Iran, an untapped market
Usually reserved for the most adventurous, Iran is now on the travel itinerary of many, thanks to the historic nuclear deal that was reached between Iran and the P5+1 (the UK, US, Russia, China, France and Germany). Hospitality News investigates
The unexpected fact that tourism increased by over 215 percent in just two years is a reflection of the increased excitement about what an open Iran means for Iranians and non-iranians alike. At the forefront of this renewed optimism is the hospitality sector, which is expected to attract vast numbers of Western visitors and fuel the travel and tourism industries. Iran by numbers (provided by Amber Consulting) Iran boasts the sort of demographics that could potentially make it one of the best untapped markets of the past decade. The world’s 21st largest economy, Iran is home to a very robust middle-class and to a very-well educated and young population of 80 million — 65 percent are under the age of 30.
- It holds ten percent of the world’s
proven oil reserves - Its GDP is approximately USD 368.90
billion - The direct contribution of travel and tourism to the GDP is USD 12.9 billion - 426,500 jobs are directly supported by the travel and tourism industry, representing 1.9 percent of total employment.
Tehran
According to Amber Consulting, the capital of Tehran is the most dynamic destination in the future of the country’s travel industry. With a population of 8 million, it is the most populous city in Western Asia, as well as the seat of Iran’s economic engine. A brief survey of hotel managers reveals that there has been a significant surge of visitors in recent months. While this is welcome news, industry insiders admit that with a meager 96 hotel properties in Tehran, the supply will have to grow exponentially in order to serve the projected market demand. This means that there will be a lot of room in which Western companies can maneuver.
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Iranians love to travel and domestic travel and tourism is what fuels the bulk of the industry’s revenues. This heightened appetite for domestic travel is understandable, considering the economic and political isolation the country has faced over the past thirty-five years— needless to say, it’s not easy to travel the world with an Iranian passport.
March is the high season for travel owing to the festivities surrounding the Persian New Year, which falls on the first day of spring. It also has the added advantage of coinciding with the most moderate temperatures of the year. According to Amber Consulting, during this time an average of 35 million Iranians travel domestically.
It’s also worth mentioning that despite years of crippling sanctions there is still a fraction
of Iranian society that retains big purchasing power—an attractive prospect for those specializing in the high-end market.
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With a 1.6 km2 land mass, Iran is nestled in between Europe, Asia, and the Middle East. With a widely diverse travel and tourism industry, an often overlooked element is the abundant natural environments and conservation efforts taking place in the country, making it a treasure for those interested in ecotourism. Operatic mountains, large rivers, plateaus and deserts: you will find them all, and more, in Iran.
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Expected to grow to USD 181 billion in 2018, the global Muslim tourism market is the largest tourism source market in the world. Considering that Iran is a predominantly Muslim country, religious tourism is one of its strong suits. In fact, Iran ranks as the number one Muslim tourist base country with USD 18.2 billion of travel expenditure. Saudi Arabia follows closely at USD 17.1 billion. Home to one of the world’s most ancient civilizations, Iran boasts magnificent historical and religious
A world of opportunities awaits and perhaps one of the most lucrative in both the short and long term is the hospitality sector sites. Most popular—with 23 million pilgrims every year—is Mashhad where Imam Reza, the eighth Shi’a Imam, is buried. In addition to this, there are also ancient Armenian churches and Jewish synagogues that attract many visitors each year.
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For the past twenty years, the practice of travelling to Iran for medical tourism has been almost routine among the Iranian diaspora. Prices for dental or cosmetic surgery can often be half the cost in the West. One reason explaining this price differential is that during the eight-year war with Iraq, Iran required an increased demand for plastic surgeons to tend to the injuries of the soldiers on the front lines. When the war was over, the surgeons returned back to the city and flooded an already saturated medical industry, which drove the prices way down. In 2014, Iran hosted 250,000 health tourists, generating USD 1.5 billion of revenue. The sector is growing rapidly and further growth is projected to continue.
n he re
The future looks bright, according to Ali Borhani, founder of the Dubai-based consultancy Incubeema. “Now is the time to look to Iran, whether it is for personal or professional reasons. With a widely underserved market in a vast array of industries; hospitality, retail, food, banking, automotive, and aviation — there are many opportunities for international firms to invest in Iran. A world of opportunities await and perhaps one of the most lucrative in both the short and long term is the hospitality sector,” Borhani predicts.
Fueling that profitability is the fact that the government is actively injecting capital into the industry and has passed laws to make it easier for foreigners to operate in the country. Most promising is the Foreign Investment Promotion Act (FIPPA) which aims to streamline the process of doing business in Iran. For example, the restrictions on the percentage of foreign shareholding has been eliminated and there is now the possibility of registering an Iranian company with 100 percent foreign capital. There is also explicit reference to the fact that foreign investors will enjoy the same rights and privileges as domestic investors. According to Borhani, this is a positive harbinger of things to come.