Every week the central Iraqi city of Karbala hosts thousands of visitors, most of them on religious pilgrimage from Iran and on their way to visit some of the most important destinations in the world for Shiite Muslims,inside and around the city. Most of the Iranians are on package tours and spend time in Karbala, Najaf and in Baghdad.
One might logically conclude that the Iraqis working in the tourism sector in these cities would benefit financially from their Iranian visitors. However many local tourism operators in Karbala say that one Iranian firm, with a virtual monopoly on Iranian tourism to the area, is making all the rules and all the profit.
Founded in 2003, after the fall of former Iraqi leader Saddam Hussein’s regime, Shamsa, whichis described as a central agency for Iranian pilgrimages to Iraq, has over a thousand branches all over Iran. And as such, Iraqi hotel owners and tourism operators in the Karbala area say that Shamsa is directly, and indirectly, monopolizing religious tourism in their country. “Due to this company’s cunning methods, a huge amount of the revenue from Iranian visitors is just going back to Iran,” they complained.
There are around 300 hotels in Karbala, many of them concentrated in the city centre near two important shrines. And almost all of them make their money from Iranian tourists. Statistics indicate that tourism is the major source of income in the area. Some private citizens in Karbala also get in on the act, providing accommodation in their own homes – however in general, these do not meet the standards set by Shamsa and are used by individuals travelling privately.
Until 2009, Shamsa, which gets a bulk discount on room rates in Karbala, operated mainly inside Iran. However after an increase in clientele complaints about the quality of services inside Iraq, Shamsa has expanded into its neighbouring country. In 2009 the New York Times reported that almost all of Shamsa’s business partners in Iraq are “affiliated with Iraqi political parties close to Iran”. For example, Shamsa started to arrange private transportation for Iranian visitors to Karbala – they are guarded by private security firms whose employees were often past members of political organisations that had opposed Hussein and been forced to flee to Iran while he was in power; private security firms are needed because of the danger of attack from armed Sunni Muslim groups motivated by sectarian rivalry and the private security firms are licensed by Iraq’s Ministry of the Interior.
Shamsa also made a deal with the state authorities that they would open a number of kitchens to serve their Iranian visitors meals.
Earlier Karbala’s committee on religious tourism had called upon the Iraqi government to encourage Iranians to travel privately, rather than with a package tour. The committee believed that, “services provided by the [Shamsa] company to Iranian visitors should be limited to within the Iranian borders. The Iraqi side, represented by local tourism firms, should provide transportation and other services to visitors”.
“Shamsa has imposed unfair requirements and unfair methods on hotel owners who deal with the firm regularly,” hotel manager Haider, who preferred not to give his whole name because of commercial sensitivities, confirmed; his hotel in central Karbala frequently hosts Iranian visitors, as well as those coming from the Arab Gulf States on important Shiite Muslim religious occasions. Haider explained that the income his hotel earned from Iranian pilgrims in 2009 was hardly enough to cover the costs of hosting them. “The company [Shamsa] obliges us to offer Iranian visitors the best of services but what they pay doesn’t add up to more than US$20 per night, per visitor.”
While visitors from the Gulf States or others not travelling with Shamsa arrange their own transportation and meals in Karbala, the Iranians with Shamsa all eat lunch and dinner at the central kitchens owned by the Iranian company and staffed by Iranians. Local Iraqi hotels only provide breakfast.
“And Shamsa even interferes in this meal,” Haider complained. “We have to provide certain kinds of food to the pilgrims, such as a certain kind of Iranian cheese.”
“The company’s representatives even visit the hotel rooms every day to check the garbage cans in each room. They behave as if they’re the hotel managers,” he continued.
While NIQASH was interviewing Haider, a man went into the lobby of his hotel. Haider stopped speaking and just nodded his head. As the man moved further into his hotel, Haider continued. As he explained, the individual was a Shamsa representative doing his daily inspection of the Iraqi hotels. If the Shamsa man had overheard his criticism, Haider said, the Iranian company would take its business elsewhere and in a market as competitive as Karbala, where Shamsa’s guests dominated, the hotel simply couldn’t afford that loss of business.
The competitiveness is actually one of the reasons why Karbala’s hotel owners feel so helpless, notes Karim Damad, an economics professor at the University of Karbala. They’ve been unable to form any kind of union for collective negotiation with Shamsa. “If they could take a united position then they would be able to embarrass Shamsa,” he said. And the company takes opportunistic advantage of the hotel owners. “It simply threatens to go to other hotels, if one hotel owner doesn’t accept its terms,” Damad argued.
After Shamsa charges a premium on package tourists for transport, lodging and food inside Iraq, “Iraqis are left with very little opportunity to make profit from religious tourism,” Damad said. Shamsa makes big profits on tourism in Iraq yet does not put money back into Iraq. “Iraqi companies should be able to invest in developing religious tourism inside their own country – but they cannot,” Damad said.
However a representative of Shamsa in Karbala, Ali al-Baqiri, defended his company and its methods. “We protect the interests of our citizens [Iranian tourists] and we defend their rights,” al-Baqiri said. “We don’t interfere in hotel owners’ work. We just organize the affairs of [Iranian] pilgrims.”
For example, the Shamsa company kitchens were created in order to provide quality meals to Iranians. Iraqi restaurants tended to be unhygienic, al-Baqiri argued. He also denied that Shamsa forces Iraqi hotel owners to provide Iranian breakfast foods. Al-Baqiri pointed out that the Iraqi culinary market is wide open to all kinds of foods, from all around the world, and that his customers preferred to eat food prepared according to Islamic principles. “This is why Shamsa asks hotels to provide certain kinds of Iranian food among the other items they may choose from at breakfast,” he explained.
Along similar lines, al-Baqiri pointed out that Shamsa also had its own medical team in the city to provide Iranian visitors with health care should the need arise.
“Conditions that Shamsa imposes on Iraqi services through its two branches in Karbala and Najaf have contributed to an overall improvement in services provided to tourists,” al-Baqiri stated.
Yet this in itself has also caused tensions. As Mohammed Abdul Amir, a visitor from the Maysan province in south eastern Iraq, told NIQASH, he thought that the levels of service differed. Hotels provided better and cleaner rooms to Iranian travellers. “In the same hotel, you can tell the difference between rooms that are for Iranian guests and rooms for Iraqi guests, just in the levels of hygiene,” Amir said.
Beside these instances of individual resentment about the Iranian tourism invasion, there is also a general feeling that the Iranians are taking over Karbala’s hotel business. Hotel owners say they suspect that Iranians have purchased hotels and real estate near the city centre but registered these properties in the names of Iraqi business partners. Al-Baqiri denied any such claims on Shamsa’s behalf.
The head of the Economic Commission in Karbala, Tariq al-Khikany, said that there was no evidence that Iranians were buying up hotels or properties through Iraqi brokers. He also said that the Commission had no authority to interfere in the commercial tourism sector – it was part of the market and as such, was governed by the usual rules of demand and supply.
“Hotel owners should come up with tools for collective bargaining and find a successful way to manage this sector so they can make profits,” the Commission’s chairman, Tariq al-Khikany, said. Shamsa and other companies were entitled to try and maximize their profit, al-Khikany said. “Globalization makes this kind of business activity possible.”