What are Tourism Investment Funds?
Investment funds are known as participatory investment tools, based on collecting funds in investors in one pot to invest them all within the fund's projects and in the service of its objectives, so that the profits are divided among the participants in the fund according to their capital contributions.
Funds vary according to their specializations, if funds specialize in the real estate sector, they are known as real estate funds, or in the field of stocks, they are known as stock funds, and the same is the case in tourism investment funds, where these funds specialize in investing within the tourism sectors.
So, tourism investment funds are financial entities that invest investors' money in projects and companies working in the tourism sector, and these funds aim to achieve a financial return on their investments by taking advantage of the growth of this promising sector, especially in countries known for their distinctive tourism activity, such as Turkey.
How Tourism Investment Funds Work?
The mechanism of tourism investment funds is similar to other funds, although their investment tools differ due to the nature and specificity of the tourism sector.
Funds start their work by developing ambitious investment plans, utilizing existing or upcoming tourism projects in this sector, with an integrated business plan and investment strategies, after thoroughly studying the target tourism market.
The investment fund may or may not own some investment assets, then the investment fund publicizes itself among investors, to convince them of its investment plans and participate with their capital in its investments, which contributes to increasing the fund's capital significantly, and opens the way for it to engage in major investments with rewarding returns.
Tourism funds usually seek to diversify their investments to ensure profits and not take risks in a single investment, so their activities may span all aspects of the tourism industry, such as resorts, hotels, aviation services, amusement parks, and logistics companies. The essence of an investment fund's success is the success of its management, so tourism funds are usually managed by a specialized team of financiers and experts in the tourism sector.
According to each fund's business plan, profits earned from the fund's investments are periodically distributed to its participants, according to their shares, or these profits are added to their capital to grow their wealth.
Tourism investment funds are usually subject to numerous regulations and constant monitoring by governments and the Securities Commission, as is the case in Turkey, to protect investors' rights.
Sectors targeted by tourism investment funds
One of the most popular investment sectors that tourism investment funds seek to capitalize on:
1. Hospitality
It refers to a wide range of services that are offered to tourists in all areas of hospitality, such as Hotels, resorts, individual lodges, nature camps, luxury cruise ships, and restaurants, as well as investing in their own technology, such as online booking services.
2. Traveling
This includes everything related to travel and transportation services, such as airlines, tourist agencies, car rental and tourist transportation services, or even online booking services. This investment is either directly, or by investing in an existing company, such as a shareholding in an airline startup.
3. Entertainment
It refers to activities and facilities that tourists usually visit for leisure, such as clubs, amusement parks, museums, and other recreational activities such as adventure parks, water resorts, etc.
4. Tourist real estate
It is real estate used in hospitality services, through the construction, purchase, or investment of real estate facilities used in tourism services in general.
Advantages of investing in tourism sector funds in Turkey
According to data from the Turkish Statistical Authority (TurkStat), Turkey's revenues from the tourism sector in 2022 amounted to about $46.28 billion, and the Turkish Ministry of Treasury and Finance has set a goal of receiving 60 million foreign tourists in 2023 and increasing tourism revenues to $56 billion. Turkey aims to receive 90 million tourists in 2028 while raising tourism revenues to $100 billion.
It is known that the Turkish government attaches great importance to the success of the tourism sector, which is considered one of the main sources of national income, and works to develop it continuously; therefore, we find that this sector is characterized by its strong infrastructure and advanced tourism facilities, which has given Turkey an advanced position globally in the field of the tourism industry in general.
The encouraging statistical figures and the government facilities granted to investors in this sector make it an ideal option for investment and profits, whether through direct investment or through tourism investment funds, which are characterized by their management expertise and high capital, allowing them to diversify investments in many facilities and services.
Disadvantages of investing in tourism sector funds in Turkey
At the same time, there may be some disadvantages specific to the tourism investment sector that may affect the performance of investment funds, such as:
- The turbulence of the Turkish lira's exchange rate and the decline in its value affect the expected income of these investments.
- As well as the intense competition in this sector, both internal and external competition from countries with attractive tourist destinations, may affect tourists' decisions to choose Turkey for their vacations.
Investment strategies in tourism sector funds in Türkiye
Since tourism is one of the important pillars of the Turkish economy, investing in this sector through specialized investment funds can be an encouraging investment option.
Investors need to base their investments on well-thought-out strategies:
It is necessary to study the tourism market, its characteristics and development, and market trends in the next stage, to base investment decisions on stable and informed bases.
Then study the available tourism investment funds and differentiate between them based on their projects and future vision, and it is okay to distribute investments to many funds at the same time.
It is important to hedge against potential investment risks, such as choosing the most diversified and geographically widespread fund, setting a time horizon for investments by knowing the times of peak tourist seasons dealing with investments based on them, and then following up on those investments regularly.
5. For all things related to investment funds in Turkey, consult Oragon's experts
Oragon started its portfolio management business in 2018, after which it obtained a license from the Turkish Capital Markets Board to establish real estate investment funds and venture capital funds, and in 2023 Oragon was able to expand its activity by being licensed as a creator and manager of venture capital portfolios.
Today, Oragon is led by a management team that includes some of the brightest investment figures in the real estate sector and the Turkish stock markets.
Oragon makes its investment funds available for the participation of ambitious investors who want to grow their savings and achieve the highest possible investment return, taking into account investment risks according to clear and studied investment principles, with the possibility of obtaining licenses and official approvals for those wishing to establish new investment funds of their own.
Oragon also offers free consultancy services on everything related to investing in investment funds in Turkey, through a team of consultants who are well-versed in all aspects of this important investment sector.
Edited by Oragon Company ©
