The continued growth in the tourism sector of Dubai, coupled with an increase in the level of sophistication of tourists in general, is encouraging investors to diversify their product offering by increasingly tapping into the market of holiday homes and hotel apartments.
In this article, we will compare both concepts under the lens of Dubai law to highlight the differences, and provide the reader with a better understanding in regard to the licensing and other regulatory requirements for each concept.
Decree No. 41 of 2013 ‘Regulating the Activity of Leasing out Holiday Homes in the Emirate of Dubai’ provides a definition for the term ‘holiday homes’. Holiday homes are furnished real property units leased out by a licence holder regularly and on an ongoing basis for the purpose of further subletting them to guests. These guests are natural persons who intend on using the holiday homes for overnight accommodation.
Hotel apartments are also furnished real property units. However, and unlike holiday homes, hotel apartments are located within a hotel facility and as such they benefit from hotel-like amenities (e.g. bar, spa, gym, etc.). Such hotel apartments may be leased for relatively longer periods in return for a monthly or annual rent.
Below is a comparison table highlighting the major licensing and regulatory requirements governing each concept.
Click here to view table
The licence holder will have to demonstrate experience in the hospitality sector.In addition, both types of units are subject to the below regulatory requirements:
- The DTCM will register, monitor and inspect holiday homes and hotel apartments to comply with set standards.
- Unlicensed operators will be fined and immediately closed down.
- Each licensed property will have to display an official certificate of registration by the DTCM within the property.
- Licensed properties will have to be properly and regularly maintained.
- Electricity and water must be provided to customers at no additional charge.
- Licensees will be required to participate in the electronic program of guest registration for hotel and tourism establishments.
- Licensees must provide data and statistics to the DTCM.
- Licensees will not be allowed to act as an intermediary, or middle man, between unlicensed operators and their customers.
- Licensees must collect taxes and fees as set out by the Dubai Municipality and the DTCM for each confirmed booking.
- Licensees will require insurance to the required specification of the DTCM for the duration of the licence term.
- The DTCM will have powers to warn, suspend apply fines and cancel the licence of any operator that is in violation of their rules.
Holiday homes and hotel apartments are two concepts that are fundamentally different from each other and are designed to achieve diverging results. Most of all, each concept is governed by a different set of licensing and regulatory requirements which needs to be clearly understood by investors as a precondition to determining whether to venture in one concept or the other.