Tourism Market Overview - Ernst & YoungFILE/EY_Tourism_Ind… · 2 Tourism Market Overview, H1 2017 Important Notice and Disclaimer Important Notice and Disclaimer Content of this

Tourism Market OverviewTurkey & Istanbul 2017, 1st Half

2 Tourism Market Overview, H1 2017

Important Notice and Disclaimer

Important Notice and Disclaimer Content of this Document

This document has been prepared by Ernst Young Kurumsal Finansman Danmanlk A (EY Turkey), it is based on the information provided by the other sources referred to in the document. It provides Interested People with necessary information about the overview of tourism market in Istanbul and Turkey. This document (and the information contained herein) does not constitute an offer to sell of or an invitation to invest into any asset or business, nor will it form a part of any strategic alliance decision or any decision to enter into any type of cooperation.

Interested Persons are not to construe the contents of this document as legal, business, tax or other advice. Each Interested Person should consult its own legal, business, technical, accounting and tax advisers.

EY Turkey has not verified any of the information in this document. EY Turkey (including its partners, officers, employees and agents) does not owe a duty of care to any recipient of this document in relation to the information in this document.

Neither EY Turkey nor any of its partners, officers, employees and agents make any express or implied representation or warranty and no responsibility or liability is accepted by any of them with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, operational, financial or other information set out in this document or any further information, written or oral notice, or other document at any time supplied in connection with it, and nothing contained herein, or therein shall be relied upon as a promise or representation regarding the historic or current position or performance of the tourism industry or any future events or performance of the tourism industry.

Tourism Market Overview, H1 2017 3

Contents

Turkey Tourism Market 4

Istanbul Tourism Market 12

Turkey Hospitality Sector 18

Istanbul Hospitality Sector 24

Turkey Tourism Market


Overview Turkey Tourism (Total Receipts vs. Total Visitors 10 years trend)

Source: Turkish Statistical Institute (Turkstat), BMI Turkey Tourism Report Q3 2017

Turkey Tourism Market: Overview

1.1Turkey Tourism Market

Istanbul Tourism Market

Turkey Hospitality Sector

Istanbul Hospitality Sector

Turkey has been considered to be one of the most attractive destinations in recent years because of affordable prices and variety of options available for tourists. In addition to classic sun & sea vacations, the country attracts tourists for cultural and historical visits as well as for MICE (Meetings, incentives, conferences and exhibitions).

Turkey offers strong cultural tourism with a wide range of folk and traditional cultural festivals. It also aims to promote other tourism alternatives such as golf and health tourism in the long term.

Investments in recent years in big cities such as Istanbul and Izmir were in line with the objective of developing the tourism industry. Rationale of the investments were reflections of positive expectations regarding the number of domestic and foreign visitors in near future.

Turkey remains as one of the major global tourism markets and is recovering slowly from the downfall of tourism sector in 2016. The market continues to face a challenging outlook considering the diplomatic and internal political issues, geopolitical tensions and terrorist attacks.

Number of tourists visiting Turkey increased 10%, from 13,4 mn in H1 2016 to 14,6 mn in H1 2017.

According to Turkstat, Turkeys total tourism income for H1 2017 was US$ 8,8 bn, reflecting a decrease of 2,7% in comparison to the tourism income in H1 2016, which was US$ 9,0 bn. Total tourism income for 2016 was recorded as US$ 22,1bn.

Accordingly, per capita average tourism expenditure of visitors has decreased from US$ 718 to US$ 641, respectively.

13,414,6


Source: WTTC Data gateway, World Bank and Turkstat

Turkey Tourism Market: Overview

1.1 (Contd.)

Tourism industrys direct contribution to GDP is expected to be at a ratio of 4,1% with US$ 26,1 billion in 2017 according to WTTC Data Gateway.

In 2016, direct contribution of the industry to the GDP was also 4,1%.has produced US$ 29,1 billion.

Capital investment is expected to be at the level of US$ 15,5 billion in 2017 with a decrease of 11,3% from 2016 (US$ 17,5 billion).

This capital investment includes spending by all industries directly involved in tourism and investments by other industries on the specific tourism assets like accommodation, passenger transport equipment, development of restaurants and leisure facilities.

Tourism industry Direct contribution to GDP (constant $)

Capital investment in tourism industry


Source: Turkish Statistical Institute (Turkstat), Culture and Tourism Ministry

Turkey Tourism Market:International Tourists





Average expenses per capita ($) (H1 2014 H1 2017)

Top Ten Arrivals by Country of Origin (H1 2015 H1 2017)

According to Turkstat, the number of total foreign visitors to Turkey was 12.2 mn in H1 2017 as compared to 10.7 mn in H1 2016. Average expenses per capita foreigners occured as US$ 592 in H1 2017, showing a decrease of 8% from H1 2016 ( US$ 647).

