1. WHAT IS A HOTEL CONCEPT RESIDENCE?

A hotel concept residence is a rental business model that has become increasingly common in Türkiye in recent years. Under this business model, independent units are sold to purchasers, and subsequently, these independent units are leased from the owners (“Owner”) by the contractor or an operating company (“Operator”) and become subject to a sublease relationship.

The leased independent units are used for short-term and long-term accommodation purposes, including daily, weekly, or monthly stays, under a hotel concept. Within this business model, the Operator both manages the rental processes of the independent units and undertakes the management of the common areas.

2. WHAT ARE THE MANAGEMENT MODELS OF HOTEL CONCEPT RESIDENCES?

In a hotel concept residence business model, the Owner leases the independent unit registered in their name to the Operator and assumes the position of the lessor. The Owner becomes entitled to rental income in accordance with the operating model determined by the Operator.

The most common operating models under this business model are the pool system and the independent unit-based system. The main difference between these systems lies in the calculation method used for allocating the rental income to be received by the Owner.

1. Pool System

Under the pool system, the income generated from the operation of all independent units within the project is collected in a common pool.

Certain expense items are deducted from the amount accumulated in the pool, and the remaining amount is distributed among the Owners based on the value, quality, and location advantages (“goodwill value”) of the independent units. The rental income payable to each Owner is calculated accordingly.

2. Independent Unit-Based System

Under the independent unit-based system, certain expense items are deducted from the income generated through the operation of the relevant independent unit, and the remaining amount is paid to the Owner as rental income.

The expense items deducted from the generated income consist of costs incurred within the scope of operating the independent units. In addition to basic service expenses such as electricity, heating, water, and cleaning, expense items may vary depending on the facilities and services provided.

It should be noted that, in addition to managing the rental relationships of the independent units within the main property, the Operator also carries out the management services of the main property.

In this case, the Operator obtains a service fee from the rental income due to conducting the rental operations within the main property.

3. IS A HOTEL CONCEPT RESIDENCE A TOURISM/ACCOMMODATION BUSINESS?

A hotel concept residence business model does not constitute a hotel/accommodation business.

In a tourism/accommodation business, the Operator owns the facility, and all income obtained from accommodation services provided to guests belongs to the Operator.

However, in a hotel concept residence, each independent unit within the main property where condominium ownership has been established is leased from the relevant Owner and then subject to a sublease relationship.

In this structure, the Operator manages the rental services of the independent units and provides management services for the common areas within the main property, including cleaning, maintenance, and security services.

The profit obtained from rental services and the operation of the areas within the project is distributed between the Operator and the Owners according to the ratios determined between the parties.

4. RELATIONSHIP BETWEEN HOTEL CONCEPT RESIDENCES AND SHORT-TERM RENTALS

Pursuant to the Turkish Code of Obligations (“TCO”), short-term rental arrangements are regulated within the scope of leasing independent units for periods of six (6) months or less.

In addition, regarding daily rentals, the Regulation Amending the Regulation on the Implementation of the Identity Reporting Law, published by the Ministry of Interior in the Official Gazette dated 17 June 2022 and numbered 31869 (“Regulation”), introduced the concept of “daily rental residences”.

According to the Regulation, daily rental residences are considered accommodation businesses and facilities such as hotels, motels, and guesthouses when used as residences or actually operated as workplaces.

The Ministry of Interior’s Circular dated 26 November 2013 defined accommodation facilities and stated that such places are considered workplaces subject to the provisions of the Regulation on Workplace Opening and Operating Licenses.

It was regulated that these workplaces must obtain a workplace opening and operating license from the competent administrative authorities in accordance with the applicable procedures and that, in case of non-compliance, such places may be sealed and closed.

As explained above, leasing relationships are regulated under the TCO, whereas there is no comprehensive regulation under Turkish law specifically governing rentals carried out within the scope of the hotel concept residence business model.

Therefore, there is no authorized body responsible for ensuring the quality and supervision of the services provided, and issues such as identity reporting obligations of customers benefiting from accommodation services may create security concerns.

CONCLUSION

Hotel concept residences are a business model that has become increasingly widespread in Türkiye in recent years.

Within this business model, real estate units sold to purchasers are leased by the Operator from the Owners and subsequently subleased for short-term or long-term periods, such as daily, weekly, or monthly rentals.

Since this type of operation relates to the leasing of independent units subject to condominium ownership, it does not fall within the scope of tourism or accommodation services.

Therefore, these activities are carried out without being subject to a specific license or operating permit. In other words, there is no regulatory supervision mechanism applicable to these operations.

The fact that this business model is conducted without being subject to licensing or authorization requirements prevents the services from being provided within a certain standard and security framework.