In the recent weeks, a number of deductions in fees and tax within the hospitality industry has taken the country by storm. The capital has reduced the 6% tourism fee previously applicable on hotel rooms and outlets to 3.5 %, halved municipality fees to 2%, and lowered the per room per night hotel fee to AED10 from AED15. In Dubai HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, crown prince of Dubai, ordered to reduce the municipality fees on sales at restaurants and hotels from 10% to 7%. These changes were welcomed by industry professionals and here we find out how this will impact the future of hospitality in the UAE.
While announcing the change in municipality fee in Dubai, HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, crown prince of Dubai tweeted: “In line with the directives of @HHShkMohd we are announcing a 3% reduction of fees on the sale value for hotel facilities and restaurants in Dubai to enhance its position as a preferred destination for both investment and tourism.
“This decree will expand the series of measures announced days earlier and aimed at supporting companies operating in Dubai, reducing the cost of doing business and attracting new investments.
Today, Dubai is one of the world’s most popular tourist destinations. Last year we welcomed 16 million visitors & look forward to receiving 20 million in 2020 when we host the Expo. Our goal is to preserve these gains & consolidate our position as a competitive global destination.”
The changes have resulted in a positive outlook from both operators as well as guests.
Cenk Unverdi, cluster general manager, Rixos Premium Dubai
“After the implementation of VAT, the decision to reduce municipality fee is very much appreciated by us and I believe other hoteliers too. It was a perfect timing as well as to implement this change as many hotels in Dubai drop down in occupancy levels during the summer season. As a hotelier, I believe that reduced municipality fee will not only enhance guest experience and give an extra value but will also support further growth and positive change for UAE’s hospitality and the tourism industry itself. From the tourist and guest point of view, I believe that Dubai as a destination would become more attractive and affordable, thus increasing levels of spending in our hotels and restaurants.”
The future of hospitality looks: Bright
Neil Houghton, general manager, Intercontinental Abu Dhabi
“There are a number of indicators showing that with the reduction of taxation some of our challenges will be reduced due to the fact the accommodation cost for a guest is less. We have reviewed our strategies making sure we have attractive offers and packages in place and that these offers and packages are communicated to the right markets. I expect resilient results for the coming year and our hotel will take part in a number of global exhibitions like World Travel Market, GIBTM, and ATM among others. We will be promoting the hotel with all the new changes along with the destination .
“Our partners, the Abu Dhabi Department of Tourism and Culture and Etihad Airways are doing an excellent job in promoting tourism and attracting travellers to Abu Dhabi. These new changes along with the attractions we have in Abu Dhabi like the Louvre Museum, Sheikh Zayed Grand Mosque, Yas Water World, and Ferrari World, will have a great impact in attracting leisure travellers to Abu Dhabi and turning the capital into a cultural centre and key international tourist destination.”
The future of hospitality looks: Optimistic
Ferghal Purcell, chief operating officer, Hospitality Management Holding
“In an incredibly aggressive worldwide tourism market the governments of both Dubai and Abu Dhabi have shown incredible foresight in maintaining that competitive advantage by ensuring that we remain a desired destination that also offer value for money.
“From a customer experience and perspective, the new changes establish the foundation for a long-term relationship, wherein they recognise that the government is committed to ensuring that the destination prioritises the needs of travellers, and assure they are receiving value at every level, whilst simultaneously investing in the tourism infrastructure, both of which are the cornerstones of success.”
The future of hospitality looks: Evolutionary
Satish Nambiar, general manager, Citymax Hotel Bur Dubai
“The reduction in the municipality fee and tourism fee is definitely a positive initiative made by the Dubai and Abu Dhabi government. It is a step in the right direction to creating a more affordable platform in which companies within the hospitality industry can thrive with a reduced commitment to mandatory overhead costs. I believe that the UAE government is working towards creating an attractive tourism hub where both travellers and investors will benefit. Considering today’s market, we see that companies and consumers are adopting a discount driven approach and this reduction in fees only helps with the company’s cost and profitability, and the consumer spend.”
The future of hospitality looks: Valuable
Patrick Antaki, complex general manager of Al Maha, A Luxury Collection Desert Resort & Spa, and Le Meridien Al Aqah Beach Resort, Fujairah
“A visionary government that takes active measures in helping businesses reduce their costs and steps in to encourage tourists recover their VAT must be applauded. With the UAE gearing up for Dubai Expo 2020, the decision to reduce overheads will benefit all stakeholders and in turn encourage more investors and international hospitality brands to consider Dubai as a potential market and destination for future ventures. It is extremely motivating to see these active initiatives that are primarily focused on reducing the burden and encouraging a higher footfall. Combined with the active efforts of the Dubai Desert Conservation Reserve to conserve and maintain the indigenous flora and fauna of the region and Department of Tourism and Commercial Marketing activations, this initiative of reducing the municipality and tourism fees will further popularise the destination and certainly benefit tourism in the United Arab Emirates.”
The future of hospitality looks: Successful
Jennifer Pettinger Haines, managing director Middle East, Bench Events and founding member of GRIF Society and the Dubai Restaurant Industry Think Tank.
“The recent announcement that His Highness Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the United Arab Emirates and ruler of Dubai, is cutting municipality fees on sales at hotel facilities from 10% to 7% is great news for the industry, made all the better when we heard that Abu Dhabi was also taking measures to reduce tourism fees from 6% to 3% and municipality fees to 2%. These are very positive and significant steps in support of the UAE’s hospitality industry and come at a challenging time for many operators, especially as we head into the summer period. Only time will tell what the true impact will be but it is a very positive gesture which will offer enhanced value to guests.”