Zirve Eki - ISTANBUL REstate

16-17 Haziran 2010
terms of investment in this country, number one as most of the international
brands, our priority is obviously to cooperate on management and franchise
level. However, there are times that calls for some, what we call scene
in the game. So before the crisis we were happily using the Marriott
capital in some markets. Have we used it in Turkey yet? Not so far, but
with the pace of the economy picking up, we might consider. We shall
never go, buy and purchase a land and invest a hotel on it as Marriott
group but we would be motivating and encouraging a local investor to
move with us. Most of the local authorities in terms of governmental
offices, they are very much in favor of developing their locations, their
cities, their towns. So with the right local partner and with the promise
of international exposure, they do open lot of ways. Some of the bureaucracy
is eliminated when you bring in an international group or even Divan or
Dedeman or any other local brands because immediately that location
when a hotel is put on it will be in the map. That will mean visitor dollars,
that will mean tourist dollars, that will mean some corporate travel from
the other cities. So in terms of hotel investment in the country, I think the
environment is quite pink now.
Georg Wailand: Stephen Schnorr, you mentioned you want to roll
out your company in different countries. What are your priorities and
which position has Turkey in this ranking?
Stephen Schnorr: If you are going to Central Eastern Europe the
priority right now is on Budapest, Warsaw, Athens and Istanbul.
Georg Wailand: The first step.
Stephen Schnorr: So but let me say something to you because we
don't have a brand name like Marriott or Hilton, we are relatively unknown
out of Germany. But on the other hand we have a little advantage
negotiating hotel plots in the eastern countries because we are very high
capitalized. We are able to invest. We are able to sign long term lease
contracts, so this is right now very interesting for the investors to get the
refinance for the development. And with other groups like Divan or Hilton
I know they only sign management contracts which makes it very difficult
for the local investor or developer to get his whole development refinanced.
And this is an advantage we have, we have to get our brand name more
known in the area of Istanbul. So I think if we can start with one hotel.
This is our idea, one hotel in Budapest, one hotel in Istanbul, then our
product is known abroad. And then the next step could be to make more
Gayrimenkul Zirvesi 10
hotels in Istanbul or go to Ankara. So just start with one city.
Tar›k Nasser: I totally agree because Marriott's, Hilton's of this world
have started by building their own hotels. After they build some flagship
hotels, they created brand awareness. Then people started knocking on
their doors and say would you come and manage my hotel. So that will
also be obviously you need to establish your brand awareness especially
in a market like Turkey if you want to grow. That would be also my piece
of advice for the local companies to obtain as much as flagship properties
with their own capital before knocking on other people's doors because
especially in the international market, without doing that you will be hitting
into a lot of competition. Because you will be selling only know how which
is available abundantly. So let's say, if you want to put a hotel in London,
you should do it with your own money, your own capital. Then go and
knock on somebody else's door in Paris and say look I have this very
successful hotel in London. Would you like us to manage your four star
hotel?
Stephen Schnorr: Our product is much easier to handle than yours
because the investment, the total investment is not so high, building a
Motel One. This is the first thing you must know and the second thing is
the experience we have in Germany is when we operated a four star chain
Aston in the 90s, we were lucky to have 65% of occupancy after a beginning
phase of one or two years. Now we start a hotel and in the second month
we are running an 80% of occupancy. So we have over all hotels in
Germany, even the first ones which were out of the cities, we have an
occupancy of about 75% and we break even under 40%. So you don't
need a lot of cash to get a hotel running on a high level. We earn money
from the first day on. This makes it a lot easier.
Georg Wailand: That is quite another strategy then your group has.
Begüm Kaya: About this strategy that Mr. Nasser mentioned, that is
actually correct that when we look at international chains, even if they are
very young, some of them like 30-40 years of age but they are very market
wide expanded but when we see how they grow they did make investment
and after they got the strength of their brand, they expanded by purchasing
new chains, getting it to into their brand. As we are aware of that I would
like to mention a bit here what we plan, how we plan to expand in
international markets. First of all, we would like to concentrate on our
growth in Turkey by reaching a certain level of stock. And it is, so we now
have ten hotels. We are planning to somehow reach the double size of
it. And after reaching the stock, it will be easier for us to convince investors
that we are dominating one of the big players in the market. For Europe,
we think that it should be nice to have a few flagship properties for instance
say Divan Vienna. It would be very nice for us but we also seek management
opportunities, we need to do leases. We are aware of it. And maybe we
should be giving some guarantees to convince the investors for the middle
eastern and northern African regions especially in the Gulf region, we see
good opportunities for ourselves as we have great export volume of Turkish
delight and chocolate. We are well known in those countries. And the
stock, when we checked the levels for instance in Europe branded room
stock is around 6 million whereas it is one million in the Mina region. So
there is still an immature market waiting for us. So we plan to have a few
flagship hotels in the Europe and then we can be much more concentrated
on the Middle East and North Africa region and also CIS countries where
we can hopefully find management contracts. But for Turkey we definitely
are concentrated on management contracts because we have our group
behind. It is much easier to realize.
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GYODER