Iran has hammered out an investment package worth $25 billion to revitalize its tourism which has been under the shadow of its sprawling petroleum industry.

The country is working to diversify its foreign exchange earnings away from petrodollars as the liability of the oil sector is beginning to dawn on the nation following years of sanctions and crude market volatility.

“In the year 2025 vision plan, Iran must annually host 20 million foreign tourists who could generate between $25-30 billion in foreign exchange earnings,” head of the Iran Cultural Heritage, Handicrafts and Tourism Organization (ICHTO) Masoud Soltanifar said.

“For tourism development in Iran, our organization has prepared a package for $25 billion of investment in 1,300 projects,” he said on the sidelines of a signing ceremony to hand over two hotels in Tehran to AccorHotels.

Under the deal with Iran’s Tourism Financial Group, the French group will run the hotels near Imam Khomeini International Airport (IKIA), marking the first foray by a major foreign entity into the country’s hospitality market since 1979.

Hotel groups from several countries are pushing to boost their portfolios in Iran which is being tagged as the most lucrative emerging hospitality development market.

They are encouraged by a new opening after the July nuclear accord which is expected to boost general trade, with $185 billion of investment plans under Iran’s belt only in the petroleum sector.

A general view of Ibis and Novotel hotels at the Imam Khomeini International Airport in Tehran.

The conclusion of the nuclear talks has already unleashed a jet-setting spree by international entrepreneurs and business leaders as well as state politicians in their hunt for new business opportunities in the country of 80 million people.

Iran’s hospitality market, however, is immensely underdeveloped and the country is in need of brisk development of its tourism infrastructure in order to rise to the occasion.

“Iran has great potential in the tourism sector. In the post-sanction era, we are decided to make up for the backwardness in using this hidden treasure,” Soltanifar said.

The priority, he said, is to raise the number of four- and five-star hotels in order to cater to foreign tourists. Iran has currently 1,100 hotels of which only 130 are in the four- or five-star category, according to the official.

“By 2025, the number of four- and five-star hotels in Iran must rise to 400,” he said, adding 125 such hotels are currently under construction with physical progress of between 5-90%.

On Tuesday, chairman and chief executive of AccorHotels, Sebastien Bazin, flew to Tehran to sign four-star Ibis IKIA with 196 rooms and five-star Novotel IKIA with 296 rooms for management.

The French group, he said, wants to book 100 more hotels in Iran which “has absolutely everything, in terms of very rich history, extraordinary geography and a true sense of hospitality”.

According to Iranian officials, hotel groups from Germany, Greece, South Korea and Singapore have recently traveled to Iran for talks.

Arab investors began work in a number of Iranian cities even before the nuclear accord which would lift sanctions on Tehran.

The UAE-based Rotana has hotel projects in Tehran and in the pilgrimage city of Mashhad. Its five-star Espinas Behnood Hotel will open this year in northern Tehran, with 600 rooms.

Others are expected to be completed from 2015 onwards, including the five-star, 200-key Rayhaan in 2017.