Emphasizing that Turkey has always been a major tourism destination, Accor Turkey CEO Murat Kadaifçioğlu says"We believe in Turkey's potential and we want to grow even larger. Our target is to reach 50 hotels in Turkey as soon as possible. We target at least 30 hotels in Istanbul". Accor Hotels is the largest hotel group in Europe, as well as one of the top three in the world. The group had a direct impact on the standards of urban hotel management industry since many years. We talked with Murat Kadaifçioğlu, Country Manager of Accor Turkey, about the group’s operations in Turkey, its partnership with Akfen Holding since 2005, its targets in the market and its new projects to come. Can you tell us about Accor’s hotel management vision that has successfully put you to the leadership in Europe? Accor mostly owns its hotels. Our own investment ratio reached 37 percent a while ago. But now, we choose to exhilarate our growth strategy with the management and franchise model. We abstain from the rental model because we have the capability to invest. We think “why not own it instead of renting”. We care about constant project development in certain principles. For us, creativity, innovation and respect of human are the core values. All the employees in Accor hotels around the world can receive various kinds of trainings. For example, if a receptionist in Trabzon shows a promising performance, he/she can apply for the leadership training organized in France. We are a company that constantly evaluates itself through the eyes of its employees. We periodically carry out employee satisfaction surveys with our 178 thousand employees to determine which areas are problematic in the operation. Besides, Accor does not enter a country for only 1-2 hotels; it’s very aggressive in each market but never alone. As Accor, we always look for a partner in different markets. I must say we choose our partners very selectively. When Accor enters a market, it wants the partner it is going to work with to be an ethical and loved investor in its community. Akfen Holding is a significant partner for you. How did you meet with them and decided to invest together? In 2004 when the deadline of our contracts were approaching, we were persistently offering projects to France. However the managers in France at the time were not quite open to investments in Turkey. Back then, I would constantly drive to the airport and pass from the same route. One day I saw a pin board on the side of the road, reading “Hotel construction site”. It was the pin board of Akfen-Yüksel partnership. I saw it the day it was put out. A friend of mine said he knew Mr. Süha. So we arranged a dinner together. They must have liked my ideas, because soon after, they wanted to arrange another meeting. Every manager in the teams of Akfen Holding and Yüksel Construction were present at the meeting including Hamdi Akın. It was obvious that Mr. Akın was very aggressive in his plans, he offered to “construct a five-star hotel together”. I believed he was correct in his offer because there were many international five-star hotels in Istanbul. So it would make sense to enter the market with the full standardized hotels of Accor as are the Group’s landmark. Then I had to start working on convincing both Mr. Akın and the managers in France to this idea since back then, one of the advisors, who had significant services here in Turkey as well, reported that “it was not convenient to construct neither an airport, nor an urban or historical hotel in Istanbul”. He would argue that Istanbul did not offer any value. He could be right for the ones with blind eyes however in this business, you have to be able to see the future. Then how did you convince France? Our Chairman at the time, Monsieur Pélisson would keep saying “That country is dangerous, I will not invest a penny there!” Then, I found a way to invite Monsieur Pélisson to play golf in Turkey. He arrived here with his private jet, in which he could oversee the Istanbul view from atop. We told him about all the foreign investors in Istanbul. He was very impressed by what he heard and saw, and at the end of that trip he told me “We fly to Brazil to acquire hotels there but never thought of Turkey before. I thought Istanbul would be the same as 1968, when I last visited the city. There were soldiers everywhere, we could not even go to sightseeing at the time, we only traveled from the airport to our hotel, Hilton.” When we were saying goodbye, he told me he wanted at least 10 hotel investments in Turkey in the next five years. Finally we signed the deal in 2005. Our strategy was to build 50 hotels from scratch. Akfen Holding brought together all the right players in time to make this come true. And within only two years, we opened our first hotel. I believe that was a great success story. Today the number of our hotels reached 14. This is by far the highest number that a group has achieved in Turkey. How do you work together with Akfen Holding? What is your collaboration model? Akfen Holding rents us the hotels that are Accor standards. We pay the rent by according to the income of that hotel. We are the only two companies in Turkey working with that business model. This model is our own with Akfen. Today we have 21 hotels; 7 of them are operated under the franchise and management model. This year we will have 7 other new openings. We are active in 9 cities and all of these