|Investors slow to spot opportunity in Turkey and Central Asia|
Thursday, 17th February 2011
Source : Central Asia and Turkey Hotel Investment Conf.
Investors have yet to embrace the investment opportunities presented by the under-developed hospitality sector in the Turkic region, according to the organisers of the recent Central Asia and Turkey Hotel Investment Conference.
Investors need information and education
“Hospitality investment in the region is way behind other industries yet the opportunity is huge, and it is now,” said Jonathan Worsley, Chairman, Bench Events and CATHIC’s co-organiser.
Mehmet Önkal, Managing Partner – Turkey, BDO Hospitality Consulting agreed. He noted that Turkey’s in-bound visitor numbers continue to grow, but real estate development lags behind.
“Tourism is growing in leaps and bounds, up more that 1,000 per cent in two and a half decades, yet the country’s hospitality infrastructure is stuck in yesteryear. There is a real opportunity for home-grown investors but they have yet to grasp just how attractive the return on investment in the hospitality sector is.”
He said that one solution is education and information for investors, banks and financial institutions, suggesting that the upcoming CATHIC forum will help close the gap.
“One figure that may help investors to see the potential in hospitality is that the overall average hotel room rate in Istanbul was €94 in 2005 – and it is €150 today, an increase of more than 50 per cent.”
These sentiments are echoed by Haluk Kaya, President, Bekay Property Partners: “Turkish tourism is growing at a rate of five-six per cent each year, and the city destination of Istanbul is showing 20 per cent growth.”
Quality mid-market hotels are under-represented in Turkey
Kaya noted that an opportunity for three- and four-star hotels throughout Turkey.
“Turkey’s business traveller and tourist profile demands a weighty presence of international mid-tier brands, as opposed to five-star trophy assets. There is a great opportunity for the likes of Accor with Novotel and Ibis or Courtyard by Marriott and others to develop their mid-market brands across Turkey.
He suggested that the home market alone would be enough to stimulate early success for good value-for-money properties flying international flags.
“Domestic hoteliers need to learn from the global operators that a quality three-star property fulfils a significant market need. It is all about putting the right product in the right place, and this is the right time,” Kaya added.
Turkish Banks need to understand the hotel business
Kaya points out that the Turkish financial system has not suffered the blow of global market and while banks may be robust, they are also very conservative.
“Those developers who are looking to develop hotels and related infrastructure are facing difficulty in borrowing because the banks do not know enough about the tourism and hospitality business. I would like to see representatives of the major Turkish banks join us at CATHIC and be part of our conversation on the investment potential in this sector,” he said.
Golf Resorts offer great potential … in the right location
Önkal also believes that resort developments are set to offer great returns, particularly world-class golf resorts. Turkey presently has around 25 courses, mainly in the Antalya region to take advantage of the climate which offers a nine-month season.
“We have seen a number of new golf resorts but there is room for more. Golfers like variety, and it is hard to get a course to work alone. In golf, the success is in numbers,” said Önkal.