The number of Turkish citizens residing abroad and visiting Turkey was 2.4 mn in H1 2017 (H1 2016, 2,6 million). Average expenses per capita for citizens residing abroad was US$ 862 in H1 2017, showing a decrease of 15% compared to H1 2016.

Tourism income from foreigners was US$ 6,8 billion in H1 2017, which composes 77% of the total tourism income.

Russia showed an increase of 820% with 1,7mn visitors and became the leader in the list after the improvement of political relations between Turkey and Russian Federation.

Even though the number of visitors from Germany to Turkey decreased by 17,05% in H1 2017, Germany continued to be the second in the visitors list with 1,25 mn people, followed by Georgia and Iran with 1,07 mn and 1,00 mn visitors, respectively.

In contrast to H1 2016, USA and Greece are off while Iraq and Russian Federation make appearance to the top ten list of by country of origin list.


Source: BMI Turkey Tourism Report Q3, 2017

Turkey Tourism Market: Current Scenario

1.3

International tourism receipts

Total Arrivals (in Millions)

2017 Tourism recovery underway; Boost in government investment raises hope

After a failed coup attempt and terrorist attacks last year, which battered the tourism market in Turkey, we are seeing encouraging signs in the sector this year. Tourist arrivals and tourism revenues have begun growing again.

It is expected to see the increase in tourism receipts by 6.7% Y-o-Y in 2017, driven by the expected growth of inbound tourists by 1.2%. Lower Turkish lira versus the US dollar is also expected to boost local currency denominated inflows.

Heightened security measures taken by the government will support the swift recovery of the tourism industry in Turkey.

Russia is one of the key sources for inbound tourism in Turkey. Hence, improving relations with Russia, post removal of sanctions and lifting of the travel ban, is also expected to support growth in tourism numbers during 2017.

According to BMI, governments investment boost is expected to provide a fillip to the economy and the sector.

Surge in investment in transport infrastructure, additional domestic flight routes (particularly from Ankara); and major hotel investment are key initiatives for the boost in tourism sector.

Turkey will be home to the worlds largest airport by passenger capacity - Istanbul New Airport (first phase) is set to open in 2018. Once complete, the airport will have capacity for 150mn passengers annually.

Galataport will be the new cruise terminal in Istanbul which will provide a modern port facility to sea travelers among other facilities like the first ever Peninsula Hotel in Turkey, an upscale shopping center and a fine F&B destination.

While the industry is seeing recovery, a cautious optimism about the near future should remain since changing international perceptions about the safety and security might take longer than changing actual facts.


Source: BMI Turkey Tourism Report Q3, 2017

Turkey Tourism Market: Opportunities & Challenges





Opportunities

A range of markets are catered for, from budget holiday through high-end and luxury resorts as well as a number of holiday variations can be chosen from sun&sea to cultural destinations, ancient ruins and historical sites or natural wonders such as Cappadocia as well as shopping opportunities.

Turkey has became one of the most preferred and popular destination for visitors from the Middle East and former USSR countries such as Ukraine and Georgia.

Turkeys popularity with Middle East tourists is on the rise as religion begins to take a prominent place in the countrys culture and politics.

Golf tourism is expected to pick up in the coming years, challenging established markets in Portugal and Spain.

Medical tourism is also expected to develop, attracting visitors from Europe and the Middle East.

The governments plans to increase winter travel would decrease seasonality of Turkeys tourism sector.

Government support for the sector should help secure the industry against difficult headwinds.

Revitalised diplomatic relations with Russia brings out new opportunities to increase touristic arrivals from this Turkeys once top tourist-providing country.

The tourism market is susceptible to seasonality, and more could be done to promote tourism outside of the summer season.

Regional instability including war in Syria, tension between the Gulf countries, political friction between EU (particularly German) and Turkey and terrorism in general remain as main concerns of the industry.

While relations between Russia and Turkey have stabilized, the sharp fall in particularly Russian visitors in previous year in addition to general decrease in arrival numbers has had substantial impact on room rates. The hoteliers will need some time for pulling back the rates to the previous levels.

A turndown in key source markets, especially the EU and Russia, would disproportionately hit receipts and industry value in general.

Challenges


Key highlights

In terms of transaction value and volume, tourism sector is not located in the M&A list for the first half of 2017.

The leading sectors in terms of value are Energy, Financial Services, and Transportation.

The leading sectors in terms of transaction volume are Energy, Transportation, and Manufacturing.

In the first half of 2017, there is no record of transaction for the tourism industry.

The most notable transaction in the tourism sector during 2016 was the acquisiton of Renaissance zmir Hotel by Strategic Internet Investments for US$ 47,4mn.

