Tourism and Hospitality Business in the UAE

The United Arab Emirates, and particularly Dubai, annually welcome millions of tourists from all over the world. The tourism industry is steadily growing, aided by its geographical location and well-developed logistics. The country positions itself as a luxurious vacation destination. As a result, tourism in the UAE holds a leading position in the global industry. Various types of tourism are developed, including classic, medical, educational, gastronomic, business tourism, and shopping.

Why Go

Despite the tourism sector in the Emirates being well-established with basic infrastructure and promising factors, people don't just come to this state to stay in luxurious hotels; entertainment is also important. This means that other sectors that don't require as significant investments as hotel construction can be developed.

Thanks to investments in the entertainment industry in the UAE, hotel rooms are occupied even during the offseason. Hotels typically reach 80% occupancy during this time, which is incredibly high. Earning opportunities exist here year-round. Additionally, traveling within the UAE, known as staycation, has become popular. Furthermore, government support contributes to business development. Notable factors include:

• Tourism strategy, aiming to increase tourist flow to Dubai. By 2025, it is projected that up to 25 million people will visit the emirate.
• Modernization strategy of Dubai's infrastructure.
• Expansion of the emirate's area and population by one and a half times.
• Migration policy involving visa liberalization.
• Advertising campaigns featuring global celebrities to attract tourists from around the world.
• UAE greening strategy.

A significant advantage is that governmental support is available to every participant in the UAE's business market.

Visa and Entry

To conduct hotel or other tourist business, it is best to obtain an investor visa. This is a multi-purpose permit that allows legal residence in the country, tax benefits, and more. Visas are issued for different durations: two, three, five, or ten years.

To obtain a five-year visa, one must purchase real estate in the Emirates worth at least two million dirhams (which is more than 500 thousand US dollars). Properties can be purchased not only with personal funds but also with loans. It is also possible to purchase multiple properties totaling two million dirhams.

However, for entrepreneurs, a residency visa may be obtained for a smaller amount. To obtain it, one can invest in their own business, and the company will act as the sponsor, providing the opportunity to obtain an investor visa.

Hotels

Entering the hotel business can be done in various ways. For example, one can acquire a part of an existing business in the country. Additionally, there is an option to register a new enterprise. In this case, the most advantageous form would be a Limited Liability Company (LLC). Currently, the most profitable options are apartment hotels, hostels, and other hotel establishments with single bedrooms.

For those entering the hotel business, it is important to know:

• To start a business, one must obtain permits from Dubai Tourism, Dubai Municipality, Civil Defence.
• 100% foreign ownership is permitted (i.e., no local agent is required).
• To register business activities for renting property in the UAE, one must pay from 20,000 dirhams, as well as 5% of the rental value, marketing expenses, and other ongoing expenses.

Last year, there was an increased demand for budget accommodations, driven by a large number of foreigners, including those from the former Soviet Union.

Resorts

In the Emirates, there are three main tourist destinations. The most popular is Dubai. This emirate boasts a large number of world-famous brand stores and incredible architecture with modern skyscrapers. Additionally, tourists are attracted by various entertainment options and a large number of hotels.

Dubai has many well-equipped beaches with all the necessary infrastructure. However, there are hotels (of which there are quite a few) that are quite far from the beach area, and transfers are not always provided. People visit the emirate for urban, sightseeing, beach vacations, as well as for shopping.

Abu Dhabi is the capital of the United Arab Emirates and, at the same time, the largest and wealthiest emirate. Almost all hotels here have four or five stars. Tourists are attracted by the Formula 1 racetrack and Ferrari World. Additionally, there are plenty of comfortable sandy beaches with developed infrastructure. The capital offers respectable urban and beach vacations, as well as shopping. Families with children often come here.

The lesser-known emirate is Sharjah. It attracts lovers of excursions with its numerous historical monuments. It is important to note that alcoholic beverages cannot be consumed in Sharjah due to strict restrictions. Despite being close to Dubai, vacations here are significantly more budget-friendly. The emirate has many hotels located on the waterfront with affordable prices. There are both paid and free beaches.

