The Sun, the Sea and the Turks

In May 2012, when Turkish Dogus Group acquired the majority shares of the luxurious five-star Capri Palace Hotel, located in the heart of Anacapri and famous for its international celebrity clientele, it did not create much of a stir in Italy or Turkey. The transaction looked more like a partnership, as the hotel would go on being managed by Tonino Cacace, previous owner and current minority shareholder, while Dogus Group would support its growth and have access to its brand and know-how. Turkey’s Dogus has been growing in and out of Turkey at such a surprisingly fast speed in the restaurant and tourism industries during the last couple of years that this was just another transaction, one out of many. Maybe that’s why it went largely unnoticed.

Conversely, in October 2013, when Turkish Permak Group acquired the Venice lagoon island of San Clemente together with the five-star 205-room hotel on it, the deal made headlines. Here was an island in the very heart of Venice, one of the world’s top tourist destinations, and a luxury hotel with a view of San Marco. The hotel had been closed since 2012 when it was placed in insolvency administration, and the Turkish Permak acquired the real estate, together with the assets on it, from a consortium of banks. Here is a case when the Turks seized the opportunity. When the €25mn restructuring work is finished, Permak will proudly reopen the doors of the resort, hopefully in April 2014.

The Mediterranean region is by far the world’s most competitive zone in terms of tourism. There are four Mediterranean countries, France, Spain, Italy and Turkey, listed among the world’s six highest-ranked countries according to the number of international tourist visitors. Turkey ranks six with 36mn visitors per year, right after Italy with 46mn visitors.

What’s unique to Turkey, though, is the fact that it is last decade’s fastest growing tourist destination among these four countries. The cumulative average growth rates of international tourist numbers in France, Spain and Italy are in the range of 0.6%-1.6% for the last decade, whereas it is an impressive 12% for Turkey. Isn’t that a two-thumbs-up performance?

Today tourism is a $37bn industry in Turkey, and its contribution to the overall GDP is around 4%. With the explosive growth that happened in the last decade, local entrepreneurs and groups who have long been operating in the industry grew bigger and bigger, accumulating a significant amount of experience, know-how and, of course, wealth. Turkish growth attracted big international hotel groups like the Four Seasons, Hilton, Marriott, etc., who invested large sums in Turkey. This has made the local tourism industry a highly competitive one, forcing local groups to improve quality across the board. Today, Turks can construct the best hotels, cook the best meals, and provide their guests with the best service. In short, they’ve matured to be globally competitive. And that’s exactly what they want: to compete globally; to create their own international hotel chains; to be among the leaders in the international market.

In the last three to four years, we’ve heard about Turkish companies acquiring hotels in Greece, Germany, and now Italy. Do you think we will hear of more acquisitions or partnerships in Italy? I think so. As one of my executive contacts in the Italian tourism industry says, ‘Opportunities in Italy are ample right now’.