Iranians' Foreign Trips Down 30%

EghtesadOnline: A total of 5,900,381 Iranians traveled overseas during the nine months of the current Iranian year (March 21-Dec. 21, 2018), indicating a 30.45% decline compared with the same period of last year, according to director for planning and support of Iran Cultural Heritage, Handicraft and Tourism Organization's Tourism Development Office, Leyla Ajdari.

News ID: ۷۴۶۵۷۱

28 January 2019

Turkey, Iraq, the UAE, Azerbaijan and Georgia are Iranians' top travel destinations.

"The number of Iranian citizens' traveling overseas has at least halved in recent months due to skyrocketing prices caused by a freefalling national currency," Morteza Qorbani, secretary of Iran Flight Services Guild Association, said in October.

"Istanbul, Tbilisi, Kuala Lumpur and Dubai are the most frequented flight routes for Iranians and the number of those flights has halved at present," Financial Tribune quoted him as saying.

According to Qorbani, some flights to Georgia and Turkey have witnessed a steeper decline in demand of up to 60%.

Ajdari told ISNA that the exponential rise in the costs of travelling abroad and the sudden rise in the value of foreign currencies against the Iranian rial seem to be the main reasons behind the decline in Iranians’ travels abroad.

The rial lost over half its value against the dollar in 2018. Much of the depreciation followed the United States' May decision to leave the multilateral nuclear deal Iran signed with world powers in 2015 and impose the "toughest ever" sanctions against the Islamic Republic.

To a lesser extent, a government-proposed measure to significantly increase taxes paid when leaving the country (known as departure tax) has also impacted outbound travels.

In February 2018, after months of back-and-forth, the parliament approved the proposed departure tax bill. Communicated to Bank Melli, the agent bank for collecting the tax, on April 10, the measure requires outbound travelers to pay 2.2 million rials (about $19) in the form of departure tax for the first time they exit the country.

Travelers will have to pay 3.3 million rials (about $28) in tax upon their second exit from all land, air and sea borders of Iran and 4.4 million rials (around $38) for their third and further consecutive exits.

Outbound travelers had to pay only 1.1 million rials ($9.4) previously upon exiting the country.

When unveiled as part of the government's fiscal 2017-18 Budget Law, the measure faced harsh criticism, but ultimately failed to prevent its implementation.

High Hopes

Initially, authorities hailed lower outbound travel a positive development since it means less money exiting the country.

As Iranians were showing less favor to their perennially attractive destinations abroad–albeit not by choice–policymakers expected to take advantage to streamline local travels and attract more foreign tourists to boost the country's strained foreign currency reserves.

"It seems that by making local destinations more attractive, we can redirect money spent by Iranian tourists in foreign destinations toward domestic destinations and boost local communities," Mohammad Khayatian, deputy for tourism affairs at Iran's Cultural Heritage, Handicrafts and Tourism Organization, said.

The forex crisis in this way helped Iran take better care of its hard currency reserves, especially since experts and private sector figures had long cautioned that too much forex is exiting the country. The main reason behind increased outbound travels prior to the currency crisis was that the government was artificially keeping foreign exchange rates down by subsidizing them, as it brought general inflation down to single-digit levels after more than two-and-a-half decades.

Pundits observed on many occasions that by forcibly keeping foreign exchange rates down, the government was in effect handing out foreign currency subsidies to foreign countries, leading to a considerable recession for local travels.

Various local tourist destinations were increasingly finding that they no longer had the capacity to compete with attractive foreign destinations.

The government, in a controversial move on April 10, tried to fix the rate of the rial at 42,000 rials to the US dollar. It announced that Iranians wishing to travel to other countries will be eligible to receive €500 and €1,000 in cheap government currency for neighboring and far countries respectively.

The measure was terminated on Aug. 5 after much criticism and handing out millions of dollars to people and travel agencies that were quick to take advantage of the scheme.

Data published by the Central Bank of Iran on July 17 showed that the government spent $312 million this way in roughly three months after fixing the rial rate.

Failed Expectations

Despite all the positive expectations as a result of the decline in foreign visits by Iranians, Hormatollah Rafiei, the head of Travel Agents Guild Association, recently said the decline in international travels by Iranians has not been offset by an expected rise in domestic travels.

“Those who can no longer afford travelling abroad have not shifted to destinations at home. Domestic and international travelers have different interests and preferences,” he told ISNA.

Rafiei lamented that unstable foreign currency rates have derailed travel agencies’ plans.

Noting that it takes at least two weeks from the time a travel package is planned to the date it is marketed, he added that fluctuations of foreign currency rates are so wild, you can’t set a stable rate.

Referring to the eroding purchasing power of Iranians, Rafiei said, “Travelling is not a priority for most people, particularly now that prices of some consumer goods have risen astronomically.”

Growth in Inbound Tourism

Latest data on the number of foreign tourists visiting Iran show over six million tourists visited the country during the nine months to Dec. 21 to register a 54% growth compared with last year's corresponding period, the head of Iran's Cultural Heritage, Handcrafts and Tourism Organization, Ali Asghar Mounesan, said.

In the month to Dec. 21 alone, about 800,000 tourists traveled to Iran, indicating more than a 100% growth compared to the 385,000 who visited during last year's similar month.

"The development of tourism infrastructure, considerable investments in tourism sector, issuance of electronic visa and visa waiver for target countries could be considered the main reasons for the growth in the number of foreign travelers," Mounesan said.

A majority of foreign travelers visiting Iran are from neighboring countries, namely Iraq, Turkey, Russia, Turkmenistan, Azerbaijan and Armenia.

Germans top the list of European tourists to Iran followed by the French and Italians.

According to Foreign Ministry's Spokesman Bahram Qasemi, 1,880 US citizens traveled to Iran during the nine months under review.

The drop in the value of national currency since the beginning of the current fiscal year in March has helped attract more foreigners to the country, as travelling to and shopping in Iran are now significantly cheaper for foreigners.