Other notable transaction was Jolly Tur, Gordion Teknolojis acquisition by Goldman Sachs.

Source: EY Analysis and Merger Market

Turkey Tourism Market: M&A Sectoral Breakdown (2017 H1)

1.5

Sectoral breakdown of target companies (in terms of transaction value)

Sectoral breakdown of target companies (in terms of transaction volume)


Turkey Tourism Market: M&A Sectoral Breakdown (2017 H1)


% of Intl Arrivals to Istanbul & other cities of Turkey (H1 2009 - H1 2017)

# of foreign visitors to stanbul and other cities of Turkey (H1 2009 H1 2017)

Source: Republic of Turkey Ministry of Culture and Tourism, Turkstat

Istanbul Tourism Market: Overview





Apart from being the cultural, historical and commercial pulse of Turkey, Istanbul has become the new shopping destination for tourists from Middle East as well as other emerging market countries.

As of the first half of 2017, 36% of the foreign tourists visiting Turkey chose Istanbul as their holiday destination, which demonstrates the importance of Istanbul in Turkeys tourism sector.

The Turkish Tourism Investors Association indicates that Istanbul has become the leading city in terms of hotel investments, given the boost to tourism initiatives.

Istanbul Culture and Tourism Directorate announced that the city welcomed more than 4,44 mn foreign tourists in H1 2016. Foreign tourists visiting Istanbul declined by 1% to 4,39 mn in H1 2017 compared to H1 2016.

While there is a decline in the number of foreign tourists visiting Istanbul, the number of foreign tourists visiting other cities of Turkey showed an increase of 25% from 6,30 in H1 2016 to 7,86 in H1 2017.


Source: Republic of Turkey Ministry of Culture and Tourism

Istanbul Tourism Market: International Tourists

2.2

The highest number of foreign visitors to Istanbul came from Germany (9,2% of the total visitors) in H1 2017. It was followed by Iran (7,7%) and Russian Federation (4,3%).

In H1 2017, while other nationalities showed a decrease in the number of visitors, Istanbul attracted more visitors from Iraq, Russian Federation, and Saudi Arabia in comparison to H1 2016.

Highest increase in terms of visitor numbers is observed among Iraqi visitors at a rate of 73,5% Y-o-Y. The visitor number increased from 106.801 in H1 2016 to 185.308 in H1 2017.

Foreign visitors from Russian Federation increased by 55,2% with the amelioration of political relations between Turkey and Russian Federation.

Foreign visitors from Saudi Arabia also increased by 20,5% from 155.025 in H1 2016 to 186.875 in H1 2017.

Visitors from USA shows the highest decrease by 29,1% from 180.391 visitors in H1 2016 to 127.855 visitors in H1 2017. USA is followed by UK, which shows a decline of 19,1% from 187.739 in 2016 to 151.890 visitors in H1 2017.

# of Foreign Visitors to Istanbul (2008 - 2016)Th

e N

ethe

rland

s

Top 10 Arrivals by Country of Origin to Istanbul (H1 2016 H1 2017)


Source: https://newsroom.mastercard.com/wp-content/uploads/2016/09/FINAL-Global-Destination-Cities-Index-Report.pdf, Istanbul Tourism Statistics Report, December 2016

Istanbul Tourism Market: International Tourists

2.2 (Contd.)Turkey Tourism Market




Top 5 feeder cities (Istanbul) According to the MasterCard Global

Destination Cities Index 2016, Istanbul ranked third in Europes Top 10 Destination Cities by International Overnight Visitors and Cross-Border Spending.

The city is the third fastest growing destination city in Europe with a CAGR of 7,8% in the period 2009-2016.

Istanbuls top 5 feeder cities are London, Jeddah, Dusseldorf, Tehran and Paris as of 2016. London was also the biggest feeder city in terms of visitor spending, estimated at US$ 306mn in 2016.

Istanbul is the city with fastest growing air travel connectivity, increasing its score by 26 points between 2009 and 2015.

The level of air travel connectivity for a city is measured in terms of both the scope of the citys connections with other cities by air travel, as well as the frequency within each connection. So, being located in a hub between the Middle East and Europe, Istanbul is more likely to benefit from the new airport located in the northern side of Istanbul which was tendered and contracted during 2013. The new airport is planned to be operational from 2018.

According to Istanbul Culture and Tourism Directorate, the number of foreign arrivals to Atatrk Airport and Sabiha Gokcen Airport recorded as 9,5mn and 2,3mn in 2015 and 7,2mn and 1,9mn in 2016, respectively.

