive option for hotel owners with property in prime locations.

The assumption is that tourists will prefer staying in branded properties that they know over non-branded hotels that they don’t, even if the cost of doing so is higher.

“Now that there are a limited number of guests, it’s a tough market,” explains Erdogdu. “I think that in the next chapter, in Turkey, there will be fewer new hotels being built but much more conversion.”

There do seem to be some grounds for optimism. In addition to the return of Russian holidaymakers to Antalya, Thomas Cook reported in March that more of its customers were booking holidays to Turkey and Egypt, another country that has seen tourist numbers slump dramatically in the wake of political instability and violent attacks by ISIS militants. Certainly, Erdogdu has seen more Western tourists in Istanbul recently, but the future remains in the balance.

“A friend of mine visited me,” says Erdodgu. “I took him to Sultanahmet and the Hagia Sofia. Two years ago, just to enter the museum, I had to wait two hours in the queue. This year, we went into the museum straight away. There was no queue.”