ISTANBUL—On 29 October, the first part of Istanbul’s new international airport will open, making the Turkish city one of the central worldwide aviation hubs, according to sources.
Airport developer IGA, a division of the state-owned General Directorate of State Airports, has already chosen the first hotel and brand to be part of the project: a 451-room Yotel property, which will have some of its rooms only accessible inside the post-security area of the airport.
In Istanbul’s Arnavutköy district, Istanbul New Airport will be the world’s largest, but sources said it’s unlikely the airport will be a direct threat to regional hubs such as Dubai and Abu Dhabi in the United Arab Emirates and Doha, Qatar.
Mehmet Önkal, partner at business consultancy BDO Turkey, said the airport will further put Istanbul on the map, but that the situation remains mixed.
“First of all, the airport will not be finished completely until 2023, but I think the only problem with it is that is far away from the center of the city,” he said. “Public transport is not available, so everyone is wondering how to get there, certainly with taxi rates being very high.”
That is not discouraging hoteliers, though, since Turkey’s hotel performance and inbound visitor numbers both have recently improved.
According to Önkal, Russian tourists have returned following a travel ban and a soured relationship between the Turkish and Russian governments, as well as the development of new source markets such as Eastern Europe.
“Generally, occupancies are high, the number of visitations are high,” Önkal said. “(Average daily rate) is not at the old pace. To our surprise, we might have a record year this year, like 2014 to 2015.”
Mega-hub
IGA has only announced one hotel so far, but several more are expected to be announced soon.
Hubert Viriot, Yotel’s CEO, said he is excited about the Istanbul airport development because it’s in a “deep domestic Turkish market” and the recovery in 2018 of traditional feeder markets such as France, Germany and the United Kingdom.
“Rates are still behind, but we’re seeing a definite recovery,” Viriot said.
According to STR, the parent company of Hotel News Now, Atatürk— the current airport in Istanbul—is seeing low ADR and revenue per available room, perhaps the result of the country recovering from geopolitical events. In 2017, full-year occupancy increased 22.8% to 59.8%, while ADR increased 6.1% to 200.51 Turkish liras ($43.82) and RevPAR increased 30.3% to 120 liras ($26.22).
Önkal said the new airport will likely not directly compete with hubs such as Dubai, which he said was three-and-a-half to four hours away by plane.
Viriot, however, said the initiative will generate domestic and international business and be a game-changer for the region.
“Business will be generated in and around the airport, which has been developed in an exceptional fast manner, 42 months after the shovel,” he said. “Traditional development does not exist yet, such as residences, but there will develop a huge urban city, all on the European side and all the way to the north. There is a lot of land near the new airport.
“The beauty is that it is a completely new airport, which is quite rare if you think about it, at least outside of China.”
Viriot said on the air side of the new Yotel, there will be an emphasis on cabin-style rooms, and there would be a lounge and shower cabins for non-overnight guests. On the land side, there will typical facilities such as a gym, F&B and a club lounge.
“The difference between the usual Yotel is that the lounge will be larger, and it will have more meeting rooms, not so much for conventions but for smaller meetings,” Viriot said.
Persuasion
IGA’s original plan, according to Viriot, was to have a more traditional 300-room hotel as the first asset announced for the site, but the developer revised its plans following what Viriot called a “significant response from Yotel.”
IGA is a consortium of five Turkish companies, including some whose core activities include construction, real estate and retail, Viriot said, who added IGA is a “private organization that is run very thoroughly and speaks the same language as we do.”
IGA was not available for comment by press time.
“I do not know who my competitors were for the site, but we reinvented the (request for proposal) and emphasized to IGA that tomorrow’s travelers want an innovative product and that we have real expertise at operating airport hotels,” Viriot said.
Viriot said Yotel, which last September saw Starwood Capital Group buy 30% of the brand and inject $250 million into the firm, took IGA to see their existing airport hotels at Paris Charles de Gaulle and London Heathrow.
“We have a management agreement, which is quite unusual for an airport site. It is for 15 years, with a 10-year renewal,” Viriot said. “I think IGA was quite tempted by a lease, as they would not need to worry about it, but the risks are quite low, and they saw the best way to maximize returns is with a (hotel management agreement). There are very few white-label management agreements in Turkey.”
Viriot said he has no doubt Yotel will be joined by other hotels at the airport.
“For us, this is huge as there is no better way of entering a market than by having an airport hotel,” he said. “The airport is visible; it will be the country’s flagship airport, and Turkish Airlines is an international carrier.”
Önkal reiterated that Istanbul will be further put on the aviation map when the new airport opens.
“Istanbul already is a huge hub, and Turkish Airlines I now think flies to 303 destinations, much more than any other airline in the world, and it is profitable,” Önkal said.
Viriot said Yotel is looking at further Turkish opportunities, perhaps in its capital city of Ankara and in more seasonal Bodrum, continuing its strategy of preferring one airport hotel and one urban hotel in each gateway city.