SAN’s Piers Brown moderated a session at the Arabian Hotel Investment Conference 2015 (AHIC), which discussed the surge in Dubai in short-term rentals and the recent regulatory implications that have impacted the sector.
Joining the discussion were Taleeb Noormohamed, vice president global partnerships of HomeAway.com; Helen Hangari, senior legal consultant of DLA Piper; and Shaun Hinds, managing director EMEA and APAC of BridgeStreet Global Hospitality.
With the award of Expo 2020, Dubai has acknowledged the need to double its accommodations within the next five years to support the number of visitors anticipated. The Department of Tourism and Commerce Marketing (DTCM) has since has taken a proactive role in addressing this dramatic influx of visitors, and bringing short-term rentals under the same regulatory structure as hotels.
These new laws have helped ensure that all properties available for short-term rental meet the DTCM’s stringent criteria. Noormohamed stated that a registered property manager would have to have a minimum of 20 properties and to be in the business of “doing this properly”. Therefore only operators with experience in short-term rentals and vetting customers will be licensed, and they will be held accountable for who they rent properties to. In addition, the individual property must be registered and approved by the DTCM. HomeAway works very closely with the DTCM to ensure that it continuously meets all the regulatory requirements. Consequently, all of the Dubai properties listed on HomeAway will be licensed under the legislation.
“The regulatory environment pushes toward protecting the traveller as well as aiming to provide them with the best experience,” said Noormohamed. He continued to add that the protection of the brand in Dubai is extremely important, and therefore regulations have been put in place to ensure a tight and secure relationship between the licensed operator and property owner.
Hangari was asked if there had been instances of property owners falling foul of the legislation. To her knowledge, she was not aware of any instances. However, if there happened to be an actual incident in a property, heavy fines would be strictly imposed. Hangari also stated that certain communities in Dubai have forbidden the use of owners using their properties as short-term rentals, regardless of them being the legal owners of the property.
Noormohamed responded to a question from the audience asking whether Airbnb was legal in Dubai, stating that it was not currently a licensed property manager. Therefore, property owners would need to ensure that work with a property manager legally licensed to manage the property on their behalf if they did not conform to the minimum requirements.
Brown asked the audience for a show of hands for those who had previously booked with HomeAway or with Airbnb, and would use them again: around 25 per cent of the audience raised their hands. He also raised an interesting point that very rarely do we hear bad stories in the press. Hinds mentioned the popularity of two-way review system that Airbnb has in place, which naturally eliminate both property owners and bookers who receive negative reviews.
A comment from the audience highlighted a disruptive trend published in a research piece by Barclays earlier this year. It predicted that in three years time, Airbnb would have outpaced large hotel groups such as IHG in terms the number of room nights sold. The question was then asked whether or not this would pose a threat to the supply in the region?
Hinds suggested that there can be a tendency to get carried away by this valuation. Within BridgeStreet’s client base, which are 80 per cent business travellers, it hasn’t seen a turning point where corporates are switching to alternative short-term rentals, such as Airbnb. The decision-making process being made by corporates compared with leisure travellers will continue to be extremely different. Therefore, Hinds believes that there is still a long way to go before the alternative short-term rental sector offered the “promise, trust and guarantee” that the traditional short-term rental sector currently offers.
Brown ended the session on a more light-hearted note asking the panel to name a hospitality brand that they admired. Hinds chose Jumeirah Group because of how it embodies a real brand standard on a luxury level. Noormohamed chose Starwood – interestingly both hotel brands, and Hangari refrained from stating a preference.
