Controlled Forex Rates Make Travel to Iran Costlier

Although Iran has been ranked the most affordable travel destination in the World Economic Forum's Travel & Tourism Competitiveness Report for 2017, tourists visiting Iran on package tours complain that it is more expensive compared with its neighboring countries.

Mohammad Ali Vaqefi, the deputy head of Iran Tour Operators Association—one of the most prominent providers of travel services to foreign tourists, blames it mainly on what he calls "unreal" foreign exchange rates, ISNA reported.

"Inflation rates are high in Iran and the cost of travel services often goes up accordingly, while exchange rates are constantly controlled by the government and do not increase proportionately," he said.

According to the official, travel to Iran would be much cheaper, if currency rates increase in accordance with inflation rates.

Vaqefi noted that open market rates do not affect domestic tourism since such costs are not influenced by foreign exchange.

"Services for domestic tourists are provided inside the country and the claim that high rates of exchange raise the costs of travel inside the country is baseless and false," he said.

Obviously, free market rates will benefit exports but imports will suffer.

Iran's ultimate goal based on the 20-year Vision Plan is to attract 20 million foreign tourists annually by 2025. However, with only eight years to go, the target appears to be very ambitious.

The third phase of the plan targets a 15% increase in inbound tourism per year to eventually bring in 13 million tourists and earn $10 billion.

This is while statistics of the UN World Tourism Organization show under 5 million foreign tourists visited Iran in 2016.