How to Start a Vacation Home Rental Business in UAE?

Dubai is one of those places which is more quested for adventurous activities, romantic getaways, and relaxing vacation retreats. Every year Dubai welcomes a whopping number of visitors to the city, which by the way, is likely to only increase in the coming years. Therefore, the demand for vacation homes is also rising accordingly as visitors are now pursuing the option of rental properties for both long-term as well as short-term visits. With many more projects to come, there cannot be a better start to set up a vacation home rental business in Dubai. All you need to do is obtain a holiday home license in Dubai and get started with your vacation home project. 

Vacation Homes or Holiday Homes are furnished accommodations rented to tourists and visitors on a daily, weekly, and monthly basis, as per their choice. The owner of the property is the legal license holder of the accommodation.  According to UAE Decree No. 41 of 2013, individuals or authorized housing groups are allowed to lease their property for public accommodation, thereby complying with the regulations of Administrative Decision No.1 of 2020. The Department of Tourism and Commerce Management (DTCM) is the licensing authority of the, which holds the power to accept or reject license applications and monitor the compliance of rental homes.  

Why is this the best time to invest in a holiday home license in Dubai? 

• Dubai is developing to be the world’s commercial center.
• People from all parts of the world are flocking in for work and recreational purposes. 
• The number of visitors in Dubai is expected to rise in the coming years. 
• Dubai often hosts major events, which would bring in more visitors and tourists from all over the world, and would seek accommodation in the city for the course of the event. 
• Families, during vacations, prefer comfortable and fully furnished holiday homes over hotel rooms. 
• The transformation of Dubai into a technological core and a smart city, and the emerging business sectors in the Emirate are enough to invite more expats to come and stay in Dubai for work.
• The proximity of major tourist attractions in Dubai leads to an increase in the demand for holiday rental homes inside the city. 
• Since Dubai is listed as one of the safest cities in the world, visitors would feel safe and secure while looking for a comfortable vacation experience. 
• Dubai is one of the sought-out destinations for vacation and adventure. Therefore, tourists tend to like the concept of holiday homes for a complete experience of the city. 
• The process of securing a holiday home license in Dubai has been made easier by the UAE authorities, thus ensuring safety as well as compliance. 
• One of the most profitable professional setups in Dubai is now under the Tourism and Hospitality sector, which is only expected to grow in the future. 

And thus, getting a holiday home license in Dubai is not only profitable but now easy, especially with the help of an expert who can lead you through the procedure, thereby ensuring quality and compliance. 

Pros & Cons of Holiday Home Business 

Investing in a holiday home business in Dubai can sound like a lucrative idea, but there are certain pros and cons to it that one needs to review before executing this idea into reality. 

Pros of starting a holiday home business in Dubai:- 

1. Easy to cover the mortgage 
2. Helps generate extra revenue 
3. To balance the cost of the future retirement home 
4. Wonderful opportunity to earn money during high seasons and certain events 
5. More popular and legal in Dubai 

Cons of starting a holiday home business in Dubai:- 

1. Can be costly to manage and upkeep during seasons 
2. Likely to be affected by economic downturns 
3. Chances of leaving the owner financially stranded in case of fewer or no bookings 
4. Flexible rules and regulations of UAE 
5. Competitive market 
6. Not easy to assess prospective tenants 

Regulations for Holiday Home Business in Dubai 

1. While leasing out the property to tourists, you need to abide by the following laws and regulations of Dubai:- 
2. Necessities like water and electricity must be provided free of cost by the owner. 
3. The owner should properly maintain and take care of the property all the time. 
4. The manager of the holiday home must ensure to adhere to DTCM guidelines. 
5. Every visitor renting the vacation home must contribute 10% to the municipality tax. 
6. There would be additional charges in the tourism fee for standard and deluxe accommodations.

You may also visit: Apply for New UAE Investor Visa

How to set up a vacation home and get a holiday home license in Dubai? 

You need to follow the below steps to procure a holiday home license in Dubai and get your business up and running – 

• Outline your activity 
• Choose a business name 
• Apply for the holiday home license 
• Proceed to the visa applications 

Documents required for the holiday home license in Dubai – 

• Passport of the owner 
• Application form for the license 
• Details of the property 
• Trade license issued by the DED 
• Approval from the DTCM 

Tips to invest in the right Holiday Home Business 

The given steps would ensure that you are investing in the right property – 

• Choose a perfect location 

If you wish to make a profit out of your investment, especially in real estate, then the first thing you need to consider is the choice of location. Location is one of the core pillars when it comes to the real estate business. Therefore, you must never forget to study the location while conducting market research. Several variables such as occupancy rates of the location, its daily and monthly rates, average monthly income, property expense rate, etc. together affect your revenue. Thus, you must go for the one that has high-income potential, convenient property expenses, and enough scope to earn profit. 

• Maintain a pricing policy 

When it comes to short-term rentals, the pricing should be flexible. However, this is one of the common mistakes property owners make. They tend to keep a fixed nightly rate for all seasons of the year. What the property owners must actually do is conduct a comprehensive study on factors like occupancy rates, competitors' prices, nearby property prices, etc., and then update their prices accordingly. For instance, prices can go high during peak seasons. On the other hand, when the season is low, they can lower their property prices as well to attract more customers. 

• Study the market 

The most important aspect to cover before stepping into any business plan is studying the market. The owner needs to dive into the market and understand the demands of the market. Are tourists showing interest to stay in holiday homes? Is your property nearby tourist sites? What is the occupancy rate? Is there enough demand for vacation rental homes? 

• Determine your cash flow 

Before you invest in the property, evaluate the potential cash flow. This gives you a vague idea of how much profit you can probably make from this investment. In simple words, a good cash flow means your revenue is more than your expenditure. 

• Think of property management 

Property management is also an important part of the short-term rental business, which is often overlooked. The owner needs to take care of operations such as managing inquiries, bookings, and check-out, maintaining proper cleanliness and hygiene in the property, and ensuring guests have a pleasant stay. 

Tips to promote your Holiday Home Business 

• Think unique for the property 
• Market via social media platforms to promote your property 
• Take some quality pictures of the property for listings 
• Communicate and be available for the guests 

Shuraa Business Setup has been helping clients for the past 20 years to set up their businesses all across the UAE in a hassle-free manner. Please feel free to mail your queries to info@shuraa.com or call +971 44081900 for a free consultation.