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Located on the Bosphorus strait, and lying on both the European and Asian sides, makes Istanbul the world’s only dual-continent metropolis. Istanbul is the largest city in Turkey and one of the most populous cities in the world, having a population of 15.6 million (2022). The Old City has most of the historic monuments that drive leisure demand, including the Aya Sofya, the Sultan Ahmet Mosque (the Blue Mosque), the Basilica Cistern, the Hippodrome, Topkapi Palace, Suleymaniye Mosque, the Grand Bazaar and the Spice Market. Meanwhile, with its skyscrapers and shopping centres, the New City is the modern face of Istanbul, although it does retain some of the city’s history with its wooden houses bordering the Bosphorus and historic sites such as the Dolmabahçe Palace and Clock Tower, Galata Tower, Nusretiye Mosque, Yildiz Palace and Rumeli Fortress. As well as leisure demand, the city also attracts numerous corporate travellers. The Levent and Maslak financial districts are home to the headquarters of Turkey’s largest companies and banks, as well as the local headquarters of global giants of the financial sector.

Istanbul’s strong cultural appeal as a tourist destination typically generates substantial foreign visitation (which accounts for roughly 65% of arrivals), although the city also benefits from around 30% of corporate demand. Hotel demand in Istanbul plummeted in 2016 and 2017 owing to the coup d'état attempt in July 2016 and various terrorist attacks. In 2018 and 2019, as stability returned to the city, the market experienced an impressive recovery, resulting in double-digit RevPAR rebounds both years. Moreover, the continued depreciation of the Turkish lira, coupled with favourable government actions, such as the development of a new airport that opened in April 2019, resulted in a demand boost for the city, mainly from international visitors. The pandemic-induced market downturn in 2020 extended well into the first half of 2021. From July 2021 onwards, the city saw occupancy rates above 60%, and this trend continued to the year’s end, resulting in a RevPAR recovery of more than 75%, in euro prices, compared to 2020. In 2022, the market was able to return to similar figures as 2019, achieving occupancy levels in the mid 70s, broadly in line with historical levels. Impressive rate growth has, however, only brought rates back to the levels before the coup d'état of 2016. The country also suffers from one of the worst rates of inflation in the world. It is worth noting that the war in Ukraine and the sanctions imposed on Russia as a result have led to substantial Russian demand being displaced to Turkey, as access to European markets became more difficult. This is a positive demand boost for Istanbul.

The city’s pipeline remains modest, with a couple of notable new openings in the coming years, including the 177-room Peninsula Istanbul (scheduled for 2023) and the 168-room Moxy Instanbul Beyoglu (expected to open in 2024). At the time of writing, we are not aware of any recent transactions in the market.

Our 2023 European Hotel Valuation Index indicates a value increase of 3.0%, in euro terms (74.0% in local currency), for properties in Istanbul. We highlight that the lack of transactions and the challenging economic environment for this country, including one of the highest inflationary environments in the world, make it particularly difficult to assess value changes in Istanbul. The elections, currently planned for May 2023 at the time of writing, might create further political instability for the country in the months to come.

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

ADR Change
Market Demand Change
Hotel Occupancy Increase/Decrease
RevPAR Change	0.0%	0.0%
Market Supply Growth

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 2078787722 (w) +44 0 7725781037 (m)