Saturday, 31 March, 2018

Hotel groups eye Iran tourism potential as sanctions deal nears


By: Najmeh Bozorgmehr and Monavar Khalaj, Finantial Times

In the years before the Islamic revolution in 1979, Tehran’s luxurious hotels were visited by stars such as Elizabeth Taylor and Paul McCartney.

After the overthrow of the Shah, Iran severed contracts with the Hilton, Hyatt and Sheraton, and those hotels fell under state control. While they may still bear the five stars that allude to a more glamorous era, the service rarely lives up to it.

This year’s opening of a four-star Axis hotel in Tehran under the management of France’s Accor, with a five star Axis Prime set to open soon nearby, is an indication of how fast things could change.

Not since the Islamic revolution has a western company managed a hotel in Iran. This month, Iran hopes to strike a comprehensive nuclear deal with world powers, paving the way for the end of sanctions and — Iran hopes — a boost in foreign investment and tourism.

Still it is not clear how Accor — Europe’s largest hotel group by number of rooms — secured the contract given continued sanctions. While the sanctions do not directly target the tourism industry, they prohibit the transfer of money to or from Iran unless for basic commodities or medicine. The French hotelier did not respond to requests for comment. Neither did Axis. Saeed Shirkavand, a deputy for development affairs of the tourism organization confirmed that the two new airport hotels are under Accor management “which is providing services based on its global standards”.

Axis has changed some aspects of its service to comply with local norms. It does not serve alcohol and women employees behind the reception desk wear Islamic dress. But the welcoming staff and the availability of real French coffee and espresso mark the hotel out as cut above the 100 or so other hotels in Iran that claim to have four and five stars.

Accor is now poised to benefit from the doors opening to one of the world’s biggest untapped tourist destinations, home to huge and historic attractions such as Persepolis and Isfahan. Rumors are rife that other French groups are negotiating with Iran about the construction and management of hotels.

Bouygues, the French construction, media and telecoms conglomerate, declined to comment, as did the UAE-based Rotana hotel management group, understood to be planning hotels in Tehran and the holy city of Mashhad.

The potential is huge. Already the number of European tourists has more than doubled since centrist president Hassan Rouhani came to power more than two years ago. Around 6m tourists visited last year — many of whom were pilgrims from the regions — generating up to $7.5bn or about 2 per cent of GDP, according to official figures. “Tourism was an abandoned and totally forgotten industry in Iran’s economy,” said Mr Shirkavand. “Hotel construction in Iran is a big attraction as the number of our four and five-star hotels have to at least triple over the next decade.” As it stands, it is questionable if Iran’s infrastructure could cope with more tourists. “Our tourism infrastructure cannot respond to a tsunami of tourists if we face it,” acknowledged Mr Shirkavand.

Hoteliers are getting ready. Didar Complex, an Iranian group, began to build a $300m 300-room British-designed hotel more than a year ago in central Tehran. For its plan to come to fruition, sanctions need to be lifted so they can raise foreign finance. “Our preference is for a European investor like Germans or even Turks who will work only if sanctions are lifted,” said Shahram Poursafar, chairman of the board of Didar Complex. “But if sanctions continue then we have to work with a Chinese partner.”


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