London

000 Visitors (2016)

Visitor spending

(US$ mn) 2016

423 $306

Dusseldorf

000 Visitors (2016)

Visitor spending

(US$ mn) 2016

317 $265

Paris

000 Visitors (2016)

Visitor spending

(US$ mn) 2016

293 $183

Tehran

000 Visitors (2016)

Visitor spending

(US$ mn) 2016

315 $161

Jeddah

000 Visitors (2016)

Visitor spending

(US$ mn) 2016

319 $167


Source: BMI Turkey Tourism Report Q3, 2017; EY Analysis

Istanbul Tourism Market: Opportunities & Challenges

2.3

Opportunities

Due to ever increasing demand for high profile meetings and conferences, business tourism is expected to result in higher average spending per visit and higher tourism revenues.

Increasing domestic travel habits is further expected to boost tourism in Istanbul.

Promising upward trend in the number of Middle Eastern tourists visiting Istanbul after the removal of visa requirements for Middle Eastern countries in 2010.

Development of health tourism, attracting visitors from both Europe and the Middle East.

New attractions such as theme parks and extensive shopping opportunities make Istanbul a preferred destination for both domestic and international tourists.

Istanbuls tourism office is placing a strong focus on cultural tourism, which is becoming one of the key attractions for visitors.

Improving relations with Russia after the removal of a travel ban sanctions is expected to support growth in 2017.

Surge in government investment in transport infrastructure like the new airport with up to 150 million people capacity and the new cruise ship port (Galataport), additional domestic flight routes and major hotel investments are expected to boost tourism in Istanbul and securing its place as a top travel destination.

Increased competition from other attractive and affordable destinations in Eastern Europe such as Croatia and the Czech Republic.

Competition with other Turkish destinations, such as Antalya which is the second most preferred city after Istanbul regarding the number of foreign visitors.

The risk of negative impact on the growth of Turkeys tourism in the short or medium term because of global economic issues.

International, regional and local political and social issues that may affect the tourism industry.

Brexit may affect tourism in Istanbul since the UK is fourth in terms of number of foreign visitors to Istanbul.

Usual megapolis issues such as traffic jam, air pollution, dense urbanization and alike.

Challenges

Turkey Hospitality Market


Number of hotel rooms by city in Turkey (2016) Top 5

Turkeys hotel data (2014 2021)

Source: BMI, Turkey Tourism Report Q3 2017; Culture and Tourism Ministry,

Turkey Hospitality Sector 3.1





In terms of tourism operation licensed rooms by city in Turkey, Antalya was the leader with 193.506 rooms, followed by Istanbul and Mugla with 51.483 and 51.146 rooms in 2016 respectively.

According to BMI, an increase in the number of hotels and accommodation establishments is expected in near future.

Average length of stay by tourists is expected to increase from 1,6 in 2017 to 1,8 nights in 2018 and then remain stable between 2018-2021 at 2,1 nights per visitor.

According to BMI forecast demand is unlikely to outstrip increase in supply (of hotel rooms), which is expected to result in falling of the average occupancy rate to 30,2% in 2021 from the peek level of 36,3% of 2014.

2014 2015 E 2016E 2017 F 2018 F 2019 F 2020 F 2021F

Number of hotels and establishments, 000 5,64 5,64 4,81 4,94 5,09 5,37 5,71 6,07

Total overnight stays, 000 21.358 12.855 8.992 12.007 12.657 13.312 14.081 14.829

Average length of stay, nights 2,1 1,8 1,6 1,6 1,8 2,1 2,1 2,1

Hotel rooms, 000 165,21 165,16 141,70 147,85 152,23 160,57 170,73 181,31

Occupancy rate, % 36,3 31,3 29,2 28,5 29,7 30,2 30,4 30,2


Turkeys hotel industry is in the midst of a significant development boom, with many major management companies looking to expand their presence within the country.

According to BMI, while regional insecurity is a concern, international hotel groups have identified the long-term potential of Turkey, and have continued to push through investments in the country.

The tourism sector is set to benefit from substantial investment in supporting transport infrastructure like Istanbul New Airport and Galataport Project, which will provide a modern port facility with extended capacity for cruise ships.

Despite uncertainty in the market, Turkeys tourism sector is still attracting significant investments. One of the newest hotels to open is the luxury resort of Paramount Hotels & Resorts first ever Turkish facility located in Bodrum.

Galataport will host first ever Peninsula Hotel in Turkey, which will enhance the collection of luxury hotel brands in Istanbul.

Global Hotel Group Presence in Turkey Hotel brands present in Turkey

Accor HotelsOperates 36 hotels across Turkey, including 19 hotels in Istanbul. Ten are under the Ibis brand, with the others under the Mercure and Novotel brands. The company opened a Ibis Hotel in Konya in May 2015.

