Revealed: how the UAE tourism industry can survive the impact of coronavirus

High-level think tank recommends 15 actions needed to help the UAE’s hospitality sector amid ongoing crisis

The white paper addresses five key concerns facing hotel owners and operators, and makes recommendations for potential actions to overcome them.

A new report from a high-level hospitality industry think tank has recommended 15 actions needed to help the UAE’s hotel industry survive the impact of the Covid-19 pandemic.

The white paper calls for additional steps from authorities and financial institutions to support hoteliers through the crisis, and it recommends several reforms including greater flexibility in employment regulations and zoning.

These include a 25-50 percent subsidy for staff accommodation costs and employment permits and a utility fees waiver for hotels.

The UAE Hospitality Think Tank is a focus group comprising leading industry players from across the UAE hospitality sector to assess the challenges brought about by coronavirus.

The report sets out 15 recommended actions needed in the UAE to support the country’s hotels and to create a more resilient sector that is better able to withstand future shocks.

Even as customers return as lockdown measures ease, the inevitable fall in hotel occupancy and capacity in food and beverage facilities due to safety and social distancing measures will hit revenues, it said in a statement.

The report acknowledges that while government authorities were quick to act in providing support to hoteliers as the effects of the pandemic progressed, further support is needed to facilitate recovery.

The white paper addresses five key concerns facing hotel owners and operators, and makes recommendations for potential actions to overcome them.

The recommendations cover both the immediate need of boosting an industry impacted by the current crisis and the longer-term objective of building resilience through increased collaboration and efficiency.

The paper highlights the permanent shift in the way business is done and calls for collaborative action from government authorities, operators, banks and investors to sustain the hospitality industry and position it for future growth.

Joel Van Dusen, head of corporate and investment banking group at Mashreq Bank, said: “The regional hospitality sector already faces multiple headwinds, and the pandemic has only further impacted the industry with factors such as the global economic environment, low oil prices, struggling tourist numbers and oversupply.

Joel Van Dusen, head of corporate and investment banking group at Mashreq Bank

“Despite this, there are numerous opportunities which can be leveraged to make the industry a more sustainable proposition for the foreseeable future… Only by creating a permanent shift in the way business is done, will the hospitality industry be able to create a strong momentum during the medium term.”

Key recommendations from the report:

Crisis support

Assistance from the government as well as financial institutions is critical to supporting the sector in the long-term. According to the report, the charges for financing can be quite expensive for hotels, damaging their short-term survival prospects. Banks must therefore provide flexibility on key terms for facilities. Due to a low occupancy, utility fees should also be waived, at least until the end of 2020, and there should be discounts for district cooling charges.

The Think Tank also recommends that the Government provide a 25-50 percent subsidy for staff accommodation costs and employment permits, as well as waive visa charges as a result of the high, ongoing accommodation and food costs associated with staff who are unable to return home. Taxes, including municipality and VAT should also be temporarily waived, and non-essential security enhancements should also be suspended.

Collaboration

To enhance collaboration, the UAE Hospitality Think Tank suggests establishing an official industry body to provide a forum, as well as a unified voice for the benefit of the hospitality sector. In the long-term, this will help to encourage greater collaboration amongst players and ensure that an entity works on behalf of all hoteliers in the UAE.

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