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UAE Freezones Biz News Updates
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Implementation of Dubai's new hotel classification scheme
In an effort to better serve Dubai’s 10 million and growing visitors, on 8
May 2013 HH Sheikh Mohammed bin Rashid Al Maktoum UAE Vice President, Prime
Minister and Ruler of Dubai issued Decree No. (17) (Decree) introducing a
new hotel classification scheme aimed at enhancing transparency and
modernising the existing classification framework in line with international
standards.
The Decree covers a larger scope of accommodation facilities than previous
classifications and creates new categories and classifications based on
quality grades, ratings, locale and activity designations. The scope of the
Decree extends to Dubai’s various freezones, including Dubai International
Financial Centre.
What are “Hotel Establishments”?
The new Decree applies to “Hotel Establishments”, which are defined as
hotels, hotel apartments, guest houses, university dormitories, youth
hostels, budget hotels, and floating hotels.
Previously, Dubai’s classification scheme covered hotels, serviced
apartments and guest houses. The new additions are intended to better
provide for ‘budget’ accommodations and educational facilities.
Licensing procedures
In order to operate, a Hotel Establishment must obtain from the Dubai
Tourism Commerce and Marketing Department (DTCM) approval for construction
of the Hotel Establishment (as applicable), preliminary approvals to
operate, a tourism license, classification in the appropriate category, and
a no objection certificate in order to be allowed to receive guests.
Licenses, once issued, are for a term of one year, to be renewed annually at
least 30 days prior to the date of expiry. In certain circumstances, and
upon agreement with DTCM, the license term may be for a period of up to four
years.
The Decree states that the Director General will issue resolutions for
applying for new licenses and renewals thereof, and for the documents which
must be submitted. Until new resolutions are instituted by the Director
General, the application process will remain in line with existing rules and
practice.
What are the categories and classifications?
The Decree provides for a total of six categories of Hotel Establishments as
set out below. We understand that categories of self catering and timeshare
are likely to be introduced in the future.
Category Classification
- Hotels 5 star, 4 star, 3 star, 2 star, 1 star
- Resorts 5 star, 4 star, 3 star
- Hotel apartments deluxe, superior, standard
- Guest houses deluxe, standard
- Youth hostel -
- University -
Within each category of Hotel Establishment, classifications also apply.
Mandatory classifications refer to the quality grades or star rating as
indicated in the table above. These classifications, largely in place since
1998, have been enhanced to include a “superior” grade within the category
for “Hotel Apartments”, in order to account for facilities in between
“standard” and “deluxe” grades.
The Decree allows for optional classifications describing location and
facilities or “style” to be added by the Director General of DTCM. We
understand from draft DTCM proposals that 19 additional classifications
(Designators) are likely to be added, including designations such as
“Airport”, “Heritage”, “Island”, “Shopping”, “Boutique”, “Convention”,
“Golf”, “Desert”, “Spa”, “Business”, and “Sport”.
In the future we are therefore likely to see Hotel Establishments with more
than one classification, i.e. in addition to mandatory quality grades or
star rating classifications, a Hotel Establishment may also qualify for one
or more optional designator classifications such as a Resort holding a five
star classification as well as “Island” and “Beachside” Designators.
Recognition to acknowledge merit for exceptional levels of luxury guest
accommodation is anticipated to be introduced in the form of what are likely
to be known as “Accolades” of ‘Gold’ and ‘Platinum’.
“Grace Period” adjustment of status
The Decree came into effect on 8 August 2013 (Effective Date) and gives
Hotel Establishments licensed before the Effective Date a grace period of
one year before needing to be classified according to the new standards.
Hotel Establishments which have obtained a construction permit before the
Effective Date but whose construction is completed after the Effective Date
will need to adjust their status within one year from the date of completion
of construction.
Ramifications of non-compliance
Penalties for non-compliance now range from AED 100,000 to AED 500,000.
Measures such as downgrading of a Hotel Establishment, six month temporary
closing, permanent closing and cancellation of the license remain as options
for penalties for non-compliance.
The Decree provides for the Director General of DTCM to issue resolutions
necessary for the implementation of the new classification scheme and we
anticipate that such resolutions will be rolled out over the coming year,
outlining the new tiers of classification i.e. Designators, and the
procedures and criteria for licensing.
The promulgation of this Decree demonstrates DTCM’s commitment to improve
and grow Dubai’s accommodation portfolio, by seeking to achieve uniformity
and set high and internationally recognised standards.
Benefits include transparency in line with international practices and
improved standards, allowing the consumer to conduct specific searches and
make informed choices. With record numbers of visitors and a goal of 20
million in the year 2020, the Decree provides a long-term framework to
expand on Dubai’s success as a leading global destination.
Clyde & Co has market leading knowledge and experience of the hotel and
hospitality sector, gained working with some of the world’s most prominent
hotel developers and operators. The firm's dedicated real estate and
hospitality team based in the UAE advise on all aspects of the development
process, management structures and ongoing business operation, including
hotels and resorts and mixed use projects, spanning the Middle East, North
Africa and the Far East.
Oct 10, 2013
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Courtesy Clyde & Co LLP.
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