Türkiye's tourism industry has long been a crucial source of foreign currency inflows for the republic's economy. But this year, businesses warn that rising prices are leading to a drop in visitor numbers, just as foreign exchange reserves hit new lows.

Türkiye's incumbent leader President Recep Tayyip Erdogan won an unprecedented third decade in power in run-off polls last month. New figures show central bank foreign exchange reserves turned negative for the first time in two decades in May, as billions of dollar-denominated cash was spent to prop up the value of the Turkish lira ahead of the second vote.

Tourism is an essential source of hard foreign currency for Türkiye but many businesses on the ground are reporting falling numbers for 2023. 

"We are running at about a third of capacity, which is not normal for June," Asım Genis tells CGTN. He's the manager of the Diva Hotel in İcmeler south of Marmaris, a resort town popular wıth British, Dutch and Scandinavian holidaymakers – and he's sure of the reason why numbers are down. 

"We know prices (in Türkiye) are more the less the same as the UK now, and some things are actually more expensive here. Türkiye has always had a reputation for being an affordable destination, so it's a huge change for us," he added. 

British tourists tell CGTN they've noticed the difference: "It's much quieter here this year, the bars are half empty as drinks are so expensive," says Wendy Pope.

"Through social media, we had an idea things had gone up," says her partner Dean. "But it's seven pounds ($8.85) for a slice of cake in Icmeler now – it was half that last year. A steak meal is 25 pounds ($31.61)."

Restaurants dependent on passing trade also report falling visitor numbers. Ali Aygun, who runs the Majestic Restaurant, tells CGTN: "The five-star hotels are doing better, but they offer all-inclusive deals so people aren't eating out. Overseas tourists are still coming, but local Turkish people can't come for a holiday to İcmeler now, as they just can't afford it."

Meanwhile, businesses report that tourist numbers from Russia, normally a steady source of income, have dropped off as the conflict in Ukraine continues.

Foreign currency inflows from Türkiye's tourism industry amounted to a record $46.5 billion last year, a 53 percent rise on the previous year, with many visitors attracted by the weakness of the lira boosting purchasing power. 

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"Türkiye has almost reached pre-pandemic (visitor) numbers", said culture minister Mehmet Nurı Ersoy. "Our growth in tourism revenues is even more impressive." The ruling AKP has hiked its tourist revenue target for 2023 to $56 billion. 

In Marmaris, tourism chiefs are optimistic.  

"The depreciation of the Turkish lira and inflation in our European markets, especially in Britain, make Türkiye attractive for Europeans," says Ali Kirli, head of the tourism commission of Marmaris.

But as prices spiral, in Içmeler businesses are not so confident.

"Wages and prices are going up and businesses aren't making enough money to cover their costs," says Ali Aygun. "Türkiye has gone back 90 years in the past 10 years. The economy is out of control."

Türkiye's central bank is expected to start hiking the cost of borrowing when it meets next week, as part of a radical shake-up by incoming policy makers. New finance minister and former Wall Street banker Mehmet Simsek, who has returned to government after previously servıng between 2009 to 2018, is promising what he calls "a rational… rules-based and predictable economy."

Not everyone is quite so confident.  

"All these people were in post before, until they argued with Erdogan and left," says Asım Genis. "They say they will bring prices under control. The central bank has cut the cost of borrowing to around nine percent, but for businesses and personal loans people are paying 30 or 40 percent. It doesn't add up."

Hit by such unexpectedly high costs, some tourists say they are reassessing plans for 2024.

"I've been comıng to Turkey since 2008," says Wendy Pope. "But next year we may be goıng all-inclusive or look elsewhere. If this continues, people are just going to ask if they can afford it."

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