Dubai eyes new hotel service charges law

Dubai is considering implementing a new law to regulate the distribution of the ten percent service charge hotels receive from guests, according to a report by Arabian Business.

The new law is being prepared by Dubai's Department of Tourism and Commerce Marketing, an executive from the tourism authority told Arabian Business.

"We are preparing a law explaining how to distribute the ten percent service charges gross amount among the workers at the hotels and hotel apartments," said Suzan Odeh, senior coordinator in the legal affairs section of the Department of Tourism and Commerce Marketing in Dubai.

Odeh added that the draft of the law was submitted to the Ruler's Court a year ago and was currently pending approval. She did not have any timescale as to when the law would be implemented and could not give any early indications as to what the law will contain.

In March 1999, a circular regarding service charges was issued to all hotels and hotel apartments from HH Sheikh Mohammed bin Rashid Al Maktoum, then Crown Prince of Dubai and chairman of the Department of Tourism and Commerce Marketing, but present Ruler of Dubai.

The circular stated that "hotels and furnished apartments may not levy service charges in excess of ten percent of the room rates, price of food and beverages, and other services."

It also added that "hotels and furnished apartments must allocate the service charge revenues to staff benefits."

Last week, a senior executive from the Rotana hotel group told Arabian Business at the Arabian Travel Market that only three percent of the service charges paid by guests at its hotels in the UAE goes directly into staff pay packets, while the remainder is used to cover costs such as accommodation, transport and training.

"About three to four percent [of the service charges] is distributed directly and the balance is through accommodation, transportation [and] benefits," said Omer Kaddouri, senior vice president of UAE operations at Rotana.

The remainder of the service charges revenue is put in a fund and is "used for any future projects that are payroll and training related" and "staff outings, staff training and initiatives relating to staff," he added.