cities are determined by our strategic partnership with Akfen. How has the tourism and accommodation industry been affected by the recent developments in the country and the region? Turkey is a big country with almost 80 million population. It might be affected by the economic pressure and other problems arising from the region. However, it has the power to overcome these issues. It has always succeeded on that throughout its history. It will always be an attractive destination. In our strategy, we believe in Turkey’s greatness, we believe we need to grow bigger here. Our target of reaching 50 hotels in Turkey has not changed. Currently, we have around 10 hotels operating in Istanbul, we aim to make it at least 30. We think some of our brands that has not enter Turkey should be here soon. For example, we want to bring Sofitel here and we will. What is your Sofitel strategy? As it will be the flagship brand, we need to find the right place and location for Sofitel because why would I invest in a location that I can sell with the Mercure prices? When a potential investor insists on Sofitel, I say “Let’s do the math, we have built a luxury hotel. These are the prices we can sell the rooms, this would be your occupancy rate, and you would return your investment in 50 years, however when you build a Mercure hotel in the same location, you will get your money back in 9 years.” I like to have long-term relations with my investors. I always want them to get more with their investments. You will not want to make another investment until you get your money back in 50 years. My job is to direct them to wise decisions as growth is my objective. It would not be right to make an investor play lottery; we should lead them to the right decision. I want them to win because otherwise I will also not earn money when they lose. Can you tell about your 2015 financial numbers? Our revenue per room in 2015 fell behind 15 to 19 percent from our earlier expectations, and 11 percent from last year’s numbers especially in Istanbul. We have managed to reach to the desired occupancy rates in Anatolia, however, as part of the competition environment rising from the economic and political developments, we fell behind our numbers in the revenue per room. We had to make a deduction in our prices. We earned less in 2015 but we managed to keep our earnings. Still we were 23 percent behind our expected income. That’s why we have developed dual budgets for 2016. The first one is for “bad as 2015” for things to go normal. The second one is for the scenario for when things go even worse than 2015. We have been seeing these effects since November. You can estimate the expenditure but never anticipate your income in our industry. You had your last opening in Karaköy, Istanbul. Can you tell us more about Novotel İstanbul Bosphorus? Karaköy is the center of Istanbul, but it has been forgotten for a long time. This is actually where trade and history were made. I believe Karaköy to develop again because there is no reason to keep people from going there. There are huge amounts of investments in the location. Its history is deemed to be protected nowadays with projects like Galataport. Thanks to Akfen, we managed to make an investment there. Akfen put the money in it, we tried our best to build the best hotel. Karaköy is the latest version of Novotel. It is a flagship among all the Novotels in the world. Today when investors decide to build a Novotel in Dubai or Netherlands, they will look up for Karaköy example. I am grateful for Akfen. As our land owner, they have done a lot to make this dream come true. Now our duty is to make the best of it with promotional activities. I would like everyone who is passing there to see this concept. When you enter the building, you feel as if you have gone into a summer hotel. Shiny daylight entering the building makes it glitter. For me, this is how a real five-star hotel should be in Turkey. The rooms are fixed with 24 square meters in Novotel which is 27 square meters in Sofitels. After Karaköy, Novotel has passed the flexibility analysis and from now on, this will be our concept for Novotels. We have an indoor pool in the ground floor, we have a hammam. These are not originally on the list of our Novotel concept but we wanted to make the best hotel, for the benefit of our guests. The rooms have been designed with the simplicity of Accor standards, but with a thorough observation of every need of our guests. There is nothing that we missed out. When you enter the building, there is no chance that you will not feel this dynamism. The concept flourishes with energy with all of its aspects. with the approval of our board of directors, we used the Nextroom concept, that was developed in 2014. We will start the renovation of all the social areas in the hotel this year. We will renew it all. In this industry, you have to keep renewing yourself all the time. Moreover, we are creating a separate restaurant brand in our Karaköy hotel. This is a great work for us. We have been working together for the last six months with Akfen, Autoban and Mehmet Gürses to create this specific concept over a location of 800 square meters. We have not determined its name yet but we carried out detailed analysis, personnel trainings and laboratory studies. We aim to launch the restaurant in the second half of June. We have huge expectations from this restaurant and we are very excited.