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A Wealth Still Untapped

Any discussion about investing in Iran is incomplete if it overlooks the country’s undeniable tourism potentials. To enrich the investment feature Iran International interviewed Javad Ghassemi, director in charge of Homa Tourism Center (HTC) and the former director of Iran Air Public Relations Department. With a long experience in heading the public relations policies of Iran’s national carrier after holding management positions in other organizations such as Mostazafan & Janbazan Foundation (MJF) and Iranian Public Relations Association, Ghassemi has widely been in contact with the international community either through overseas visits or international conferences.
The facts and figures he put on the table were both interesting and unfortunate: the story of a wealth still untapped; all the revenues that could be ours and are being lost. But Mr. Ghassemi also introduced some ways for joint investment and promotion of business:

Tourists Bring Jobs: Every year some 750,000 people enter the job market. This means that we have to generate 7.5 million jobs within the next 10 years and spend $55 billion because every job requires $10,000-$20,000 for it to be generated. During the past 40 years, we have succeeded in generating 15 million jobs only, but to generate half these jobs in the next 10 years, an investment of $55 billion would be required which is a clear indication of the important role of investment in economy.
There are many potential areas of investment in different sectors of our economy such as oil, gas and petrochemical sectors. However, we also have to focus on the tourist industry. It might be interesting to know that the figure for tourists travelling all around the world is now exceeding 600 million, giving rise to revenues of over $450 billion on average. With these figures in mind, developing countries should look at tourism as an economic category.

Facing a shortage of transport and accommodation facilities, Iran aims to attract 4 million tourists in the Third Development Plan. Joint investment will be rewarding in this area.

Tourists Bring Revenues: Joint investment, especially with foreign investors, can work well in a few significant areas. Currently, we are facing problems particularly with regard to transport and accommodation. The figure predicted in the Third Economic Development Plan for tourists visiting the country stands at 4 million. Obviously, given our current facilities and capacity we will be having problems attracting this number of tourists. Our hotels and other lodgings cannot meet the arrival of this number of tourists both in terms of standards and the number of rooms and lodging facilities. Therefore, we would need to bring the private sector into the scene for investment, and ultimately attract foreign investment to help us get our share of the world tourist market. Particularly in the hotel industry, we have development plans which are facing limited investment.

Tourists Need Facilities: Naturally, if we are going to offer standard services to tourists, we need to enter into partnerships with international chain hotels to benefit from their technology, experience and management methods. With respect to future strategies for the hotel industry in developing countries, several options are open to foreign investors including their full ownership, joint ventures, franchising, management contracts, hotel consortia and full state ownership. Each option entails different costs and benefits for developing countries.
Also in hotel construction there is a lack of investment. We have conducted feasibility studies for two hotels in Isfahan and Tabriz but have not gone any further due to limited investments.

Tourism Demands Investment: I primarily emphasize on creating trust and security for foreign investors. Of course, the recent developments in the oil, gas and petrochemicals sectors which have attracted a large number of foreign investors are indicative of the fact that Iran is indeed a secure place for investment and that it offers higher profitability and capital return compared to other activities taken up in the international scene. I therefore encourage foreign investors to come to Iran and invest in different sectors of the economy, particularly in the tourist industry and related areas. I think foreign investors run a greater chance of working on airlines, hotels, and development of human resources. These are the areas where investments are highly needed.