Regulatory changes and Expo 2020 diversify Dubai's tourism revenue streams

While the regulation of tourism at the local level rests with the Department of Tourism and Commerce Management (DTCM), new federal regulations from the UAE’s Department of Naturalisation, Residency and Ports Affairs in August 2014, could have an impact on visitor numbers to Dubai.

New Visas

The federal government announced a new range of visas and entry permits that could be particularly important for two tourism sectors Dubai seeks to enhance: the cruise ship segment and medical travel. A new multiple-entry tourist visa costing Dh200 ($54) has been introduced for cruise ship tourists. This will allow passengers to make multiple entries into the country without frequent immigration formalities or payment for new visas at each port.

The visas that have been developed for medical tourists include a Dh550 ($150) permit for a one-off visit for medical treatment such as cosmetic or elective surgery, which has a Dh500 ($136) renewal fee, or a Dh1400 ($381) multiple-entry visa for someone undertaking a course of treatment over several months. The same fees would apply for a patient’s escort or companion. Daniel Andrews, editor of Arabian Travel News, told OBG the new visas could be particularly good for the cruise ship industry.

“The visas are better now. If you have a UAE visa, you can get into Oman and that is particularly important for the cruise ship industry, because it will really improve access,” he told OBG.

The new move should be particularly helpful for operators such as Cruise Arabia, a collaboration between Abu Dhabi, Dubai and Oman, in promoting holidays to the Gulf. “For a number of years the cruise industry has been in a dormant state, but there has been a revival, and Dubai, Abu Dhabi and Muscat could all be destinations with these new visas,” Christopher Hewett, senior consultant for TRI Consulting, told OBG. According to Russel Sharpe, COO of the hotel division at Landmark Hospitality, the new visas could also open other travel packages, allowing visitors to extend their stay in UAE by starting with a few days in Dubai, before taking a few days to visit the new Louvre Museum and Sheikh Zayed Grand Mosque in Abu Dhabi, as well as destinations in the other emirates that are currently being developed. “If you could get people to come for two weeks, rather than four days, that would give them much better options for long-term tourism,” Sharpe told OBG. “Singapore has done this very well.”

Target Markets

The visa price changes will have a particularly significant impact for residents of some countries. From March 2014, citizens from the GCC, from all 28 EU states and a number of other countries, including Malaysia, Singapore, South Korea, Australia, New Zealand, Hong Kong, US and Canada, were entitled to a free UAE tourist visa for 30 days with the option to renew once. Citizens of other countries are required to pay Dh620 ($169) for a visa. So, the cruise ship multiple-entry visas will have a prominent effect for tourists wishing to fly into Dubai from Russia, India or China, and subsequently embark on a cruise of the region. All three countries are among Dubai’s key target markets for growth.

GCC Visas

There have been discussions at the GCC level about a common visa for all member states. This would be similar to the Schengen visa in EU countries. It might be particularly useful for any passenger services located along the proposed GCC rail network, which was originally scheduled to be completed by 2018, providing a 6000-km network around all six Gulf states. A GCC-wide visa would also open other ports and destinations in the Gulf, like Bahrain or Qatar, to cruise ships, or even ferry services in the future. However, there have been no recent announcements suggesting the GCC visa is likely to be introduced in the near future.

Medical Tourism

Dubai Health Authority (DHA) is expecting 500,000 medical tourists to visit the country annually by 2020, generating revenue of Dh2.6bn ($707.7m) a year. The new medical visas will be offered as part of a package including accommodation and medical expenses from end-2014. Health tourism is a key target for Mall of the World, which will have a 279,000-sq-metre wellness district with treatment centres, clinics and hotels. Two hotels are also included in plans for DHA-run Rashid Hospital.

Dubai Changes

In Dubai itself there have been a number of regulatory changes in 2013 and 2014 affecting the hospitality sector. The changes have been made to improve tourism facilities, but also to expedite the process of constructing new hotels and hotel apartments to meet the extra demand anticipated as Dubai prepares for World Expo 2020.

New Classification

In order to ensure standards of accommodation remain high, DTCM introduced new rules and specifications related to its hotel classification system. Decree No. 17 declared that a larger scope of accommodation that might be offered to tourists would be covered by the classification system including university residences, youth hostels and floating hotels. A new sub-category of hotel apartment was introduced in order to help tourists choose between standard and deluxe suite offerings. Further subdivisions are to be added that will enable DTCM to classify hotels under 19 new headings, including airport, heritage, business, spa, golf or boutique, among others. Attempts have also been made to speed up the planning process for hotel construction. From January 2014, applicants were promised a 60-day turn around on all requests for permission to build hotels and fees for change of use of any plot to a hotel were annulled.

Holiday Lets

DTCM has also recognised that another way of absorbing the demand spike during the six months of the Expo 2020 may be holiday lets of private properties. A decree issued in December 2013 announced that anyone wishing to let their property to tourists would have to use a holiday home letting agency. The announcement added that letting agencies would have to pay Dh110 ($30) for a licence from June 2014 and that homeowners with more than 20 rental properties would also be licensed by DTCM, which would grade properties as either standard or deluxe. Khalid bin Touq, executive director of licensing and classification at DTCM, told Arabian Business, “Through regulating the use of properties as holiday accommodation, the objective is to broaden the range of options available to visitors, while ensuring that the high standards of quality for which Dubai is known are maintained.” Touq added that visitors wishing to book their accommodation via a licensed operator have the security that the accommodation they are securing has been classified in accordance with international best practice. In addition, owners of the properties can benefit from the knowledge and marketing skills of the operator they use to rent out their property. Private rentals can be lucrative but until the new law took effect, these properties had not been under the control of DTCM. A five-night stay in a villa on Palm Jumeirah, could cost Dh25,000 ($6805) according to one online rental site, but DTCM could not vouch for the quality of the accommodation. However, homeowners or tenants tempted to let space out to tourists independently could face stiff financial penalties or eviction, according to one Dubai lawyer.

Nick Clayson, a partner at Norton Rose Fulbright law firm in Dubai, told The National newspaper, many people thinking of renting out rooms or properties to tourists may not have considered the possible consequences of failing to register it with the DTCM, or of failing to inform their landlord in the case of tenants. He said sub-letting, without written permission from a landlord, can lead to eviction in Dubai, and fines for letting without a licence can range from Dh200 to Dh20,000 ($54 to $5444), with the law allowing a maximum find of Dh100,000 ($27,220) for repeat offenders. The Airbnb online platform, which enables residents to connect with potential guests and let out rooms or flats to them, has some 1000 properties listed in Dubai.

Tourism Tax

In March 2014, DTCM introduced a tourist tax to raise money towards the cost of funding Expo 2020. The levy, a compulsory fee which must be listed on all invoices from hotels, hotel apartments, guest houses and private rental properties, is called the “Tourism Dirham”. It applies to tourists and ranges from Dh7-20 ($1.91-5.44) per room per night, depending on the standard of the accommodation. The new federal rules on visas should make it easier for licensed tour operators to package holidays to Dubai based around medical treatment and the cruise ship industry, and in both cases the cost for visitors from countries such as China, Russia or India could be significantly reduced. In this way, the federal government is helping to facilitate tourism plans that could generate billions of dollars in additional revenues. At the same time, the DTCM is working with other government agencies to introduce new measures that will tighten the rules on the quality of guest accommodation and reduce bureaucratic red tape to facilitate the construction of new hotels. At both federal and emirate level, these new measures should help the hospitality sector to grow, to tap into new markets and to prepare for Expo 2020.