News analysis: Shining a light on holiday homes

Hospitality revolution may be on the way, but progress is slow so far

Holiday homes are formally coming under the scope of DTCM's regulation in Dubai.
Holiday homes are formally coming under the scope of DTCM's regulation in Dubai.

Dubai is likely to remain well behind the major markets for holiday homes, at least in the short term, although regulators’ efforts should give the sector some much-needed legitimacy.

At the end of 2013, the Department of Tourism and Commerce Marketing (DTCM) revealed plans behind the move to set out regulations for the creation of a holiday homes market in Dubai.

That process accelerated in June 2014, when it began receiving applications for licenses to operate holiday homes in the emirate. However, the exact nature of the regulations remains to be seen, with stakeholders and observers in the industry awaiting more details.

Globally, Homeaway is one of the biggest players on the holiday (or vacation) homes scene, and a recent visit by strategy, business and corporate development director Taleeb Noormohamed to Dubai was a strong signal of the company’s intensions.

Speaking to Hotelier Middle East, he welcomed the intervention by DTCM as a portent to the potential of the sector: “The first thing it does is that it signals that people are recognising that vacation rentals and holiday homes are part of the way that people now travel, which is a fundamental shift.

“Five to ten years ago, regulators around the world were having real issues with this and didn’t really like the idea. But it was how people travelled.

“As it has become more mainstream, more regulation makes it easier for people to see this as part of mainstream travel,” he added.

One company that has already been active on the holiday homes front in Dubai for around a decade now is My Stay Group. Director Imran Latif agreed that the DTCM’s interest and introduction of two new hospitality classifications — standard and deluxe holiday homes — were positive moves.

“It is a welcome addition to us because we can then market it officially and we are recognised officially. We’ve lived in a kind of grey area, which exists around the world.”

In a similar vein, Viability managing director Guy Wilkinson also welcomed the DTCM involvement. “Since 2002, you’ve had foreigners able to buy apartments and villas in the freehold areas and they want to rent them out on a short-term basis, which they’ve been doing unregulated for some years now.

“It’s great the DTCM is now looking at regulating them and I’m assuming that if they are regulating them, they are in a way promoting them.”

So what would adequate regulation look like? “If I were a regulator I would look to, at the start, work with trusted partners,” said Noormohamed. “What that does is it enables them to take an approach that is measured. You want to enter something like this with your eyes open.

“You want to make sure that people feel like you’ve thought things through. That you’re not making up the rules as you go along. What I would say is to look at some of the best examples where this has worked and to learn from those. And to not be bullied into doing things.”

Noormohamed also dismissed any worries from hoteliers that an emergent holiday homes sector could threaten the status quo.

“What you’re really doing is actually adding the ability for different types of travellers to travel to your destination,” he explained.

“There is very much a demographic that may have come to Dubai once on business and said they would love to take their families. But they don’t want to stay in a hotel; they probably want to be in a place where kids will be able to go to the fridge and grab something if required, or to be able to have some space.”

If indeed the holiday homes sector does take off, there could also be opportunities for established hotel brands, as in the US and other countries, where operators such as Wyndham Hotels & Resorts and Hyatt Hotels Corporation manage thousands of properties.

“I believe the system works [in the US] because it works on the basis that they’ll sell the timeshare and manage it on behalf of the owners,” said Wilkinson. “It might come here eventually.

“We’ve been a bit slow in Dubai to adopt some of the American-style, more sophisticated ownership products.

“I think laws will be tightened up and it will be formalised further and then you may well find that people have the option to buy into those schemes.”

And, as DTCM CEO of strategy and tourism sector development Dr Ahmad Belhoul explained last year when the regulations were first announced, anything that brings in more visitors is likely to benefit the entire hospitality sector.

“It is a niche segment and in fact will likely benefit hotels in terms of the increased food, beverage and entertainment that will result from the rise in visitors that the holiday homes market will create.”

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