UAE’s travel and hospital industry untroubled by VAT implementation  

The implementation of value-added tax (VAT) doesn’t seem to trouble UAE’s hospitality and travel sector, as reports suggest the sturdy tourism sector is growing. Within few month of the tax implementation, the number of tourists rose to 4.7 million recording a growth of 2 per cent, while the accommodation rate reached up to 87 per cent indicating a growth by 0.7 per cent. The experts of hospital and travels industry mark the impact of tax as insignificant.

The first year of tax introduction is expected to create a revenue of Dh12 billion and may rise up to Dh20 billion in 2019. The reports suggest that hospitality revenue in the UAE is expected to rise by 10.8 per cent annually to reach $9.8 billion by 2020. The government is expected to invest more to develop the tourism industry and the investment is expected to rise by 4.3 per cent over the next decade. The opening of new theme parks and the development of specialty entertainment areas, the UAE will continue to be the ideal destination for international tourists. The authorities and experts are positive about the tourism and hospitality industry’s growth in the coming years.

According to Sameer Bagul, Cleartrip’s Middle East’s EVP and Managing Director, the introduction of tax and other policies will boost the nation’s economic growth and development of societies in the long run. “While it is true that initial adjustments following the introduction of tax in the UAE had sent shockwaves across various industries and businesses, which have long been accustomed to minimal taxation, the travel sector has seen a modest impact as airlines remain subject to zero tax rates, thus leaving no impact on airfares. The travel agents and travel management companies who earn commissions and service fees have to bear five per cent of revenue as cost. This is also an investment in the economy,” he said.

Samir Hamadeh, General Manager of Alpha Destination Management, claimed that the VAT in UAE is at one of the lowest in the world, citing the impact of tax as small. “Moreover, the government is pumping back tax funds into the development projects, which in turn will boost a number of industries including tourism in the country,” he added.

“A big focus for many right now will be the summer period and building on occupancy levels. We were off to a great start with 96 per cent occupancy year to date, up 12 points from last year. We expect to see a really strong second quarter; May is looking good for us as well as June. Historically, these have been some of the slower months, along with July and August. We are very optimistic that overall this will be a strong year for us,” said Timothy Kelly, General Manager and Senior Vice President of Operations, Atlantis The Palm, Dubai