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Incentives to Grow Mid-Market Hotel Segment

To achieve the objective of 20 million visitors per year by 2020, there is a requirement to increase the stock of hotel rooms and ensure a wide range of options of accommodation type is available. To help realise this, a number of steps have been taken to encourage investment in the hotel sector.

With one focus being to increase stock in the mid-market segment, on October 1st 2013, an incentive was announced to encourage speed of delivery and increase competitiveness in this category. Investors and developers of three and four-star hotels are being offered an incentive to waive the 10% municipality fee that is levied on the room rate for each night of occupancy for a specific time frame.

For developers whereby construction commenced prior to 1 October 2013, a two-year waiver on the 10% municipality fee will be applicable, as of the first day of operation. For investors and developers who apply for a construction permit after the 1 October 2013, a four-year waiver will be applied as of the date construction commences, hence encouraging efficient completion to redeem this incentive.

Additional incentives and directives announced in January 2014 will further encourage speed of delivery, in addition to facilitating the increased supply of hotel rooms. These focus on reducing the construction approval process to two months; setting up a one-stop-shop for all sector approvals; standardizing all approvals through Dubai Municipality; and allocating government land to develop three and four-star hotels.

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