ISFAHAN -- Iran, whose tourism industry was badly hit by the September 11 attacks, is attracting many more Arab tourists from wealthy Persian Gulf states put off by strict U.S. entry regulations, AFP reported.

Some 400,000 Arab tourists are expected to travel to Iran this year -- 20 percent more than in 2001 -- mostly from Saudi Arabia and Kuwait. It will be the first time the Islamic state will host nearly as many Muslim tourists as Western visitors.

Following the election of President Mohammad Khatami in 1997, the Iranian tourism industry witnessed an "unprecedented blossom," according to Mohammad Mo'ezzeddin, the deputy culture minister and head of Iran Touring and Tourism Organization (ITTO).

But arrivals have dropped sharply in the aftermath of the terrorist attacks in the United States. Here in Isfahan, Iran's biggest tourism resort, bookings by Western tourists have dropped by 35 percent.

At the same time, however, and following the introduction of perceived "anti-Muslim" security measures in the United States, Arab holidaymakers, notably Saudis, have started to shun America and Europe and have turned their eyes toward Muslim countries.

"The temperature is much milder than in Saudi Arabia, the sites are magnificent and the hotel we are staying in is remarkable," said Jafar Abdallah Shabour, a Saudi businessman holidaying in Isfahan.

Jafar and his two brothers, along with their wives and children, were among some 100 Saudis gathered at the main Imam Square in Isfahan where they were going through the hundreds of shops in the traditional bazaar.

"We are Sunnis, but that does not make a difference. We feel well in Iran," Jafar's brother, Omar, said of Shiite Muslim Iran.

Mohsen Emami, ITTO deputy director, believes that Iran "cannot be bypassed as a (tourist) destination" for its Arab neighbors.

"Attracting Arab tourists from Persian Gulf states is among the priorities for our development in this field," Emami said, adding that the reintroduction of visas for Arabs was not slowing down their arrivals.

"The tourism of Arabs is a family tourism. They hardly come to us for information and plan everything ahead of time. The majority visit Shiraz (south) and Isfahan, before heading for the north mostly in July and August because the temperatures are more agreeable," added Isfahan tourist official Tahereh Norouzifar. Just after September 11, some 80 percent of tourists who had planned to visit Iran canceled their trips, according to Mo'ezzeddin, who added that the possible involvement of Iran's neighboring countries in the attacks almost brought Iran's tourism industry to a "standstill."

Still, tourism revenues are estimated at close to one billion dollars a year.