Cansel Bavik Ekiz 2008

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The Unknown Market in Mediterranean Tourism: Turkish Republic of Northern Cyprus Aril Causel Faculty of Communication, Eastern Mediterranean University, Ali BavikFaculty of Business and Economics, Cyprus International University,

Erdogan H. Ekiz Department of Hotel and Tourism Management Hong Kong Polytechnic University, Abstract: This article aims to shed light on the facts and potential of a non-registered tourism power house. Turkish Republic of Northern Cyprus (TRNC), as an unrecognized country, in spite of the embargos and restrictions, generates a significant per-capita tourism income (1.288 USD) that is five times higher than the Turkey's (219 USD) and is half of the neighboring tourism giant South Cyprus (2.625 USD). However, TRNC is only scratching the surface yet. With its untouched nature, enormous cultural heritage and educated labor force, the small country awaits to be unchained and join the top set of ultimate tourism destinations. TRNC is populated by 300.000 people who have no direct access to the international community • except Turkey, the only country that recognizes the isolated part of Cyprus. Recently, controlled passage is allowed between the South and North sides of the island which brought a considerable dynamism to the TRNC economy, particularly in tourism. TRNC offers various services to four main tourism market segments; education, gambling, adult entertainment and sun-sea and sand. Within the last 10 years, the Northern part of the island became a university education haven that mainly serves Turkish, Middle Eastern and African students. This sector alone generates over 230.000.000 USD per year. TRNC has also become a gambling haven for the neighboring Mediterranean countries, Russia even for South Cyprus. Turkey and Israel have many regulars who travel to TRNC through Turkey frequently. TRNC's gambling has a percentage share in the world gambling market; however, the funds generated in this sector are not released into the economy. 35 and adult entertainment funds are growing in numbers with ongoing investrnents.TRNC has limited land development. There is a great potential to organize TRNC's development into high end tourist attractions such as marinas, golf and country clubs, luxury retirement communities and also into culture and eco tourism.

Key words: Unknown tourism market, Mediterranean, per-capita tourism income, Turkish Republic of North Cyprus.

An Overview of The North Cyprus Tourism Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia. The Turkish Republic of Northern Cyprus (TRNC) covers an area of 3,355 square kilometers which is approximately one third of the whole island. 93

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The neighbors of Northern Cyprus are Turkey, Syria, Egypt, Israel, Lebanon, Greece, and South Cyprus. The island holds an important political and geographical situation due to its specific location. Despite the rich geographical and natural resources of the country which can create an important advantage in the competitive tourism market, TRNC has not been able to fully employ that potential to enhance its tourism industry. Considering all macro factors, with a long-term strategic plan, TRNC has the potential to use tourism as its main economic drive. A comprehensive analysis factoring in all tourism incomes in 2006 demonstrates that utilizing even a small portion of the existing potential can increase the tourism income per capita to much higher levels. This study aims to show the economic and social enhancement that TRNC can reach by using its full potential systematically. Tourists generally visit North Cyprus for several purposes: 1. Gambling 2. Visiting family and relatives and-or sea sun sand (SSS) 3. University Education (Foreign students can be described as long-term tourists) 4. Sex tourism " Although the fourth issue is a sensitive one and difficult to investigate in terms of number of tourists, and the income provided, current study tries to enlighten its noteworthy contribution to economy by giving approximate values based on primary research. Tourists also visit North Cyprus for attaining to conferences, nature/adventure tourism, religion, and sport tourism purposes. However those kinds of tourism are still in developing stages and their contribution to economy is not significant. Existing infrastructure and continuous investments indicate that education, gambling, sex and (SSS) tourism will continue to be the sectors of expectation in the future. However, the embargos, restrictions in transportation, and competition with other countries will surely affect the development of the mentioned tourism sectors in North Cyprus. According to a report prepared by Ministry of Tourism of TRNC about "Tourism Promotion and Marketing Strategic Planning" in 2002 the statement of tourism' and SWOT analysis are as follow; "Turkish Republic of Northern Cyprus is located in the lower part of Mediterranean region and is~not capable of offering a differentiated tourism product in comparison with the surrounding competitor countries. Consequently, demand for tourism is decreasing, and the potential tourism expenditure is changing as for the demand. However this circumstance makes the demands more unreliable. For TRNC, there need to be new rules and regulations, variety and interrelated result which will generate competitive advantage and differentiated tourism products". 94

The Unknown Market in Mediterranean Tourism: Turkish Republic of Northern Cyprus

North Cyprus Swot Analysis

Strengths .:. Undiscovered and unspoiled . •:. Hospitality of citizens . •:. Mild climate of Cyprus which provides an ideal situation for holiday in all seasons . •:. Variety in flora and fauna . •:. Beaches ideal for swimming and all kinds of water sports. •:. Variety of Cyprus cuisines . •:. High quality of natural resources . •:. Richness of cultural and historical resources . •:. Environmental friendly accommodation establishments . •:. Availability of new investment areas.

