Monday, Apr 11, 2016

Abu Dhabi: The Abu Dhabi Tourism and Culture Authority is set to start collecting a fee from hotels across the emirate, with a rate of four per cent of every guest’s bill along with a Dh15 fee per night for each room.

The move is part of resolution No. 15 of 2016 issued by His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Crown Price of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Abu Dhabi Executive Council, on municipal fees collected for staying at the emirate’s hotels

Under the resolution, the fee will then be deposited in the government budget.

Rashid Abu Bakr, associate director at TRI Consulting, said that he did not expect a significant impact on hotel performance once the fee is introduced.

“When such a fee is introduced, it is usually passed on to customers; hotels don’t usually absorb the fee, but at a four per cent rate, it will probably be an additional Dh10 to Dh20 per bill, so it’s a marginal increase that I don’t think will impact hotel performance,” he said.

Abu Bakr pointed that there were concerns at the initial stage of introduction of the Tourism Dirham in Dubai, but that did not have much of an impact on demand for hotels.

“I would think this is part of the UAE’s diversification plan post oil. They’re also spending a lot of money on tourism promotions and travel to promote Abu Dhabi as a destination to many source markets, so it’s a way of [balancing] that out,” Abu Bakr said.

Meanwhile, Chiheb Bin Mahmoud, executive vice-president — head of hotels and hospitality for the Middle East and Africa at consultancy Jones Lang LaSelle, said it was commonplace for tourism boards to pass the cost of promoting the destination to hotels.

He said the move fits well with a strategy of managing public financing and relieving the strain on the government’s budget as oil revenues drop.

“Why would the government finance the destination? It’s not something that is unheard of [to pass the cost]. I think the fee will have to be passed on consumers as much as possible, but hotels could also adjust their price downwards after adding this fee. It’s part of the maturity and the new challenges that hospitality faces.

I don’t think it is a handicap for demand; it’s an external factor that will need to be dealt with the same way that airlines dealt with the fuel surcharge,” Bin Mahmoud said.

By Sarah Diaa Staff Reporter

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