People, Travel

15% Room Rate Hike ‘Illegal’

15% Room Rate Hike ‘Illegal’15% Room Rate Hike ‘Illegal’

The public quarrel between hoteliers and the Iran Cultural Heritage, Handicrafts and Tourism Organization over the annual increase in room rates entered a new phase this week when the latter released a statement calling any price hike above 12% illegal.

The two sides have been fighting over the increase in hotel prices for months. Whereas normally the rates are raised by 20% every year, hoteliers announced last December that they would increase their prices by 15% instead. However, since the country’s inflation rate is about 12%, the ICHHTO, apparently as the sole entity with the authority to monitor hotels, said room rates should not be raised over 12%.

Initial reports suggested that the tourism officials and hoteliers had agreed on a 12% hike, but it later emerged that no such agreement had been reached, with hoteliers accusing the ICHHTO of trying to exert full control over the hospitality industry and tourism officials fighting back by insisting that they are protecting people’s right to affordable travel.

“According to an agreement reached with the Iran Hoteliers’ Society (IHS), room rates can be increased by a maximum of 12% in the upcoming Iranian year (starts March 20),” a statement by the organization published on Tuesday read. “We ask people to quickly notify the organization if they are asked to pay inflated prices.”

The society wasted no time in releasing a statement decrying the ICHHTO’s “unilateral decision to set hotel prices” and officially announced its strong opposition to the organization’s “imposition,” Isna reported.

Citing Article 12 of the Regulations for Grading and Pricing Tourism Establishments, the hoteliers said in their statement that they “reserve the right to set prices and, following approval by the ICHHTO provincial offices, enforce the newly-set rates.”

The organization has yet to respond.

 Questionable Influence

Role Local media suggest that the IHS has already instructed hotels across the country to increase prices by 15%.

Hotel owners are adamant that the ICHHTO’s grip on their business has dissuaded potential investors from financing hotel projects.

Last week, ICHHTO chief Masoud Soltanifar insisted that so long as hotels in Iran “have not been standardized,” his organization will be the only entity that sets the prices.

“If we thought for a second that deregulating prices and allowing hoteliers to set their own tariffs would help lower hotel rates, we’d submit to it. But experience has shown that deregulation almost always leads to inflated prices,” he said.

To help incentivize hotel construction, the Iranian National Tax Administration has approved granting all lodging facilities a tax holiday for five years, and a 50% permanent exemption.

Furthermore, hotels built from the next Iranian year onward will receive a permanent income tax exemption.

However, hoteliers are now calling on the INTA to also scrap the 9% value-added tax on rooms.