TOURISM players in Dubai and the Maldives have to contend with new tourism taxes and the operational headaches they bring.
Dubai is introducing Tourism Dirham, a new hospitality fee ranging between seven (US$1.90) and 20 dirhams on hotel stays from March 31, while the Maldives resumed the bed tax of US$8 per bed per night from January.
Majestic Hotel Tower Dubai director of sales, Stella Giasta, said: “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.”
As the tax is levied according to the number of bedrooms, 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 have paid in full by February 23 and stays completed by May 31 will be exempted, she shared.
Likewise, the Maldives’ changing taxes – the bed tax will be removed in November 2014 when the tourism GST is raised from eight to 12 per cent – also bring with them operational challenges for suppliers.
Tropical Collections Maldives’ director – business development, Aminath Shadiya, said: “Our reservation system and software programmes have to be changed within a short period of time to reflect the different taxes.
“I’m not against the tax, but more time should have been given for us to prepare,” Shadiya commented, adding that tour operators who have included prices in their catalogues will face more difficulties in explaining the rate differences to clients.
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 burden) 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 opined.
David Kevan, partner, Chic Locations UK, agreed: “The Maldives’ average selling price is a good 15 per cent 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.”
Likewise, Hamzah Rahmat, director of Beststar Travel Centre Malaysia is concerned that Dubai’s tax policy will “add to the total cost of the travel package”, particularly as the ringgit-dirham exchange rate has not been favourable to Malaysian visitors to the destination.
He remarked: “Business travel will not be impacted…Leisure travellers will consider the total package price and if the costs go up too much, they will opt for other destinations.”
But Giata believed taxation “is an efficient way to bring in revenue”. “It’s a circle – everyone will benefit at the end of the day. The destination quality will improve, more tourists will visit and hotels will get more business.”
For other stories, go to TTG Official Daily – ITB Berlin 2014
Additional reports from Raini Hamdi and S Puvaneswary.
