Decline in Hotel Occupancy Rates

Occupancy rates in most Iranian hotels have seen a 10% decline since the beginning of the current Iranian year (started March 20, 2016) compared with the same period of previous year.

Jamshid Hamzehzadeh, the head of Iran’s Hoteliers Association, blames the decrease partly on people’s financial situation but mainly on the development of “unauthorized” lodgings and vacation rentals, Mehr News Agency reported.

“Not subject to any legal regulations or even compelled to pay taxes, these places continue to inflict losses on hotels,” he said.

The number of rental homes in popular designations like Mashhad has multiplied over the past few years, “causing an ever greater recession in the hotel market”.

According to the official, the occupancy rates had also fallen by 15% during the first seven months of the previous year due to the affordability of alternative lodging facilities such as state-run schools (rented out to tourists during summer holidays) and vacation rentals.

Domestic travelers constitute 90% of hotels’ occupancy rates and the reduction has primarily affected this section.

Hamzehzadeh also complained about the fact that these accommodations “lower the standards of services and cause trouble for guests”, as their activities are not monitored by relevant organizations.

Each year in mid-September, hotels determine their new rates in proportion with inflation. However, prices have remained unchanged due to the recession in the market.

Asked whether the prices will increase during the Iranian New Year (Norouz) holidays (March 21 – April 2), the official said “it would not be illegal since prices didn’t change in September”.  

But he noted that hotels are unlikely to hike room rates and “many are also contemplating reducing their prices for that period to help attract more guests”.

Hotel owners have been critical of Iran’s Cultural Heritage, Handicrafts and Tourism Organization for supporting vacation rentals for several years, claiming that the hotel industry is suffering losses because more people choose to stay in such places.

Nevertheless, experts say that it is the right of any tourist to be able to select between a vacation home, hotel, or other types of accommodation, and the elimination of alternative facilities from the tourism market is an infringement on travelers’ rights.

They say instead of questioning the operation of vacation rentals, policies must be devised so that these homes are officially recognized, compelled to meet standards and abide by regulations.

A vacation rental is the renting out of a furnished apartment, house, or professionally managed condominium on a temporary basis to tourists. Villas, suites, rural and nomadic homes also serve as a vacation rental.