News analysis: Coping with Dubai's Tourism Dirham

Hotels tentatively welcome new tax as way to promote Dubai

DTCM director general, HE Helal Saeed Almarri.
DTCM director general, HE Helal Saeed Almarri.

February saw more concrete details emerge regarding the Dubai ‘Tourism Dirham’, as His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council, issued a resolution declaring the charge will come into effect on March 31, 2014.

The resolution stated that the ‘Tourism Dirham’, first announced in January this year following the creation of the new DCTCM tourism body , is to be a charge of between AED seven and 20 per room, per night, for all guests staying in holiday accommodation including hotels, hotel apartments, guest houses and holiday homes.

Speaking at the time of the announcement, Dubai’s Department of Tourism and Commerce Marketing director general HE Helal Saeed Almarri said: “The introduction of the Tourism Dirham will support Dubai Corporation for Tourism and Commerce Marketing, helping to ensure our continued competitiveness on the global stage, which will be reflected positively in the growth of two of our economic pillars — trade and tourism.”

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Following the announcement, the Dubai hotel market has been cautiously enthusiastic about the new charge and the potential of a worldwide marketing push from the new tourism body.

Speaking to Hotelier, Dubai’s Emirates Grand Hotel director of sales and marketing Rohit Rattan said: “With a new organisation dedicated to promoting Dubai as a tourism hub, we expect a boost in the growing tourism market of Dubai, and we look ahead to a vision which is in line with the latest trends and developments of the city”.

Also enthusiastic about the work of the new tourism body was TRI Hospitality Consulting senior consultant Christopher Hewett, who said: “The formation of the DCTCM will ensure that there is an entity which is dedicated to promoting and marketing both tourism and commerce in Dubai and the overall Dubai brand. The key benefit is that the corporation will focus on attracting a greater number of visitors to the city with the aim of reaching 20 million by 2020”.

Splitting the Bill
Following the announcement, further communications from Dubai’s DTCM have since clarified exactly how the charge will be applied to each hotel, with five-star hotel guests having to pay the maximum fee per occupied room per night of AED 20. Four-star hotel guests will be charged AED 15, while at three-star hotels the fee will be AED 10 per occupied room, per night.

The AED 20 fee will also apply to deluxe hotel apartments, while superior hotel apartments will pay AED 15 per occupied room per night and standard hotel apartments will pay a Tourism Dirham fee of AED 10.

The lowest Tourism Dirham charge will apply to one-star/budget hotels and guest houses, which will be charged AED 7 per occupied room, per night.

Additionally, according to the DTCM, the Tourism Dirham must be represented as a separate line item on the guest bill, but the municipality charge and service charge will not be levied on this fee.

However, it was also revealed that a fine of AED 15,000 would be enforced if hotels provided inaccurate documents or incomplete information regarding the Tourism Dirham, or if they were found to manipulate accounts related to the fee.

As news of the fee filtered through the market, hoteliers were optimistic that any additional charges would not deter potential guests from visiting the city or impact their spending once they have arrived.

Asked about potential negative impact the Hawthorn Suites by Wyndham Dubai general manager Wael El Behi said: “I do not think so, the charges are nominal and acceptable; our role is to support the destination and recognise the effort and investment done so far to make Dubai a leading destination on the world tourism map.”

Ramada Downtown Dubai general manager Samir Arora was more wary about the fee and said: “Any additional fee levied has an adverse effect which we will wait for and see. Personally, I don’t think this will put a visitor off of travelling to Dubai but it may upset their personal spending somewhat during a stay here”.

Recalculating Rates
Another major area of debate for Dubai’s hoteliers is how the new fee will be incorporated into existing rates, and more specifically, how it may affect rates already agreed for hotel stays later in the year.

Habib Khan, general manager of Arabian Courtyard Hotel and Spa said that his hotel was “in discussions with our partners, locally and overseas to find an effective solution, as we are in the middle of the season and we already have quite a large number of bookings which were generated before the circular was received from the DTCM”.

As it stands, the Dubai market appears cautiously optimistic regarding the fee and DTCM has said more details will be provided soon to answer operational queries.

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