Ibis, Mercure, Novotel, Swissotel, Fairmont, Raffles

Best Western Operates 14 hotels in Turkey, 6 of which are located in Istanbul. Best Western, Best Western Plus, Best Western Premier

Carlson Rezidor Hotel GroupOperates 11 Radisson Blu properties across Turkey, including seven in Istanbul. The company plans to open new hotels in Ankara, Samsun and Izmir.

Radisson Blu

Hilton Operates 55 hotels in Turkey, including 18 in stanbul across its Hilton, Conrad, Hampton, Garden Inn and Doubletree by Hilton brands.

Conrad, Doubletree by Hilton, Hilton Hotels and Resorts, Garden Inn, Hampton

Hyatt Operates three hotels in Turkey, all in Istanbul, catering to the luxury travel market. Grand Hyatt, Park Hyatt, Hyatt Regency

InterContinental Hotels GroupOperates 13 hotels in Turkey across its Crowne Plaza, Holiday Inn and Holiday Inn express brands. Also has two Crowne Plaza properties under development in Istanbul and one Holiday Inn property at Gaziantep.

Crowne Plaza, Holiday Inn, Holiday Inn Express, InterContinental

MarriottOperates 10 hotels in Turkey, with seven in Istanbul and one each in Ankara, Antalya and Izmir.

JW Marriott, Marriott Hotels & Resorts, Renaissance Hotels, Ritz-Carlton, AC Hotel by Marriot

Starwood

US-based hospitality company Starwood Hotels & Resorts Worldwide has 19 properties in Turkey. St Regis Istanbul is the brands first property in the country. Plans to develop 30 new properties in Europe including Turkey over the next five years, with one set to open in Izmir by March 2017. The company merged with Marriott in 2016.

Le Meridien, Aloft, Sheraton, St. Regis, Four Points by Sheraton

WyndhamOperates 56 hotels across Turkey across a range of brands including 19 in Istanbul. This is a result of a massive expansion from 17 hotels in 2014.

Ramada, Wyndham, TRYP

Source: BMI, Turkey Tourism Report Q3 2017

Turkey Hospitality Sector: Major Players

3.2

Top global hotel groups operating in Turkey


Source: Merger Market, Capital IQ and EY Analysis

Turkey Hospitality Sector: M&A deals since 2011





Announced Date Target HQ/Location Acquirer

Deal value

(USDmn)

Stake(%)

EV (USDmn)

EV/ Revenue

(x)

EV/ EBITDA

(x)

EV/ EBIT (x)

Mar, 2017 Kervansaray Bodrum Resort

Mugla, Turkey Mega Varlk Yonetim A.S.

13,0 n/a n/a n/a n/a n/a

Oct, 2016 Renaissance Izmir Hotel Izmir, Turkey Strategic Internet Investments

47,4 50,0 94,8 n/a n/a n/a

Dec, 2015 Reysas Turizm Yatirimlari ve Ticaret Ltd. Sti.

Sancaktepe, Turkey

Reysas Gayrimenkul Yatirim Ortakligi AS

4,7 34,2 13,8 n/a n/a n/a

Nov, 2015 Mardan Palace Hotel Antalya, Turkey Halkbank 127,0 100,0 127,0 n/a n/a n/a

Nov, 2015 Dedeman Kapadokya Hotel

Istanbul, Turkey Dorak Holding n/a 100,0 n/a n/a n/a n/a

Oct, 2015 Skytower Hotel Atayol Duzce, Turkey Strategic Internet Investments

63,0 100,0 63,0 n/a n/a n/a

Jun, 2015 Surmeli Efes Hotel Istanbul & Ankara & Adana, Turkey

Peninsula Group n/a n/a n/a n/a n/a n/a

Feb, 2015 Kontes Beach Hotel Marmaris, Turkey

Nasser Ahmed Ali A. Al Thani (private investor)

7,9 100,0 7,9 n/a n/a n/a

Feb, 2015 Royal Palace Hotel Aydn, Turkey Ahmet Yilmaz and Ahmet Candan (private investors)

6,0 100,0 6,0 n/a n/a n/a

Feb, 2015 Marina Vista Hotel Bodrum

Bodrum, Turkey Milta Turizm letmeleri

19,2 100,0 19,2 n/a n/a n/a

Nov, 2014 Karinna Hotel Bursa, Turkey Harput Holding 18,0 100,0 18,0 n/a n/a n/a

Nov, 2014 Istanbul Sabiha Gokcen Intern. Airport Invest. Dev; LGM Havalimani Isletmeleri Ticaret

Istanbul, Turkey Malaysia Airports Holdings Berhad

348,0 40,040,0

870,6 n/a n/a n/a

Nov, 2014 Istanbul Sabiha Gokcen Intern. Airport; LGM Havalimani Isletmeleri Ticaret; Istanbul Sabiha Gokcen Uluslararasi

