Why Jumeirah's new Istanbul hotel with Kuzu Group may be premature

Jumeirah

The Ataköy district of Istanbul, Turkey, is poised to get a new $450 million mixed-use development that will include a Jumeirah hotel and 62 private residences managed under the Jumeirah brand.

The developer, Turkey’s Kuzu Group, has appointed Jumeirah Group, a member of Dubai Holding, to operate the property in the Sea Pearl development, which is anticipated to open in 2019. The 202-room hotel will be Jumeirah's second in Istanbul, following Pera Palace Hotel Jumeirah. The company also manages the Jumeirah Bodrum Palace on the Bodrum coast of the Aegean Sea. 

But with all of Turkey's recent problems, the development of a new hotel may be premature. Cetin Osman Budak, a lawmaker from the Republican People’s Party and former head of the Chamber of Commerce in Antalya, Turkey’s most popular resort city on the Mediterranean, called the country's tourism outlook “quite bleak,” and noted a 40-percent drop in reservations from Europe based on early bookings. Some seasonal properties in the resort town of Kemer did not bother opening this year. “Even big companies are keeping half of their hotel-chains closed because hotel managers are finding it harder to pay back loans,” Cetin Osman said.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

The government is trying to minimize the financial fallout by letting banks twice restructure as much as $17 billion in loans to tourism-related businesses before declaring them non-performing. It is also offered to pay salaries of 45,000 tourism workers for three months.

Source: Bloomberg

Suggested Articles

The hospitality arm of Frasers Property Group is planning to grow its Malmaison and Capri by Fraser brands over the next three to five years.  

The hotel is kicking off a brand that is poised to grow across both Israel and Western Europe.

A new report produced in collaboration with the Puerto Rico Tourism Co. outlines ways the island is attracting investment.