Hoteliers to Propose Hike in Room Rates

Due to poor demand, hoteliers have been asked to proposes rate increases that will be assessed on a province-by-province basis
Hoteliers to Propose Hike in Room RatesHoteliers to Propose Hike in Room Rates

Hoteliers across the country have been asked to submit their proposed rate increase to Iran Hoteliers’ Society, due to poor demand blamed on a variety of factors, from people’s weak purchasing power to the proliferation of more affordable vacation rentals.

Most quality hotels across the country have been complaining about reduced occupancy rates and pointing the finger of blame at the country’s stagnant economy and vacation rentals that are not officially supervised by Iran’s Cultural Heritage, Handicrafts and Organization.

Speaking to Mehr News Agency, Jamshid Hamzezadeh, the president of the society, said the proposals will be reviewed on a province-by-province basis by next week.

“We normally increase the rates nationwide by 20% in the second of the (Iranian) year (starting Sept. 22), but this year we’ll have to consider the supply and demand situation of each province, for which reason we called for the proposals,” he said.

Hamzezadeh said there are a number of options available to hotels.

“We can hold off on increasing rates in some provinces for a few months until demand goes up, or we can increase the rates soon and have hotels offer discount packages to encourage travelers,” he said.

The society is expected to discuss the proposals and present its conclusions to ICHHTO next week.

  Another Feud?

Industry insiders will be closely monitoring the situation, which in January sparked a months-long public dispute between IHS and ICHHTO.

The two 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, Hamzezadeh 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 rates.

Unable to reach an agreement with the organization, hoteliers started raising their rates by whatever percentage 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.

In June, tourism officials and hotel owners both announced that they reached an understanding after months of public bickering, having agreed to devise guidelines for annual increases in hotel rates.