Ever since the nuclear agreement, Iran’s tourism sector has been growing steadily. But the country’s travel tech companies are still facing some issues which are slowing down their growth rate.

A country of four seasons, with a rich culture, mesmerizing architecture, tasty foods and kind people. That’s the definition of Iran when you ask the people who have traveled to this country for the first time. Ever since the nuclear agreement and the ease of sanctions, the country’s tourism sector has been rising, however, it’s still considered underdeveloped compared to some of its neighboring countries.

According to a research by World Travel & Tourism Council, Iran’s direct contribution of Travel & Tourism to GDP was 367,635.0 billion Rial (11.9 billion dollars), 2.9% of total GDP in 2016 and is forecast to rise by 7.5% in 2017, and to rise by 2.6%, from 2017-2027, to 512,811.0 billion Rial (16.6 billion dollars), 2.7% of total GDP in 2027.

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Travel and tourism’s contribution to GDP - Source: World Travel & Tourism Council
Travel and tourism’s contribution to GDP – Source: World Travel & Tourism Council

Although the country’s tourism infrastructures and facilities have much improved, the local businesses targeting this market still have many challenges in front of them. Here are some of the issues explained.

 

1. Lack of transparent regulations

Startups in Iran need to get union permissions in their field of work. Lack of transparency and updated policies by the regulatory system has caused confusion for the business owners who want to work in the travel tech sector in Iran. For example, the market for online hospitality services is not yet active as they should be, due to the regulations which are either incomplete or contradictory.

 

2. Poor infrastructures in the rural areas

From the north to south, east to west, Iran has diverse landscapes which could attract millions of people every year. You can make the best online tourism platform for these attractions, but poor logistics and hospitality infrastructures and services are a reason which limits travelers to only a few spots to visit. Many cities of Iran still lack  a proper accommodation and hospitality service. Even during the peak times, it’s pretty hard to find rooms in the major cities of the country such as Tehran, Isfahan and Shiraz.

In the recent years, the government has been trying to empower the locals in remote areas by providing mobile internet and fiber optic networks. Last year the government officials announced that 27,000 villages have been connected to the internet while before Rouhani’s government none of the villages in the country had access to high speed internet.

 

3. Absence of foreign investors and players in the market

Tourism Technology is pretty young in Iran and is still in the infancy phase. Currently, the market needs a push by a player to pave the way for the first wave of startups in this sector. Something similar to what Digikala or Snapp did in Iran with online shopping and mobile payment. Presence of international companies and foreign investments could help this sector to lift off.

 

4. Insufficient marketing outside of Iran

A product by itself without proper marketing cannot attract customers easily. Same goes for showcasing a country’s attractions to potential travelers. The United States, China, Japan, France and the United Kingdom are on the list of the top five countries with the highest spending on travel and tourism services by their governments according to the World Bank. Despite the vast attractions of Iran, the country has not spent much on marketing its tourism potential in other countries. In the recent years Press TV, Iran’s English state-run tv has been making high-quality documentaries of the country’s attractions, but more should be invested to market this sector in other advertising channels.

 

5. Lack of education and skills

Not being able to keep up with the international standards and providing the right type of services are the results of an improper education system. To cultivate the tourism sector in the country, a long-term plan needs to be implemented in order to educate the younger generation.

 

Valuing tourism and hospitality education and raising its quality in the universities could tremendously help the country in order to transform itself into a tourism hub in the upcoming years.

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