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Dubai Short Term Rental FAQ

The Basics

Is a "Holiday Home" the same as a "Short Term Rental" or a "Vacation Rental"?


Dubai Tourism and Commerce Marketing (DTCM) officially uses the term "Holiday Homes" to reference the sector. However, the use of the term "Holiday Homes" can be slightly confusing, as a huge portion of people who stay in short term accommodations are not on 'Holiday' as the name would imply. This is particuarly true during the pandemic, when many residents wanted flexible accomodation because of jobloss etc., and 'holidays' were virtually nonexistent. See Gulf News article for reference. Broadly, all these terms imply the same thing: a furnished, residential dwelling, that is operated for the purpose of hosting guests for less than 90 days. We prefer the term "Short Term Rental" to describe the sector, because its generic enough to describe all the different reasons people chose to stay (vacation/holiday, business, resident stays, etc.).




Is a license required to operate a Short Term Rental / Holiday Home in Dubai?


A property owner (or 'authorize tenant'), can legally operate a single Holiday Home without a license, according to DTCM guidance. A Holiday Homes license is required if more than one property is going to be operated by the same individual. See most recent DTCM here for more details.




Can I run a Short Term Rental myself?


The short answer is, yes. However, operational realities will quickly make the average person reconsider. A few 2am check-ins, overnight waterheater problems and incessant guest questions ("How do I turn the TV on") makes most people realise leaving it to the Pros is a better option.




How much can I make with my Short Term Rental?


Not every property is well suited for Short Term rental. That being said, it's not uncommon for property owners to earn 30-40% more than with traditional long term contracts. Be wary of so called "Revenue Estimators", as any operator who is giving a revenue estimate without seeing your property is not being entirely forthright. Individual characteristics of a property have a big impact on earning potential (views, amenities, etc.)




Is there a major difference in how STR operators perform for their clients?


Yes! The sector is primed for consolidation, as the barriers to entry are low which has led to an overabundance of operators (many whom do not have the sophistication to consistently deliver returns). Successful operators need to act with the sophistication of major hotel brands to compete in what has become a very competitive market.




What happens if a guest damages my Short Term Rental property?


Broadly speaking, this concern is overblown. We've hosted over 10,000 stays across two continents, with no meaningful damage inflicted on our properties (that's not to say it never will happen). That being said, you should most certainly ask what your operators proceedure for vetting guests is. A security deposit acts as a strong deterent and inexpensive Homeowner's Insurance can provide piece of mind as well. In addition, many of the booking channels offer protection in the even there's an issue during a stay. With the correct mitigating steps and a competent STR operator, damage really shouldn't be a concern.




Who regulates the Holiday Homes sector in Dubai?


Dubai Tourism and Commerce Marketing (DTCM) regulates the Holiday Homes sector in Dubai. Unlike many cities around the world, DTCM was swift to regulate the sector with very clear guidelines and definitions. In many respects, Holiday Homes are regulated in a similar way to Hotels, though they do have their own explicit governing documents and bylaws. The latest Resolution issued by DTCM can be found here It is worth noting, that while DTCM issues the Resolutions governing Holiday Homes, it is Dubai Economic Depart who issue licenses to Professional Holiday Home operators.




How big is Dubai's Short Term Rental market?


As of January 2020 there were 13,000 Active Dubai properties reported across Airbnb / VRBO (according to airdna.com). For context, Dubai has just over 100,000 Hotel rooms on offer, which means Holiday Homes represent a sizable portion of the accomodation market in Dubai. Furthermore, in the year leading up to Jan 2020, over 600 Million AED in revenue was reported by Airdna across Dubai for the preceeding year. Make no mistake, a combination of proactive regulation and booming tourism numbers (Covid-19 aside), means STR will be a forced to be reckoned with for years to come.





Choosing a Partner

How do I ensure the Vacation Rental Company I'm dealing with is legit?


The Department of Economic Development issues all Trade Licenses for Holiday Home operators in Dubai. Check the validity of the Trade License and credentials of those listed as "Managers", before signing a Management Agreement.

If you'd like to be extra careful, you can call DTCM @ 600 555 559 to check that the operator is in good standing with the regulatory body.




How do I know if a Vacation Rental Company is well run?


Any reputable operator will happily share their Airbnb marketing page - here's ours

The Operator's Airbnb Marketing page highlights the properties the operator manages. The properties should reflect the portfolio size/quality of the Operator's business. More importantly, the property profiles should be stellar, with consistent and recent reviews from guests raving about their experience. If this isn't the case, or if the profile doesn't jive with the Operators claims about the size and quality of their business, you may want to look for another

In the world of Airbnb algorithms, a 4.5 start average review score just isn't good enough - and your property's returns will reflect that.

Not to mention, if guests aren't enjoying their experience, its almost certain your property isn't being well maintained.




Can I trust the revenue forecasts my Holiday Home Company is projecting?


Third-party tools like airdna are surprisingly accurate when reporting historical earnings for comparable properties in your neighhborhood or building. All STR operators should be using a third-party tool to provide justifcation for your revenue forecast - particularly if they aren't managing a property in your building. Be wary of "Revenue Estimators" you'll see on many operators sites - they're typically very inflated, and its impossible to do a forecast on a property that's never been seen in-person by a professional.

To take it one step further, request that your operator pull reports from a few properties that they manage. The third-party tool should give a sense of the revenue they've been able to deliver, vs other operators within their buildings / neighborhoods.

If they're performance is sub-par, it may be worth taking your business elsewhere.




