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Dubai is most definitely on the list of the most frequently visited cities in the world, owing to its iconic architecture, world-class services and attractive entertainment amenities on offer. The hospitality sector currently contributes more than 5.5 per cent of Dubai’s GDP. Hotel development projects are on the rise with a growing number of visitors every year, from 8.41 million in 2010 to 14.2 million last year, making it the fourth most-visited city in the world.
The demand for halal tourism is also gaining traction in Dubai, with a significant number of visitors looking for options that accommodate their religious customs and beliefs. Last year, a total of 1.54 million Saudi tourists visited Dubai, marking Saudi Arabia as the lead market in the GCC in terms of visitors. This number is growing significantly, with tourists from other countries also requiring alcohol-free or halal hotels.
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The above figures serve as key indicators to highlight a growth in the market for conservative hospitality offerings, such as Sharia-compliant hotels (SCH). Additionally, as average daily rates (ADR) and occupancy rates face downward pressure in Dubai, owing to increased supply and international headwinds, perhaps more hotel operators in the city will consider to diversify into the Sharia-compliant hospitality sector.
A misconception in the hospitality industry is a Sharia-compliant hotel is the same as a dry hotel. While there are differences in the details and layout of the two, there is no written document dictating the rules or classifications of a Sharia-compliant hotel. Generally in this region, a dry hotel does not serve any alcohol, or in some cases, pork products. Other than that, a dry hotel has no other significant difference from a “western” hotel.
On the other hand, a Sharia-compliant hotel requires strict principles not only in its operations but also in its design, layout and financial arrangements. Apart from staying away from serving alcohol and pork products, other key requirements in a Shariah-compliant hotel are halal food, prayer mats and the Quran, prayer rooms, separate recreational facilities for men and women, apt entertainment, no nightclubs, largely Muslim staff, bathrooms and beds being positioned away from the direction of Mecca, bidets in bathroom, modest dress code for staff and guests and prayer calls to be heard clearly in all hotel rooms.
A Sharia-compliant hotel should get Islamic funding for its development and participate in the concept of zakat or charity. Furthermore, separate floors should be maintained in the hotel for single men with male staff, single women with female staff, and for families.
This should not include any art depicting the human form and should offer conservative television services.
We believe that currently, there are 19 dry and SCH and hotel apartments operating and under construction in Dubai, combining for approximately 3,500 keys. The majority of these hotels do not mention anything at all on their websites about being Sharia-compliant. While booking on secondary websites, some hotels just mention separate timings for health club facilities for men and women in their fine prints; others have no indication of any Sharia compliancy whatsoever. Therefore, it is extremely difficult for a visitor to book a Sharia-compliant hotel in Dubai, without any prior knowledge about it.
Current trends show an increase in demand for such holiday accommodation not only from the Gulf states but also from across the globe. Non-Muslims can be attracted to them for a cultural experience or when they simply seek a comfortable, clean, conservative and family-oriented environment.
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Investors see Sharia-compliant financing as a healthier and more enhanced practice than conventional financing. This is due to a number of factors, including linking of savings and investments, encouraging longer-term investments, connecting financial markets and economic activity, and most importantly, acting as an anti-crisis code, which reduces the impact of a financial crash in the market by not dealing with any companies or institutions that are already greatly leveraged. Also, the wide availability of Sharia-compliant funding and Islamic banks have advanced the concept of SCH, as these lenders or banks extend funding only to hotels that follow Sharia practices. The major driver behind the success of the SCH model is the increasing numbers of Muslim visitors from around the world.
As Dubai’s hospitality sector moves towards a period of increased general supply, some operators may find it essential to further examine the worth of the SCH model as a viable sub-sector in the hospitality industry.
Source: Haider Tuaima, Special to Property Weekly
Research Manager of ValuStrat
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.