Turkey's Secondary Cities Poised for Development
22 Feb 2010 - The HTLroundtable was created as a forum for hotel and real estate professionals to discuss trends in the hotel, tourism and leisure sector. This year‟s first HTLroundtable took place at the Radisson Blu Bosphorus Hotel in Istanbul on 29 January 2010.
Turkish and international industry experts were invited to discuss "Opportunities beyond Istanbul - Turkey‟s secondary cities are poised for a wave of new hotel development". Development managers of leading Turkish hotel operators (Dedeman and Divan) and of international brands (Hilton, Marriott and Starwood), project developers, investors and representatives of financial institutions (e.g. Aareal Bank) and other organisations followed the invitation of PKF hotelexperts, a leading international hotel consulting company, which organised the event in cooperation with Entegre Project Management & Consultancy from Istanbul.
Turkey is a world-class tourism destination. A significant number of large resorts have been built along the Aegean and Mediterranean coast over the last 20 years. Furthermore, Istanbul is a popular city destination, with both demand from the corporate segment (including meetings and incen-tives) and the leisure segment. In the last years, Europe‟s largest city has seen many new hotel developments. It now offers a wide variety of national and international hotel brands. The vast majority of the internationally branded hotels in Istanbul are four and five-star properties.
Nevertheless, the Turkish Ministry of Tourism describes its own strategy (to date) as "fragmented and plot-based planning practice" and is nowadays on the verge of changing this. Despite the worldwide economic downturn - which affected Turkey later and possibly less severe than other European countries - the Ministry published a long-term plan to increase the number of overseas visitors and to implement a more efficient and profitable tourism sector. The Tourism Strategy of Turkey 2023 aims at establishing "tourism cities with remarkable global competitive power" as the Ministry specifies it. Recently, the country experienced a massive growth in domestic travel. Among the reasons for this development are the improved national flight connections between Istanbul and the various so-called secondary cities (Bursa, Adana, Gaziantep, Konya, Mersin, etc). The term itself may be misleading, as most of these cities easily account for more than 500,000 inhabitants.
However, many of these secondary cities have only a limited supply of large hotels and lack internationally branded hotels. According to research by PKF hotelexperts, there are 95 hotels with 100 rooms or more in Istanbul, of which 51 (54 %) carry a recognisable brand name. Out of the branded hotels, 19 (37%) have a national brand (such as Dedeman or Divan), and 32 (63 %) have an international brand (such as Hilton, Marriott or Sheraton).
Overall, there is a clear shortage of branded hotels outside of Istanbul. This is even more true for the low-budget (e.g. Etap) and budget/economy segment (e.g. Ibis). In the whole of Turkey, there are only three branded hotels in these segments, compared to 1,838 in France, 384 in Germany and 398 in the United Kingdom.
Thus, the participants of the HTLroundtable see a vast potential for budget and mid-market hotels in Turkey. However, the high land costs, especially in Istanbul, are a restraining factor for the development of these kinds of hotels.
Some experts see a challenge in the perception of budget hotels. Haluk Kaya, Chairman of Üçgen Construction & Trade, pointed out that some of the international budget brands will have to adapt their product in order to succeed in the Turkish market.
In cooperation with Akfen Reit, Accor - the worldwide leader in the budget hotel segment - is planning a roll-out of the Ibis and Novotel brand. The German hotel group Motel One, in Germany the fastest-growing budget brand, is also interested in entering the Turkish market in cooperation with the Turkish investment group Rhea. In the mid-segment, Hilton is focusing on its brands Doubletree by Hilton, Hampton by Hilton and especially Hilton Garden Inn. Their local development partners are Amplio Hotel Investments Emlak A.Ş. and Kosifler Group.
It can be concluded that Turkey‟s so-called secondary cities are clearly poised for a wave of new hotel development. Trendy lifestyle-oriented budget products, offering the special "Wow-effect" and catering to the needs of national and international tourists alike, would most likely be - according to PKF hotelexperts - the best and most profitable choice of filling the gap between seaside holiday resorts and upscale city hotels.
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