Hotel chains eye expansion in Iran’s untapped market
DUBAI’S JUMEIRAH GROUP AND SPAIN’S MELIA HOTELS AMONG COMPANIES ON STANDBY
Hotel chains are likely to find the Iranian hospitality market more attractive should international economic sanctions imposed on the country be lifted, according to a report issued by a hospitality consulting firm.
“The lifting of sanctions is expected to set off a modern day ‘Gold Rush’ as developers and operators race to secure their position in one of the world’s largest untapped markets,” TRI Consulting said in a report published this month, titled:
Awaiting the Gold Rush-Exploring the Opportunities in Tehran’s Hotel Market.
Dubai-based Jumeirah Group and Spain’s Melia Hotels International are two of the many hotel companies eyeing expansion in the Iranian market.
“Iran, hopefully, would be a huge opportunity for us,” said Gerald Lawless, chief executive and president of Jumeirah Group, at a session at the Arabian Hotel Investment Conference (AHIC) in Dubai yesterday.
Echoing Lawless’ views, Maria Zarraluqui, global development managing director at Melia Hotels International, said that there is a big demand for more hotels in Iran that has not been met.
“We know that Iran has some challenges because it’s closed to international markets but we see the potential. We see that there is huge internal demand that is not very well treated at the moment. So Iran is a market we would like to explore,” she said, adding that Melia Hotels is interested in introducing its midscale brand, Innside, and its upper upscale brand, Melia, in the country.
Abu Dhabi-based Rotana Hotels, meanwhile, is planning to expand in Iran, with four properties under its brand Rayhaan Hotels and Resorts. Two of the hotels — one featuring 362 rooms and the other 275 — are expected to open in Mashad by 2017 and 2018 respectively. In Tehran, the operator will open two properties by 2018 — a fivestar hotel with 194 rooms and a 210-room four-star hotel.
Isolation
Iran, which has a local population of 80 million and a growing number of tourists, has a lot to offer hotel companies. For one, it lacks good quality hotels, especially in the capital Tehran, which means that chains have the opportunity to offer better products, according to Rashid Aboobacker, senior consultant at TRI Consulting in Dubai.
“The industry’s isolation from the global hospitality and tourism market over the past 30 years has left most of Tehran’s hotels old, outdated and in desperate need of improvement, not only in terms of refurbishments and renovation, but also for the knowledge and expertise of international hotel developers and operators,” as per the TRI report.
“This presents an immediate opportunity for international hotel operators through the rebranding of existing properties in the city, particularly the four- and five- star hotels.”
There are 96 hotels in Tehran, of which 16 are classified as four- and five-star.
“The potential opening of Iran’s economy presents enormous opportunities in the city’s untapped hotel market,” TRI said in its report.
Also, occupancy and average room rates in the country, where there is more demand than supply, are high, Aboobacker said.
Hotel occupancy levels in Iran increased from 58 per cent in 2013 to 79 per cent in 2014, as per the report.
Last month, Iran and six world powers — the US, France, Britain, Germany, China and Russia — reached a framework agreement on curbing its nuclear programme.
The nation accepted restrictions on its nuclear facilities in exchange for the gradual lifting of international sanctions, which have stunted the growth of the economy.