Room Rate Fiasco Nears End

Room Rate Fiasco Nears EndRoom Rate Fiasco Nears End

The drawn-out dispute between hoteliers and Iran’s Cultural Heritage, Handicrafts and Tourism Organization over how much room rates should increase in the current fiscal year (started March 20) may be finally coming to an end.

After months of public bickering, hotel owners and tourism officials have agreed to devise guidelines for annually increasing hotel rates, travel news website Donyaye Safar reported.

This is welcome news for all stakeholders, especially tourists wary of uncertainty prevailing over room prices, which can easily ruin any traveling plan.

It all began last year when Iran’s Cultural Heritage, Handicrafts and Tourism Organization and Iran Hoteliers’ Society clashed over the annual increase in room rates, with the former saying any price hike above 12% (the inflation rate) would be illegal and hotel owners insisting on a 15% rise.

Initial reports suggested that the hoteliers had compromised on 12%. However, later it was reported that no such agreement had been reached, with hoteliers accusing ICHHTO of trying to impose full control over the hospitality industry and tourism officials declaring that they are protecting the people’s right to affordable travel.

Following the deregulation of airfares last December, which reportedly led to an increase in domestic flights thanks to competitive prices, Jamshid Hamzehzadeh, the president of Iran Hoteliers’ Society, said room rates must be deregulated.

However, ICHHTO chief, Masoud Soltanifar, rejected the call, stating that as long as hotels in Iran “have not been standardized”, his organization will be the only entity to set room prices. He argued that in this way, ICHHTO can “protect people’s right to affordable travel”.

  Costly Tours

Unable to reach an agreement with the organization, hoteliers started raising their rates by however much they wanted, with reports suggesting that some luxury hotels in Tehran increased room charges by up to 60%.

The price hike automatically made traveling more costly, but what really made package tours offered by travel agencies pricy was that hoteliers stopped offering discounts to tour operators–a practice that was in vogue for long and normally taken for granted.

Understandably unhappy with the turn of events, tour operators voiced their dismay, but Morteza Rahmani Movahed, deputy for tourism at ICHHTO, would have none of it.

“The rise in tour prices is because tourism is booming,” he said last month. “Hoteliers believe they no more need tour operators to fill their rooms and have cut ties with their old friends (travel agents).”

In many big Iranian cities and major destinations, almost all hotels have been booked for over a year.

Essentially describing hoteliers as fair-weather friends, Movahed said hotel owners offered discounts to travel agencies back when the industry was in a rut, “but instead of continuing to support tour operators, they cut ties when people started to travel more”.  

The constant squabbling seems to be a thing of the past now.

“The guidelines will help clear the air and simplify things,” Hamzehzadeh said, adding that the new regulations will come into effect as soon as they are finalized and notified to all hotel owners.

Based on the guidelines, hotel rates will increase only once a year between August and September, after ICHHTO and IHS agree on a reasonable percentage by which to raise the prices.

Details of the guidelines will be revealed once they are finalized.