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Dubai braced for UK shopping invasion

As Britain prepares for a New Year hike in its VAT sales tax Dubai is hoping for a welcome boost in shopping tourism.

A rise in UK sales tax in the new year will boost the number of tourists travelling to Dubai to shop, say members of the tourism and retail industry.

The UK's value added tax (VAT), which is charged on most goods, is to increase to 20 per cent from 17.5 per cent from January 4 to raise cash as the British government tackles record levels of debt.

Dubai hoteliers are hoping that British consumers consequently turn to the emirate for some of their big-ticket purchases.

"This will help the UAE's shopping tourism to increase," said Naeem Darkazally, the associate vice president of sales and revenue at Rotana, which manages 13 hotels in Dubai.

"The UAE as a tax-free country means it is always appealing to British tourists.

"It will always remain a paradise for shoppers.

"With the VAT increase, the prices are becoming astronomical for people in England."

He added that the ease of air travel between the two countries was also attractive to tourists.

"We are investing more money into the UK market to attract more business," he said.

Other hoteliers agreed that the tax increase would benefit Dubai.

"People's spending [in Dubai] will be increased because of the VAT increase," said Syed Zulfiqar Mehdi, the director of sales and marketing at the Samaya hotel, a luxury property in Deira.

The UK is Dubai's largest source of tourists.

In the first half of this year, it accounted for 382,356 hotel guests from 4,181,326 visitors to the Emirate in that period.

Mr Mehdi said travellers from the UK were also likely to be tempted by the lower cost of booking hotel rooms in Dubai.

"Rates are certainly not like they were a couple of years back."

With the Dubai Shopping Festival starting on January 20, the organisers are hoping to boost sales.

The organiser of the Dubai Shopping Festival, the Dubai Events and Promotions Establishment, agreed that "the increase of UK sales tax might be a positive factor for the upcoming 16th edition of DSF".

During the event, retailers offer discounts of up to 75 per cent on many products and brands.

Since the economic downturn, Dubai's shopping festivals have increasingly focused on luring visitors from the GCC.

Unfavourable exchange rates and weak economic conditions in their home countries have prompted a decline in the number of tourists visiting the emirate from the UK and other European countries.

The Kempinski Hotel Mall of the Emirates, says most of its guests are from the GCC, with the UK making up only a small proportion of its customers.

"However, our studies show that UK tourists not only visit Dubai during DSF for shopping, but also to enjoy more of a holistic experience of all of what Dubai has to offer, hence they do tend to also spend on recreation and other attractions in Dubai," said a spokesman for Dubai Events and Promotions.

But some observers noted that Dubai prices were often higher than those in the UK and other parts of Europe.

Figures from Dubai Tourism and Commerce Marketing suggest that the number of tourists coming to the emirate is growing, with hoteliers citing cheaper room prices as one of the main reasons for the increase.

The number of guests staying in Dubai's hotels in the first nine months of this year reached 5,991,660, a 6 per cent increase compared with the same period last year.

Mr Mehdi believes that factors including more competitive hotel rates, harsh European weather and the VAT increase are working in favour of the Dubai shopping festival.

"Definitely it will be better than last year," he said.



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