Weather

The high season in the Emirates occurs twice a year - March-April and October-December. During this time, the weather is comfortable, there is no rain, and the sea water is warm. In early spring and late autumn, the air temperature ranges from 23 to 30 degrees Celsius, and the water temperature can reach up to 27 degrees Celsius.

Winter in the UAE is very similar to European summer. With rare exceptions, the air temperature does not drop below 20 degrees Celsius. However, summers in the Emirates are quite extreme, with temperatures soaring up to 50 degrees Celsius. During such times, there are hardly any people on the streets - everyone stays indoors with air conditioning. The coldest water is in January and February when its temperature drops to 18 degrees Celsius.

The UAE is located in the desert, so sandstorms are not uncommon. Their season is August-September. These storms, called "sharqi," although infrequent, can last for several days. During this time, it is impossible to be outdoors.

Climate conditions do not vary much across different parts of the country, except for Fujairah. This emirate is located in the east, on the coast of the Indian Ocean, while the others are on the Persian Gulf. This provides a milder climate and more rainfall.

Currency

The national currency of the country is the Arab Emirates Dirham. In international designation, the abbreviation AED is used. There are also unofficial abbreviations - Dhs and DH. One dirham equals 100 fils. The currency is mainly pegged to the dollar, and its exchange rate is maintained administratively. This ensures the stability of the dirham at the level of the American currency.

The current exchange rate of the dirham to major currencies is:

• 0.27 US dollars;
• 0.26 euros;
• 0.22 British pounds;
• 26.16 Russian rubles.

Almost everywhere, you can pay with cards. In addition to the national currency, in some places, US dollars are accepted, but at a less favorable rate than in the bank. It is best to exchange money at a bank, but you can also do it at the hotel. Exchange offices are available at the airport and in shopping malls.

Attractions

The architecture in the UAE is mind-blowing. Here you can find skyscrapers that you won't find in any other country. Engineers constantly battle the desert and emerge victorious. As for attractions, the following can be highlighted:

• Burj Khalifa Tower;
• Al Fahidi Fort;
• Jebel Hafeet Mountain;
• Palm Jumeirah Island;
• Al Jahili Fort;
• Sheikh Zayed Mosque;
• Bluewaters Island and Dubai Ain;
• Louvre Abu Dhabi Museum;
• Bastakia and Al Fahidi Fort;
• Sheikh Saeed Al Maktoum House Museum;
• Sharjah Mosque;
• Jebel Jais Zipline;
• Museum of the Future.

This is by no means an exhaustive list, as the Emirates never cease to amaze.

Local Laws

When planning to open a business in the UAE, it's essential to have an understanding of the local Civil Code and Sharia Law. Naturally, comprehending all the nuances can be challenging, so many resort to specialized agencies that offer turnkey business solutions. However, even in such cases, basic knowledge of the law is necessary:

Special conditions for business licenses (each economic zone has its own regulatory documents);

It's possible to register a company in a free economic zone and conduct activities not only within it but also outside the emirates (available for select industries);

The UAE does not share economic information about companies registered in the country with other states;

If operations are conducted within the state, only a five percent VAT and corporate income tax apply;

Only certified imports are allowed, for which permission must be obtained;

There are no export taxes.

There are other intricacies better learned during consultations with consulting companies.

The Level Consulting Assistance

The Level Consulting company is ready to provide a full range of services for registering and opening a business in the UAE. In particular, experts offer assistance with:

• Company registration;
• Preparation of statutory documents;
• Opening bank accounts;
• Visa processing;
• Legal support;
• Deal preparation;
• Lease of premises;
• Accounting services.

With the help of professionals, you can avoid many mistakes and significantly reduce the time to launch your business.

Despite its development, the tourism industry in the UAE remains quite promising. The country's leadership is constantly working to attract more tourists. Therefore, investments in this sector are a good investment.