The rollercoaster ride jolting investors in Turkey’s lira is giving at least one corner of the economy grounds for optimism.

The currency’s 15 percent depreciation this year against the dollar and the euro spells good news for the country’s flagging tourism industry, which is showing the first signs of an upturn since a wave of deadly terror attacks and a mid-summer coup attempt two years ago drove holidaymakers to beaches in Greece and Spain.

That’s emboldening Marti Hotels & Marinas, which operates resort hotels in the country’s south, to consider new projects even as it takes steps to reduce a debt overhang that has contributed to a 40 percent decline in its share price since a September high.

Rising investor interest in Turkish tourism prompted the company to hire London-based Servotel as an adviser in April, Chief Executive Officer Emre Narin said in an interview. Marti is seeking to establish a joint venture with an international hotel chain to tap the potential of Turkish coasts, he said in Istanbul on May 11.

Partnership Talks

The company is in talks with “a handful” of western chains and a decision could be made in six months, Narin said, declining to identify possible partners. “We’ve got the know-how in all-inclusive services, while they have the brand.”

Marti has been one of the hardest hit in Turkey’s recent tourism decline. Investments it undertook to build a major hotel in Taksim, the tourist district in the European part of Istanbul known for its restaurants and shops, soured in 2013 when a wave of demonstrations and civil unrest took hold. The failed project left it saddled with about $120 million in long-term debt. The company reported a 98.7 million-lira loss ($22 million) for the year through March 2017, its most recent full-year results.

A first step for the kind of international hotel cooperation it has in mind could be a project in the southern resort of Bodrum, which would require about $50 million to build a boutique hotel and residential units, Narin said. Bringing a joint venture partner on board as well as conducting a capital increase allocated to the Narin family could help alleviate the company’s debt load while advancing the growth plan, the CEO said.

The company may also consider selling assets, including a marina, he said.

‘Put Out Fire’

A capital increase and possible sale of assets can “put out the fire” stemming from Marti’s sizeable foreign currency debt, TEB Investment analyst Kurthan Atmaca said by phone. “In that case, a rational game plan may arise” for the company, he said.

Culture & Tourism Minister Numan Kurtulmus expects 40 million tourists to spend $32 billion in Turkey this year, state-run Anadolu Agency reported earlier this month. That would mark a return to levels not seen since 2014, Osman Ayik, the head of the Turkish Hoteliers Federation, said by phone.

“We’ll probably see a double-digit rise in occupancy rates this year,” Ayik said. “The overall picture, including the European, Scandinavian and Russian markets, is positive.”

Still, while prices may look more competitive as a result of the lira’s decline, hotels will face a heavier burden in terms of input costs, especially on energy and staff, Ayik said. “We may be better protected against currency fluctuations than other industries, but that doesn’t mean we’ll be more profitable,” he said.

It is “entirely possible” that Turkey could see 40 million visitors, a 23 percent increase from 2017, Marti CEO Narin said, predicting “robust demand” for hotels in the south from June to the end of September. “We will see the biggest surge from Europe, especially from the U.K., Germany and Russia,” he said.

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Photo Credit: The Marti Resort Hotel in Marmaris, Turkey. Turkey's tourism industry has suffered in recent years. Marti Hotels & Marinas