Istanbul, Turkey TAV Havalimanlari Holding

369,0 40,040,019,6

n/a n/a n/a n/a



Deal value

(USDmn)

Stake(%)

EV (USDmn)

EV/ Revenue

(x)

EV/ EBITDA

(x)

EV/ EBIT (x)

Oct, 2014 Aktay Turizm Yatirimlari ve Isletmeleri AS

Istanbul, Turkey Ozak Gayrimenkul Yatirim Ortakligi AS

2,9 3,4 87,2 n/a n/a n/a

Oct, 2014 Ulaslar Turizm Yatirimlari ve Dayanikli Tketim Mallari Ticaret Pazarlama AS

Ankara, Turkey RE Grup Dis Ticaret AS

0,2 6,7 6,7 2,6 11,5 21,3

Apr, 2014 Yoo2 Taksim Hotel Istanbul, Turkey Lucis Global n/a 100,0 n/a n/a n/a n/a

Mar, 2014 Dedeman Ankara Hotel Ankara, Turkey Latanya City Hotel n/a 100,0 n/a n/a n/a n/a

Feb, 2014 Hotel Ephesus Princess Aydin, Turkey FTI Group 15,8 50,0 16,0 n/a n/a n/a

Feb, 2014 Net Turizm San. ve Tic. AS

Istanbul, Turkey Net Holding A.S. 52,0 32,2 222,5 12,1 9,6 10,7

Jan, 2014 Aktay Turizm Yatirimlari ve Isletmeleri AS

Istanbul, Turkey Ozak Gayrimenkul Yatirim Ortakligi AS

27,5 32,0 56,7 n/a n/a n/a

Dec, 2013 Istanbul Sabiha Gokcen Intern. Airport Invest. Dev; LGM Havalimani Isletmeleri Ticaret


405,4 40,040,0

405,8 n/a n/a n/a

Dec, 2013 LGM Havalimani Isletmeleri Ticaret ve Turizm AS


92,5 40,0 231,3 8,6 n/a n/a

Dec, 2013 Dedeman Hotels and Resorts International

Istanbul, Turkey Murat Dedeman n/a 49,0 n/a n/a n/a n/a

Nov, 2013 Dedeman Antalya Antalya, Turkey Barut Hotels 80,0 100,0 80,0 n/a n/a n/a

Nov, 2013 Net Turizm San. ve Tic. AS

Istanbul, Turkey Net Holding A.S. 129,0 42,9 218,3 9,5 n/a n/a



3.3 (Contd.)




3.3 (Contd.)Turkey Tourism Market





Deal value

(USDmn)

Stake(%)

EV (USDmn)

EV/ Revenue

(x)

EV/ EBITDA

(x)

EV/ EBIT (x)

Nov, 2013 Yenipark Turizm Sanayi Ticaret AS

Ankara, Turkey BERA Turizm Seyahat Insaat Tic. AS

n/a 100,0 n/a n/a n/a n/a

Aug, 2013 Yeditepe Beynelmilel Otelcilik Turizm ve Insaat

Istanbul, Turkey Aksoy Holding AS 41,1 26,0 158,1 n/a n/a n/a

Jul, 2013 Club Magic Life Kemer Imperial Hotel & Seven Seas Hotel Manavgat

Aksaray & Antalya, Turkey

Otium Otelcilik Turizm Tic. AS

71,1 100,0 71,1 n/a n/a n/a

Jul, 2013 Best Western Plus Khan Hotel

Antalya, Turkey Guncem Turizm 8,3 100,0 8,3 n/a n/a n/a

Jul, 2013 Net Turizm San. ve Tic. AS

Istanbul, Turkey Net Holding AS 111.9 47,5 n/a 8,8 n/a n/a

May, 2013 Maca Kizi Hotel Bodrum, Turkey Dogus Turizm Saglik Yatirimlari ve Isletmeciligi San. ve Tic. A.S.

n/a n/a n/a n/a n/a n/a

Apr, 2013 Kemer Resort Hotel Antalya, Turkey Barut Hotels 57,0 100,0 57,0 n/a n/a n/a

