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Fax: +65 6407 7251Dominic Ellis
EditorA
re you an installments fan? I’m not one
who likes payments hanging over me, but
equally recognise the appeal of ‘buy now,
pay later’, which you see on everything from home
furnishings to luxury cars.
So it shouldn’t come as a surprise to see it crop
up in the travel arena. Etihad’s tie-up with 17
banks in the UAE, Saudi Arabia and Egypt is an
interesting move. As it covers all cabins,
theoretically the airline has widened its premium
class appeal to those who wouldn’t have been able
to afford first or business previously, while at the
same time providing Guest members with more
flexibility. It will be interesting to see if other
airlines follow suit.
Payment was definitely a recurring subject in
September.
With the clock ticking towards the introduction
of VAT across the GCC in January, it’s a hot topic
of conversation in hotel offices, newsrooms and
trade shows. The 5 per cent levy, in itself, seems
manageable (particularly when you compare it
with 20 per cent in the UK) but on top of the
municipality tax, service charge and tourism fee- and let’s not forget F&B costs too – there are
understandable concerns.
Operators are widely expected to pass on VAT to
guests in the new year but, in time, likely to absorb
most of the overall VAT burdens amounting to a
cumulative sum of $1.9 billion over the next five
years, according to Euromonitor.
Privately, hoteliers have told me they aren’t too
worried about VAT but more interested in how it
will impact the perception of Abu Dhabi and
Dubai as international destinations, and whether
more incentives and packages might be needed to
offset these charges; certainly all travel
stakeholders will need to work together to ensure
travellers keep coming (air transport is zero rated),
but this is at a time when airline yields are
pressurised, RevPars continue to slide and market
forecasts are far from certain.
The UAE is already the 11th largest hotel market
globally, eclipsing Thailand, Australia, India and
Brazil, which is extraordinary for a country its size,
and with Expo 2020 on the horizon, the omens
look favourable. But with rising supply and new
charges, there could be testing times ahead on
both sides of the reception desk.