As currency fluctuations continue to batter Iran's economy and increase travel costs, the number of Iranians visiting other countries since the onset of the crisis has fallen noticeably. This may prove to be a positive development, though.
Mohammad Khayatian, deputy for tourism affairs at Iran's Cultural Heritage, Handicrafts and Tourism Organization, told ISNA that 3,092,759 Iranian tourists travelled abroad during the first five months of the current fiscal year (started March 21), down by 11% compared with the 3,474,692 in the similar period of last year.
According to the official, Iranians' top destinations were Turkey, Iraq, the UAE and Georgia.
"Top destinations were more or less the same as in last year, with the difference that Georgia has replaced Azerbaijan this year," Khayatian said.
> Why is Outbound Travel Declining?
The main reason behind the decline is an ongoing currency crisis caused by the US unilateral withdrawal from Iran's nuclear deal with world powers in May and the worsening structural issues in the economy.
Iran's rial has lost approximately two-thirds of its value against the US dollar in 2018, meaning that outbound travel is now much costlier for Iranians.
Outbound as well as local flights have become significantly more expensive in recent months. Although airfares are expected to become slightly more affordable as the rial is finding a degree of stability on the back of recent market intervention by the central bank, they are still more expensive than last year.
To a lesser extent, a government-proposed measure to increase departure tax while leaving the country has also impacted outbound travels. In late February, the parliament after months of back-and-forth approved the proposed departure tax bill.
Communicated to Bank Melli Iran, the agent bank for collecting the tax, on April 10, the measure requires outbound travelers to pay 2.2 million rials (about $15) in the form of departure tax for the first time they exit the country. Travelers will have to pay 3.3 million rials (about $23) in tax upon their second exit from all land, air and sea borders of Iran and 4.4 million rials (around $30) for their third and further consecutive exits.
Outbound travelers had to pay only 1.1 million rials ($7.5) previously while exiting the country. The figure was the same for any number of overseas travel. When unveiled as part of the government's fiscal 2017-18 Budget Law, the measure faced harsh criticism, but ultimately failed to prevent its implementation.
> Why Declining Outbound Tourism Can Be a Good Thing
Even as fewer Iranians are now able to venture on foreign travels under the increasingly tougher economic conditions, less outbound travel has been actually hailed as a positive development since it means less money exiting the country.
The currency crisis at least in this way helped Iran to take better care of its currency reserves, especially since experts and private sector figures had long warned that too many Iranians are traveling abroad. The main reason behind increased outbound travels prior to the currency crisis was that the government was artificially keeping foreign exchange rates down by subsidizing them, as it brought general inflation down to single-digit levels after more than two-and-a-half decades.
Pundits observed on many occasions that through forcibly keeping foreign exchange rates down, the government was in effect handing out foreign currency subsidies to foreign airlines and companies, leading to a considerable recession for local travels. Various local tourist destinations were increasingly finding that they no longer had the capacity to compete with attractive and relatively cheap foreign destinations.
> A Changing Foreign Travel Landscape
According to the Persian economic daily Donya-e-Eqtesad, official monthly figures disclosed by relevant tourism authorities in Turkey, Georgia and the UAE, which happen to be among Iranians' favorite destinations, show that all saw a declining number of visiting Iranians in the aforementioned period compared to last year.
However, annual figures from the tourism industry of Serbia show that Iranians increasingly favored the Balkan peninsular country in the current year. While Iranian tourists were breaking records in January and February in terms of accounting for very high share of inbound tourists to Turkey and Georgia, Serbia only received 653 and 637 Iranian tourists respectively. But an about-face was in order since 2,098 Iranians travelled to Serbia in March. The rising trajectory continued and 22,230 Iranians visited the country between March and August.
Serbia has waived visas for Iranian travelers, which is thought to be the main reason behind the rise.
The administration of President Hassan Rouhani, in a controversial move on April 10, tried to fix the rate of the rial at 42,000 rials to the US dollar. It announced that Iranians wishing to travel to other countries will be eligible to receive €500 and €1,000 in cheap government currency for neighboring and more distant countries respectively. The measure was terminated on Aug. 5 after much criticism and handing out millions of dollars to people and travel agencies that were quick to take advantage of the scheme.
Data published by the Central Bank of Iran on July 17 showed that the government spent a total of $312 million this way in roughly three months, after fixing the rate of the rial.
> What Lies Ahead
While a considerable rise in the number of Iranians taking money out of the country to travel to Serbia deserves sufficient analysis by local tourism authorities, boosting local tourism under the current difficult times is much more important.
Even as Iran's tourism sector has received increased attention in recent years, Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei referred to the sector as a major avenue for decreasing reliance on oil exports. Nevertheless, it has remained relatively underdeveloped due to ineffective policies.
Now, as Iranians are showing less favor to their perennially attractive destinations abroad–albeit not by choice, policymakers can take advantage by streamlining the local travel sector and attracting more foreign tourists to boost the country's strained foreign currency reserves.
Some measures are underway. ICCHTO's Khayati said the organization has signed an agreement with the Plan and Budget Organization to allocate loans with the aim of fostering infrastructures in local destinations.
"It seems that by making local destinations more attractive, we can redirect money spent by Iranian tourists in foreign destinations toward local destinations and boost local communities," he said.
On the other hand, Iran has launched several other initiatives. The country is actively boosting its marine tourism and relaxing visa processes to incentivize foreign tourists that can now travel to Iran at much cheaper rates than before.
