Construction Boom Built on Turkey’s Tourist Hopes

Taking a guided tour of capital investments made by Turkish leisure companies and the government leads to one conclusion: The country expects a boom in tourism.

Net Holding AS, which has stakes in more than 35 companies ranging from hotel builders to duty-free shop owners and retail stores, has invested more than $40 million over the last year in its properties. About half went to tourist shops that cater to tourists.

The government recently opened a $40-million convention center in Istanbul’s city center, and spent another $40 million on related building and infrastructure, just in time to host Habitat II, an international conference and trade fair on urban development held earlier this month.

As the country reaps rewards from tourism, some business leaders are hoping for an added benefit--a stronger image as a Westernized nation.

“Habitat is a big opportunity for people to see us as a democratic country,” said Sakip Sabanci, chairman of Haci Omer Sabanci Holding AS, one of Turkey’s largest industrial companies, at the opening of the Habitat conference. “We can show where we’ve come from, and where we’re going, to the world.”

The Ministry of Tourism expects 9 million visitors to Turkey this year, up from 6.5 million, or 38%, over last year. In the first five months of this year, the number of tourists visiting Turkey has increased by 16.33%, compared with a 6.57% rise in the same period last year. Revenue from tourism is expected to hit $6.2 billion this year.

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Tourism in Turkey, the government said, has been increasing steadily over the past 10 years.

Net Holding Vice President Mete Sayici expects growth in the company’s businesses to come from “hotels, jewelry and duty-free development. We have finished all our investments in strategic locations so our aim is to increase sales.”

A Net Holding subsidiary, Net Turizm Ticaret ve Sanayi AS, one of the country’s largest retail tourist businesses specializing in carpets and jewelry, spent $11 million last year on a tourist “superstore” near the Grand Bazaar.

Net Turizm also has expanded and refurbished two shopping centers near prime tourist destinations. One of the centers is in Aspendos, home to one of the world’s best preserved Roman amphitheaters. The other is in Antalya, a Mediterranean city with sandy beaches and historical ruins. The region attracts 2 million tourists annually.

“We’re expecting them to have a good year,” said Orlando Calumeno, a tourism analyst at Global Securities Inc. “We like their expansion strategy and have a positive outlook for the company.”

Net Turizm expects sales of between $140 million to $150 million this year, up 66% from last year.

Net Turizm stock has climbed 361% in the last six months, recently closing at 32,500 lira. For the same period, Net Holding shares were up 240% to 3,250 lira.

Turkey’s antiquities attract millions annually. Istanbul is a living museum, founded by Emporer Constantine I on the ancient site of Byzantium in A.D. 330 and later home to the Ottoman Sultans.

Because Turkey is a developing country--per-capita income is $2,500--hotels and resorts can be a bargain compared to their Western counterparts. A recent promotion for a seven-night stay at a luxury resort was priced at just 18 million lira ($208).

In recent days a group of tourism developers announced that they were going to spend $30 million to transform a 155-year old French palace, on the exclusive Princess Islands, into a five-star hotel.

The exchange rate also favors tourist dollars--the lira has depreciated against the dollar by 26% in the first five months of this year. The lira was recently trading at 81,650 to the dollar and 53,300 to the deutsche mark.

German tourists favor Turkey; they increased by 73.16%, or 634,520 people, for the first five months of this year compared to last. The number of U.S. tourists is also growing, up 16.11%, or 90,597 for the same period.

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While the future looks strong for tourism, recent experience shows that reality sometimes doesn’t live up to its promise. Turkey spent an estimated $80 million to $90 million preparing for the Habitat conference, which was organized by the United Nations. Many hotel managers and businesses that sell tourist goods were hoping the event would help to boost sales.

Yet days before the conference began, unlaid bricks were scattered about and some of the top floors of the center itself were nothing but bare cement.

“We thought it would bring a lot of business, but so far nothing,” said Sebahattin Onal, 33, a partner in Ottoman Sanayi ve Ticaret Limited Sirketi, a hotelier and retailer of carpet and handicrafts. “We spent $5,700 to rent space in a fair and now I’m crying. I threw my money away in the street.”

Hotels had originally reserved enough bed space for 30,000 visitors; only 11,000 showed up. Tourists not associated with Habitat who wanted to book were turned away because of the anticipated conference attendance.

Some Turkish officials and business owners take a longer-term view of how the Habitat conference will improve Turkey’s image abroad. Many of the conference-goers were government officials and executives, so their personal recommendations on the country will boost its popularity, they said.

“I wouldn’t say that it will boost tourism, I would say that it will help with the promotion of Turkey,” said Talha Camas, president of the Assn. of Travel Agencies of Turkey.