Industry Spotlight: Tourism (2018)
/By Marykate McNeil, Research Associate
The AIC last published an Industry Spotlight on the subject of tourism in Iran in December of 2016. At the time, the JCPOA had been in effect for more than a year, and tourism in Iran was on the rise. Indeed, by March 2017, less than two years after implementation of the JCPOA, “more than 6 million people visited Iran [that year], up 50% on the previous year, and three times the number in 2009”. Hoping to capitalize on this progress, the Iranian government announced 1750 new tourism infrastructure projects in the form of improved highways, new hotels, increased flights to Iran, etc, with the goal of growing the number of visitors to 20 million a year by 2025. This government push helped bring foreign corporations to Iran including: France-based AccorHotels, Spain’s Meliá Hotels International, UAE’s Rotana, and the UK’s EasyHotel. Additionally, British Airways and Lufthansa resumed direct flights to Iran.
These laudable tourism statistics and investment goals signified the opening of the Iranian economy due to eased economic and political tensions achieved under the JCPOA. Tourists flocked to Iran’s rich cultural and historic tourist attractions, including its twenty-three UNESCO world heritage sites, in record-setting numbers. While we highlighted much of this progress in our last spotlight, the winds have shifted drastically in the past year given US President Trump’s withdrawal from the JCPOA in August 2018 and the recent reimposition of sanctions.
Today, the outlook for Iran’s tourism industry is far less optimistic. The effects of President Trump’s decision to unilaterally withdraw from the JCPOA on tourism is highly debated, and not yet definitively known, as hard data since the withdrawal is not currently available. However, signs of a turndown abound. In August, “British Airways and Air France followed KLM in announcing an end to direct flights to Tehran, citing a lack of interest in the route”. Additionally, Iran is under a great deal of economic strain, and took a hit from US sanctions in the third quarter, even though the most biting sanctions did not take place until November 4, 2018. Economists believe that Iran “will likely be pushed into a severe recession this year and next, with sanctions destroying business confidence, weakening the currency and fueling inflation.” Given the economic environment, the Iranian government’s own previously-set tourism goals are in jeopardy as they focus their attention elsewhere.
Adding to difficult headwinds for the tourism industry are two recent deadly terror attacks in Iran, which have proved to be a deterrent for travelers. On June 7, 2017 two simultaneous attacks ripped through Tehran, one at the parliament building and the other at the mausoleum of Ayatollah Ruhollah Khomeini. ISIS claimed responsibility for these attacks that left 12 people dead and dozens more wounded. This terror attack was the first in Iran since 2010. Additionally on September 22, 2018 terrorists dressed as soldiers opened fire at an Iranian military parade in Ahvaz, leaving 29 people dead and at least 70 others wounded. Two such deadly attacks within almost of a year of each other following a 7 year period of nonviolence suggest a deepening instability in Iran and provide security concerns for would-be travelers. Indeed, governments such as the UK, Canada, etc. are warning their citizens about the risk of terror attacks when travelling to Iran.
Additionally, throughout 2018 a myriad of protests that started in 2017 have continued across Iran, reflecting the growing discontent amongst Iranians over a variety of grievances, including economic conditions, strict Islamic rules, and water shortages. In January 2018, thousands took to the streets across 80 Iranian cities with economic demands and calls for increased freedoms. These protests turned deadly as 25 people were killed and 4,000 arrested. Later in February violence broke out between security forces and a minority religious group, the Dervishes, leaving five security officers dead. These deaths constituted the deadliest night for Iranian security forces since massive nationwide protests in 2009. Other smaller and more sporadic protests in 2018 included strikes amongst truck drivers and bazaars, women protesting the mandatory hijab, and a plethora of instances where hundreds of people called for better economic policies. While the protests in 2018 are nowhere near the level of the nationwide Green Movement in 2009 where millions took to the streets, they still reflect a growing tide of resentment and instability towards the regime.
The new data regarding Iran’s tourism for 2018 is not yet available, and it is therefore difficult to predict the exact effects of worsening economic conditions, terrorism, and the protests mentioned above. Due to this fact, below we have provided tourism data for 2017, Iran’s tourism peak. Numbers are expected to drop notably for 2018 and we will update this Spotlight accordingly when those numbers are available.
● 2017 saw 6 million tourists in Iran
● Travel & Tourism investment in 2017 was IRR93,473.5bn, 3.3% of total investment (USD2.8bn).
● In 2017, the total contribution of Travel & Tourism to employment, including jobs indirectly supported by the industry was 6.1% of total employment (1,577,500 jobs).
● The total contribution of Travel & Tourism to GDP was IRR1,018,310.0bn (USD30.7bn), 7.3% of GDP in 2017
Below, information can be found about an upcoming tourism exhibition in Tehran.
Event:
Tehran International Tourism Exhibition
Where:
Tehran
When:
February 12-15, 2019
Additional Details:
