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Tourism is Booming, but is the Country Ready?

Tourism is Booming, but is the Country Ready?Tourism is Booming, but is the Country Ready?

If there is one market in which the Rouhani government has so far scored outstandingly, it would be the tourist industry. After a black-out of more than three decades, the tourism industry finally looks to recover to its potential. The Rouhani administration is ambitious, with aims of doubling the amount of tourists to 10 billion annually. However, is the government ready to accommodate these growing numbers? And will it be able to keep up the trend?

Tourism has boomed since the moderate Hassan Rouhani became president more than a year ago. In the previous Iranian year, which ended in March 2014, the tourist industries booked revenues of about $6 billion according to Vice President and Head of the Cultural Heritage, Handicrafts and Tourism Organization (ICHHTO) Masud Soltanifar. The same year saw a total of 4.8 million tourists coming to the country, which is a growth of 35 percent compared to the 4.07 million tourists visiting Iran in the Iranian year ending in March 2013.

As the new president made his entree only in mid-2013, growth in 2014 looks set to overtake last year’s. Goftogoo News quoted Mohsen Haji-Saeed, a tour operator for tourists from Hong Kong, saying that “we have witnessed a growth of 300 to 400 percent in foreign tourist trips to Iran. The growth rate has been so high that for some languages, we didn’t even have a proper tour leader.” Tours, which are the preferred way of tourists traveling to the country, operate mostly in spring and autumn. According to newspaper Donya-e Eqtesad, last spring tourism grew by an astonishing 215 percent in comparison to the year before. This huge growth has already caused hotels in the main tourist cities, such as Isfahan and Shiraz, to be fully booked.  

There are major economic incentives for promoting the tourist industry. According to Morteza Rahmani Movahed, deputy of the ICHHTO, quoted by ISNA, tourism makes up a 5.6% share of the country’s GDP.

However, the total contribution of tourism to the economy might be much larger, as it creates strong positive linkages to other industries.  

Iran is rich in ancient monuments and sights. According to UNESCO, the country takes in the 18th place of countries with most heritage sites. Unfortunately it has so far not been able to exploit its potential. While the global tourism industry generated more than $1250 billion in revenues in 2013, the slice allocated to Iran amounted to only 0.5 percent.

The recent growth in tourism has, to a large extent, been natural and only acknowledges the fact that tourism should be of more importance in Iran. Masud Soltanifar stated that Iran’s contribution to global tourist revenue must increase to at least 3% “considering Iran’s tourism potentials.”

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Despite the improved publicity of Iran in the western press, the Rouhani government has also tried to expand investment in the tourist industry and refurbishing its infrastructure. The 2013 Travel & Tourism Competitiveness Index (TTCI), which ranks countries according to the relative attractiveness of their tourist industry, ranks Iran 98th out of 140 countries. In comparison to its 2011, Iran was up by 15 places. Iran’s gains in the index have been due primarily to rapidly increasing inflation, which has increased the domestic purchasing power of foreign currencies and in turn increased the price competitiveness of the country. In fact, the report ranks Iran first globally on price competitiveness.

The Iranian press was rife with publicity for luxury train operator Golden Eagle, which organized its first successful train tour from Europe to Iran. The Rouhani administration can be proud at having co-organized this trip and it will set a precedence for future luxury train travel to the country.

The Iranian tourism industry is so far mostly focused on the pilgrims coming mostly from Arab countries, Afghanistan, Pakistan and India, but the government is keen to change that. Currently, the pilgrimage city of Mashhad counts most hotels in the country.

In order to attract these tourists, Iran has been trying to attract foreign investment. Rotana Hotels, a Saudi-based company, already plans to build hotels in Tehran and Mashhad, while French hotel group Accor S.A. is seeking to invest in a hotel near the international Imam Khomeini Airport in Tehran.

Airline companies such as Alitalia have also opened new lines from Europe to Iran.

Stringent visa regulations have held back many tourists, notably Europeans who are used to visa-free travels. Recently, getting a visa became easier for twelve countries but the Rouhani administration is trying to ease visa requirements still more.

Another issue has been carrying money in Iran. Tourists are not able to use their credit cards in Iran due to the international sanctions against Iran’s financial system and are thus required to bring all their money in cash. Soltanifar stated that “we are planning provisions to help them [tourists] draw Iranian currency from their bank accounts on arrival at the airport.”

The Rouhani administration has done more than only improving Iran’s image abroad, concrete efforts have also been made to expand tourism in the long run and make it a more viable source of income for the country’s economy.

 

Financialtribune.com