Economy, Domestic Economy

Int’l Bids Pouring In for “100 Hotels, 100 Businesses”

Business & Markets Desk
Travel & Environment Desk
Tourism authorities aim to increase Iran’s inbound tourists by fourfold to 20 million by 2025, a rather ambitious goal but one that they feel is achievable, given Iran’s untapped potentials
Tourism authorities aim to increase Iran’s inbound tourists by fourfold to 20 million by 2025, a rather ambitious goal but one that they feel is achievable, given Iran’s untapped potentials

The Tourism Holding Company has received proposals from renowned international groups to build 30 hotels in Iran.

Reputable groups, including France's Accor, Vinci Construction and Bouygues Batiment; Spain's Grupo Martinon; Singapore's Ascott limited and the UAE's Roda Hotels have submitted proposals to build new hotels in Iran, as the country seeks to overhaul its aging infrastructure and expand its capacity to host tourists.

"As part of the '100 Hotels, 100 Businesses' scheme [which is one of the few plans in Iran with a clearly defined manifesto and 40 maxims devised in cooperation with officials from the country's 31 provinces], we introduced in the International Conference on Investment in Tourism Industry held in Tehran in early October, over 170 projects to be considered by investors interested in hotel construction, out of which 100 projects are to be picked out for construction," Gholamheydar Ebrahim Bay Salami, the head of Tourism Holding Company, known by its Persian acronym HEGTA, told Financial Tribune.

"So far, we've received 30 proposals to build new hotels in Iran from well-known hotel and construction groups, and the scheme has received far more attention than we had expected," he added.

HEGTA is a semi-private entity, affiliated to the government-run Social Security Organization.

The "100 Hotels, 100 Businesses" scheme includes investment projects in each one of Iran’s 31 provinces and aims to encourage foreign investors as well as domestic entrepreneurs to build four- and five-star hotels.

There are over 1,140 hotels in Iran, fewer than 140 of which have four and five stars, which experts and insiders say has stymied the growth of the nascent tourism sector.

Tourism authorities aim to increase Iran's inbound tourists by fourfold to 20 million by 2025, a rather ambitious goal but one that they feel is achievable, given Iran’s untapped potentials.

Observers say Iran needs at least 400 high quality lodging facilities to accommodate the projected 20 million travelers.

> Up to $20 billion of Investment

Salami says up to $20 billion worth of investments can be made in the 100 projects the company has lined up.

"Up until now, the volume of investments proposed by these companies amounts to $6 billion. One company alone has proposed to invest $500 million in a single project," he said.

"All the projects will be carried out in the form of joint ventures in cooperation with Iranian parties. Memoranda of understanding have been signed with these companies and negotiations are underway so as to determine the partnership arrangements and details in the final contracts."

He noted that plans are underway for all the projects in the  scheme to be completed within the next 10 years.

"We expect each hotel to create employment for 1,000 people approximately. Therefore, if all goes well, the scheme will generate 100,000 jobs," he said.

These hotels will all be multi-functional, according to the official, constructed on par with the latest international standards.

The companies have been asked to include Iranian architectural and cultural elements in the design of the hotels so they could also serve as tourist attractions.

"Tehran, Mashhad, Isfahan, Shiraz, Hamedan and Kashan are provincial capitals that have received the most offers. Tehran alone has six offers," he said.

Salami noted that HEGTA has received propitious offers and that it's now time to pave the way for foreign investment and ease bureaucratic procedures and regulations.

"The banking system needs to take the necessary measures as soon as possible to support the projects since problems pertaining to money transfer to Iran still remain," he said.

"Iran's Cultural Heritage, Handicrafts and Tourism Organization should cooperate with the Hotelier's Society in setting room rates, which has been a matter of dispute. Also the issuing of permits as well as investment regulations need to be rectified so the least hardship is faced by this mammoth scheme."

> Gov't Guarantees Investment

In the October conference, Mohammad Khazaei, deputy minister of economic affairs and finance, referred to the law on supporting foreign investment, approved by the parliament, which offers full guarantee against all non-commercial risks.

"Foreign investors need not be concerned about the repatriation of capital and profits overseas, as it is guaranteed by the government as per the law," he said, adding that the guarantee is not legally required but will offer protection and reassurance.

Since March 2015, guarantees worth more than $9 billion have been issued for foreign investments, the official said back then.  

The Foreign Ministry is tasked by the same law to issue three-year extendable residence permits for foreign nationals who are involved in investment projects in Iran.

According to Khazaei, the National Development Fund is ready to offer loans but investment through personal capital is preferred.

Based on Iranian laws, no foreigner is allowed to own property in Iran but foreign investment law allows ownership of land once the applicant registers a company in Iran.

Besides, all activities in the fields of hospitals and tourism can enjoy 100% tax holidays for three to 13 years, depending on the location of the business.

Khazaei noted that thanks to negotiations with the European Union and the world's credit rating agencies, Iran's sovereign risk has decreased from seven to six and is expected to reach five within a few months and four in the upcoming year.



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