The new chief executive of the rapidly-expanding “The House” hotel chain has warned against sectoral excess, noting that the “void” observed in the market is being filled by unrealistic projects that could end up out of business.
“We see [companies] diving into such projects without any calculation,” Cenk Göktalay, the recently appointed chief executive officer of The House hotel chain, told a group of journalists last week. “There’s no regard whatsoever for balance sheets, profit-loss calculations and the like. Can you imagine a 100-million-euro project being entrusted to a single advisor?”
Without giving any names, Göktalay, a Toronto-educated manager, said claims to sell property for as much as 12,000 euros per square meter may end up in a disaster. “These big projects also ask for unbelievable amounts in shopping mall rents,” he said. “We’ve been seeing impossible figures, impossible buildings and impossible budgets.”
The House Hotel chain currently operates three hotels and has an apart operation in Istanbul. In February 2010, Irish private equity fund Kerten invested in the business, alongside its interests in Poland and Romania.
In the same past few years that the House chain has grown, Istanbul has seen billions of dollars invested in huge projects that include residential units, hotels, offices and shopping malls; some have interpreted the rapid growth as a sign that the construction and real estate sectors are overheating.
The House franchise builds upon a perceived void in the luxury segment, aiming at customers who wish to have other choices in Istanbul besides luxury giants such as Çırağan Kempinski and The Four Seasons. “We serve those who seek a five-star service in a warm, home environment,” Göktalay said. Daily room prices vary between 170 and 1,039 euros.
The House Hotel currently has a capacity of 117 rooms, including the apart operation. It plans to add at least one more boutique hotel to its Istanbul chain next year. The chain, which sports an occupancy rate of 84 percent, utilizes a “20 percent share from revenue” principle that’s attractive for landlords who plan to hand over their property to the company.
“We are currently in contact with 12 companies and are looking into 23 properties in Istanbul,” Göktalay said. “Three of these are good possibilities for us – in Maslak, Gümüşsuyu and Karaköy. We also wish to launch an apart operation in Ortaköy.”
Göktalay also gave hints of plans to open internationally in two to three years. “We may start with London,” he said. “The Dubai market is gone nowadays, but if it signals a return to its past glory, we may think of entering there. In Turkey, we see a potential in Ankara.”
Source - hurriyetdailynews.com
// 04.08.2011
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