The Dubai Department of Economy and Tourism has launched an incentive programme that reimburses eligible hotel developments for 100 per cent of the Dubai Municipality room-sales fee and the Tourism Dirham levy for two years following opening. The scheme targets new hotels, resorts, hotel apartments and other approved hospitality facilities in the designated growth zones of Dubai South, Palm Jebel Ali, Dubai Parks and Dubai Islands. The move stems from Executive Council Resolution No. of 2025, signed by Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum.
DET has set out licensing and classification criteria, including operation commencement within three years of application and adherence to Decree No. of 2013, which governs hotel-establishment licensing in the emirate. The department will review applications, monitor compliance and manage the benefit period.
Officials describe the policy as a strategic effort to expand Dubai’s hospitality infrastructure into emerging districts and support its broader tourism-and-investment agenda.
Tourism metrics indicate momentum: between January and August 2025 the city recorded 12.54 million international overnight visitors, a 5 per cent year-on-year rise, and logged 29.03 million occupied room-nights, up 4 per cent, with an average occupancy rate of 78.5 per cent.
Issam Kazim, Chief Executive Officer of Dubai Corporation for Tourism and Commerce Marketing, said the initiative represents “an important new phase in the development of Dubai’s hospitality ecosystem,” adding that “our commitment to public-private partnerships and a diversified market approach continues to be at the heart of our tourism strategy.”
For investors the appeal lies not only in fee relief but in geographical targeting of under-penetrated areas that city planners expect to underpin future growth. The emphasis on locations such as Dubai South and Palm Jebel Ali marks a deliberate decoupling from saturated central zones in favour of peripheral hubs with development potential.
Khalifa Al Zaffin, Executive Chairman of Dubai Aviation City Corporation and Dubai South, remarked that the policy “reflects the forward-looking vision of our leadership to strengthen the competitiveness of the business environment and foster an investment climate that attracts private-sector participation.”
While the programme offers significant incentives, industry observers caution that success will depend on how quickly and robustly new hotel projects are delivered in the targeted zones. Some analysts warn of potential oversupply risks if growth accelerates without corresponding demand, particularly in secondary areas. As one hotel-investment analyst noted: “Fee waivers help, but location fundamentals and connectivity matter just as much.”
The scheme aligns with the emirate’s broader economic diversification agenda, known as Dubai Economic Agenda D33, which aims to broaden revenue streams beyond hydrocarbons and consolidate Dubai’s global tourism and investment positioning.
The programme applies only to hotel establishments that submit their application after the resolution’s introduction and meet all eligibility criteria—including licensing, classification, location and operational timelines. Non-compliant projects will forfeit the benefit.
From a competitive standpoint, the incentive places Dubai in a stronger position compared with other Gulf-region hospitality markets which are also vying for international investment. It sends a signal that the emirate remains proactive in offering global investors favourable terms while seeking to steer hotel development into new growth corridors.
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