Construction workers perched 440 feet above the Bosporus in the East-meets-West megalopolis of Istanbul are building one of Europe’s most expensive hotel rooms, a 4,596-square-foot penthouse that will rent for €20,000 a night ($27,500) and crown the new 28-story Raffles Istanbul when it opens in July.
Guests moneyed enough to bunk in the sumptuous Presidential Suite need not walk through the lobby and zip up by elevator like average patrons: They can alight in style much closer to their digs on a 118-foot-diameter helipad, complete with heated floor, that has been erected atop the 181-room, $225 million hotel.
Turkey’s currency is tumbling, investor confidence eroding and interest rates soaring amid a stalling economy, splashy corruption headlines and a volatile political situation. But hotel development is booming, as 75 hotels with 11,376 rooms are in the pipeline.
Moreover, global hospitality companies—which manage and operate signature hotel brands, typically in partnership with local Turkish investors—say they are undeterred by recent events. In fact, some executives are bullish.
With tourism remaining strong, they are looking for additional expansion opportunities. “Our intention is to continue aggressive growth over the next few years and double the portfolio all over again,” says Patrick Fitzgibbon, senior vice president for development in Europe and Africa for Hilton Worldwide Holdings Inc.
Today, Hilton operates 24 hotels with 5,826 rooms in Turkey, more than double its 10-hotel inventory in 2007. In January, the company opened the 829-key, 34-story Hilton Istanbul Bomonti Hotel & Conference Center on the site of a storied beer factory in the Sisli district. Sporting a giant column-free ballroom that can hold 6,350 guests, the Bomonti lays claim to the title of Istanbul’s largest hotel.
To be sure, the sharp decline of the lira’s value has made it harder for hotel developers to service euro- and dollar-denominated debt. Travel likely will suffer if the economy continues cooling, government steps up its authoritarian push and political problems intensify.
But hotel-industry executives say they are buoyed that recent unrest doesn’t appear to have had a major impact on tourism. There were about 34.9 million foreign visitors in 2013, up 10% from 31.8 million in 2012, according to Turkey’s Ministry of Culture and Tourism. In December of last year, the most recent month for which figures are available, there were 1.4 million visitors, up 7.4% from December 2012.
Occupancy rates in Turkey’s 1,533 hotels averaged 63.2% in 2013, down 2.3% from the previous year, while average daily rates were $148.58 with the revenue per available room at $93.93, according to STR Global data. By contrast, political turmoil in Egypt has brought occupancy down to 44%.
Meanwhile, the luxury end of Turkey’s market performs more robustly than that snapshot suggests, some hoteliers say, with occupancy rates exceeding 85% by some estimates.
Germans, Russians and Britons are leading the charge.
Turkish Airlines also operates more than 70 weekly flights between Tel Aviv and Turkey.
Hipster hot spots already are proving popular with Israeli tourists. That includes the new Mama Shelter Istanbul, the moderately priced, 81-room boutique co-founded by Philippe Starck, who designed the Delano in Miami Beach.
The rapid growth of Turkish Airlines is another indicator of the boom in the hospitality industry. Known by its Turkish initials as THY, the flag-carrier jets to 105 countries and more than 200 international destinations and unveiled plans last year to double the size of its fleet by ordering or optioning 117 planes from Airbus Group and 95 from Boeing Co. over the next six years.
“Historically, Istanbul was underserved by hotels, but our hoteliers now are starting to catch up” and finally are developing lodging properties on the Asian side of the city, not only the more traditional European side, says Alp Ozaman, THY’s regional marketing manager for New York. It used to be “unthinkable” for business travelers to stay overnight in Asia, he adds.
One of the major players pushing development eastward is Starwood Hotels & Resorts Worldwide Inc., HOT -0.14% which on Tuesday announced that it was partnering with a real-estate development company owned by Turkey’s Cevahir family to develop the 160-room Sheraton Istanbul Atasehir in a planned financial district on the Asian side of the Bosporus.
The company also is bringing its first St. Regis to Turkey, complete with more than 16 multilingual butlers available to every guest for personalized services 24 hours a day. Sitting amid a row of fashion houses in the exclusive Nişantasi district on Istanbul’s European side, the 118-room hotel is set to open July 1.
“Many countries where we operate go through political unrest and social and financial growing pains,” says Michael Wale, Starwood’s president for Europe, Middle East and Africa. “But we’re not building for five years. This is a long-term capital-intensive business, and we’re building for 40 or 50 years into an evolving, vibrant, thriving economy.”
Stoking tourism has been one of the most ambitious development projects in Istanbul’s recent history, the $2.5 billion, 6.7 million-square-foot Zorlu Center, a four-tower complex that includes high-end residences, the new Raffles, 180 luxury retail shops, office space and the $350 million Zorlu Center Performing Arts Center, the city’s largest theatrical complex, which opened last November with a production of Broadway’s “Jersey Boys.”
Run by Nederlander Worldwide Entertainment, the arts center has musical, ballet, dance or theatrical events every night, around 400 a year. One huge hit: “Cats,” which on Feb. 9 concluded a sold-out, three-week, 24-performance run.
The Wyndham Ankara, will join three Wyndham hotels open in Turkey since 2012, including the upscale Wyndham Istanbul Kalamis Marina and Wyndham Istanbul Petek in the cosmopolitan city of Istanbul as well as the five-star, 219-room Wyndham Izmir Özdilek in Izmir.
The agreement supports Wyndham Hotel Group’s aggressive global expansion of the Wyndham brand, which currently consists of 170 hotels throughout the world, 30 of which are situated throughout Europe and the Middle East.
In 2013, the brand was introduced to both Germany and Austria through a strategic partnership with Grand City Hotels, which saw 60 hotels signed under the Wyndham Hotels and Resorts, TRYP by Wyndham and Days Inn brands.
Starwood announced it will open a new Sheraton hotel in Istanbul, Turkey, in 2015. The Sheraton Istanbul Atasehir will be located on the upper floors of a multi-purpose office building in the city’s financial district.
The hotel will have 160 guest rooms, a 24-hour restaurant, a lobby bar, an outdoor pool, a spa, fitness center, and retail outlets. The property will also include meeting and event space, in the form of 12 conference rooms, two ballrooms, and a business center.
The new hotel will be located within walking distance of many office complexes, retail stores, and the Marmara Sea coastline.
Starwood currently operates ten hotels in Turkey, including four in Istanbul. In addition to the Sheraton Istanbul Atasehir, the company also plans to open three other Sheraton and St. Regis properties in Istanbul and Samsun, Turkey, by the end of 2015.