A sign of an trend, hotel groups are not only interested in the capital, but are increasingly investing other major cities in Turkey. The economic centers are preferred for these implantations, and the tourism destinations on the Aegean and Mediterranean Seas and further inland even more so.
As a turntable for 29 million tourists and 70 million Turks, Istanbul is obviously the priority of world leaders in the hotel industry. But they are increasingly numerous to want to move away from the shores of the Bosphorus. Until now, whenever hotel groups ventured outside this nerve center, albeit not central, it was to establish themselves in Ankara, the administrative capital, in Izmir, the number three city in the country, or along the Mediterranean coastline for upscale resorts targeting a rich international clientele that is not so interested in the hundreds of all inclusive tourists’ caravanserais in the region of Antalya.This strategy, which gave rise to the Sheraton, Radisson, Renaissance, Crowne Plaza and Ramada networks in this country, is still being used. After the recent conversion of a former bank into a Doubletree by Hilton, Ankara is awaiting the arrival of a JW Marriott next November, to be followed in 2011 by a Mövenpick and a Luxury Collection by Starwood Hotels. On the resort segment, recent developments include Radisson’s opening last year of its first leisure hotel in Cesme, not far from Izmir on the Aegean Sea, and Hilton which established its presence further south in Dalaman, on the shores of the Mediterranean .The incursions of hotel groups into the heart of Anatolia were relatively rare until recently, aside from a few opportunities such as the Renaissance in Erzurum, Ramada in Kahramanmaras, Crowne Plaza and Antakya. But, today, the economic growth of the country allows for more ambitious strategies. Hilton, Accor, Rezidor: these three groups have a clear goal to open at least twenty properties in the short term (see interviews). The economic growth of major Turkish manufacturing centers sustains a new wave of development that runs to the borders it shares with Syria and Iran. Bursa, Gazantiep, Konya, Samsun, Denizli, Eskisehir, Trabzon among others: these regional cities lack properties to satisfy a demand that is both regional domestic from nearby countries and the ex-Soviet Union and the Middle East, and international markets. All this clientele are seeking quality hotel accommodations at reasonable rates. Also, whereas these markets are often controlled by local players that are well established on the upscale market, the under-capacity of hotels with international standards is high on the midscale and economy segments. Hilton Worldwide, already present in regional cities with Hilton hotels in Adana, Kayseri and Mersin, plans to take advantage of opportunities that are arising today in Turkey to build its Hilton Garden Inn and Hampton Inn by Hilton networks throughout the country. The first Garden Inn opened in Kutahya and others should follow in Corum, Corlu, Manisa and Mardin. The Hampton Inn brand should appear in Bursa in a mixed property under the Hilton brand. The group’s goal is to be the #1 choice in these locations, the development of its upscale brands Hilton and Doubletree will be more selective.In this race to develop, Rezidor, always very active on emerging markets with its midscale brand Park Inn by Radisson, is off to a slow start. However, the recent resolution of conflict over the use of the brand name should make it possible to launch this brand that is adapted to the market’s particularities in the near future. The Scandinavian group will cross paths with a major competitor: Accor. With Ibis and Novotel, the French group may count on two Trojan Horses that have already entered the heart of Turkish territory - Ibis in Eskisehir, Novotel in Trabzon and the two brands together in Kayseri, Cappadoce, and Gaziantep, near the Syrian border. The future hunting grounds have already been identified. The Ibis brand will appear in a few weeks in Bursa and then, in 2012, in Adana and Izmir. The group is also targeting Samsun, the main port on the Black Sea, and Denizli, the major textiles center.Whether it is the strategies of Hilton or Accor, associated with the group Akfen through a five-year renewable partnership to operate hotels through variable rent leases, their growth relies on solid local conglomerates. Hilton’s ambitious development plan relies on two strategic alliances. Signed in December 2007, the partnership with the investor and developer Amplio calls for twenty properties through management contracts. Another identical partnership was signed a few months later with the group Kosifler, involving 25 hotels. As these two strategic development agreements are not exclusive, Hilton is also focusing on a model used less often in emerging countries – the franchise – to accelerate the growth of its brands, especially Doubletree. The potential is fantasticPuneet Chhatwal, Chief development officer at the Rezidor Hotel group“The Rezidor group has always been particularly interested in emerging markets, and thus, evidently, in Turkey. This country plays a strategic role in terms of history and geography - as it is the crossroads of Europe and Asia and the gateway to the Turkish-speaking, ex-Soviet republics – and today on an economic level. We began to develop our star brand Radisson Blu in Istanbul ten years ago at Istanbul’s airport, followed by a second leading property located on the Bosphorus, as well as in Ankara and Cesme. We foresee potential for achieving a network of a dozen or so properties by the brand in three to five years. We are already waiting for a new hotel positioned on the Business and Conventions segment to open on the Asian Shore of Istanbul and are targeting other cities such as Izmir, Antalya, Bodrum and Belek. Very satisfying initial results from our resort in Cesme encourage us to grow our presence in the leisure segment. But even more the country presents many opportunities for the brand Park Inn given that the 3-star hotel chain segment is