Abu Dhabi imposes municipality fee on hotel stays
New fees on hotel stays in Abu Dhabi could raise hundreds of millions of dirhams in revenue for municipal authorities.
A new decree will impose a 4 per cent municipality fee on hotel bills and a Dh15 charge per night per room, according to a report in Al Ittihad. The fees will be collected by the Abu Dhabi Tourism and Culture Authority (TCA) and added to the government budget of the Department of Municipal Affairs.
Abu Dhabi hotels charge all guests and customers a city tax of 6 per cent and a 10 per cent service charge.
But hotel operators said they do not yet know whether the new fees would be applied to all customers or just guests.
“Once this is implemented, we expect facing some operational challenges while collecting the new fees from guests, but it will eventually be normal as guests will become more aware of it, like the case in Dubai when the Tourism Dirham was introduced," said Guy Hutchinson, the chief operating officer of hotel operator Rotana.
Last year, 4.1 million guests checked into Abu Dhabi’s hotels, staying a total of 12.24 million nights. That could have fetched the government Dh183.6 million based on the new Dh15 fee per room per night. The 4 per cent municipality fees charged on the total bill would raise an additional Dh264.8m based on last year’s hotel revenues.
Hotel guest numbers gained 18 per cent last year, compared with the year earlier.
TCA has not yet published tourism targets for this year.
“We do not believe this additional fees will have notable impact on hotel demand and will be absorbed by the market," said Rashid Aboobacker, the associate director at TRI Consulting, a Dubai management consultancy.
Abu Dhabi’s room rates fell in February along with average occupancy. The average occupancy rate was 77.6 per cent, down from 81.5 per cent a year earlier, according to Hotstats data from TRI Consulting. The average daily room rate was Dh157.95 in February this year, down from Dh217.20.
The declines were attributed to the absence of large trade fairs this year, such as the biennial International Defence Exhibition and Conference – Idex – held in February last year. The event at the Abu Dhabi National Exhibition Centre attracted 80,000 people.
“The exhibition was primarily responsible for the 51.2 per cent spike in profit per room," said a Hotstats report.
Dubai introduced a “tourism dirham" of between Dh7 for budget hotels and guesthouses and Dh20 for five-star hotels and luxury hotel apartments in 2014. The fee is charged per room per night.
Dubai hotels also impose a 10 per cent service charge and 10 per cent municipality fees per room per night.
Hotels in Ras Al Khaimah also charge a Dh15 tourism fee per room per night and a 10 per cent service charge.