Series of measures to stimulate Dubai’s hospitality sector
Fee waivers and reduced approval timeline for three and four star hotel projects to further stimulate the growth of its vibrant hospitality sector.
Dubai has initiated a series of bold new measures and incentives including fee waivers and reduced approval timeline for three and four star hotel projects to further stimulate the growth of its vibrant hospitality sector.
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, on Monday pronounced a string of directives to this effect to offer exciting new opportunities for hotel investors.
A prime focus of the move is to cut red tape to expedite the approval process for three and four star hotel projects. The range of incentives includes the allocation of government land at favourable rates and an exemption from fee for change-of-use of land for hotel construction.
For three and four star hotels that begin operations before June 2017, there will also be an extension of the period of exemption from the 10 per cent Dubai Municipality fee to five years from the previously four years.
The directives, which were made in response to recommendations raised by Dubai’s private sector hotel developers during a consultation workshop, will act as a catalyst to the booming hospitality sector and help bolster the industry’s room capacity in time for hosting over 25 million visitors expected for World Expo 2020.
According to Dubai Tourism Vision 2020, the city needs to double its hotel inventory to around 164,000 hotel and hotel apartment rooms within the next seven years. In 2013, Dubai has added around 3,000 new hotel rooms to its inventory.
Dubai, the regional hub for hospitality, tourism and shopping, is the world’s biggest growing market outside of China since 2008 in terms of new hotel openings. The city has been named a top-10 global destination for business, leisure and shopping tourists, in a research exercise by Genesis Consulting ME. Hotels in Dubai exceeded the regional and national average and recorded a 9.9 per cent growth in average daily rate to $290.68.
In line with the directives, hotel construction pre-approval process period will henceforth be reduced to two months (currently the approval process for private developers ranges from three to six months); a one-stop-shop for all sector approvals to be created (a single streamlined system will be managed by the Dubai Municipality to help reduce red tape for businesses and ensure the new reduced approval timeframes are met); approval processes of planning permission for all hotel establishments in the emirate to be standardised through the Dubai Municipality (currently some free zones manage their own building regulation approval processes for hotels in areas across Dubai. These will now be moved to Dubai Municipality); Government land to be allocated for the development of three-star and four star hotels; Dubai Municipality and government-linked master developers will work with Dubai’s Department of Tourism and Commerce Marketing (DTCM) to identify key locations for hotels at favourable investment terms.
Incentives to help ensure the development of more three and four star hotels that Dubai will need by 2020 to meet the growth in visitor numbers include: no fees on change-of-use of land for hotel usage, and the establishment of a special committee to review the re-zoning of plots: and an additional year of exemption of the 10 per cent Dubai Municipality fee for any three and four star hotels which begin operating before June 2017, based on the hotel Incentive initiative announced by DTCM in September 2013.
The consultation workshop of private sector hotel developers was organised and hosted by DTCM and Dubai Municipality on January 16. It was attended by representatives of key investors in the hospitality sector, including Al Habtoor Group, Al Futtaim Group, Al Ghurair Group, Rotana Group, Dubai Holding and Emaar.
The workshop was designed to discuss the Tourism Vision for 2020, including the recent positive growth in the hospitality sector in terms of visitor numbers and hotel openings, to identify barriers-to-entry currently being faced by hotel investors and to find solutions to further stimulate the sector, particularly in the three and four star segment, as Dubai prepares to welcome more than 20 million annual visitors by 2020.
Hussain Lootah, Director-General of Dubai Municipality, said in partnership with public and private sectors, Dubai will identify opportunities for streamlining in the hotel development sector. “Our aim is to continue Dubai’s journey, to further progress from our position as the region’s leading tourism and business destination to being recognised as a global leader in trade and tourism. To achieve this, we will demand and help our partners to deliver world-class buildings standards and to create an environment of high quality, sustainable growth.”
Helal Saeed Almarri, Director-General of the DTCM, said collaboration and consultation between the public and private sector is essential to ensure delivery of the infrastructure, accommodation, events and attractions needed to meet not only the current growth of the tourism sector but also the ambitious future growth. “The directives offer new and exciting opportunities for hotel investors. They will act as a stimulus to the sector and help to broaden our current accommodation offering, particularly within the three and four star segment, which is needed to meet the targets outlined in the Dubai Tourism Vision for 2020,” said Almarri.