Hospitality investors 'slow to spot opportunity'

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 upcoming Central Asia and Turkey Hotel Investment Conference (CATHIC, Istanbul, February 7-9).

“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%.”

These sentiments were 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% growth”.

“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 added.

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.