Should my Short Term Rental Company have a website?


Yes!

Online Travel Agents (OTAs) like airbnb.com and booking.com collect a commission of at least 15% for every reservation booked on these channels. Every decent STR operator should be looking to increase the proportion of 'direct' bookings as a proportion of overall reservations, as this will result in better returns for you (the property owner).

A functioning, well designed website is an excellent indicator that your operator is well equipped to maximize your STR revenue.




Is a coherent pricing strategy really that important?


Yes, its absolutely critical.

Ideally, your operator should have a Dynamic Pricing tool, linked to its Channel Manager (sorry for the tech talk). This is basically a fancy way of saying: your property's prices should automatically update based on market demand (algorithmically).

We use a company called Pricelabs for Revenue Management.




What is a Channel Manager and why is it important?


A Channel Manager is a centralized location where your property's availability (i.e. calendar) and pricing are managed across a variety of channels (ex. airbnb.com, booking.com, vrbo.com, STR rental operator's website and many more).

Simply put - a channel manager automates reservations and pricing across channels with consistency.

This is important because being on multiple channels with prices that update in response to market demand, is critical to maximizing revenue. If you don't get the sense that your Operator has the sophistication of a Hotel from a marketing standpoint, you should probably continue your search for another operator.





Shosty-Specific

What is Quintessential Quarters?


Shosty and Quintessential Quarters (QQ) operate under the same Trade License issued by DTCM and are sister brands.

QQ is a Hospitality brand whose primary goal is delivering a superior accomodation experience for guests.

Shosty is the platform we use to communicate with clients and prospects who own real estate and are interested in improving their Property's ROI.

We've made the strategic business decision to develope two seperate brands, for the purpose of clearly communicating our value proposition to very different stakeholders.

We're more than happy to explain this in further details, if you'd like to understand more.




When does Shosty pay me as the property owner?


Quarterly disbursements to property owners are delivered 10 working days after each calendar quarter concludes. For example, Q1 Jan-Mar; due 10th working day of April.

There are instances where different terms might be accommodated, but these are Shosty's general payout terms.

For more information about a various fee structures related to short term rental, check-out this comprehensive article by Hostfully




Who maintains my STR property and how does payment work?


Shosty oversees all maintenance for your property. For smaller jobs, Shosty will handle at no cost to the property owner.

In the event that a contractor or maintenance service is required, Shosty will get a quote from the contract and submit to the owner for approval.

Any costs for maintenance will be paid for by Shosty on behalf of the owner, and deduct from the rental income paid to the owner.




Who pays for Utilities?


Utilities such as Dewa and Du (or Etisalat) are paid for by the owner. Shosty is happy to pay on the owners behalf. Amounts will be deducted from the rental income.




Who pays for Service Charges?


The owner is responsible for payment of Services Charges. Shosty is unable to pay on the owners behalf unfortunately.




Does Shosty require that the Owner have Homeowner's Insurance?


Yes, for the protection of the owner, the guests and Shosty, it is required that valid Homeowner's Insurance be maintained at all times. The fees are quite minimal, and Shosty is happy to recommended a reputable provider.




Who pays for the Housekeeping / Cleaning?


Shosty collects the Housekeeping / Cleaning fees from the guests for every guest stay. All cleaning / housekeeping fees are charged to the guest at the time of reservation.

Shosty manages all housekeeping and cleaning on behalf of the owner.




What if I want to use my property?


All of Shosty's client will have access to an app that enables them to reserve their own property at not cost to them.




Is there a Tourism Fee for Holiday Homes in Dubai?  How does it work?


There are two different Holiday Homes Fees charged byt DTCM. The first is an Annual Unit Permit Fee and the second is based on occupancy / property size.

Annual DTCM Unit Permit Fees are as follows (paid annually):

Studio / 1 Bedroom: 370 AED

2 Bedroom: 670 AED

3 Bedroom: 970 AED

4 Bedroom +: 1,270 AED

In addition, there is a nightly fee of 10 AED / bedroom / nights occupied.

For example, a 2 Bedroom that was occupied 20 nights in March, would owe 400 AED for March (20 night x 20 AED / night = 400 AED)





Onboarding

I'm curious about Short Term Rental.  How does the onboarding process work and how long does it take?


Below is a high-level outline of the onboarding steps:

1. Value Assessment: Shosty earnings assessment for your property after in-person viewing

2. Outfitting Cost-out: Shosty estimate of outfitting costs

3. Management Agreement: Signed management agreement after terms are aligned

4. Outfitting & furnishing of property

5. Photography, online profile creation and listing

6. Receive guests and earn more!

Steps 1-3 typically take about a week.

Steps 4-6 usually take about 2-3 weeks (though can be excelerated in some cases)




What outfitting costs does the Property Owner pay for?


The owner pays to furnish the property with whatever contents are required.

Shosty will style and cordinate any maintenance work that's required, as there are particular considerations specific to Holiday Homes revenue performance.




How much does it cost to furnish / outfit a property?


Cost can vary depending on the property's size and quality of furnishings.

You can check out our outfitting estimates here.




What responsibilites does the owner have in the Onboarding process?


The owner is responsible for the following:

1. Signing the Management Agreement and providing requisite documents

2. Connection of Utilities (Dewa, Du or Etisalat)

3. Registering for Homeowner's Insurance (if not already done)

4. Approving outfitting costs

Everything else shall be completed by the STR operator.





Dubai Short Term Rental FAQ

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Tel: +971 52 877 1988

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Dubai, UAE

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