Nov, 2012 Istanbul Doors Restaurant Group Ltd

Istanbul, Turkey Dogus Holding AS n/a 100,0 n/a n/a n/a n/a

Aug, 2012 Atac Turizm A.S. Istanbul, Turkey Atac Insaat ve Sanayi AS

32,0 39,99 80,0 n/a n/a n/a

Dec, 2011 Swissotel Gocek Marina & Resort

Mugla, Turkey Dogus Holding AS n/a 100,0 n/a n/a n/a n/a

Sep, 2011 Suntopia Sarigerme, Turkey

First Choice (Turkey) Limited

40,1 51,0 78,7 n/a n/a n/a

Feb, 2011 Kartanesi Hotel Bursa, Turkey Akdeniz Insaat ve Egitim Hizmetleri AS

42,0 100,0 42,0 n/a n/a n/a

Jan, 2011 Carian Bay Spa & Beach Residences

Bodrum, Turkey EIIB Invest Co SPC 3,9 n/a n/a n/a n/a n/a


Hotel performance indicators: Istanbul

Key characteristics of hotel industry in major tourist cities

Source: STR June 2017 Report

Istanbul Hospitality Sector4.1





According to HotStats data, Gross Operating Profit per available room (GOPPAR) at hotels in Dublin has increased by 17,0% while Istanbul witnessed a decline of 73,0% in Feb 2016 Feb 2017 period as compared with the same period of previous year.

According to STR June 2017 Report, Istanbuls hotel occupancy rates increased by 8,3% Y-o-Y.

The ADR of hotels in Istanbul suffered a 24,8% decline year-on-year for the month of June 2017, which led to a decrease of 18,5% of RevPAR for the same period.

Feb 2015 Feb 2016 (in EUR) Feb 2016 Feb 2017 (in EUR)

Occupancy A.R.R RevPAR GOPPAR Occupancy A.R.R RevPAR GOPPAR

Dublin 85,10% 143,20 121,89 67,84 84,00% 161,38 135,51 79,40

Frankfurt 72,30% 148,95 107,66 54,13 74,10% 145,28 107,65 54,61

Istanbul 60,9% 104,92 63,86 28,72 45,90% 84,65 38,88 7,75

Current Month (EUR) Jun 2016 Jun 2017 % Change

Occ % 39,9 43,2 8,5

ADR 86,27 71,16 -17,5

RevPAR 34,38 30,77 -10,5

Year to date (EUR) Jun 2016 Jun 2017 % Change

Occ % 49,2 53,3 8,3

ADR 96,24 72,38 -24,8

RevPAR 47,36 38,58 -18,5

Source: HotStats, Europe Chain Hotels, Market Review Briefing Data


Source: TUROB June 2017 stanbul Hospitality Data

Istanbul Hospitality Sector: Capacity

4.2

Number of Facilities Number of Rooms Number of Beds

Category European side Asian side European side Asian side European side Asian side

5 Star Hotels 79 19 19.537 4.981 39.516 9.960

4 Star Hotels 109 12 12.449 1.148 24.911 2.275

3 Star Hotels 99 18 5.829 1.182 11.426 2.291

2 Star Hotels 40 4 1.437 146 2.757 295

1 Star Hotels 6 1 144 19 271 38

Special Category Hotels

112 12 4.220 411 10.694 819

Boutique Hotels 15 2 732 42 1.468 84

Apart Hotel 2 1 58 36 154 72

Pensions 3 1 26 9 52 18

Hostel 1 - 123 - 166 -

Sub-total 466 70 44.555 7.974 91.415 15.852

Majority of hotels in Istanbul are of 5-Star Hotels assessed by the number of the rooms.

Middle and lower segments remain relatively weak compared to the upper segment hotels, indicating that there is a growth potential for these categories in the future.

As of June 2017, the number of touristic facilities on European side is 466 with a total 44.555 room capacity; whereas on Asian side there are 70 facilities with 7.974 room capacity.

Number of tourism facilities on European and Asian side of Istanbul, June 2017


Source: Republic of Turkey Ministry of Culture and Tourism, General Directorate of Investment and Enterprises, 2016

Istanbul Hospitality Sector: Hotel types





Hotel Type Nights Spent Average Length of StayOccupancy

Rate %

5 Star Hotels 7.541.460 2,0 48,36

4 Star Hotels 4.561.654 2,5 51,28

3 Star Hotels 2.231.631 2,2 48,27

2 Star Hotels 531.740 1,6 46,84

1 Star Hotels 187.819 2,5 55,09

Hotel Type Nights Spent Average Length of StayOccupancy

Rate %

5 Star Hotels 6.852.011 2,0 41,60

4 Star Hotels 4.038.882 2,4 43,21

3 Star Hotels 1.817.628 2,1 38,47

2 Star Hotels 416.731 1,7 38,64

1 Star Hotels 164.351 2,6 55,09

Accommodation by hotel type, 2015

Number of nights spent, by hotel type 2016

Accommodation by hotel type, 2016

Change in the occupancy rates of hotel types (2016 vs 2015)


Source: Republic of Turkey Ministry of Culture and Tourism, Municipality Report 2016

Istanbul Hospitality Sector: Hotel types

4.3 (Contd.)Distribution of Foreigners vs. Citizens by

hotel type (2016)

Number of Arrivals by Hotel Category, Foreigners

Number of Arrivals by Hotel Category, Locals

Percentage of Arrivals and nights spent by Foreigners vs. Citizens (2016)

Percentage of Arrivals by Foreigners vs. Locals

Percentage of Nights Spent by Foreigners vs. Locals

According to the municipality report, foreign visitors mostly prefer 5 star hotels with a 52,0% proportion, followed by 4 stars with 31,0% and 3 stars with 14,0% respectively.