Weaknesses .:. •:. •:. •:. •:. •:.

No direct flight from other countries (except Turkey). Cheaper flights to other Mediterranean countries including South Cyprus . Lack of "product image" . Unsatisfactory level of accommodation, catering, and general services . Lack of Self-catering in accommodation places. Lack of variety in provided services to answer the changing tendencies in market.

.:. •:. •:. •:. •:. •:. •:. •:. •:.

Lack of public transportation . Army bases in close proximity to tourist places. Political isolation . Lack of respect to cultural heritage by citizens . Lack of marketing segmentation and differentiation knowledge . Lack of infrastructure . Environmental pollution (Physical) . Insufficient urban planning . Lack of financial resources.

Opportunities .:. Possibility of formation of an economically, environmentally and socially appropriate tourism product. .:. Political determination and importance committed to tourism . •:. Possibility of using Ges;itkale airport for tourist purposes . •:. The Eastern Mediterranean's high tourism potential . •:. Growing potential of special interest tourism in the world. •:. Growing collaboration between Turkey and Greece. •:. Growing economical power of Turkey and possibility of European Union membership. 95

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.:. Possibility of an agreement in Cyprus problem and European membership.

Union

Threats .:. •:. •:. •:. •:.

Competition with the other Mediterranean countries . Environment pollution (in Mediterranean Region) . North Cyprus political indefiniteness . Existing embargos . Uncertainties in Middle East.

.:. Possible conflicts in Balkan region . •:. Economical problems and crises in Turkey. The economical and political changes after 2002, beginning with opening of the borders as a result of a two-sided agreement with South Cyprus, have led the tourism planning and strategies away from its expected route. Opening of the borders on one hand, provides an easier transportation possibility for foreign tourists, and on the other hand allows the Greek Cypriots to visit North Cyprus. This situation have increased the potential of gambling and sex tourism as well as sea, sun, sand tourism and relative visits. It has also created new hopes for development of religion tourism.

Information About the Market North Cyprus hosted 805.583 tourists (Ministry of Tourism, 2005), 2005 in 2004 and earned 288.300.000 USD from tourism (Cengiz, 2006). On the other hand, according to the National Planning Office, North Cypriots spent 106.900.000 USD for their tourism activities in other countries (National planning Organization, 2006). Tourist arrivals can be break down as follows; 652.779 were foreign tourists (488.023 Turkish - 164.756 other nationalities) and remaining 152.804 were domestic tourists. Net tourism revenue in 2004 was 181.400.000 USD (288.300.000 tourism revenue 106.900.000 tourism . expenditure).According to the official numbers tourism revenue per person is 919 USD (288.300.000 tourism revenues / 300.000 population of North Cyprus).This official number is the sum of the numbers provided by the large scale accommodation establishments Thus, with a simple calculation of below listed accounts, it can be found that actual tourism revenue was far more than the official numbers; 1.There are 37.576 registered students to 5 higher education institutions in North Cyprus. In addition to this, Middle East Technical University (METU), one of the Turkey's oldest and most respected university, has recently started accepting students to its campus in Giizelyurt region. METU joined to education tourism in spring 2006 semester. Out of 37.576, 14.550 are Turkish Cypriots where remaining 23.026 are foreign students (National planning Organization, 2006). 96

