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Istanbul, straddling both Europe and Asia, stands as a dynamic metropolis pulsating with history, culture and modernity. With a population of 16.4 million in 2026, Istanbul is not only Turkey's largest city, but also Europe’s most populous city and an overall global economic hub. The Old City, home to iconic historical landmarks such as the Aya Sofya, the Sultan Ahmet Mosque (Blue Mosque), Basilica Cistern and the Spice Market, drives much of the city's leisure tourism. In contrast, the New City is the modern face of the metropolis with its skyscrapers and shopping centres. Retaining some of the city’s history with its wooden houses, this district hosts historic sites such as the Dolmabahçe Palace and Clock Tower, Galata Tower, Nusretiye Mosque, Yildiz Palace and the Rumeli Fortress.

The city also attracts a substantial amount of corporate demand, with the financial districts of Levent and Maslak housing the headquarters of major Turkish companies and international financial giants. Istanbul’s strong cultural appeal continues to generate significant foreign visitation, which accounts for approximately 65% of arrivals, alongside around 30% of corporate demand.

Turkey continues to navigate a complex and volatile macroeconomic environment. Inflation, which reached 58.5% in 2024, has been on a downward trajectory under the orthodox monetary policy framework introduced by Finance Minister Simsek, declining to 34.9% by 2025, which is still very elevated by any international standard. The Turkish lira depreciated a further 21% against the US dollar over the course of 2025, continuing its long-running managed decline. While lira weakness has historically been a stimulus for inbound tourism by improving affordability for foreign visitors, this dynamic has increasingly inverted. The lira depreciation that followed the opening of Istanbul Airport in April 2019 had briefly turbocharged inbound arrivals, but persistent inflation has since pushed hotel and hospitality prices well above general lira depreciation, making Turkey materially more expensive for key source markets such as Germany and the UK and driving some visitors to redirect trips to competing destinations. Istanbul nonetheless welcomed close to 12 million foreign visitors in 2025, a 19% increase year-on-year.

Political risk remained a material drag on investor sentiment in 2025. The arrest of Istanbul Mayor Ekrem Imamoglu in March 2025 heightened concerns over the rule of law and institutional stability, compounding earlier diplomatic strains with Western nations that had already weighed on international visitation. Alongside macroeconomic instability and rising operating costs, particularly payroll, these factors continue to present structural challenges for the city's hotel operators.

Against this backdrop, hotel performance in 2025 was mixed. Average rates grew in the mid 20% in local currency terms, but with inflation running at 34.9% this represented a real-terms decline, and therefore rate growth recorded was driven by price-level pass-through rather than genuine demand strength. In euro terms, the depreciation of the lira translated this into a 2% year-on-year average rate decrease, while occupancy edged down by one percentage point. In local currency, RevPAR remains some 20% below 2019 levels in real terms, reflecting the cumulative erosion of purchasing power over the period.

Supply expansion has been pronounced. Fifteen projects adding approximately 2,000 rooms opened across the city in 2025, followed by a further eight hotels (around 800 rooms) in the first quarter of 2026 alone. The forward pipeline comprises approximately 40 projects and 6,000 rooms scheduled to open over the next five years, representing approximately 7% of existing stock and maintaining sustained competitive pressure on established operators. Key forthcoming additions include the 397-key Istanbul Marriott West Hotel & Conference Center (late 2026), the 259-room Ramada Istanbul Sanayi Mahallesi (2027), and two major 2028 openings: the 483-key JW Marriott Istanbul and the 158-room Mandarin Oriental Etiler Istanbul.

Transaction activity remains limited given the complexity of pricing assets in a high-inflation, depreciating-currency environment, with few sellers willing to accept lira-denominated valuations and few buyers able to underwrite returns with confidence. In 2024, one hotel transaction was recorded: the 177-room Peninsula Istanbul was sold by Bilgili Holding to Dogus Group AS in October as part of the wider Galataport portfolio; no other properties have transacted since.

According to our 2026 European Hotel Valuation Index, hotel values in Istanbul declined by 7.6% year-on-year in euro terms.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

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Change In Value For Market: (€Euro)

Istanbul RevPAR Change (€Euro)

Istanbul RevPAR (€Euro)

For more information, please contact:

	Sophie Perret, MRICS, MBA Managing Director [email protected] +44 0 7725781037 (m)
	Maxime Gauthier Senior Associate [email protected] +44 0 7593572865 (m)