THE Central Asia and Turkey Hotel Investment Conference (Cathic 2012) was a resounding success with an impressive selection of panels led by global CEO’s and industry experts from around the globe.
More than 330 members of the hotel investment community met in Istanbul from February 6 to 8 at the Ceylan InterContinental in Istanbul to discuss opportunities in this dynamic region.
The event started with World Travel and Tourism Council (WTTC) marketing director Geoffrey Breeze outlining predictions for the global travel and tourism industry over the next decade. “In 2012 the global tourism industry provides one in 12 of all jobs, and accounts for nine per cent of global gross domestic product (GDP.) By 2022, we predict that this will change to one in 10 of all jobs worldwide, and 9.6 per cent of GDP,” he said.
He also predicted that by the end of 2012 one third of all worldwide travel sales will be made online. Turkey currently has the seventh largest online audience in Europe, with a 44 per cent penetration rate; Turks spend more time online than any other European country.
Issues affecting the Turkish tourism sector were addressed by Mehmet Ersoy, chairman of Etstur, Haluk Kaya, chairman of Bekay Property Partners and John Wilson, executive board member of Dedeman Hotels & Resorts, Ersoy said: “The Turkish government is working towards eliminating visa problems, developing more airports and extending existing ones.” He added that Istanbul’s role as a major hub will also be enhanced by a new airport which will open in three years’ time.
Kaya pointed out that there are two distinct tourism sectors in Turkey - all-inclusive resorts and city tourism. Istanbul has experienced a very fast growth of tourist arrivals, from just 2 million five years ago to eight million in 2011. He predicted that Istanbul will welcome 15 million visitors by 2015. “So of course, everyone wants a hotel in Istanbul.”
Kaya also raised the issue of inclusive resorts which do not generate income or jobs for the local community. “Belek is a disaster. Not a single restaurant in the town even though there are more than 40 four- and five-star hotels”, he said. “There is some investment now from Rixos hotels - but it is an important lesson for other resort locations.”
Wilson said: “There is Istanbul and there is the rest. This is an extraordinarily dynamic marketplace and there is no sign of a slowing down in the growth in the Turkish tourism business. While we’re not immune from Europe’s troubles, I am not worried because Turkey’s unique geography means we can explore alternative and emerging markets to replace lower numbers from Europe’’.
The complexities of financing new hotel construction was explored in detail by Andrew Sangster, editorial director of Hotel Analyst Emerging Markets, in conversation with Puneet Chhatwal of Carlson Rezidor Hotel Group, Carlton Ervin, chief development officer for Marriott International, Ömer Isvan, president of Servotel Corporation and Peter Norman, SVP development at Hyatt International.
Sangster posed the question of how much equity the large global hotel management companies were prepared to commit to emerging markets in general, and Turkey in particular.
For Servotel, Isvan said: “Here in Turkey there is a ‘footprint’ race between the hotel companies. Particularly in resort areas, the traditional management contracts are the norm in this market. The big brands are reticent to introduce different equity models because they don’t want to set a precedent. However, some of the smaller chains are more aggressive and are embracing more creative financing deals.”
Norman said Hyatt has more asset investment than other global bands, with about 20 per cent of its portfolio in owned assets. “We believe that the bricks and the brains under one roof is good. You have to eat your own cooking sometimes, and as owners ourselves, we have the confidence of our other owners. In these more difficult times, we have to see what we can do to help owners get financing for projects, so we may look at joint ventures and ownership options in emerging markets on a case-by-case basis.”
Marriott’s approach was somewhat different, said Ervin. “We recently made two acquisitions in Western Europe, to give our Edition brand a presence in key markets. But we do these with an eye to recycling this capital as soon as possible. We also tend to consider this option only in established markets, so while we never say never, we are not contemplating buying assets in Turkey in the foreseeable future.”
The Carlson Rezidor Hotel Group has long experience of asset investment in this region, Chhatwal said: “We were first to do this in Istanbul 15 years ago, and we sold that asset recently. We also have experience in Tlbisi, Kievand St Petersburg. But Istanbul is not the place to invest these days, as the prices are too high. But I think it is a good time for investing in mid-market hotels in secondary Turkish cities and we would certainly use our balance sheet for that purpose.”
The final session of Cathic 2012 was with Turkish hotel veteran Murat Dedeman, chairman of Dedeman Hotels & Resorts International and president of Dedeman Holding who was presented with the Cathic 2012 Leadership Award by Mehmet Önkal, managing partner at BDO Hospitality Consulting. The award recognizes Dedeman’s 40-year contribution to the region’s tourism and hospitality sector.
Cathic 2013 will take place from February 4 to 6 , 2013, Istanbul.