As Iran's national currency has lost considerable value in recent months, local hotel operators are now calling for a two-tier pricing system.
The proposal is fiercely opposed by tour operators who say it will hit the country's growing inbound tourism sector hard.
In May, US President Donald Trump announced Washington's unilateral withdrawal from Iran's nuclear deal with world powers and reinstated sanctions against the Islamic Republic in August, with the second tranche taking effect on Monday. This has led to Iran's rial losing more than 70% of its value since the beginning of 2018.
But it also meant traveling to Iran is now much cheaper, giving the country's inbound tourism a major boost.
According to Ali Asghar Mounesan,the head of Iran Cultural Heritage, Handicrafts and Tourism Organization, inbound tourism saw a 51% surge during the first half of the current Iranian to Sept. 22, as more than three million visitors traveled to Iran.
But not everyone is happy. Hoteliers, for example, are finding that getting foreign tourists pay in rials has impacted their business negatively. They are trying to do something about this, but their proposal to have foreign visitors pay in foreign currencies—effectively creating a two-tier system of payments–may lead to adverse repercussions.
Jamshid Hamzehzadeh, the head of Hoteliers' Association, argues that bankruptcy awaits a number of hoteliers due to the economic downturn.
"A dual pricing system for reserving hotel rooms benefits all since this is a common practice in the world," he told the Persian economic daily Donya-e-Eqtesad.
He claimed that implementing such a system will benefit tour operators and travel agencies who happen to be the main opponents of the plan, since foreigners travelling to Iran will easily find that travelling via tours will be much more affordable for them.
"Tour operators will not be hurt and the number of travelers will rise, so they must look at this as an opportunity," he added.
As Hamzehzadeh sees it, hotels are "national capitals" that are being offered to foreign visitors at the cheap. He also rejected the idea that this will make foreign travels considerably more expensive for foreign travelers to the point of not being viable.
As to how such a scheme can be implemented, the official said there are two ways to go about this: either use the official government-unified rate of 42,000 rials against the US dollar or go with the much more expensive open market rate of 140,000 rials.
Counterargument
Other stakeholders of the inbound tourism sector, however, see this as a profit-driven ploy that will hit the industry hard.
"This is all empty talk with no basis and expert evaluation," Mahmoud Bonakdarnia, a member of Tour Operators' Association, said. "Who says this is common practice in the world?"
He said offering tax discounts, municipal tax rebates and concessions on utility costs are among incentives that can be offered to help hoteliers with their current dilemmas, slamming the move to require foreign currencies from foreign tourists, saying it will ultimately lead to corruption and rent-seeking activities.
What Iran needs, he said, is to organize a series of expert meetings on this to uphold global norms in this regard.
"It is not right to say we must do it because some country is doing this. We must see what other factors are at play when another country is doing this and not distort facts to further our own agenda," Bonakdarnia said.
Ebrahim Pourfaraj, the head of Tour Operators' Association, recently penned a letter to the ICCHTO chief, warning him of the plights of implementing a two-tier pricing system that can eliminate Iran's current price competitiveness advantage spurred by the national currency devaluation.
He pointed out that foreign tourism companies monitor Iran's economic developments closely and have on many occasions called on tour operators to balance out their tour prices unless they want to see their tours altogether removed.
"Hoteliers say counterparts in other countries receive their expenses in currencies other than their own national currencies but this is false," he wrote, pointing out that foreign tourists are always given a choice.
Pourfaraj said under conditions where Iran is engaged in an economic war due to the reimposition of US sanctions, such a misguided move will only damage the growing domestic tourism sector.
Implementing a two-tier pricing system will lead to another bout of rampant price jumps and cancellation of foreign tours, he warned.
The proposal for a two-tier pricing system for hotels comes as a similar phenomenon is taking form in the aviation industry, albeit for local flights.
As a number of local aviation companies have failed to obtain subsidized foreign currencies from the government's online system Nima, local flights in Iran may be offered at two prices: one based on Nima rates of about 90,000 rials to the US dollar and another based on the open market rates of about 140,000 rials.
