Iran's 2025 Tourism Target Elusive

Iran’s budding tourism sector continued to grow in 2016, but forecasts by the World Travel and Tourism Council suggest the country’s 2025 goals are more ambitious than previously thought.

In its annual report titled “Economic Impact 2017–Iran”, which was published on Monday, the WTTC figures clearly show Iranian tourism is growing but at a considerably slower pace than desired—yet still faster than the regional and global average.

The direct contribution of the sector to GDP in 2016 was $11.9 billion, comprising 2.9% of total GDP, up $3.5 billion from 2015. The contribution is expected to rise by 7.5% in 2017 and is forecast to increase by 2.6% annually for the next 10 years, reaching $16.6 billion in 2027 (2.7% of GDP).

Direct contribution primarily reflects the economic activity generated by industries such as hotels, travel agencies, airlines and other passenger transportation services (excluding commuter services). But it also includes, for example, the activities of restaurants and leisure industries directly supported by tourists.

Leisure travel spending (inbound and domestic) generated 92.3% of the industry’s direct contribution to GDP, compared with 7.7% for business travel spending.

Foreign visitor expenditure made up 20.2% of the sector’s direct contribution to GDP, up from 7.4% in 2.15.

The sector’s total (both direct and indirect) contribution to GDP was $31.5 billion (7.7% of GDP).

  Generating Employment

Iran tourism industry generated 559,000 jobs directly in 2016 (2.2% of total employment) and this is forecast to grow by 4.9% in 2017. Previously, it was forecast that tourism would generate 496,000 jobs directly in 2015.

This includes employment by hotels, travel agencies, airlines and other passenger transportation services (excluding commuter services). It also includes, for example, the activities of restaurant and leisure industries directly supported by tourists.

In 2015, about 476,000 jobs were directly created by the travel sector.

By 2027, the industry is predicted to generate 670,000 jobs directly, an annual increase of 1.3% over the next 10 years.

  Visitor Spending and Investment

An important part of tourism’s direct contribution to the economy is the money spent by foreign tourists (called visitor exports in the industry). This amounted to $4.2 billion in 2016, up from $1.1 billion in 2015.

The figure is expected to grow by 11.6% in 2017 and continue to grow by 3.4% every year until 2027, when it is predicted to reach $6.6 billion.

Furthermore, Iran's tourism industry attracted $3.5 billion in capital investment last year, which is expected to rise by 6.3% in 2017 and by 3.4% per year over the next 10 years to $6.2 billion in 2027.

  Better Than Average

The industry’s contribution to Iran’s GDP is expected to grow by 7.5% this year, which is faster than the Middle East (4.6%) and world (3.8%) average.

Iran is ranked first regionally with regard to the predicted growth of the sector’s direct contribution to employment (4.9%) this year, more than double the Mideast and global average (both at 2.1%).

Visitor export is also expected to grow by 11.6%, far above the regional (5.2%) and world (4.5%) average.

However, Iran is not expected to fare well in terms of attracting investment compared to other countries, as WTTC predicts a modest 6.3% rise in capital. While this is above the global average (4.1%), it is below the Middle East average (7.3%).

Iran’s declared goal is to attract 20 million tourists every year by 2025, generating $30 billion in revenue. However, if the council’s forecast is anything to go by, achieving that target in eight years is not going to be easy.

The WTTC report is based on the council’s own research and not limited to data submitted by Iran. Because Iran lacks a Tourism Satellite Account—a standard statistical framework and the main tool for the economic measurement of tourism—WTTC and other respected entities, such as the United Nations World Tourism Organization, have to rely on projections and estimates for their annual reports.