Vacation rental has a 4,128 billion toman market in Iran (nearly one-billion-dollar market in Iran before the devaluation of Toman =10*Rial). That’s why Iranian startups are trying to tap into this market and bring it online.

A vacation rental is the renting out of a house, apartment, villa or any accommodation to a tourist as an alternative to hotels. This is the market that Airbnb is operating in. In the past three years, a few players have entered this market. This business model is an example of a shared economy in which individuals give services to each other and unlike the traditional model (hotels), people participate and earn money themselves.

In this model, the online platform
connects tourists to hosts. Some of the advantages of this model are using the
vacant capacity of people’s houses, apartments, and villas (any rentable
accommodation) and helping them to rent their property for a short period of
time.

This model noticeably decreases the cost of accommodation services for tourists, which in turn can help to stimulate the country’s economy. In addition to that, empowering this market can help local businesses and stores such as restaurants, recreational and commercial centers to grow too.

Comparing the 4,128 billion tomans vacation rental market to other sectors
in Iran

Tourism in Iran has an estimated
market size of 50,000 to 60,000 billion tomans annually which consists of
different sectors. The vacation rental market with 4,128 billion tomans annual
market size is a part of the tourism industry in Iran.

How is the vacation rental market
size in comparison to the other parts of the tourism market?

• Local
  hotel annual market is about 4 to 5 thousand billion tomans
• The
  annual foreign hotel market is more than 1,500 billion tomans.
• The
  annual ecotourism market is about 2,000 billion tomans, which only a few of the
  vacation rental platforms have entered to.
• Annual
  bus ticket market is something about 3,000 billion tomans.

The Vacation rental market can also be compared to other startup sectors such as FinTech and transportation:

• The
  annual motorbike delivery market is about 4,000 billion.
• The
  annual ride-hailing market in Tehran and 7 other big cities is about 8,000
  billion tomans. Approximately 70% of this market is online.
• The
  annual taxi change transaction market in Tehran and 7 other big cities is
  nearly 6,000 billion tomans.

The vacation rental market is bigger than most subsectors of tourism in
Iran

What should be considered is that there are no official published report or market research in the markets that we just mentioned so far. That’s why TechRasa in partnership with Shab as a data partner has gathered all the information and analysis of this market.

The remarkable point is that only 2%
of the vacation rentals are booked online which shows the potential of this
market for online platforms.  Note that
the average commission rate for connecting the host to the guest is about
16.6%.

The vacation rental market size is greater than 4,128 billion tomans, but
why?

First, the number of foreign
tourists who visit the country is not included in this report.

Second, with the entrance of online
platforms and easier access, the market will expand. A good example of this
effect is Airbnb and Uber in other countries and Snapp and Tap30 in Iran.
Startups that caused their target market to grow.

Average basket value of 711,000 tomans

In 2018, local tourists rented the
accommodations in groups of 3.8 people for about 2.4 days on average. The cost
of a vacation rental for 2.4 days, with the average daily rate of 293,000
tomans, is about 711,000 tomans.

The 31% share of vacation rentals
versus the 25% share of the public and organizational accommodations

As shown in the infographic, 31% of
the accommodations used by tourists are vacation rentals. This percentage is
based on Per Person Per Night number in total. This means that tourists have
used vacation rentals (with an overnight stay) more than any other type of
accommodation. The share of the public (Hotels and etc. with 13%) and
organizational (12%) accommodations is 25% in total.

5.8 million vacation rental bookings per year

In 2018, vacation rentals had nearly
5.8 million bookings. There were 24,000 owners and 64,000 properties. The
notable point is that it has been the source of income for 103,000 people
(directly and indirectly).

How did we calculate the vacation rental market size in Iran?

The main sources of this market research are the reports and surveys done by the Statistical Centre of Iran from 2008 to 2018 which is generally done just for the season of Spring. The main focus of these reports is on giving statistics on tourism in Iran.

However, we couldn’t calculate the
market size only by these reports. We also needed these variables from online
vacation rental platforms to calculate the market size:

• The average length of stay
• The average daily rate of vacation rentals
• The average number of guests per stay
• The annual average number of properties’ rented days
• The average number of properties owned by the host
• The average number of owner’s dependents
• Average commission rate
• The percentage of bookings done online

The required data are compiled directly from online vacation rental platforms: “Shab”, “Mizboon”, “Booking Villa”, “Moosem” and “Jajiga”.

For further information about the market size estimation, you can contact us via email or social media.

* Shab is the data partner of “Vacation Rentals in Iran” research, which provided us with their insights on the market. Shab is one of the leading vacation rental platforms in Iran.

Doing market research in various
industries and areas is time and money consuming. With the growing number of
startups and venture capitals and the tendency for data-driven decision
makings, these kinds of market research and reports are vital.

References:

• Statistical Centre of Iran’s Tourism survey from 2008 to 2018
• Shab, Mizboon, Booking Villa, Moosem, Jajiga