The Unknown Market in Mediterranean Tourism: Turkish Republic of Northern Cyprus

Each of these foreign students spend approximately 10.000 USD for tuition fee, accommodation, food and other expenses annually which accounts 230.026.000 USD contribution to the North Cypriot economy. 2.By the year 2006 there are 336 prostitutes working with legal permit in 46 licensed night clubs and 9 pubs. These clubs and pubs contributed approximately 4.714.285 USD annually to North Cyprus economy by paying outlay on permits, taxes, visa and passport fees, social security, reserve fund, weekly health checks in hospitals and so on(Cansu, 2006). One prostitute earns approximately 300 USD daily which accounts up to 43.800.000 USD annually. Presumably, half of this money paid by the tourists visiting North Cyprus which makes 21,900,000 USD contribution to the tourism revenues. 3. Revenues of national airlines and monopolistic sea Transportation Company also contributes to the tourism revenues. Other airline companies also contribute to the tourism revenues by their taxes. Cyprus Turkish Airlines carried 946.000 passengers paying approximately 200 USD which makes 189.200.000 USD. Sea Transportation Company carried over 300.000 passengers paying 50 USD which makes 15.000.0000 USD approximately. Conjecturally, half of these passengers are foreign tourists and contributing over 102.100.000 USD totally (94.600.000 USD from air and 7.500.000 USD from sea transportation. 4.According to the Forbes magazine, money transaction generated by gambling industry reached 900 billion USD worlds wide. Out of 900, 270 billion dollars goes to the governments budgets as contribution to their economy (http:/ " /www.ntv.com.tr/news). There are 21 active casinos generating 172.153.050 USD annually 'n the TRNC (Ozge9, 2006). 80.000.000 USD of this amount is generated by gamblers coming from the Greek side of the island, approximately 90.000.000 USD of the total casino revenue is created by the gamblers from Turkey and gamblers with other nationalities. Finally, remaining 2.153.050 USD is assumed to be generated by the students whom entrance to the casinos is forbidden. The figures about the students are obtained from a recent research by (Cansel and Bavik;, 2006) and the calculations are as follows; results of the questionnaire revealed that %55 of the respondents reported that they gamble minimum 5 times a year, spending 170 USD approximately. 55 percent of the foreign students (12.665 students) are assumed to gamble and spend 2.153.050 USD (12.665 students * 170 USD). Unfortunately this money can not be taxed since it is an illegal operation. However, casinos paid 3.500.000 USD for opening and operating in North Cyprus (http://wwwkktcbul.com). The contribution of the gambling to North Cyprus economy is rather indirect, through; employment to the locals, purchase of goods and services like food and beverage stocks, furniture and cleaning material and transportation services. The total approximately accounts to 1.328.670 USD (Social Security Office, 2006). Furthermore, Bed capacity of the North Cyprus hotels is 12.839. In 200Q. In 2005, 335.235 overnighter 97

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tourists had stayed 1.566.580 nights in total (Ministry of Tourism, 2005). The annual occupancy rate for 2005 was 40.7 percent. Representing 30 percent casino guests for gambling reasons. This figure correspond 469.974 overnights by 100.570 tourists. If we think that the average price for one night accommodation is 80 USD that makes 37.597.920 USD. 5.Although, there are no official stats for the tourists who visit the island for sea-sand-sun, yet it is still possible to estimate the number by considering the hotels' annual occupancy levels. According to the information obtained from hoteliers, 30 to 35 percent of the tourists accommodating in their establishments are the casino guests, in other words their primary motive is gambling. Bed capacity of the North Cyprus hotels is 12.839. In 2006. In 2005. 335.235 overnighter tourists had stayed 1.566.580 nights in total (Ministry of Tourism, 2005). The annual occupancy rate for 2005 was 40.7 percent. Excluding 30 percent casino guests, the motive of the remaining 10 percent can be SSS or other reasons. This figure correspond 156.600 overnights by 33.500 tourists. If we think that the average price for one night accommodation is 80 USD that makes 12.528.000 USD. Also, this tourist will be spending money for food, beverage and other additional facilities, in this study we assumed that they may spend up to 40 USD (almost half of what they spend for accommodation). The sum of these two numbers (12.580.000 and 6.290.000), may reveal the contribution of SSS tourists to the total tourism revenues which is 18.870.000 USD. 2005 Tourism Receipts of North Cyprus 250

Students

Garrbling

Nght Oubs

Transportation

sss

The sum of above listed figures is 386.589.285 USD and we believe that this number reflects a more realistic view of the existing market and tourism in North Cyprus. In this case, the tourism revenue per capita reaches up to 1.288 USD levels which are almost 5 times more than the Turkey's per capita tourism income and half of the South Cyprus'. 98

The Unknown Market in Mediterranean Tourism: Turkish Republic of Northern Cyprus

Turkey shares the Mediterranean tourism market with Albania, Bosnia, South Cyprus, Croatia, Macedonia, Greece, Israel, Italy, Malta, Portugal, Serbia and Spain. Mediterranean tourism market generated 133 billion USD in 2005 which is the 40.6 percent of the 327 billion USD worth European tourism market. Spain, Italy and Turkey are the three countries with the biggest shares in the European tourism market with 14%, %11 and %5 respectively 14. Turkey, with 70 million populations, received 16 billion USD tourism revenues that equals to 229 USD per capita. Unlike the TRNC, where education, gamble and sex tourism dominate the market, Turkey's tourism based mostly on mass SSS tourism, followed by culture and history based tourism activities. Tourism in Turkey experiences heavy competition in transportation sector. Moreover, tourism imports of the country caught up the tourism exports and at the end of the year 2006, there is a possibility that imports will surpass the exports. South Cyprus economy received 2.1 billion USD from tourism in 2004 with its 800.000 population; South Cyprus had 2.625 USD per capita in tourism revenues. South Cyprus's tourism mostly based on mass and SSS tourism which is assisted by cultural factors (http://www.wto.com).

