The Airbnb success story has been nothing short of sensational. In just 16 years, the company has gone from one sofa-bed to over seven million listings in 191 countries.
And it’s not just the founders who are reaping the rewards. Total host income is over USD 180bn, with the average host in the US generating USD 13,700 per year.
Here in Dubai, profits can be much higher as the emirate ranks among the best locations in the world for Airbnb hosting. So, if you want to get involved, keep reading to find out how to get started. We’ll cover:
- Importance of Dubai as a prime destination for Airbnb business
- Dubai’s regulations on short-term rentals
- Steps to get an Airbnb license in Dubai, UAE
- Taxation and fee structure for an Airbnb in Dubai, UAE
- Tips for optimising your Airbnb property in Dubai
- How Worldwide Formations can help
Importance of Dubai as a prime destination for Airbnb business
Dubai is a hugely important location for almost any travel or hospitality-related business. Revenues in the tourism industry out here are expected to reach USD 1.2bn by the end of 2023 and increase by an annual growth rate of 5.12%, up to USD 1.5bn by 2027.
This vast sector is driven by Dubai’s large and increasingly tourist numbers. Last year, the emirate welcomed 14.4m overnight visitors across 2022. And this year is already off to a great start, with 1.47M tourists visiting Dubai in January of this year.
High demand is undoubtedly a factor in the emirate’s standing among global Airbnb destinations. A survey last year found Dubai to be the most profitable location for landlords, with average monthly incomes meaning it takes an average of just four months to see a return on investment.
This finding puts Dubai ahead of popular global tourist destinations such as Hawaii, Nairobi and Niagara Falls.
Dubai’s regulations on short-term rentals
All holiday rentals in Dubai are regulated by the Department of Economy and Tourism (DET) and subject to several laws featured in the Guide Regulation the Activity of Leasing Out Holiday Homes.
In short, any property intended for use as a holiday home must be registered with the DET before it can be listed. Individual owners are permitted to manage up to eight units at once.
If you wish to manage more properties, you must incorporate a UAE company and obtain all necessary licenses and approvals from the Dubai Department of Economic Development (DED).
You do not need to own the property in order to rent it out on Airbnb. However, tenants who wish to list holiday homes must obtain an authorisation letter and a No Objection Certificate (NOC) from the property owner.
You will also need to produce your leasing agreement with subleasing clause, the title deed, a recent electricity and water bill under your name plus a copy of the owner’s passport and Emirates ID.
Rooms for holiday let in the UAE are classified as either deluxe or standard depending on their amenities, so it is important that you list them in the correct category. That said, neither owners nor tenants can rent out single rooms, as holiday homes must be whole units.
Steps to get an Airbnb license in Dubai, UAE
The first step before obtaining any business license in the UAE is to talk to a local company formation expert. The team at Worldwide Formations can guide you through the entire process below, helping you obtain your license and all required approvals.
Step 1: Choose a company name
If you intend owning or managing Airbnbs through a business, you will need to choose a company name before you can apply for your license.
This process is relatively straightforward, but you will need to adhere to UAE corporate naming conventions. For example, your business name cannot be the same as one used by an existing business in the UAE. In addition, it should not contain any blasphemous or offensive language or have any religious connotations.
Step 2: Apply for your UAE trade license
You can apply for a license to manage and rent out Airbnbs directly from the DED or many of the UAE free zones. At this stage, you will need to submit a completed application form along with ID and documents relating to the property you intend to list.
In either case, Worldwide Formations can manage every step of the application for you, liaising with free zone and mainland authorities depending on your chosen jurisdiction.
Step 3: Register with DET
The next step is to register as a homeowner with the DET. You can do this online by following the steps on the department’s dedicated Holiday Homes website.
Once you have registered your account, you can add units and upload all relevant documentation. You will then be issued with a certificate confirming that you can lease out the property. This certificate must be visible somewhere in the rental.
Step 4: Apply for visas
As a property and/or business owner in the UAE, you are eligible for a residency visa. This process takes a little longer than a license application and involves a medical examination, blood test and biometric scanning for your Emirates ID.
You can also sponsor the visas for dependants such as your family or employees. Once again, Worldwide Formations can guide you through this process.
Taxation and fee structure for an Airbnb in Dubai, UAE
The UAE tax rate on both corporate and personal income remains at 0% in the UAE. So, there is no tax to pay on any rental profits.
However, there are fees to pay. As the owner/manager of a holiday home in Dubai, you will be responsible for collecting the Tourism Dirham. This is currently levied at AED 15 per night for each occupied deluxe bedroom and AED 10 per night for each occupied standard bedroom.
The Tourism Dirham is chargeable up to a maximum of 30 consecutive nights. It must be shown as an individual daily item on all receipts and be clearly marked as a fee rather than a tax.
On top of this, there are other fees to consider. You will need to pay for your business license if listing rentals as a company, plus an annual registration fee and license fee per room.
Tips for optimising your Airbnb property in Dubai
There are several ways to help your Airbnb listing stand out from the crowd, including:
- Optimised title: With so much choice on offer, holidaymakers want to know exactly what they are getting as soon as possible. So, if your property is right by the marina or two minutes from downtown, put that information in the title.
- Highlight unique features: If your property has a USP such as a hot tub or cinema room, be sure to highlight that early in your description. Visitors to Dubai like a touch of luxury, so if you’ve got it, shout about it.
- Detail, detail, detail: Vague listings are not only dull, but they can also raise suspicion that all is not as it seems. Be sure to pack your listing with as much detail as possible about every room in your property as well as amenities, facilities and added extras.
- Fast response: There are often times when potential visitors require a little more information about your property. If you can respond quickly and informatively to their questions, they are more likely to proceed with the booking.
- Encourage positive reviews: There is nothing like first-hand feedback to encourage bookings at a holiday let. So, do all you can to encourage reviews and, of course, make the stay extra special so those reviews are always positive!
How Worldwide formations can help
With visitor numbers looking to exceed pre-pandemic levels in the coming years, now is a great time to invest in property here in Dubai.
But while the process of buying and managing real estate out here is designed to be simple, it is always best carried out with the help of an expert.
At Worldwide Formations, we’ll take the time to understand your plans and goals before handling every aspect of business setup in the UAE on your behalf.
For more information and a personalised quote, please visit Worldwide Formations.