How to start a hotel business in Dubai
Every year, millions of travelers from all over the world visit Dubai, one of the world’s most energetic and growing cities. It’s hardly surprising that the city is a top choice for both leisure and business travelers given its stunning architecture, opulent malls, and exciting nightlife. Due to this, Dubai’s hotel and tourist sectors have seen substantial expansion in recent years, making it an excellent place to launch a hotel venture.
Recent data indicates that Dubai’s hotel sector has been expanding steadily, and the city now boasts over 700 hotels and counting. Despite the ongoing epidemic, the emirate received a total of 3.7 million visitors in 2021 alone. This figure is anticipated to rise sharply in the upcoming years as Dubai strives to bring in 25 million visitors yearly by 2025 in accordance with its tourism goal.
In Dubai, new hotels are continuously being built to meet the rising demand for lodging. A total of 8,633 additional rooms were added to the market in 2022 with the opening of 33 new hotels. This shows the possibility for company owners and investors to take advantage of this booming industry by starting a hotel operation in Dubai, showing a 5% rise year over year.
There are a number of things to take into account if you’re thinking of opening a hotel in Dubai, from getting the required licenses and permissions to choosing the ideal site and staffing levels. We’ll walk you through the main processes of opening a hotel in Dubai in this blog, providing pointers and suggestions to make the process go more smoothly and increase your chances of success.
Benefits of Starting Hotel Business in Dubai
Due to the numerous advantages the city provides, opening a hotel company in Dubai might be a profitable investment option. The following are some major advantages of opening a hotel in Dubai:
1. Growing Tourism Industry:
Dubai, one of the most popular tourist destinations in the world, attracts millions of visitors every year. Before the epidemic, the city had a record-breaking 16.73 million overnight visitors from abroad, an increase of 5.1% over the year before. Additionally, Dubai received 3.7 million visitors in 2021 despite the COVID-19 pandemic’s obstacles, demonstrating a resilient tourism business. This number has greatly grown in 2022 and is anticipated to climb in the upcoming years.
2. High Occupancy Rates:
Because the city hosts events and attractions all year long, Dubai’s hotel business has strong occupancy rates. Despite the effects of the epidemic, Dubai’s hotels often had 60% occupancy rates in previous years and these occupancy rates are expected to rise significantly in the coming years.
3. Lucrative Investment Returns:
The hotel sector in Dubai is a profitable investment opportunity with excellent returns. The average day rate (ADR) for hotels in Dubai was AED 468 (USD 127) in the past despite the pandemic, and the revenue per available room (RevPAR) was AED 197 (USD 54), based on statistics from STR.
4. Events and Attractions:
Throughout the year, Dubai holds a number of top-notch events and attractions that draw visitors from all over the world. The city welcomed more than 25 million people to Dubai throughout the Expo 2020, an international exhibition held there in 2022. Dubai also organizes several other events, including the Dubai Shopping Festival, GITEX, and the Dubai International Film Festival which together drew millions of tourists.
As a result of the city’s expanding tourism sector, high occupancy rates, profitable investment returns, and year-round events and attractions that draw millions of tourists from across the world, opening a hotel company in Dubai may be a smart investment.
What are the Types of Hotel Business Setup in Dubai?
You may open a hotel in Dubai under a variety of headings, including:
These are luxury hotels with first-rate amenities including spas, dining options, and other leisure spaces.
These are typical hotels that give visitors accommodation and other amenities.
These are serviced apartments with services including housekeeping, utilities, and furniture that are frequently rented out for lengthy periods of time.
Hostels for Youth
These affordable lodging options are designed with young visitors in mind.
These are more modest businesses that provide travelers with housing and meals.
These are holiday residences that may be hired out for a brief time, typically for a week or less.
It’s crucial to remember that hotels in Dubai are given star ratings ranging from one to seven, with seven being the highest. Holiday homes can also be classified as basic or deluxe, based on the facilities and degree of luxury they offer. Be careful to select the category that most closely matches your target market and company strategy.
How to Obtain a Hotel License in Dubai?
For setting up a hotel in Dubai you must do the following actions in order to receive a hotel license:
Register Your Business
Registering your hotel company with Dubai’s Department of Economic Development (DED) is the first step. You will need to give a copy of your trade license, as well as other needed papers such as your business strategy, feasibility study, and leasing agreement.
Obtain Approval from DTCM
After registering your company, you must request clearance from Dubai’s Department of Tourism and Commerce Marketing (DTCM). An application for a hotel license must be submitted along with all necessary paperwork, including floor layouts, fire safety plans, and health and safety certifications.
Obtain a Bank Guarantee
You must give DTCM a bank guarantee to get a hotel license in Dubai. The size and kind of your hotel will determine the amount of the guarantee.
Your hotel property will be inspected by the DTCM to make sure it complies with all the requirements for health and safety, fire safety, and other areas.
The DTCM will grant your hotel license in Dubai if your hotel property passes all essential inspections and complies with all relevant rules.
It’s crucial to remember that getting a hotel license in Dubai may be a difficult and drawn-out procedure. It is best to deal with a local expert or solicitor who is knowledgeable about the procedure and can walk you through each stage. They can guarantee that you fulfil all standards and will help you in setting up a hotel in Dubai.
What are the Rules and Regulations to Start a Hotel Business in Dubai?
More information on each of these specifications is provided below:
Minimum Room Size
In Dubai, a hotel room must be at least 30 square meters in size. Both conventional hotels and hotel units fall under this.
Guest Data Storage
The local data protection rules require you to safely keep each guest’s personal and identity information.
Before a guest makes a reservation, the packages and rates you provide must be made clear to them. Taxes and any other fees are included in this.
A “Certificate of Good Conduct” from the Dubai Police is required for the hotel management. This document attests to the person’s lack of criminal history and credibility as a manager of a company in Dubai.
Health and Safety Regulations
To guarantee that your hotel satisfies the necessary criteria for fire safety, hygienic conditions, and food safety, you must abide by health and safety laws.
For the protection of your hotel company against potential dangers and liabilities, you must seek insurance coverage.
It’s crucial to keep in mind that these are only a few of the main rules that apply to beginning a hotel business in Dubai. Depending on the size, nature, and particular location of your hotel, there can be extra criteria. To make sure you adhere to all relevant laws and rules, it is recommended to engage with a local expert or legal adviser.
The Cost of Starting a Hotel Business in Dubai
The business license, permissions, name registration including the sponsorship fee will cost around 30,000AED (approximately)
The precise price may differ based on the hotel’s location, size, and style, as well as other elements like the cost of labor, electricity, and real estate. It is recommended to speak with our trustworthy business establishment professional service providers at Shuraa Business Setup in Dubai who can walk you through the process of getting the required licenses and permits from relevant authorities and give you a comprehensive summary of the costs associated with beginning a hotel company.
It can be profitable to open a hotel in Dubai, but doing so takes meticulous preparation and execution. You may position your hotel company for success in this bustling metropolis by doing careful research, acquiring the required permits, choosing the ideal site, hiring the best personnel, and offering premium facilities and services. Always put your guests’ wants and pleasure first and keep up with the most recent industry trends and standards.