Hotel project investments down 42 percent in first 5 months

Incentive-based hotel investments have fallen 42 percent in the first five months of 2015 year-on-year, according to a report by the Turkish Hoteliers' Association (TUROB) released on Sunday.

While investment incentives for 148 projects totaled TL 2.6 billion between January and May of 2014, the figure fell to TL 1.5 billion for 114 projects this year, according to the report, which analyzed Economy Ministry figures pertaining to investment incentive certificates.

Investment incentive certificates were issued for projects in 38 provinces, with İstanbul and Antalya having the highest numbers, accounting for 37 of the 114 projects.

However, TUROB Chairman Timur Bayındır emphasized in an accompanying statement that tourism in Turkey should not be seen as being confined to İstanbul and Antalya, and that the decline in investment is largely the function of a supply-demand imbalance. He said it was noteworthy that none of the projects this year were centered around one or two-star hotels, pointing out that investment throughout Anatolia is becoming more common.

The decline in investment comes alongside a drop in occupancy rates. The country's average hotel occupancy rate fell 7.6 percent last month year-on-year, the largest drop in occupancy among the surveyed countries in Europe, according to an announcement from TUROB released last week.

While the overall occupancy rate for hotels in Turkey stood at 68.6 percent in June of 2014, that number dipped to 63.3 percent last month, said TUROB in its announcement, which cited figures from the STR Global analysis firm.

Average room prices have also dropped alongside falling occupancy rates, as the average room price stood at 149.1 euros in June of 2014, decreasing to 134.5 euros last month. Many upscale hotels have been forced to cut prices in an effort to attract visitors during a particularly rough period for the Turkish tourism sector, brought on by declining numbers of Russian tourists tightening their belts due to the weak ruble, and the perception of instability and uncertainty in the country spooking potential visitors.