Iran Tourism Booming Despite Sanctions—Or Perhaps Because of Them?

International efforts to isolate Iran and force it to halt its uranium enrichment program have seriously damaged the country’s economy: entire industries have been paralyzed, food and fuel prices are skyrocketing, and the local currency is collapsing. But by causing a plunge of the rial, the sanctions have had an unintended and, for Iran, very welcome consequence: a jump in tourism. According to several sources, some three million tourists visited the country in 2011, contributing more than $2 billion to the local economy. Moreover, according to the UN World Tourism Organization, from 2004 to 2010 international tourism in Iran grew four times faster than the global average, which posted an annual gain of 3.2%.

The growth in international tourism to Iran is also due to the changing attitudes among Iranian officials. After the 1979 Islamic Revolution, hard-line clerics called for the destruction of many of the country’s pre-Islamic sites, including the ruins of Persepolis, a 2,500-year-old palace complex. Today, Persepolis is proudly advertised on Iran’s Department of Tourism’s website. This site calls Iran “a land of grandeur and beauty” and “a country as old as the history itself and as beautiful as eyes can perceive”. Besides countless ancient sites, Iran’s allure lies in its natural beauty, its reputation for hospitality, its cuisine, and, for some, its forbidden quality, as for decades it has remained off-limits to all but the most intrepid tourists.

Still, most foreign tourists come to Iran for religious reasons: to make pilgrimages to Shiite holy sites. Only about 20,000 of the visitors who entered Iran last year came for non-religious reasons, most of them from China and Germany. In August 2011 the Iranian and Chinese governments established an agreement to facilitate travel between the two countries. Official travel agencies are now appointed in Iran to handle visa applications and letters of invitation for Chinese travelers. Iranian carrier Mahan Air now flies three times weekly between Tehran and Shanghai, while China Southern Airlines has Tehran-Urumqi services. The Iranian Cultural Tourism and Heritage Organization is teaching Mandarin to tour guides. These steps are expected to increase Chinese leisure travel to Iran, in addition to encouraging corporate and government visitors. According to Iranian tourism operators, an average Chinese tourist stays about a week in Iran, visiting historical sites, such as Tehran, Isfahan, Yazd, and Shiraz, and spends an average of US$800 per person.

Due to such restrictions as requiring head coverings for women and prohibiting alcohol, as well as opaque procedures for obtaining Iranian visas, Iran is less attractive for Westerners, and especially Americans. Although the U.S. State Department has a long-standing warning against travel to Iran, there are no restrictions on Americans visiting the country, as there are for Cuba and North Korea. But Iran imposes additional rules on American visitors. An official guide must accompany U.S. tourists throughout their journey in Iran, driving up costs. And Iranians cannot host Americans in their homes. As a result of these limitations, the number of American visitors to Iran remains very low: only about 1,000 carriers of U.S. passports visited Iran in 2011. It is thought that most of these American tourists are of Persian decent and come to Iran to visit their relatives.

The reverse side of the coin is that the plunge in Iran’s currency means that fewer Iranians are able to afford foreign travel, restricting their ability to visit Shiite holy sites in neighboring Iraq. Until the recent collapse of the rial, about 3,500 to 4,000 Iranian pilgrims had been traveling to Iraq daily, accounting for as much as 95% percent of Iraq’s tourist trade. Due to hyperinflation, the price of organized tours has gone up sharply. Many Iraqi money changers and merchants are now unwilling to accept Iran’s volatile currency. Employees in Iraq’s travel industry are being laid off. Some establishments are expected to shut down if the crisis continues. According to Mahmoud Abdul-Jabbar al-Zubaidi, the head of the tourist department at Iraq’s Ministry of Tourism and Antiquities, Tehran’s state-run pilgrimage company owes Iraqis about $75 million in unpaid bills that have piled up since last year, prompting some of Iraq’s biggest travel agencies and hotels to stop accepting Iranian pilgrims altogether until the payment dispute gets resolved. Instead, the focus is now on attracting visitors from Arab countries with substantial Shiite minorities, such as Bahrain and Saudi Arabia.

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