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Turkey is looking for summer tourism revenues to finance its large current account deficit. However crisis-stricken European countries are offering cheaper holiday packages and causing a decline in tourist arrivals.

During the first four months of the year, arrivals declined 5.9% year-on-year to stand just below five million tourists, according to data released by Culture and Tourism Ministry. Arrivals have been on the decline since February, whereas one of Turkey's biggest rivals, Spain, managed to increase tourist arrivals by 2.3% for the January to April period.

Those coming to Turkey are also inclined to spend less. First quarter tourism revenues shrank 9.7% year-on-year to $2.8 billion, according to Turkstat data. During the first quarter of the year, expenditures per tourist also fell to $633 from $705 compared to the first quarter of 2011.

Ali Onaran, chairman of Pronto Tour, told SES Turkiye that countries like Spain and Italy have become preferable destinations due to lower prices. "Our pricing became a little bit uncompetitive. We have to be careful and play catch-up to finish the year on a good note," Onaran said.

Despite the problems, Turkish entrepreneurs remain optimistic. Onaran said Spain and Italy are trying to implement all-inclusive holiday bargains. However, according to him, this is not really easy since the all-inclusive tourism model requires heavy investment.

"Turkey is really advanced in terms of all-inclusive holiday packages. Our resorts are designed for such a business model. Europeans will have a hard time competing with Turkey in this field," Onaran said. All-inclusive holiday packages offer every service, from flights to accommodations and food for one single price.

Attracting tourists to Turkey's coastlines was not an issue last year when tourism revenue hit a record $23 billion. Mete Vardar, chairman of Jolly Tour, said 2011 was an exceptional year and the tourism sector might have become a little too comfortable in its position.

"During the Arab Spring, all the tourism activity destined to Egypt and other southern Mediterranean countries ceased and Turkey attracted most of the tourists. This year, there is no such thing," he said.

Vardar explained that entrepreneurs thought this year would be a repeat of last year's success and kept prices at high levels. "We have lost a good portion of Russian tourists to rival destinations like Spain. Our prices are high and the Turkish lira appreciated considerably compared to last year. This is not helping us," he said. Last year euro/Turkish lira parity hovered above 2.50 while it was below 2.30 this year.

According to Vardar, tourist arrivals will recover during the high season but now the main aim of the sector will be staying defensive and preserving market share rather than increasing it.

"This year, revenues will probably grow around 5% but no more than that. It is not possible to repeat the success of 2011," he said.

However, there are executives who feel more confident. Basaran Ulusoy, chairman of the Association of Turkish Travel Agencies, expects no shortage of tourists during the summer season. "We have very healthy occupancy rates for the summer season and we are not planning to cut prices. We don't want to react to the actions of other countries," Ulusoy said.

Despite the slowing tourism sector, Istanbul still stands out as a solid tourism revenue generator. According to MasterCard target cities index, tourist arrivals to Istanbul is expected to jump by 14%, generating around $11 billion in revenue for the city.