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New taxes in Dubai, Maldives bring challenges

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Tourism players must deal with new operational headaches

Tourism players in Dubai and the Maldives are having to contend with new tourism taxes and the operational headaches they bring, TTG Asia reports from ITB Berlin.

Dubai is introducing Tourism Dirham, a new hospitality fee ranging between seven ($1.90) and 20 dirhams on hotel stays from March 31. The Maldives resumed the bed tax of $8 per bed per night from January.

“Tourism Dirham won’t have a problem on demand, but it will raise a lot of operational issues as rates are negotiated a year ago or sometimes even more,” said Stella Giasta, Majestic Hotel Tower Dubai’s director of sales.

As the tax is levied according to the number of guest rooms, Giasta foresees some groups or families staying in accommodation with multiple rooms burdened by the higher fees.

Further confusion may arise over a two-month exemption period, in which guests who paid in full by February 23 and stays completed by May 31 will be exempted, she added.

Likewise, the Maldives’ changing taxes – the bed tax will be removed in November 2014 when the tourism GST will rise from 8% to 12% – also bring operational challenges for suppliers.

“Our reservation system and software programs have to be changed within a short period of time to reflect the different taxes,” said Aminath Shadiya, director for business development at Tropical Collections Maldives.

“I’m not against the tax, but more time should have been given for us to prepare.”

In a destination already pegged with high operational expenses, Dusit Thani Maldives’ director of sales and marketing, Thanos Lionsatos, expects the taxes to “affect bottom line”.

“We need to think creatively if we are to pass [the tax] onto the consumer. […] We need to deliver a far more superior product with additions and modifications so that any possible rate increases are justified,” he commented.

David Kevan, partner at Chic Locations UK, agreed: “The Maldives’ average selling price is a good 15% higher than other destinations [offered by Chic Locations]. It’s still an important destination for us, given the value of the bookings, but I don’t see it as a growth destination, [due] to the high price which does limit its attraction.”

TTG Asia

[Dubai International Terminal 3; photo courtesy Dubai International]

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