People, Travel

Look to East for Investors

Look to East for InvestorsLook to East for Investors

European and Middle Eastern hotel groups have wasted no time to enter the Iranian market to secure a share of the tourism pie since the signing of the Joint Comprehensive Plan of Action last July, which will no doubt be beneficial for the tourism industry.

However, an industry heavyweight believes Iran should consider attracting investment from East Asia as well.

Mohsen Mehralizadeh, chairman of the Tourism Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture, believes luring investors from Malaysia and South Korea to finance hotel projects will have a profound impact on the hospitality and tourism sectors.

“Establishing tourism and trade ties with those countries can benefit all parties,” he was quoted as saying by the Persian daily Donya-e-Eqtesad.

Pointing to South Korea’s economic policies, Mehralizadeh said South Korean investors are looking to expand their businesses abroad and Iran is well-positioned to provide investment opportunities.

“While Malaysian and South Korean brands may not have the recognition enjoyed by European hotels, they still adhere to strict international standards, something we really need in Iran,” he said.

Mehralizadeh noted that the lack of foreign competition in Iran’s hospitality industry made Iranian brands content, which has led to a drastic drop in service quality.

“However, as the post-sanctions era heralds a new chapter in the industry, Iranian hotels will have to up their game to compete with foreign brand,” he said.

The country has over 130 four- and five-star hotels, while industry insiders say it needs at least 400 quality lodging facilities to accommodate the projected 20 million tourists a year by 2025.

  Plenty of Interest

Following the signing of the nuclear deal a year ago, French group AccorHotels opened two hotels in Imam Khomeini International Airport just south of Tehran. This was followed by an announcement by Spanish firm Melia Hotels that the group was set to open a luxury hotel in Mazandaran Province’s Salman-Shahr in 2017.

Turkish and German investors have also signed agreements with Iran to open a combined 20 hotels in Iran in the next 10 years, while Dubai-based group Rotana, which is building hotels in Tehran and Mashhad, is expected to launch its hotels by 2018.

The Middle East and North Africa branch of Louvre Hotels Group is close to signing agreements to open three hotels, at least one of which will be a 300-room establishment in Tehran.

Furthermore, the Dubai-based Shaza Hotel, an affiliate of the prestigious Kempinski Hotel chain, is targeting entry within the next five years to open five hotels in Tehran, Isfahan, Shiraz, Rasht and Mashhad, while two other Emirati hotel operators, Crista Hotels and Jumeirah Group, are reportedly exploring the possibility of investing in Iran.