Mehmet Önkal, a native of Turkey and veteran in tourism and hospitality, has done work in 37 countries in Europe, Middle East, Africa and Asia over the 40 years he has been in the industry. He is the founder and managing partner of BDO Hospitality Consulting-Turkey, specializing in advisory services.
At MR&H, Mehmet hosted a roundtable on the ups and downs of Turkey’s travel and hospitality development of tourism in Turkey, with representatives of hoteliers and investors.
1. How would you describe the state of hotel investment and development in Turkey?
In the mid 1980s, Turkish tourism was undeveloped and the number of visitors was less than 3 million. With the sole vision and initiative of Prime Minister Turgut Özal, a new era in tourism started. Special “Tourism development” laws were enacted for the development of sea-side resorts which gave advantages to the investors. In addition, investment incentives were created and applied to tourism investments in Turkey in the 1980’s that helped the number of hotel and resort beds to increase over 1000 fold to date. Many of these incentives are still available today.
Thus, initially the South Antalya Tourism Development project was launched and Kemer region was developed. Subsequently Belek Region was the target of development. Today, Turkey has approximately 1.2 million beds and the number of foreign visitors has increased to almost 40 million – an increase of 1333 per cent in 30 years!
2. What destinations offer the biggest investment opportunities and why?
The above listed six are all coastal provinces of Aegean and the Mediterranean seas and are the top areas of tourism activity. Examples of destinations in high demand are Bodrum, Çeşme, Belek, Kemer, Marmaris, Fethiye, Kuşadası. There is still a lot of pristine coastal land where new resorts can be developed. And the state-owned land is leased to the investors for 49 years! The advantage of most of these destinations is that the sun-sea-sand season is at least 9 months long.
Golf can be played throughout the year. There are 19 golf courses in the country, some of them signature courses; 15 of them concentrated in the Belek district of Antalya – a golfer’s paradise. Although the major cities of Turkey are almost saturated with 5-star and luxury accommodation, there is still a huge need in rural parts of the country for budget hotels.
3. Who are the key players in the market and do you see it changing in the coming years?
International brands have arrived and continue arriving in high demand areas such as Bodrum, at the very end of the upper luxury segment, with branded villas. This trend is expected to continue. Primary and secondary cities are all saturated with hotels with almost all international brands. Resort players are almost all domestic, with some offering real luxury properties. International brands are expected to show a presence in the resort areas as well.
4. What is the biggest obstacle for a foreign investor searching for a project to invest in?
Bureaucracy! For the first time in 20 years we now have a Minister of Tourism who is genuinely from tourism industry. This will for sure ease the process of investment. High land prices! Assignment of state owned land is a solution to this obstacle. Geo-political and economic volatility! Stability is hopefully being achieved.
5. How is the current economic uncertainty and currency fluctuation affecting tourism and hotel investment?
I have always advocated tourism in Turkey to be a very “safe haven” for investment. First of all, tourism does wonders even during difficult times due to the diversity of tourism offers and also diversity of customers – if not from the West, from the East! Perhaps advantage of being a Moslem country.
More important maybe is that we sell hotel rooms / packages in dollars or euros but almost all of our inputs are in local currency. So, for example, local currency loosing value has no effect on our revenues, the effect on our inputs is usually not immediate but delayed.
6. What travel trends have the biggest influence on tourism in Turkey?
All-inclusive resorts are the fastest growing segment of vacation lodging. Changing of the economic conditions globally to the better and shifting guest expectations, all-inclusive resorts now offer high quality accommodations, diverse cuisine, and an ever-expanding array of amenities and services for guests of all ages and preferences. Some of these new trendy all inclusive's are as good as the world’s most luxurious 5-star properties, if not better.