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Airbnb gains a foothold in the UAE market

Despite a significant delay in its arrival caused by legal uncertainty, Airbnb is finally gaining a foothold in the UAE market, emboldened by regulators who are now keen to promote Airbnb’s offering of apartments and villas to a more youthful, intrepid audience.

“Policymakers in the region are increasingly recognising the added value of Airbnb in growing and diversifying tourism sustainably,” Airbnb’s general manager for the Middle East and Africa, Hadi Moussa, told Gulf News in an email.

The San Francisco-based start-up was founded in 2008 to allow homeowners to rent their entire house, or just a room, for a nightly fee, circumventing hotels and allowing travellers to get a more authentic, on-the-ground experience of their destination.

It was not until 2016 that Airbnb was officially sanctioned by the Dubai Tourism authority, ending years of ambiguity. Ras Al Khaimah followed suite in January 2018, signing an agreement with Airbnb to promote “new rules and responsible home sharing,” seen as the last hurdle to a full-scale launch in the emirate.

Users looking to rent their properties in Dubai or Ras Al Khaimah are still required to register with the relevant tourism authorities and gain a permit, a process much more rigorous than elsewhere in the world.

Nonetheless, these agreements represent a new dawn for relations between the $31 billion company, the second most valuable start-up in the US behind Uber, and the UAE’s tourism authorities. Not all the emirates have agreements however. Abu Dhabi declined to comment for this story on the current regulatory status of Airbnb in the capital, Sharjah, Ajman, and Fujairah have not signed agreements, like Dubai and Ras Al Khaimah have, with Airbnb. It is unclear whether the other emirates will follow Dubai and Ras Al Khaimah in signing memorandums of understanding (MoUs) with Airbnb.

Regulatory position

Gulf News asked four prominent law firms in Dubai about Airbnb’s current legal status in those emirates They all declined to comment, citing a lack of certainty around the company’s regulatory position.

“We are committed to being good partners to all emirates,” said Moussa, adding that Airbnb “welcomes discussions to extend our existing partnerships with Dubai and Ras Al Khaimah to other emirates in order to support the responsible growth of new forms of tourism.”

Since the 2016 agreement, Dubai and Ras Al Khaimah’s decision to allow the service has paid dividends: The number of guests travelling to Dubai using the Airbnb platform has increased by over 50 per cent, according to the company.

Research conducted by property specialist Chestertons in October 2017 highlighted how, since 2015, revenues for Dubai properties listed on the online marketplace have increased by 421 per cent to top $3.3 million (Dh12.1 million), with the number of listings nearly tripling to 3,249. This was, in large part, as a result of the change in the law in April 2016.

Not everyone is so sure the service will be a success in the UAE, however.

It goes without saying that the Airbnb business model will further increase competition in the region’s hospitality industry, said Daniel Ponzo, a travel and leisure expert based in the UAE who has previously worked with local travel agencies.

However, he added, “Dubai is very well known and strongly perceived in travellers’ minds, offering a wonderful experience in hotels, with excellent service and competitive prices.”

As a result, “the Airbnb business model is more difficult to penetrate this market, and might be less successful than in other part of the world because of the strong and high standards of hotels,” Ponzo said.

Declining to state the exact cause for the emirate’s reluctance to adopt the service until recently, Ras Al Khaimah Tourism Development Authority (RAKTDA) simply said in an email statement that given their target of one million visitors by the end of this year, it was important for them to provide a greater diversity of accommodation.

The need to offer “different stay experiences within RAK is essential,” the statement said, adding that many travellers nowadays wanted to experience their destination as a “local,” spending more time “within the diverse neighbourhoods throughout the city, rather than luxurious hotels.”

Millennials

Cruz Ignatius, a senior executive for travel management firm ITL World, identified these kinds of tourists as millennials, or those largely in their twenties and thirties now.

“The rise of interest among business travellers for Airbnb accommodations globally is especially prevalent among millennial-age business travellers, who now make up the majority of the professionals in the workplace,” Ignatius said.

Despite this, he cautioned that not all millennials could be grouped together: “UAE millennials usually like to plan trips in advance but tend to have a more cautious outlook, often opting for guaranteed standards and levels of privacy,” he said, adding that this was not necessarily the same behaviour as their counterparts in other parts of the world.

For now, with Dubai setting its sights on 20 million visitors by 2020, an increase of nearly three million additional tourists on its 2017 levels, and Ras Al Khaimah setting a similarly ambitious goal of 2.9 million visitors by 2025, analysts say that they will both need to open up to as broad a spectrum of people as possible, offering more affordable apartments in less glamorous areas, to counterbalance the slew of five-star, beachfront hotels that have become a mainstay of the country’s tourism market.

Source: Gulf News

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