(eTN) – According to the latest issue of Turkish Real Estate Survey 2011, Turkey was the fastest-growing economy in Europe in 2010 and one of the fastest in the world. Strategically located, Turkey is known as the gateway between Europe and Asia.
Celen Guniz, Chairperson of Celen Corporate Property Valutaion & Counselling Inc., said: “It is unbelievable what is happening in Turkey right now. I have been waiting for more than 25 years for this to happen, and it is happening.”
This was also confirmed at the Central Asia & Turkey Hotel Investment Conference (CATHIC) held last month in Istanbul. Emerging markets, including Turkey and Central Asia, are expected to be the “hot spots of hotel investors,” experts said.
Nanced Pacek,Co-Founder of CEEMA Business Group and President of Global SuccessAdvisior, said in his opening speech at CATHIC that he believes emerging economies such as Turkey and Brazil are candidates for becoming the rising stars of hotel business worldwide.
“Doing business in Turkey was like ice skating a few years ago. But due to constant positive changes and reforms, Turkey has decreased its debt problem. In 2010, Turkey’s economy has grown 5% percent, and in 2012, Turkey’s economy is expected to grow by 7 percent.”
Dr. Turgut Gür, Chairman of Turkish Tourism Investor, added that the inflation rate has beens kept low for the past 4 years. Turkey is ranked 2nd, after Russia, as the best place for investment. Kasachstan is also doing quite well and will outperform many places. He also pointed out that new emerging markets are more flexible, and there is also more approach to innovation.
Turkey is also a country with many neighbors around, underlined Elif Egeli Nisanci, Senior Vice President of Jones Lang LaSalle Hotels. In 2009, over 82 million people passed through Turkey, and this number more than doubled to 203 millions passengers and travelers in 2010.
More and more international hotel chains are trying to get their feet in the Turkish markets, such as Jumereia Hotels, St. Regis, Meridian, Shangri-La, and the Waldorf, and this might lead to an over supply of 5-stars hotels in Istanbul. With 70% occupancy in 2010 in 5-star hotels and a very high REV PAR (revenue per available room) of US$185, revenue was 9 percent higher than in 2009. Average room rates have increased exponentially in the last 5 years , in Istanbul alone by 60%. On the other hand, on the Turkish coastline, there is no sign at all of any international hotel chain. In comparison, the first Hilton hotel ever built outside the USA opened in 1954 in Istanbul.
“Antalya is boosting 165 5-star hotels and has 25 million tourists arriving, with 11 million staying in Antalya – no foreign chain could handle that,” explained Haluk Kaya , Chairman of Bekay Property Partners and award winner for outstanding achievement for his contribuition to the Central Asia and Turkish hotel development and investment industry.
For Hüseyin Öztürk, CEO of The Maramara Hotels and Residences, it is clear, Turkish investors are not very reciprocative to foreign investments companies and hotel management companies. Also, branding is not an issue. In Turkey, around 95% of all hotels are not branded. Therefore, management contracts should become more negotiable. The average management contract is subject to very long terms of at least 20 years running time. Turkish Hotel owners are ready for franchising, where they can keep the management power in their own hands. According to Hüseyin Öztürk, Turkish owners are not ready for management of hotels, explaining that this stands in strong contrast against Central ASIA where owners are ready to manage their own hotels. Panelist Siber Yurttutan put it this way: “Turkish owners are not qualified and ready for the worldwide beurocracy, therefore, a partnership would be an ideal solution.”
Serdar Bilgili, chairman of Bilgil Holding & BLG Capital and owner of the first Starwood W Hotel in Europe (opened in 2008) and also owner of the legendary boutique hotel “Ajia” direct on the Bospherous, sees the vision, which is quite instinctive and has become a driver for vision management. He said in a panel discussion at CATHIC: “In Central Istanbul, the current land prices are so expensive that you can’t build a low budget hotel, as prices are too expensive; it’s got to be in the luxury segment. Respectively, hotel accommodation demands the hotel is building a reputation – selling emotions selling dreams – for the revenue side is pretty much the market that counts.
“It is not an estimate, it is the project, the design – it is very different. It is the location… the location and falling in love with it. We have 40 architects that manage the projects, and we know what kind of contract should be given to us.”
The first hotel in Istanbul to host passengers from the legendary Orient Express train was the Pera Palace Hotel. In the old times, passengers of the Orient Express train were lifted and carried in a special chair direct from the train station to the hotel. The original chair is still displayed in the hotel lobby. In recent times, the Pera Palace Hotel has undergone a 2-year, 23 million, lavish restoration, reopening in September 2010 and just received an award for the best new hotel of Turkey.
Right now the whole historic area around Hotel Pera Palace, just a stone’s throw away from busy Istikal Street and Taksim Square, is getting ready to transform into the new hot spot for hotels, with newly-opened Dionizetti Hotel, named after the Italian musician Giuseppe Donizetti who lived in Beyoglu in the times of the Ottoman Empire, when this building was used as a guesthouse, just across from Pera Palace Hotel. Another jewel adjacent to Pera Palace Hotel is the former American Embassy, residing in a real palace until last year. This property has been sold and is going to be transformed into a luxury hotel of very high scale.
Further down in Sultanemet, in and just behind the Sikeci train station in old Istanbul,the former glorious Orient Express railway station is an Orient Express Hotel for everyone, built ten years ago with reasonable rates starting at 50 euros for comfortable rooms. But why is there no luxury Orient Express Hotel in new Istanbul? By asking this question directly to Paul White, President & CEO of Orient Express during his first visit in Istanbul, I was told that the Orient Express Hotel would love to come Istanbul, but there is no land left to build. This means the hotel has to be different, much smaller, and very unique compared to their other global players.
Turkey’s hotel investors are investing a great deal in Central Asia in countries like Georgia, Turkemensistan, Kasachstan, and you name it, and have long become one of the most important suppliers to them. Richmond International, a luxury hotel chain in Turkey, aims to expand into neighboring countries such as Syria, Bulgaria, Georgia, and the Turkic countries of Central Asia, with new hotel investments in the long run, its general manager told the Hürriyet Daily News & Economic Review at a press meeting in Istanbul. The chain has 5 hotels in its portfolio – Istanbul, Sapanca Nua Wellness & Spa, Ephesus Resort, Pamukkale SPA, and Pamukkale Thermal Richmond. It plans to open 12 hotels in Turkey and 5 hotels abroad by 2020.
“We’ve almost come to an agreement for a new hotel in Syria and are planning more in neighboring countries,” said Umit Yasar Atalay, general manager of Richmond International.
“We have great advantages due to our cultural connections with the neighboring countries of Turkey,” said Oktay Orhon, board member of the Aksoy Group, adding that the connections can pave the way for new investments in the hinterlands of Turkey.
“The aim is to reach total revenues of US$250 million and increase the total number of beds from 2,000 to 9,000 in 10 years’ time,” Atalay said at the meeting. Talking to the Daily News, Orhon said the Aksoy Group is preparing to invest US$100 million this year to open three new hotels in Istanbul under the Richmond name. Aksoy Group also owns Capitol Shopping Entertainment Center, one of the first shopping malls on the Asian side of Istanbul; Shop Mix, a firm in the advertising business at shopping malls; and Sahibinden.com, a prominent domestic e-trade platform.