Dubai’s hotel market is growing fast. In 2023, the UAE hotel market hit USD 7.7 billion, projected to grow to USD 9.5 billion by 2028. Starting a hotel business in Dubai is a great opportunity. It is famous for luxury and tourism making it a perfect location for your hotel business setup.
Whether you want to open a boutique hotel or a large resort, this guide will help you understand how to set up a hotel business in Dubai.
Quick Guide to Setting Up a Hotel Business in UAE
- Research Market: Analyze competition and target audience needs.
- Plan Business: Define concept, services, and financial projections.
- Secure Funding: Use loans, investors, or government programs.
- Register Business: Submit DED application and documents.
- Get DTCM Approval: Obtain clearance for tourism operations.
- Obtain License: Apply for a tourism license with bank guarantee.
- Classify Hotel: Submit details for star rating and inspections.
Read on to uncover 5 tips to avoid costly mistakes and launch your UAE hotel by 2025!
Benefits of Starting a Hotel Business
If you are looking to start a hotel business, there is no better place than Dubai. Here is why:
Growing Tourism Industry
Dubai’s tourism industry is booming. Millions of visitors come to the city every year, creating a strong demand for hotels. Starting a hotel business here means tapping into a constantly growing market.
High Occupancy Rates
Dubai’s hotel occupancy hit 73% in 2023, with 76% projected for 2024, signaling strong demand. This rate is expected to rise in the coming years, making it a promising time to start a hotel business. High occupancy rates mean better returns for your investment.
High Investment Returns
Opening a hotel business in Dubai can be very profitable. In 2023, Dubai’s average daily rate (ADR) was AED 553, and revenue per available room (RevPAR) was AED 404, showing strong returns. These figures show that opening a successful hotel business setup in Dubai can offer high returns.
Events and Attractions
Dubai hosts major events that attract millions of visitors. For example, the Future Hospitality Summit, a top hospitality investment conference, is set to have its biggest event yet in 2024. Additionally, Expo 2020 attracted 24.1 million visits, boosting hotel demand. These events provide a great opportunity for a successful hotel business setup.
Detailed Guide on How To Set Up Hotel Business UAE
Here is a checklist on how to set up a hotel business, the most comprehensive guide you would ever find. So don’t forget to bookmark it. let’s start:
Understanding the Hotel Industry in Dubai
Dubai’s hotel market is thriving. The UAE hotel market is projected to grow at 4.2% annually through 2028. Therefore, the demand for hotel accommodations is expected to grow, offering plenty of opportunities for new hotel businesses.
However, it’s vital to conduct thorough market research on how to set up a hotel business. This will help you understand the competition, identify market gaps, and determine the type of hotel that will best meet the needs of your target audience.
Creating a Solid Hotel Business Plan
A well-crafted hotel business plan is the backbone of your business setup. It should clearly outline your vision, mission, and objectives. Here are the key components to include:
- Concept and Theme: Define the unique concept and theme of your hotel. Whether it’s a luxury resort, a business hotel, or a holiday hotel, your concept should resonate with your target market.
- Target Market: Identify your primary and secondary target markets.
- Location: Choose a strategic location that aligns with your hotel concept.
- Services and Amenities: List the services and amenities your hotel will offer.
Securing Financing for Your Hotel
Setting up a hotel business requires substantial capital investment. Here are several financing options available:
- Bank Loans: Approach banks for business loans. Ensure you have a robust business plan and financial projections to present.
- Dubai SME Support Programs: Dubai SME offers various programs for UAE nationals, including business scale-up support services and funding support loans.
- Investors: Look for investors interested in the hospitality industry. This could include individuals, venture capitalists, or investment firms.
- Personal Savings: If you have substantial personal savings, you can use them to fund part of your hotel business.
- Government Support:
- Future District Fund: Launched in 2020, this is a $272 million seed-to-growth fund aimed at supporting and growing startups.
- Dubai Next: This crowdfunding platform helps startups and SMEs raise funds. The platform collects the funds in an escrow account to guarantee the project.
Legal Requirements and Licensing for Starting a Hotel Business in Dubai
1. Register Your Business
To get initial permission from the Department of Economic Development (DED), you must have all required documentation ready. Here’s what you need:
| Requirement | Description |
|---|---|
| DED Application Form | Fill out the form, have all your partners sign it, and submit it. |
| Passport Copies | Provide copies of your passport, your business partners’ passports, and your staff’s passports. |
| Property Documents | Submit plot maps, site designs, and the building completion certificate for the hotel property. |
| Categorization Card | Necessary for the company formation of a hotel business. |
| Manager’s Documents | Provide a copy of your manager’s passport, letters of recommendation, and academic transcripts. |
| Certificate of Conduct | Approved by the Department of Tourism and Commerce Marketing (DTCM). |
| Dubai Police Approval | Obtain authorization from the Dubai Police General Headquarters. |
2. Obtain Approval from DTCM
After registering your hotel company, you must get clearance from Dubai’s Department of Tourism and Commerce Marketing (DTCM).
3. Get Your Hotel License in Dubai
To start a hotel business, you need a tourism license. Here’s what you need:
| Requirement | Description |
|---|---|
| Initial Approval Receipt | Present the fee receipt. |
| Trade Name Certificate | Submit the certificate and payment receipts. |
| No Objection Certificate | Required for international hotel groups or chains. |
| Ejari Registration | Register on the Ejari platform and get your tenancy contract and unique Ejari number. |
| Tenancy Contract | Approved by the landlord for a minimum of ninety days. |
| Dubai Municipality Consent | Acquire approval for sanitation, waste management, public health, etc. |
4. Obtain a Bank Guarantee
Typically AED 50,000–100,000 for 3–5 star hotels, based on size and rating.
