x Abu Dhabi, UAETuesday 23 January 2018

Dubai to levy hospitality fee on hotel guests to help finance Expo

The fee is in the early stages of planning and it is not known what rate the fee will be set at, nor what total it is hoped to raise.

Helal Saeed Al Marri, director general of Dubai Tourism and Commerce Marketing, in discussion at the Destination Dubai 2020 conference in Dubai on Tuesday. Antonie Robertson/The National
Helal Saeed Al Marri, director general of Dubai Tourism and Commerce Marketing, in discussion at the Destination Dubai 2020 conference in Dubai on Tuesday. Antonie Robertson/The National

Dubai is planning a hospitality fee on hotel stays to help to finance Expo 2020 projects.

The fee, to be called “tourism dirhams”, would generate a set amount “from each guest night” in the emirate, said Helal Saeed Al Marri, the director general of Dubai Tourism and Commerce Marketing (DTCM), at the Destination Dubai 2020 conference.

The fee is in the early stages of planning and it is not known what rate the fee will be set at, nor what total it is hoped to raise.

It would be imposed on hotel and hotel apartments of all categories, Mr Al Marri said.

DTCM has said €6.45 billion (Dh32.33bn) will have to be spent to develop the infrastructure for Expo 2020 and to host the six-month event.

Mr Al Marri said that while a significant amount of that sum would come from the Government, and some from foreign investment, a part of the funding would also flow from the hospitality sector.

More details about the fees would be revealed in the next 10 days, DTCM said.

The plan for the fee does not appear to have been communicated to hotels yet.

Laurent Voivenel, the chief executive of the Dubai-based operator Hospitality Management Holdings, said, “As we have still not received any information regarding the value of tourism dirhams to be levied on hotels and hotel apartments in Dubai, it is difficult to anticipate or calculate the impact of this fee on the room rates at the various hotels in HMH portfolio in Dubai.” HMH manages four properties, including the Coral Deira Dubai and Coral Al Khoory Hotel Apartments Dubai.

The Thai hotel chain Dusit Thani, too, has not been notified of the new fees as of Thursday, but said it would welcome the proposal.

Dusit Thani entered the Middle East with its Dusit Thani Dubai hotel on Dubai’s Sheikh Zayed Road in 2001. It also manages the Pearl Coast Premier Hotel Apartments in the city and Dusit Residence Dubai Marina.

Currently, hotel guests in Dubai pay 10 per cent municipality fees plus 10 per cent services charges, both based on their daily room rates. In December, the average daily room rate in Dubai was Dh1,063.32, according to the research company STR Global.

In the first nine months of last year, Dubai’s hotel and hotel apartments generated 30.87 million guest nights, up 13 per cent from the same period in 2012.

The big picture for Expo is that the emirate’s number of hotels is expected to double, Mr Al Marri said. The newcomers, he added, would include a number of “good quality” three and four-star hotels.

On September 28, the Dubai Government exempted new three and four-star hotels from the municipality’s 10 per cent fee for four years from the date the permit to construct is granted, if this date falls between October 1, 2013, and December 31, 2017.

On January 20, the emirate cut the duration of the pre-approval process for new hotels to two months from six months for private developers. It has also scrapped fees levied for “change-of-use of land” for hotel usage. The Government would also allocate its own land to develop three and four-star hotels.

The move is intended to ensure rooms are available for travellers with a wide range of budgets, but Dubai will still frame itself as foremost a luxury destination.

“We will definitely remain a premier destination,” Mr Al Marri said. “The number of required rooms has not been defined by star rating, but we are concentrating on ensuring we retain our reputation as a luxury destination, while also increasing the mid-market segment so that Dubai’s hotel offer has options for a range of budgets.”

The emirate would need 140,000 to 160,000 rooms by 2020 to be able to accommodate the targeted 20 million visitors per year, he said.

Dubai has more than 600 hotels and hotel apartments accounting for around 84,000 rooms, according to DTCM.

Since Dubai won the vote to host Expo 2020, the emirate’s developers have revived old hotel projects and announced new ones.

Nakheel aims to build nine hotels in Dubai in the next five years, the company’s chief executive, Sanjay Manchanda, told Destination Dubai 2020 on Tuesday.

Five of the hotels, he said, would be on the Deira Islands project, which is at an early stage of construction.

The first of Nakheel’s new hotels in Dubai is to open in Dragon Mart premises this year.

Others are scheduled to open on the Palm Jumeirah, near Ibn Battuta Mall, and The Dubai Mall as well as in International City.

Projects worth US$10.1 billion were already under way in the emirate’s hospitality sector, said Andrew Davies, the head of conference production at Meed, which organised Destination Dubai 2020.

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