TBY talks to Murat Akpınar, Tourism Group President at Ofton İnşaat, on the company’s operations, the possibilities for hotel development in Istanbul, and the company’s Rixos Hotel project.
TBY Ofton İnşaat is well known for constructing upscale residences. How has the consumer appetite for this kind of development changed since the company began?
MURAT AKPINAR The company was started 10 years ago by two experts from the construction sector. The company was established during a financial crisis in Turkey, yet the founders were brave and trusted their experience. In terms of construction, Turkey is a fast-developing country, and there is still a big need for high-end residences and skyscrapers. Ofton is wise in its choice and development of land, and its major projects are always in the heart of the city, in places such as Taksim, or Bomonti, which Ofton really drove the development of as a top-class residential area. Ofton’s main residential brand, Elysium, is hugely popular and brings massive value to a development.
What is your assessment of the Turkish construction industry in recent years, especially since the crisis?
The crisis did not hit the construction industry in Turkey as severely as other regions. People had land, and they continued building on it. Some companies held onto land and have now resumed building again. The construction industry didn’t shut down, it merely slowed temporarily. In 2010 we saw another boom, and we anticipate 2012 and 2013 being exceptional years also.
What is the status of the Rixos Hotel project?
Rixos is a large hotel chain, and popular throughout the world. The project we are developing there is unique. It is being developed in the style of a residential building, including mostly loft-style suites, but will operate as a hotel. The hotel will give visitors the option to stay for as long as they like. We are seeing good investments, and our clients believe in our projections. We have a contract with Rixos for 25 years, and the location—Taksim—is excellent. We talked with other hotel chains, but decided that Rixos was the best option. Rixos means luxury and quality, and we are happy to be bringing it to Istanbul. The smallest unit is 85 square meters in size, and our larger suites are up to 180 square meters. Our presidential suite is 350 square meters. There will be 140 fully furnished suites in total. Even though people can stay for as long as they like, our target is for shorter trips of a few days, catering to top business executives in town for meetings and so forth. It is like a home away from home, a full apartment with a hotel feeling.
What opportunity is there in Istanbul for further hotel developments?
Istanbul needs city hotels. This can be determined by a simple calculation. With around 800 flights landing in Istanbul each day, it is obvious that the city is packed with business people. City hotels are what is needed to provide the right accommodation for business travellers. These hotels need to be well connected, to the airports and to the main business districts. That is what makes the Rixos project so special. Its location is perfect. In Taksim alone there are 10 five-star hotels, including Metro Park, Swissôtel, Intercontinental, Hyatt, and the Ritz-Carlton. The total number of rooms is 1,400. The four-star hotels in the region have occupancy rates of 90% to 95% over the whole year, and the occupancy rate for five-star hotels is 80% to 85%. This gives you an idea of how urgent the need is for more hotels.
Would you say that MICE tourism is one of the main drivers for tourism in Istanbul?
Yes. It is this fact that is driving our focus. We have another hotel project underway in Kasımpaşa, close to Taksim. It will be a four-star hotel, catering to both pleasure and MICE tourists alike. We are currently negotiating with three major international chains: Marriot, Hilton, and Wyndham. The selected chain will fully manage the development, which will contain conference and meeting facilities.
You have talked about your developments in Istanbul. What do you think the prospects are for these kinds of developments in other cities in Turkey?
The other major cities beside Istanbul are Ankara and Izmir. Other developing cities include Bursa, Gaziantep, Kayseri, and Konya. There are city hotels in these areas, yet we are looking to develop the market further in the future. The next target is Ankara. As the economy grows there will be an increase in demand for city hotels in these areas, and international brands will step up their presence in the country.
Are there any regulation challenges that the company has encountered?
Every country has its own rules and regulations, and that is the same for Turkey. Ofton buys land that is authorized for sale by municipalities. It then develops the land and sells it on for a profit. We also work with companies that have land and want to work with us in its development. The regulations are very simple, and the municipality must be obeyed in terms of height restrictions and the like. We have a successful track record at finishing projects on time, and are continuously looking to develop new ideas for the future.
Seeing that the company is playing a significant part in developing the tourism industry in Turkey, do you receive assistance from the Ministry of Culture and Tourism or the government specifically?
The Ministry of Culture and Tourism is always ready to help any company that is potentially investing and helping the development of the tourism sector. Our work is being recognized in Ankara, and this is because of the significant role we are playing in the development of the economy. The government is doing a lot to encourage investment into the development of hotels and resorts.
Turkish companies have huge international experience. What has made Turkish companies so successful in this sector abroad?
Turkish people bring a certain level of professional involvement to projects. They do not give out too much business to contractors, and that has kept Turkish businesses successful in the construction sector abroad. The government also helps such companies with tax advantages. This is because those companies are providing a service for the country, raising its profile and providing work for its people.
What are your expectations for Ofton, and the tourism and construction sector in 2011 and in the years ahead?
Rixos will be opened in the summer of 2011, and by 2012 our other hotel development will be complete. Ofton will also continue in its residential developments, and we will go from strength to strength. This will be assisted as regeneration begins, aimed at preparing the country for earthquakes. The strong connections the government is building with its neighbors are also going to be positive for the economy and our concerned sectors. In terms of tourism, we expect the sector to develop well over 2011 and 2012 as well. Turkey has the facilities to support year-round tourism, and this also makes Turkey special. All that is left to do is to develop more hotels.
© The Business Year