Situation Analysis When the ever changing trends analyzed, it can be clearly seen that preferences are shifting from the main SSS tourism stream to more specific substreams. Destination countries aim at using their strong sides and comparative advantages to increase their shares from these specific sub-streams. For instance the United Kingdom, built a reputation as being an important destination for education and culture tourism. United Kingdom receives considerable amount of tourism revenues from these two sources of sub-streams. The importance of; nature-adventure trips, eco-tourism, purchasing and leasing land from exotic countries, culture, education and health tourism are increasing in popularity constantly. Countries, using their unspoiled resources wisely, are more likely to be the popular destinations of future. North Cyprus, with its unspoiled natural and cultural resources, has this advantage. Both Turkey and South Cyprus are the direct competitors of North Cyprus. However, this competition is concentrated on SSS tourism, where North Cyprus has no distinct strategic advantage. Although, with the new investments to Bafra region, the bed capacity is about to increase, but since these hotels target gamblers as their primary target population, probably their guests will be spending most of their times in the hotels & will not contribute largely to the region & to the country. Nine new university constructions began in Turkey. Moreover, by the year 2006, the applications for the general university entrance exam (aSS) has declined 30 percent. These developments will surely have a negative affect on North Cyprus education tourism whose primary market is Turkey. On the other hand, South Cyprus is planning to act more actively in education tourism by developing campuses for five new universities. This will create competition for foreign 99

Aril Cansel, Erdogan H. Ekiz

students planning to visit Cyprus Island for education purposes. Education tourism has a 59.5 percent share among the overall tourism revenues and has a vital importance for TRNC economy. If, for any reason, a decline occurs in education tourism, this may create radical changes in per capita tourism revenues. Tourists recently fly to South Cyprus and pass the border to the North Side by land transportation. This new development and the direct competition from the Turkish airline companies cause a decline in the revenues of the national airline, Cyrus Turkish Airlines. As this situation continues, it will also cause a loss in the North Cyprus tourism revenues. ':' The standards and training that are applied to the service sector professionals are insufficient and the control mechanism is weak ':. The merchants who in contact with the tourists usually have bad mannerism, attitude and behavior . •:. Public transportation is extremely weak. Even the airport shuttle buses, the only available mean of public transport are designed in such a way that there are no storage sections for luggage . •:. All TRNC ports service without enough personnel. Beside, neither the personnel nor the police speak good English to communicate with the tourists . •:. Travel agencies bring tourists mainly from Turkey and England and they •• present TRNC from two different perspectives: The Turkish tourists are presented the war and suffering history while others were presented the nature, history and culture of the island . •:. The agencies also use a double standard in informing the tourists such as while automatically supplying maps, locations and access information to cultural, historical and natural sites to foreign tourists, they only supply the same information to Turkish tourists on request.

Conclusion and Recommendations

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TRNC currently generates a significant tourism per capita income. However, there lies the possibility of great losses from that amount unless the changes and developments are not carefully monitored and analyzed in the macro environment. If TRNC's forte of gambling, sex and education tourism types is weakened, then other factors should be vitalized and supported by infrastructure investments. These factors are rare resources that TRNC possesses and most other Mediterranean countries do not. If and when the following resources are utilized and invested, they will become significant and steady tourism income sources for TRNC: 1) An environment that is almost free of all types of pollution. Vast flat lands 2) 3) A large historical and cultural accumulation in a small geography 4) Unspoiled local culture and production methods 5) Long summer season, generous beaches, coves and winds Educated locals 6) 100

