Iran Travel Information, Tourism Industry News & Reports 

High demand from business travelers for high class hotels in Iran, many opportunities for hotel investment

After Iran and nuclear deal and lifting of sanctions is opening up opportunities in a variety of sectors, including oil and gas, financial services, telecoms, technology and media, pharmaceutical and consumer goods. European companies and persons will have much greater freedom to access Iranian markets, there is significant movement from France, Germany and Italy in particular, with corporations gearing up to be in first mover positions. This increase in activity across sectors will inevitably result in an increase of business travelers to the Iran, boosting demand for hotels to cater for their needs.

The immediate demand is therefore from business travelers. This is expected to be from both domestic and international business persons, the latter of which are likely to flock towards internationally recognized brands, with an estimated 65% of business travelers already being part of hotel loyalty programs. Therefore, the hotels market is likely to reflect an initial focus on catering for both international and domestic business guests, though it is also predicted that as soon as a wider variety of new and internationally recognized range of hotels become available this will trigger a rise in general domestic travel.

The current lack of any experienced hotels operators in Iran presents vast opportunities in all hotel classes. According to reports, only 13 out of the 96 hotels in Tehran are classified as four and five-star, although it is widely acknowledged that these would not meet internationally recognized standards for these classifications. Consequently, there is a clear opportunity for an influx of international class high-end hotels (which would also take market share from the existing 4 and 5 star hotels) as well as “true” luxury brands.

Another significant opportunity has been flagged in the mid-range sector, with a particular focus on modern, trendy hotels to cater for the young population of Iran, with around 70% of the total population aged under 35 and generally eager to travel domestically. Additionally, there is likely to be a growing demand for budget hotels, particularly those maintaining internationally recognized standards. Accor have clearly seen the potential across both the budget sector, in the opening of Ibis in Tehran, as well as in different classes, as demonstrated in the opening of the mid-scale Novotel, both of which opened in Tehran in October last year.

These opportunities in the hotels market are coupled with a series of recent incentives for foreign investors provided by the Iranian Government. These incentives include 100% income tax exemption for new hotels and tourist infrastructures in less developed areas for which a licence is issued by the Iranian Cultural Heritage, Handcrafts and Tourism Organisation (ICHTO) after the Iranian Year of 1395 (commencing 21 March 2016). Hotels and tourism projects in developed towns and areas will also benefit from 50% income tax exemption.

In addition, the Iranian government now issue visas for nationals of nearly 65 countries (including citizens of most European countries, Australia, New Zealand, Qatar, Oman, and the UAE) upon their arrival at Iranian airports.

Outside of business travel, there are other significant markets to be considered, particularly once the number of international tourists (as opposed to business travelers) begins to grow, which is likely to be a more organic pace. These include religious tourism, in particular to the various World Heritage Sites and religious and health tourism, with Iran boasting outstanding medical expertise and knowledge at competitive pricing. Such markets will spread demand throughout the country, and also call for tailored hotels.

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