TURKEY’S ECONOMIC SUCCESS
Yapi Kredi Bank’s Cevdet Akçay kicked off the CATHIC conference with a rousing call to Turkey’s economic and financial community to improve its communication with the rest of the World. “Turkey has a perception problem because we are not doing a good PR job on our economy. My idol is Brazil because there are many similarities between our economies, but Brazil is doing an excellent job of managing the perceptions of their economy”.
He went on to outline how Turkey has changed and improved its economic position over the past 10 years, and how this transformation was accelerated by the Global financial crisis. Turkey now has ‘normalised’ interest rates, and brought down the real cost of borrowing, and is now a completely different country from that of 4 years ago. With these basics Turkey has immense opportunities for growth and prosperity.
“The bad rap that Turkey has had is unfair, and Turkey has not been given the credit it deserves for its economic reinvention,” Akçay said. “If Turkey can manage its economic image abroad and utilise the best brains the country has to manage the economy, then there is huge potential for the country”.
In a session on securing finance for hotel development in today’s market, Serdar Bilgili, Chairman of Bilgili Holding explained how he has created a hotel investment fund to tempt international institutional investors into the Turkish hotel sector. He believes the Turkish real estate market is one of the best in Europe, but there was not a suitable vehicle that was attractive to these institutional investors.
Bilgili outlined the difficult path to success: “After one and a half years of raising funds, we have fifty per cent of what we wanted,” because, he said, real estate institutional investors are very careful. Interestingly, Bilgili expected most of the money to come from the Middle East, but in fact most of the interest so far has come from US pension funds and University endowment funds.
Bilgili also pointed out that his company has three hotels in Istanbul, but doesn’t manage any of them. The global hotel management companies give the banks confidence to finance projects. “If my hotels were called Bilgili Hotels, I don’t think the banks would have financed them – the brands give credibility”.
Emre Narin, Vice President of Marti Hotels highlighted the potential for REITS (Real Estate Investment Trusts) as a financing tool for Turkey, and predicted a growth in REIT numbers going forward. Senay Azak-Matt of Aareal Bank pointed out that from the banker’s perspective, hotel investments are relatively risky, as it is a volatile business. Banks look for projects from companies with good hotel and tourism experience, and that the development represents the right brand that fits the market, and the right product for the location.
CATHIC REGION UPDTE
Mehmet Önkal Managing Partner at BDO confirmed that Turkey is the hottest market for new hotel development in the CATHIC region, with the spotlight on Istanbul and secondary cities across the country.
Önkal advised that hotel operators should follow Hilton’s lead by committing to Turkey for the long term and setting up a development base in Turkey, employing local knowledge and expertise to aid the development process.
Hilton Worldwide chose the CATHIC conference to announce four new hotels in Turkey – DoubleTree by Hilton properties in Kusadasi and Malatya, and Hampton by Hilton hotels in Samsun and Istanbul Ataköy.
This brings Hilton’s development pipeline to 13, and the total hotels in Turkey (operating and under development) to 33. Commenting on the announcement, Simon Vincent said: “we have opened a record number of hotels in Turkey in the past year, and by the end of 2013 we expect to have 33 hotels operating in Turkey, with potential to expand further.
Hilton also announced its first property In Kazakhstan – the Garden Inn Astana, which will open in 2014.