Istanbul Five-Star Hotel Managers Worry About Oversupply

- A dramatic rise in the number of five-star hotels in Turkey’s biggest cities, especially in Istanbul, has pushed hotels to cut their room prices to remain competitive, but the trend is not sustainable, according to sector representatives.

“Unplanned investments have created oversupply in the sector … Many businesspeople want to open a four or five-star hotels in Istanbul … [and] the extreme rise in the number of luxurious hotels led sector players to slash hotel prices dramatically” said Wyndham Grand Istanbul Kalamış Hotel General Manager Mustafa Alparslan.

Unless the required measures are taken, the return time of the investments will take up to 18 years, extending from its original 10-year return estimate, he added.

Alparslan said hotel occupancy rates are around 80 percent in Istanbul, with five-star hotels making up a third of the Istanbul’s total hotels.

The problem, Alparslan explained, is not with a possible decrease in occupancy, as “Istanbul is the most visited fifth city of the world. The problem is, however, with profitability. The hotel sector of the city is not in the top 10 [sectors] in terms of revenues.” According to Alparslan, the hotels discourage tourists from spending money outside in the city, as tourists “do not want to spend outside the hotels.”

According to data from the Istanbul Culture and Tourism Directorate General, there were 79 five-star hotels in Istanbul as of January 2015. With the completion of the 44 five-star hotels under construction, the number of five-star hotels will increase to 123, with a total bed capacity of 67,000. There are around 300 five-star hotels in the Mediterranean coast of Antalya, according to data from the city’s tourism directorate general.

In comparison, there are 251 five-star hotels across all of Spain, the third most visited country in the world, with a bed capacity of around 78,000.