The hotel industry clearly has much to offer as Iran welcomes new visitors with the lifting of nuclear sanctions. Hotels represent a particular focal point for business and international gatherings in the region, and it is highly likely that major hotel chains will offer a welcome familiarity to first-time or early visitors to Iran, not to mention relative “safe haven” venues for visitors as in other parts of the region.
With Iran isolated for some 35 years, hotel development looks to be a major potential investment opportunity. With some major caveats, clearly, there are going to be visa and lifestyle-related issues for certain nationals wishing to visit Iran.
Some hotel chains will obviously hesitate before looking to broaden their business further into Iran. There are still numerous non-nuclear sanctions on Iran in place – particularly from the United States, which will continue to have a potential impact on hotel-related investments and transactions in Iran.
The financing of any major hotel developments would need to exclude designated, sanctioned entities. Moreover, Iran remains one of the very few jurisdictions in the world of major concern for the Financial Action Task Force (FATF), the global body overseeing money laundering and terrorist financing activities.
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Due to the fundamental nature of US sanctions policy, merely utilising non-US based companies to trade outside of US dollar transactions may not be adequate if these are inadvertently linked to covert front companies funding illicit activities.
Taking the right advice is therefore essential to avoid penalties imposed on Iran-related sanctions breaches.
Adequate legal certainty is critical for potential investors, not to mention visitors to Iran, especially as Iran is reputed to have a slow moving court system, falling short of global standards.
The global hotel industry can undoubtedly help Iran to align itself to global best practice levels and standards. But unlike financial services, the hotel industry has not been challenged by global sanctions enforcement to date.
Hotel companies must take the right advice on sanctions. This will help them avoid ending up like many financial institutions, heavily penalised over sanctions breaches. They must not rush to premature business decisions when financing projects.
Hotels look to be ideally placed to showcase the numerous opportunities afforded to potential business and tourism in Iran. The future looks potentially optimistic for the hotel industry, particularly for those willing to embrace and incorporate extra-territorial sanctions enforcement policy.
About the Author:
Stewart Linnhe provides advisory services to governments, regulators, financial services firms and industry – high level training, drafting and implementations of procedures and policy, as well as report and briefing writing for global clients.
Linnhe also has a regular briefing and report subscription with in-depth analysis and solutions to current global regulatory issues and the all- important real-time implications.
Stewart Linnhe – Smarter response to regulation: www.LochLinnhe.com, idsl@LochLinnhe.com
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