under-represented in this country. Were we in conflict with a local company to operate this brand, but we succeeded in registering it at the end of 2009. This slowed our development for a long time, but better late than never! We fully expect to have a portfolio of 20 to 30 hotels in the future starting with the two cities that are essential to beginning this network: Develop an Ibis and Novotel networkMurat Kadaifcioglu, Operations manager Accor Turkey “Our strategic partnership with Akfen, an investor that is also present in the energy, portuary and airport construction sectors, is bearing its fruit. After the sale of the Compagnie des Wagons Lits in 2005, we made a new start from scratch in Turkey. And we will have 1,568 rooms in the country at the end of this year. Our first renewable contract forecasted the opening of twelve hotels, a growth benchmark that we have now reached. With Akfen we just re-signed a 5-year contract that will not block us if other players offer us the management of their properties. At the end of 2013, we will have 2,700 rooms and our network should reach around 25 hotels in 2015. Our strategy aims to develop a network of Ibis and Novotel properties starting from Istanbul where we opened two properties under these brands in 2007 to progressively expand to other major and midsize cities. Ibis is a unique product that is able to establish itself on all markets. Projects were signed in Adana and Izmir for openings scheduled in 2012. A new Ibis is expected in Istanbul where we plan to develop a network of 5 hotels, while we hope to add a Sofitel and a Pullman. A Novotel is also under discussion. For this brand, we will advance cautiously in the region because the room rate difference between Ibis, positioned on the 3* segment in Turkey, and a Novotel is small and cannot match the difference in investment. Moreover, it is difficult to enter certain markets where 5* hotels owned by rich local families are solidly established and have prices close to those of Ibis. At Trabzon, our Novotel has a very good occupancy rate but the average daily rate remains low. On the other hand, we control the market because we were there first and Novotel is the city’s property of reference. In this case the challenge was worth it. Ankara, an administrative city, is not as interesting a market, but it is the capital and being there is imperative. We are exploring opportunities to open an Ibis and eventually a Novotel.” Strong potential for the midscaleMichael Collini, VP Development Northern Europe for Hilton Worldwide“Turkey, which plays an increasingly important role worldwide, has been identified by Hilton Worldwide as one of the strategic destinations where the group is concentrating its investments. We have an important ally for our approach: the Hilton Istanbul that opened 57 years ago. It is the first international hotel that opened in Turkey and we are building on the benefits of this property that has become a veritable institution and has popularized the brand in the country. Our development strategy is built around three axes. In Istanbul, the potential remains important for all our brands, particularly on a midscale segment that is below-capacity. In London and Chicago, we have almost a hundred properties. The market in Istanbul is not as mature, but why not eventually reach this figure? In regional cities, we are trying first and foremost to develop our midscale and economy brands Hilton Garden Inn and Hampton and, in a more selective manner, the upscale brands Hilton and Doubletree by Hilton. Finally, we will continue to develop resorts. With a wide variety of cultural treasures, Turkey is not limited to opportunities on the coast, in Cesme, Bodrum and Antalya. For example, we will open a Doubletree resort Cappadoce, after the Hilton opened in Dalaman. We are very satisfied with the results of this property that demonstrates the strength of our brands with respect to local players. In order to sustain our strategy, we have two strategic partnerships with Amplio and Kosifler, that concern mostly the brand Hilton Garden Inn. We like such multi-unit partnerships that help us grow rapidly. And, today, we are actively looking for a partnership for Hampton Inn. A certain number of negotiations are underway. The brand will complement Hilton Garden Inn on certain markets or in place of this brand on less mature markets.”Ambitious expansion of the Turkish groups Undoubtedly the other world leaders – such as IHG with the Holiday Inn brand family – will also successfully seize upon opportunities to develop their supply in countries harboring lots of promise for the future. But within the framework of their development, international groups must also deal with ambitious Turkish hotels, mostly owned by major names in the local economy such as The Marmara Hotels, a subsidiary of Kiska Construction, and Divan Hotels, which is part of the giant conglomerate Koc Holding. Aside from Istanbul, Ankara and the resort destinations in Bodrum or Antalya, these players are gradually expanding their footprint to regional cities. Already present in Corlu, Divan Hotels will open a property in Bursa. But the group has a bigger outlook and is aiming at 50 hotels for 2015, including both owned and management properties.The regional growth of Dedeman Hotels is already more advanced. The country’s tourism leader, a conglomerate from the world of construction that has made its way into mines and real estate, opened its first hotel in Ankara in 1966. But its real development began in 1994 with the takeover of 8 properties and then accelerated in 2002 with the opening of properties through franchises and management contracts. Today it has a supply of 23 hotels for some 4,750 rooms, with a few incursions into the neighboring countries of Bulgaria, Syria, Uzbekistan and soon Iran. After Dyarbakir, Gazantiep, Konya, Sanliurfa, Sile and Rize, the group found several new destinations such as Edirne, Zonguldak on the Black Sea and Cavlak for a spa resort near the Armenian border.
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