HOTELS interview: Turkey holds promise for hotel developers

TURKEY The geographical and cultural buffer between Europe and the Middle East, Turkey has emerged in recent years as a booming hotel development market. Elif Egeli Nisanci, a senior vice president at Jones Lang LaSalle Hotels specializing in the Turkey hotel industry, talks to HOTELS about the state of development there.

HOTELS: Why is Turkey such an attractive market for hotel development these days?

Egeli Nisanci: Turkey has a perfect location, within four hours’ flight all of Europe, North Africa, most of the Middle East and the western part of Russia. Istanbul’s international hotel market has been holding up quite successfully. As the direct flights increase to resort destinations, their visitor numbers increase significantly as well.    

Both leisure and business travelers can satisfy their needs in Turkey; Istanbul is becoming the meetings and convention center, as well as the  financial and cultural center, of the region. Antalya caters to mass economical tourism, whereas a region of Antalya—Belek—caters to high-end golf tourists, where there are 13 golf resorts within 22 km length of coast. Bodrum and Cesme are known as the Turkish Riviera, with their boutique hotels and nightlife, and are developing as an incentives destination in addition to a summer destination.  

Secondary and regional cities offer a lot of cultural tourism options, in addition to Istanbul, which has been inhabited for thousands of years and has been capital of three empires. Although the mountains are not widely marketed, Turkey offers some nice ski resorts as well.


HOTELS: Which markets within Turkey and the surrounding region hold the greatest potential for future hotel industry growth at this point?

Egeli Nisanci: Istanbul is always popular, though we do not think it needs as many 5-star hotel additions as some investors would like to think. We believe that 3- and 4-star international good quality hotels are needed in the city. Ankara and Izmir are the most popular secondary cities. Although we have additionally more than 20 cities with population more than 1 million, we believe that the return on investment in mid-market and budget hotels will be more profitable compared to 5-star hotels in those cities, as they can only charge mid-market rates. Resort areas can still be developed, but brands who are comfortable with seasonality should look into them—Antalya and regions Bodrum and Cesme.

HOTELS: Which market segments seem to be recovering the fastest, and which are having the toughest time?

Egeli Nisanci: The 5-star market in Istanbul actually recovered quite fast, posting a 25.7% increase in RevPAR year to September, compared to same period last year. The main reasons are the government-related group events and Middle Eastern visitors staying longer at higher rates. Turkey, especially Istanbul, became a popular destination for them, and as Ramadan moves to earlier dates during the year, they come in the beginning of summer and stay for a few weeks. Also, Turkey has agreements with more than 60 countries where the citizens can travel to Turkey without a visa, which increased the visitor numbers. As resort destinations increase, the cities struggle with seasonality—for example, visitors go to Cesme one week and Bodrum one week, instead of spending two weeks at the same place—but in terms of ADR, they are on the increase as well. 


HOTELS: How much of Turkey’s hotel growth in the near term will come from new-build projects as opposed to conversions? 

Egeli Nisanci: Turkey is still a development country. Few projects are conversions or renovations of old buildings, most seen in Istanbul, such as the W hotel (opened in April 2008), Four Seasons Atik Pasha (opened in June 2008), Park Hyatt (opened in November 2008), Shangri-La (old tobacco factory, to open in 2012), The Edition Hotel (old HSBC building, to open in 2011), and Palazzo Corpi (old American Embassy, to open in 2013). Due to lack of land in Istanbul we see some conversion projects, especially in prime locations, but for other cities and locations in Istanbul, the hotels are mostly new-built.


HOTELS: What are some significant hotel projects in the region that we should keep an eye on?

Egeli Nisanci: Since 2009, more than 50% of the hotel developments were either postponed or cancelled. Notable projects that are either in the planning stage or under development are Palazzo Corpi, Shangri-La, the Edition and Zorlu Center, all in Istanbul, along with Olivion Golf Resort in Belek. Major proposed developments are Kum Beach in Cesme and a Unicorn/Safir development in Gumusluk (Bodrum).


HOTELS: Who are the main hotel investors in Turkey these days, and what are they looking for?

Egeli Nisanci: The majority of the owners for luxury hotels in Istanbul are Turkish.  However, in Istanbul and other cities, we also see some international investors; some of are our clients are from the Middle East, specifically from Abu Dhabi, Qatar, Bahrain and Russia.