With the lira already having lost nearly half its value against the pound this year, rates tumbled further over the weekend after US president Donald Trump hiked trade tariffs on Turkish steel and aluminium imports. Turkish president Recep Erdogan branded the move a "stab in the back".
As a result, the exchange rate against sterling topped out at nine lira to the pound on Monday evening (August 13), up from around 6.5 lira at the start of August and 4.5 at the start of the year. The lira had subsequently rebounded around 6% by midday on Tuesday (August 14).
An industry expert has since told TTG that while the plunge was a short-term positive for sun-seeking Brits, the longer-term effects of the weak lira were unclear, with the likes of Thomas Cook, Tui and Jet2holidays having invested heavily in a resurgent Turkey.
“What surprised me was seeing Cook and Tui shares down,” they said. “I expected it to go the other way. Their pricing should be more competitive next year. It might be investors are taking a longer-term view, or it might just be they don’t understand the travel industry that well.
“I do expect it to weaken consumer confidence. Travellers are more susceptible than they used to be, although political instability tends to be worse for business than currency instability. It has to be good news for people going overseas at the moment though. The pound’s going a lot further.”
They added Turkish operators “were wising up to the volatility of their own currency”, selling beds on favourable US dollar rates instead while undercutting price increases elsewhere in the Mediterranean, such as in Spain where prices have risen significantly.
Akin Koc, managing director of Turkey specialist operator Diamond Sky Holidays, welcomed the weak lira, with 2018 on course to be "a record year".
“Turkey was already offering excellent value for money compared to Eurozone rivals, but this has now reached incredible levels,” he said.
“The Turkish travel industry has been surrounded by a cloud of negativity - but at this moment, with the currency crisis, they are looking forward with optimism.
"With the price of a meal and a glass of wine at a local Turkish restaurant now half the price it was last year, choosing an all-inclusive hotel in Turkey is not the smart choice anymore."
Koc added the next step for Turkey was to broaden its appeal to more affluent holidaymakers and increase average spend per tourist.
"After the uncertainty of Brexit, it is not only low-income families thinking about their pockets but also middle- and high-income families," said Koc.
"I believe it is now time for Turkey to appeal those higher income holidaymakers, promoting the cultural and historical aspects of the country such as Cappadocia and Istanbul.
"Turkey is still suffering from lower average spend per tourist compared to rival countries and the only way this can be improved is by appealing to these higher income holiday makers."
The market turmoil though sent share prices tumbling at some of the UK’s largest providers of travel to Turkey this week.
Opening at 88.00p on Monday, Thomas Cook shares fell to 84.15p at close of trading on Tuesday, while Tui shares fell from £15.63 to £14.82 over the same period.
Britain's three largest tour operators, Cook, Tui and Jet2holidays, have all championed the return of Turkey this year.
Earlier this year, Cook said Turkey had recovered to its second most popular destination, and revealed Antalya had replaced Palma as its top destination airport.
Meanwhile, Tui last month said Turkey featured among its five most booked destinations across 11 markets, including the UK, and ranked third for bookings behind Spain and Greece.
Ingo Burmester, managing director Thomas Cook UK, said: “Turkey is the stand-out destination this summer and is set to overtake the ever-popular Canary and Balearic Islands combined.
"Bookings to Turkey are more than 60% ahead from the UK which means we’ll send more customers there this year than its 2015 peak, showing how strongly it has bounced back.
“It’s a very popular late holiday destination this year and customers are taking advantage of the great offers and weak lira to make their money go even further.”
Anth Mooney, managing director Thomas Cook Money, added with the lira at an all-time low against the pound, customers could take advantage of the rate by putting money on a pre-paid card ahead of future travel, locking in the rate.
A Tui spokesperson said: “Despite the current exchange rate, Turkey continues to deliver strong growth in bookings this summer and there has been no impact on our booking trends. Turkey continues its comeback as a customer favourite ranking in the top three for the most popular holiday destinations this summer.”
A Jet2holidays spokesperson said: “Earlier this year, Jet2.com and Jet2holidays reported how we had seen a huge surge in 2018 bookings to Turkey thanks to the country’s range of two to five-star hotels, culture, endless sun and fantastic value.
"On the back of this demand, we responded by adding more flights and holidays, more than doubling the number of seats on sale for 2018. For 2019 we have added a brand new destination, Izmir, in addition to more flights and seats to our existing destinations."