International Hotel operators sound cautious note on emerging Iran tourism market

Tourists drink tea in a tea house in the city of Shiraz, south of Tehran. Behrouz Mehri / AFP

Iran’s tourism operators are optimistic about the revival of the sector even as international hoteliers sound a more cautious note.

A framework agreement between Iran and a group of six countries, including the United States, Russia and China, over its contentious nuclear ambitions was signed last month, paving the way for a final deal and the lifting of international sanctions. A deal could be completed next month.

Of Tehran’s market of 96 hotels, only 13 are classified as four and five-star, accounting for about 3,000 rooms, according to a report from TRI Consulting.

“Tourist numbers already look to be double the size for this year [compared with last] because of the sniff of the lifting of the sanctions,” said Akbar Ghamkhar, the chairman of Tehran’s Rastin Tours. He handles about 15,000 foreign visitors a year and said he could welcome as many as 30,000 this year.

In the 12 months through March, Iran received about 4.8 million tourists who stayed at 640 hotels in the country, according to TRI. Of these, 2.5 million were pilgrims.

“Since there are not enough hotels, we lose tourists, especially during the peak seasons of April and May and September and October, for the five-star properties,” said Mina Amrovani, a representative of the Tehran-based HRC tour operator.

“Moreover, now we have problems with payments from tourists and support agencies in other countries; we usually take cash in US dollars from tourists.”

The existing luxury hotels in Iran are owned and managed by local companies such as Persian Esteghlal International Hotel in Tehran and Homa Hotel Group, which owns properties in Tehran, Shiraz, Bandar Abbas and Mashhad.

Several luxury properties in Iran were operated by foreign firms such as InterContinental, Hilton, Sheraton and Hyatt before the 1979 Islamic Revolution.

All international hotel operators exited the country after the revolution and none have set up shop there since.

Abu Dhabi’s Rotana plans to be the first to do so. It has four hotels being built in the country under its Rayhaan Hotels and Resorts brand, which is aimed at Muslim travellers.

Rotana aims to open the properties in the pilgrimage city of Mashhad and in Tehran by 2018.

Other international hotel operators are still cautious, however. IHG, which owns the InterContinental brand, will wait and watch. “It is definitely an attractive market, but before we can explore it, everything has to be absolutely clear,” said Pascal Gauvin, the chief operating officer for India, Middle East and Africa at IHG.

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