The Unknown Market in Mediterranean Tourism: Turkish Republic of Northern Cyprus

Those resources can turn into valuable tourism products by targeting the right markets with a good mixture of product, price & marketing communications such as: .:. Golf courses, country clubs and luxury summer residents Targeting Middle East and some European countries, that type of investments should attract international finance and know-how. They may present an opportunity to become a prestigious tourism haven and they do not pose a threat to the environment . •:. Modem marinas, yachting clubs and facilities Developing attractive marinas and surrounding facilities can put TRNC on the map as a favorite spot for yachters especially when convenient connections are made to the Country Clubs, and other touristy areas . •:. Luxury senior citizen care centers in combination with health facilities As the health tourism gains momentum, it is turning into a money maker for the countries with good health services and facilities. There is also a migration trend for retired people from expensive European countries to low pace, friendly climate areas of the world. Creating excellent senior care facilities supported with excellent health facilities would attract many elderly with financial powers to TRNC . •:. Facilities for international water sports and facilities for athletes and teams who seek for milder climates in winter time That type of facilities can play a major role in country promotion when there are recognizable event organizations. They continue the flow of funds in slow seasons. Developing facilities for sports such as soccer, rugby, hokey fields and water ski. Wind surfing, jet ski areas will undoubtedly contribute the vision and enthusiasm of the athletic youth of TRNC. .:. Facilities for ecological tourism Promoting eco tourism is crucial in the process of attracting environmentally conscious and high income level tourists. The facilities that support eco tourism must be designed with environment in mind. Ecotourism would be the supportive platform for all suggested tourism types in this part of the article. "Tours & accommodations for well organized historical sites & religious places TRNC possesses a wealth of cultural and historical accumulation that can be considered a world treasure. However, those riches are far from being well kept and displayed properly. Cleaning, restoring and landscaping the sites will provide a valuable tourism product to TRNC. Besides, it would trigger the flow of funds and international interest for land and underwater archeology. "Trekking, mountain bike and horse back riding courses, adventure travel organizations and local handcrafting training Without harming the nature, various activities can be conducted to benefit both the tourists and corporate training needs. "Aero-sports centers and regulations Sky diving, wing gliding, ultra light ~d small plane riders should be able to 101

Aril Cansel, Erdogan H. Ekiz

enjoy the long season and surroundings. New airports would also make the transportation more convenient to and from the island. The number of above examples can be increased. However, there is a need for a master marketing plan for TRNC. Target market analysis, marketing objective setting, product mix, pricing decisions and an effective marketing communications mix must be created in short term in order to utilize the strengths of TRNC. If that is done properly, it would not be difficult for TRNC to catch, even surpass the Southern Cyprus' per capita tourism income. It seems possible for TRNC to reach a USD 5,000 per capita level without sacrificing its environmental, historical or cultural riches. Other than the marketing plan, TRNC also needs a master plan for urban areas and for the above mentioned areas and sites. All master planning must be done by professionals who are outside the political circles. Only then it can be ensured that the riches of the country will survive and transfer to the next generations. Setting the environmental and urban standards and regulations will complete the planning. TRNC will earn positive reputation and take a big step toward being a prestigious tourism brand. Putting marketing thought first also requires qualified human power. Imbedding tourism principals and fundamentals into the TRNC education system would be a desirable strategic act.

Reference : Altinay, L., Altinay M., Bicak, H.A (2002), "Political Scenarios: the Future of the North Cyprus. Tourism Industry", International Journal of Contemporary Hospitality Management, 14(4), 176-182. Arasli, H. (2002), "Diagnosing whether Northern Cyprus hotels are ready for TQM: An empirical analysis", Total Quality Management, 13(3),347-364. CANSU, A., (2006, April 7) Entertainment Sector Printing Money. Cyprus Newspaper, pp I. Cengiz, T. (2006), "Turkish Republic of Northern Cyprus Country Profile", Turkish Republic. Country Reports. Retrieved April 8, 2006, from http://www.wto.com Trade Office Country Profiles, pp I-56. Ministry of Tourism (2002), "Tourism Promotion and Marketing Strategic Planning". Ministry of Tourism (2005), "Tourism statistics Book", December. National Planning Organization, (2006). Ozge~, G. (2006, February 27) Gambling Threats. Cyprus Newspaper, pp 1. Social Security office, (2006) "Regualtions". State Gambling Earnings 270 Billion $' NTV-MSNBC News. April, 23,2006. http:// www.ntv.com.tr/news TRNC Gambling Earnings 3.5 Billion $ http://wwwkktcbul.com.

January, 19,2006.

About the Authors Dr.AriI Cansel is Assoc. Professor in Faculty of Communication of Eastern Mediterranean University Ali Bavik is Instructor in Faculty of Business and Economics,Cyprus International University Erdogan H. Ekiz is PhD Candidate inDepartment of Hotel and Tourism Management Hong Kong Polytechnic University

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