5. Inspections
DTCM will inspect your hotel property to ensure it meets health, safety, fire safety, and other requirements.
6. Final Approval
If your hotel passes all inspections and complies with regulations, DTCM will grant your hotel license.
Rules and Regulations
Here are some hotel business requirements other then the above mentioned checklist. You need to fulfill:
- Architectural Requirements:
- Kitchen area: 300 to 380 square feet.
- Proper ventilation and a chimney 2 meters higher than the nearest building.
- Washable, non-absorbent, and fireproof walls, floor, and roof.
- Separate basins for washing utensils, vegetables, fruits, and meat.
- Storage facilities for all types of food items.
- Drainage pipe at least 2 inches from the walls.
- Guest Data Storage: Implement measures to safeguard guest information.
- Transparent Pricing: Include 5% VAT on services and account for 9% corporate tax on profits above AED 375,000.
- Manager’s Certificate: The manager must have relevant qualifications and approved certifications.
Corporate Governance: As part of DTCM’s governance, the Whistleblower Protection Policy promotes transparency, ethics, effective communication, and accountability in Dubai’s tourism industry.
Classifying Your Hotel Establishment in Dubai
As it’s the most comprehensive and up to date guide on how to set up a hotel business in dubai or UAE, we are not going to keep anything hidden. So To operate in Dubai, all hotels must apply for classification. Worried about this step? Rest assured we will walk you through this as well. Just follow the simple steps below and you are good to go.
Pre requesit Document Requirements
- Initial approval from DET (Department of Economy and Tourism)
- Passport copy of the license holder
- A land map copy
- Dubai Municipality building completion certificates
- Trade name certificate
Fees
Fees vary depending on the hotel category, star rating, and total number of units.
Processing Time
Inspections occur within 1–2 days, with full processing in 3–5 days.
Steps to Apply for Classification
- Collect the Property Unit Details
- Gather all necessary details about your property units.
- Log in to the Classification Portal
- Access the online classification portal.
- Complete the Online Application
- Submit the following documents through the online application:
- Initial approval from DET
- Passport copy of the license holder
- A land map copy
- Dubai Municipality building completion certificates
- Trade name certificate
- Submit the following documents through the online application:
- Fill in the Self-Assessment
- You can complete a self-assessment to understand your hotel’s potential rating. It is optional.
- Last Steps to Start a Hotel Business in Dubai
- The DET inspection team will visit your property within one business day of submitting your application.
The Cost of Starting a Hotel Business in Dubai
Starting a hotel business in Dubai can be a significant investment. A boutique hotel may cost AED 10–30 million; a 5-star resort, AED 200 million+, including construction, licensing, and furnishings.
| Cost Item | Estimated Cost (AED) |
|---|---|
| Trade License | 10,500–50,000 |
| Construction | 5M–200M (size-dependent) |
| Bank Guarantee | 50,000–100,000 |
| Staff Visas | 5,000–10,000 per employee |
Here are some key costs to consider:
- Trade License Fees: Necessary to legally operate your hotel.
- Office Space: Renting or purchasing office space for your hotel operations.
- Memorandum of Association (MOA) Fee: Required for the legal formation of your business.
Want to get a detailed estimate for starting your hotel business? We have a hotel business setup cost calculator for you or contact us today for a free consultation service and take the first step towards your successful hotel business setup in Dubai!
How To Set Up A Hotel Business with Bestax
Dubai is a global hub, perfect for starting a hotel business. Your hotel can cater to an international clientele and set new standards in luxury and innovation. To make this process easier, we shared the key rules and requirements you should know before setting up a hotel in Dubai.
However, to make this complex process simplified, you can hire top-notch consultants. Bestax’s experienced consultants and legal advisers can help you. They provide all the information, support, legal requirements, and advice you need to set up hotel business in dubai.
FAQS on How to Set Up a Hotel Business
How much does it cost to start a hotel business in Dubai?
Costs range from AED 10M for boutique hotels to AED 200M+ for resorts, covering licenses, construction, and amenities.
What licenses are needed for a hotel business in Dubai?
You need a DED trade license, a DET tourism license, and Dubai Municipality approvals to operate legally.
How do I write a business plan for a hotel in Dubai?
Include your hotel concept, target market, location, services, marketing, and financial projections with startup costs and revenue forecasts.
What are key factors for a successful hotel business in Dubai?
Choose a prime location, offer top-notch service, create a unique concept, use strong marketing, and manage finances well.
How do I find a location for my hotel business in Dubai?
Research high-traffic tourist areas, ensure accessibility, and check proximity to attractions and nearby hotel performance.
What is the process to register a hotel business in Dubai?
Get DED initial approval, secure a trade name, submit documents (passports, property papers), and obtain DET final approval.
How do I finance a hotel business in Dubai?
Use bank loans, attract investors, tap Dubai SME programs (for UAE nationals), or fund with personal savings.
What are marketing strategies for a hotel business in Dubai?
Build a website, use social media, optimize SEO, advertise online/print, partner with travel agencies, and offer deals.
What taxes apply to a hotel business in Dubai?
Charge 5% VAT on services and pay 9% corporate tax on profits above AED 375,000 to comply with FTA rules.
Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts
