Iran Plans to Build 20 High Quality Hotels This Year

Iran's Cultural Heritage, Handicrafts and Tourism Organization has targeted the construction of 20 four- and five-star hotels by the end of the current Iranian year (March 20, 2018).

According to Saeed Shirkavand, ICHHTO's deputy for investment, Iran had 125 luxury hotels by 2013, but 55 four- and five-star properties have also opened since then.

"Kickstarting an initiative to build hotels is our top achievement," he was quoted as saying by Mehr News Agency.

Attracting foreign investment to develop the country's hotel sector has been a major strategy of the department. However, foreign investors have mainly been involved in hotel management rather than hotel construction so far.

The official explained that certain processes must occur before hotel owners decide to put their money in the business in a foreign country.

"It is only after a certain destination becomes popular with tourists that hotel chains begin to study its potential," he said.

"It takes at least a year before investors decide whether expanding their business in the target destination is profitable."

Shirkavand noted that hotel owners are gradually moving toward building properties in Iran, adding that no contracts to build hotels have been signed yet.

Iran has set an ambitious target of 20 million tourists a year by 2025, which should potentially generate $25-30 billion. The main obstacle, however, is its aging and underdeveloped infrastructure, particularly hotels.

The country has 180 four- and five-star hotels, while industry insiders say it needs at least 400 good quality lodging facilities to accommodate the projected 20 million travelers.

French group AccorHotels became the first foreign branded hotel to set up shop in Iran after the 1979 Islamic Revolution when they opened two hotels–Ibis and Novotel–last October near Imam Khomeini International Airport, 30 km south of Tehran.

Accor has also started training middle managers and staff to improve the quality of hotel services in Iran, which field is in dire need of further investment.

The UAE-based Rotana, which is expanding its business to Tehran and Mashhad, is expected to launch two of its four hotels by 2018. Spain’s Melia Hotels International is to open a five-star property called Gran Melia Ghoo in Salman Shahr, Mazandaran Province, on Caspian Sea.

Tourism officials announced last year that a group of Turkish business leaders and German luxury hotel firm Steigenberger Hotels have agreed to build 20 hotels in Iran in the next decade.

However, based on Shirkavand's statements, it seems unlikely that any deal has been signed yet.