Turkey’s hoteliers warn of oversupply in Istanbul amid $1.3 billion in new hotel investments
ISTANBULAround 1.3 billion dollars’ worth of new hotel investments are underway in Istanbul despite ongoing problems in the sector, Turkey’s hoteliers association said Nov. 1, warning of a serious oversupply in beds.
Some 47,000 new beds will be added to the sector after the planned investments are completed, pushing up the total bed capacity in Istanbul to 234,000 units, according to a new report by the Hoteliers Association of Turkey (TÜROB).
Istanbul’s existing bed capacity, which is 186,000 units in total, is enough to host around 28 million people annually. Only one third of this capacity was used in 2015, the year which the sector experienced better results than it did over this year, the statement read, adding that the vacancy rate in Istanbul’s hotels resulted in roughly $3 billion in losses for the sector, excluding losses in other sectors, such as food and entertainment.
Around 12.4 million foreign tourists visiting Istanbul in 2015 opted to stay in places unregistered by the Tourism Ministry, choosing to rent houses or avoid the city by traveling elsewhere.
TÜROB President Timur Bayındır said some extremely high hotel investments in Turkey had resulted in a serious oversupply in the sector. “Especially in the last three years, new investments cannot pay their costs due to the sharp loss in demand.”
Urgent need for board to analyze supply and demand curve
Bayındır said the sector has been considering establishing a tourism investment monitoring board in cooperation with the Economy Ministry and the Tourism Ministry.
“We hope this board will play a key role in enabling the use of sources more efficiently, in accordance with the current supply and demand curve. In order to be able to develop a balanced investment perspective, we must analyze the bed capacity that is needed,” Bayındır said, adding that there were too many five-star hotels.
“The city actually needs two-, three- or four-star hotels that are high-quality,” he added.
According to the TÜROB report, there are 92 five-star hotels in Istanbul, 74 percent of which are on the European side and the remaining on the Asian side. Most of these hotels are located in the central districts of Şişli and Beşiktaş.
The majority of the two- and three-star hotels are located in Eminönü, the city’s touristic historical peninsula.