Keeping Chinese tourist numbers growing has never been more important for Turkey. Poor relations with Western allies, including the United States, could threaten inbound tourism. To make matters worse, the country’s ongoing currency crisis means tourists are one of the best sources of revenue that will actually maintain a stable value. The Turkish lira has inflated by 15 percent, the stock market is down 17 percent, and borrowing costs for the government are up 18 percent. In a strange twist, Ctrip has been caught up in the crisis, and the company has suspended use of the lira on its platform.
Users were able to use the Ctrip platform to buy tickets in heavily devalued lira and then request refunds in yuan, netting a hefty profit
The issue is less about the tumbling value of the lira than a loophole in Ctrip’s platform. Some users have been able to exploit Ctrip’s platform to pay for tickets in lira, but then request refunds in Chinese yuan. It’s unclear who exactly has been utilizing this workaround to profit via the refund. The main Ctrip platform isn’t widely used outside of China, and it seems more likely that it was Chinese users who were attempting to take advantage of the loophole.
According to Yicai Global, users purchased air tickets from China Southern Airlines via Ctrip’s main website and then went to the airline’s app and requested a yuan refund.
This issue probably won’t be a major blow to Ctrip’s bottom line or Chinese tourism to Turkey. But this news does come at a time when Chinese companies are coming under increased scrutiny over how they handle cross-border and forex transactions. Nipping problems like this in the bud isn’t just financially prudent; it could also help Ctrip avoid the ire of Chinese regulators.
The lira crisis is bad for the overall economy, but it has resulted in a sharp spike in Chinese tourist spending at luxury retailers
The one silver lining in the rapid decline of the Turkish lira is that tourist spending will undoubtedly encourage international tourists to spend even more. With the yuan currently devalued, Turkey may prove to be one of the few destinations around the world that’s cheaper than before.
In fact, it seems that Chinese shoppers in Turkey are taking advantage of the crisis to get deals on luxury goods in the country. Some luxury outlets, like the Chanel outlet in Istanbul, have sold out of handbags, with effective price drops for some goods in the range of 25 to 30 percent compared to European outlets. It’s certainly not good for Chanel or Louis Vuitton’s Turkish operations, but it’s good for Turkish tourism revenue.
This year is an especially ideal year for cheaper tourism to Turkey. Chinese tourism to the country is booming. Chinese tourism, despite arrival numbers almost doubling for the first seven months of this year compared to last year, is still relatively small, with a record of just over 300,000 Chinese tourists coming to Turkey in 2015.
Of course, Turkey has long been a staple of European outbound tourism. In 2017, the country attracted 4.7 million Russian tourists, 3.6 million German tourists, and 1.7 million British tourists. The country has rich historical and cultural sights, well-known culinary traditions, and scenic mountains and Mediterranean beaches.