Dubai‘s Rotana Eying Expansion in Isfahan

The Dubai-based Rotana Hotels and Resorts will expand its presence in Iran by opening at least one property in Isfahan.

During an interview with Arabian Business, CEO Omer Kaddouri announced that his firm has signed a deal with an unnamed partner to open a hotel in Isfahan. Previously, it was thought that the group was only planning to open four properties—two each in Tehran and Mashhad.

“We have signed up for hotels in Tehran, Mashhad and Isfahan," he said, adding that they'll launch their first hotel in Mashhad by the first quarter of 2018.

The holy city of Mashhad in Khorasan Razavi Province is home to the shrine of Imam Reza (PBUH), the eighth Shia Imam. Rotana’s Rayhaan brand is aimed at Muslim tourists and offers halal services. The group also hopes to bring its “much-demanded” Arjaan Hotel Apartments brand into the country. The four hotels will have a total of 840 rooms, helping Iran move toward its goal of expanding its capacity to host 20 million tourists a year by 2025.

Iran, along with Saudi Arabia, is a key location for Rotana as the group speeds toward reaching its 100-hotel target by 2020.

The firm, whose properties are spread across the Middle East and North Africa region, operates 55 hotels and has 49 under development. When the new properties are complete, they will add 12,054 rooms to Rotana's capacity, taking the total number to 27,087. Iran has set itself an ambitious target of 20 million tourists a year by 2025, which should potentially generate $25-30 billion. The main obstacle, however, is its underdeveloped infrastructure, particularly in the hotel sector.

The country has just over 130 four- and five-star hotels, while industry insiders say it needs at least 400 quality lodging facilities to accommodate the projected 20 million travelers.

To incentivize foreign investment, Iran announced last year that all activities in the fields of hospitality and tourism can enjoy 100% tax holidays for three to 13 years, depending on the location of the business.

Officials say they have received multiple offers from reputable hotel groups to expand their businesses in Iran.

Gholamheydar Ebrahim Baysalami, managing director of the semi-private Tourism Holding Company, told Financial Tribune in November that his office is holding advanced talks with famous foreign groups, such as France’s Accor and Spain’s Grupo Martinon, to build 30 hotels in major cities.