Locals also prefer 5 star hotels with a 57% proportion, followed by 4 stars with 21% and 3 stars with 14% respectively.

In terms of number of arrivals to these five types of hotels, foreign visitors have the major proportion; specifically for 4 stars hotels. 5 star hotels are also preferred mostly by foreigners with a 61% proportion.

Similarly, nights spent by foreigners has higher proportion as compared to locals.


Source: EY Research, Hotel News Now, JLL Turkey Commercial RE Market Overview 2016 Year- End Report, JLL Turkey Jan 2017 report

Istanbul Hospitality Sector: Investments





Major international and local hotels opened in

2013

MN naat Miracle Istanbul Asia Istanbul 219

Shangri-La Hotels and Resorts

Shangri-La Istanbul Istanbul200

Accor Ibis Otel Esenyurt Istanbul 156

2014

Fairmont Raffles Hotels International

Raffles Istanbul Zorlu Center

Istanbul184

Morgans Hotel Group

10 Karaky Istanbul71

Hilton Worldwide & IC Holding

Hilton Istanbul Bomonti Hotel & Convention Centre

Istanbul 829

Hilton Worldwide Hilton Garden Inn Kasmpaa

Istanbul 200

Hilton Worldwide Hampton by Hilton Kayaehir

Istanbul 142

Wyndham Wyndham Grand stanbul

Istanbul 389

Silence Silence stanbul Hotel & Convention Center

Istanbul 340

2015

Morgans Hotel Group

Mondrian Hotel Istanbul 128

InterContinental Hotels Group

Holiday Inn Express Istanbul Airport

Istanbul 110

Hilton Worldwide Hilton Garden Inn Istanbul Airport

Istanbul 217

Hyatt Hotel Group

Hyatt Regency Ataky Istanbul 284

Regis The St. Regis Istanbul Istanbul 118

Soho House Soho House Istanbul Istanbul 105

Mercure Mercure Istanbul Topkapi

Istanbul 204

Sheraton Four Points by Sheraton Istanbul Dudullu

Istanbul 182

Hilton Double Tree by Hilton Istanbul Piyalepaa

Istanbul 203

Company Name Hotel City # of Rooms

Company Name Hotel City # of Rooms

2015

Sheraton Four Points by Sheraton Istanbul Batehir

Istanbul 144

Sheraton Sheraton Istanbul Atasehir Hotel

Istanbul 160

Choice Hotels International

Clarion Hotel stanbul Airport North

Istanbul 237

Rotana Hotel Management

Tango Arjaan Istanbul 188

Rotana Hotel Management

Burgu Arjaan Istanbul 222

2016

Rezidor Hotel Group

Radisson Blu Residence Istanbul Batisehir

Istanbul 171

Steigenberger Hotels and Resorts

Steigenberger Hotel Istanbul Airport

Istanbul210

Accor Hotels Pullman Istanbul Airport and Convention Center

Istanbul403

Accor Hotels Novotel Istanbul Bosphorus

Istanbul 200

Dedeman Hotels Dedeman Park Bostanc Istanbul 110

Accor Hotels Mercure Istanbul Airport

Istanbul 377

Accor Hotels Ibis Istanbul Airport Istanbul 96

Hilton Worldwide Hilton Istanbul Bakirkoy Istanbul 305

Hilton Worldwide Hampton by Hilton Istanbul Sabiha Gokcen Airport

Istanbul148

Hilton Worldwide Hampton by Hilton stanbul Zeytinburnu

Istanbul 164

2017

Fairmont Hotels Fairmont Quasar Istanbul

Istanbul 207

Accor Hotels Ibis Hotel Tuzla (Q117) Istanbul 100

Golden Tulip Hotels

Golden Tulip Bayrampaa (Q117)

Istanbul169

Accor Hotels Mgallery Istanbul Galata (Q217)

Istanbul 85


Contact us

Mfik CantekinlerPartner Head of Transaction Advisory Servicesstanbul, Turkey

Tel +90 212 408 5570Fax +90 212 248 [email protected]

Mehmet KkkayaPartnerReal Estate Industry Leaderstanbul, Turkey


Alp N. enDirector Transaction Real Estatestanbul, Turkey


Pinar imekManagerTransaction Real Estatestanbul, Turkey



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