Dubai Offers Tax Break for Affordable Hotels

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Dubai is planning to give developers of mid-market hotels a financial incentive to build more affordable hotels in the emirate, which is best known for its luxury resorts. 

New hotel investors will be granted a fee waiver for four years from the date the construction permit is granted, as long as it is between October 1, 2013 and December 31, 2017. The goal is to generate quicker construction of three- and four-star hotels in Dubai, according to a press release. 

"In order to achieve our objective of 20 million visitors per year by 2020, we need to both increase the overall stock of hotel rooms and widen the range of options for visitors," Helal Saeed Almarri, director-general of Dubai Department of Tourism and Commerce Marketing, said in a statement. "In recent years, the number of three- and four-star establishments has increased, but it's vital that we continue to engineer the growth of this range."  

Hotel rates in Dubai rank among the highest in the world, with average daily rates approximately $230 a night. Contrary to hotel markets in the U.S. and Europe, five-star hotels dominate in Dubai. They represent more than 60 percent of the market and account for 50 percent of pipeline supply, according to The National.

"For every person who could afford to stay at a five-star hotel, there were probably more than 100 who could not," Jonathan Wall, the assistant director of property advisory at Deloitte and Touche Middle East, told the National. "There is therefore a significant gap in the hospitality and tourism market that is currently not being catered for, and Dubai hoteliers will need to start focusing less on five-star hotel accommodation and more on mid-scale and budget accommodation in order to realize Dubai's tourism growth vision."