Zirve Eki - ISTANBUL REstate

it but I don't think they can follow the standards of the franchising.
Michael Widmann: Speaking of standards, we recently worked
in Russia and we are working with a Russian hotel group and we
visited some of the hotels. And we analyzed the figures and said we
are thinking about bringing in an international brand. And when
we looked at the figures we saw that more than 50% of revenue
not from rooms but from food and beverage and entertainment.
And entertainment for their hotels was bowling, billiard and striptease.
That was Russia. And it was very difficult for me to explain to them
that maybe Marriott would not give them the brand name at this
concept. And they couldn't understand why. So, looking to Turkey,
are there any particular elements you have to look at, you have to
wait when you develop, construct a hotel or when you manage a
hotel. So is there anything which works fundamentally different in
Turkey than anywhere else in the world?
Haluk Kaya: For resort hotels I can tell because they entertain.
There are night entertainments. So they all have an amphitheater
or town hotels especially in Anatolia must have a big ball room for
the weddings only. We celebrate weddings. So it is, even it is not
economically justified, you have to make it. Otherwise this is not
respected as a hotel because people want to say I had my wedding
in this hotel. And the owner will push you. But in Istanbul at a normal
international standard there is no big change unless you have an
owner with a crazy ego. In Antalya we have 1067 rooms, 5 restaurants,
600 seats and 2000 square meter of lobby furnished with Fendi
furniture. Of course this is not the idea of Kempinski but to say yes
to something like this, I think this is the responsibility of Kempinski.
They should have told them don't do it otherwise we don't manage
it. Don't say we manage it. Now they make loss every year, one
after the other. And the owner is angry.
Michael Widmann: But have you ever met a hotel group in your
life who told you don't spend this money?
Haluk Kaya: No, no, okay. But there are limits to it. Of course they
say they spend the money in the front and not in the back house
but this is an extreme example what I am giving you.
Michael Widmann: When we look now into investment
opportunities, you mentioned as an opportunity to have branded
products in the budget, maybe mid-segment, maybe we will speak
later in the last session today will be on secondary cities. We made
recently a survey of 38 cities in Turkey and the brand penetration
and the number of hotels and the types of contracts and it is amazing
in some of the cities there is basically no branded hotel and in many
cities only one hotel. So there is a huge market out there. You
mentioned the land cost. Is there any solution? So there is a demand.
So people want to travel to these places. They want to stay at
modern, clean and well established hotels without any negative
surprises. There is no supply so there is money to be made. The land
cost is a difficulty but how to overcome the situation and how could
it be done that there is a massive role out of budget in mid segment
hotels in Turkish cities?
Haluk Kaya: Well, one possibility is to deal with the local
municipalities. Local municipalities, they of course want that nice
hotels come. But on the other hand, local municipalities are elected
municipalities. So you have to have another relation on the one side.
And on the other side because he is elected, let's say you make a
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deal with a honest, perfect guy. He says I want this hotel. I give you
this land for 99 years. It is possible. When he is not elected, the other
guy will come and say where is the deal behind it? And you have
given government land for free to this guy and this is foreigner and
he is making so much money. So it should be coming more from
our Tourism Ministry or from the government that they say every city
has to allocate a hotel land and it shall be auctioned. But auction
again, I mean, my Turkish colleagues know here, I had a contract for
the Maçka hotel. We have 25 year lease. Despite the lease, the
government auctioned this land and the bid was 110 million dollars.
110 million dollars for a 147 room hotel, only the land.
Michael Widmann: It is a bargain.
Haluk Kaya: So that means people go crazy when they hear hotel.
There is no calculation behind it. This could be the same in the cities
when the municipality says I am auctioning this land. What are you
bidding? Crazy people come, bid, bid, bid... If I have the solution, I
would be now owner of 50-80 hotels like this because I am trying
this since 20 years.
Michael Widmann: In many countries, what we have seen is
hotels are built when the office market is down. So in other words,
if the alternative scenarios are not working out well, then hotels will
be built. I am not an expert in the office market but from what all I
hear is shopping centers are not a very good investment right now
in Turkey. I think there is an over building of office centers, shopping
centers. Maybe within the office market there is also looming danger
of overdevelopment. So maybe it is only after the other alternatives
have failed that the hotels would be considered.
Haluk Kaya: we have now the alternative of smaller flats, service
smaller flats. This is now the runner in the market. We have quite a
lot young Turks with good incomes of professionals who can pay,
with the help of their family, good moneys for two room apartments
in nice places. So what I am saying is is not a hotel, not office but
semi-serviced apartments.
Michael Widmann: Maybe there is also a market need for the
real serviced apartments.
Haluk Kaya: There is.