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Wed 7 May 2014 12:00 PM

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Dubai's tourism levy could 'hinder' business - hotel boss

Carlson Rezidor Hotel Group criticises new Tourism Dirham but other hoteliers say it will have minimal impact

Dubai's tourism levy could 'hinder' business - hotel boss

The global head of Carlson Rezidor Hotel Group has criticised Dubai’s new tourism levy as potentially “hindering” business.

President and CEO Wolfgang Neumann told Arabian Business the Tourism Dirham scheme, a charge of between AED7 ($1.9) and AED20 per occupied room per night, which came into effect on April 1, would not help to increase business.

He said while many countries implemented such taxes the Tourism Dirham scheme grained against Dubai’s mantra of promoting the emirate as a top destination.

“We view it ... with caution because essentially it’s not trade and business enhancing but could well be seen as obviously a hindering point,” Neumann said.

“It remains to be seen what impact it will have but it’s certainly something that we’ll be monitoring very closely.

“Dubai is going through, yet again, a very positive cycle and while I’m somewhat critical of this levy, I’m extremely complimentary to the government and the initiative the government is taking year after year to promote the destination.

“That to me is so positive and I struggle a little bit to then put this in context with the levy.”

However, other hoteliers interviewed by Arabian Business said the tourism charge would have minimal impact on bookings.

“I think this is pretty logical,” IHG CEO India, Middle East and Africa Pascal Gauvin said.

“I can understand ... when you see the development of Dubai, the infrastructure that they’re putting up, their ambition to really make this destination absolutely impeccable for people to come.”

Gauvin said IHG had passed on the levy, which is charged according to a hotel’s rating, to customers but there had been no harmful effects.

“Because of the amount we’re charging, there’s no significant impact on any customer,” he said. “In fact, we implemented it from April 1 and, honestly, there’s absolutely no push back from anyone.”

Jennifer Fox, president international at FRHI Hotels & Resorts, which operates Raffles, Fairmont and Swissotel hotels, said any impact from the tax had been negligible.

“Taxes change in different countries and different cities over time, so I think there’s not much we can do about them but embrace them and know that the taxes are being put to good use in the city,” she said.

“It certainly hasn’t had an impact on occupancies or ADRs (average daily rates) in Dubai. Dubai is just a very strong, solid market and I think that really helps us in terms of being able to absorb anything that happens in that sense.”

Tricia Warwick, regional vice president, sales and marketing Viceroy Hotel Group, which is opening three hotels in Dubai, said the tourism levy would have “very little” impact on customers.

“It’s actually a very small amount of money,” she said.

“The Maldives has a bed tax of $8 per person, per night and we have no resistance [there]. So AED20 per room, per night doesn’t even really touch the radar.”

When the Tourism Dirham scheme was revealed in February, the Department of Tourism and Commerce Marketing said it was introduced as a means to raise funds for international promotion and marketing of Dubai and to drive tourism growth.

Hotels would be fined AED15,000 ($4,083) if they provided inaccurate documents or incomplete information regarding the Tourism Dirham, or if they were found to manipulate accounts related to this fee.

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