Hotel Management & Transactions 2026 Comparisons

UAE

The UAE is a constitutional federation established on 2 December 1971, comprising seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Umm al-Quwain and Ras Al Khaimah (RAK).

The country’s governance structure is rooted in its Constitution, which distributes legislative competence between the federal level and the individual emirates. Federal law prevails over emirate-level legislation. However, the emirates retain authority to legislate in matters not reserved exclusively to the federal government, as well as in areas where federal legislation has not yet been enacted. A notable exception to the general primacy of federal law concerns property matters, where emirate-specific legislation plays a particularly significant role. Outside of property law, civil and commercial affairs are predominantly governed at the federal level. The principal federal laws relevant to hotel transactions include the UAE Civil Code (Federal Law No 5 of 1985), which governs contractual and property relationships, as well as more recent enactments such as Federal Decree-Law No 47 of 2022 on corporate taxation and the UAE VAT framework. Each emirate has additionally developed its own regulatory regime for real estate registration, licensing and land use.

Share deals and asset deals are both widely used structures for hotel sale and purchase transactions in the UAE.

Hotel transactions and their associated terms, including the identities of the parties and the sale and purchase price, are not publicly disclosed in the UAE.

Dubai

Foreign investors who are not UAE or Gulp Cooperation Council (GCC) nationals may acquire real property in specifically “Designated Investment Areas”, including locations such as Dubai Marina, Downtown Dubai, Palm Jumeirah and Business Bay.

Abu Dhabi

Foreign investors who are not UAE nationals are entitled to hold real property in designated “Designated Investment Zones”, such as Yas Island, Saadiyat Island, Al Reem Island and Al Maryah Island

Designated Investment Areas and Designated Investment Zones, in Dubai and Abu Dhabi respectively, are dynamic and continue to expand over time, with areas/zones being expanded or new areas/zones being introduced as part of ongoing efforts to promote and facilitate foreign investment in the real estate sector.

RAK

RAK has economic zones equivalent to designated investment areas/zones in Dubai and Abu Dhabi. Examples of economic zones in RAK include Al Marjan Island and RAK Maritime City.

UAE

Privately owned structures/independent hotels

In contrast to branded hotels, privately owned and independent hotels are relatively uncommon in the UAE. These hotels are owned and run by individuals or smaller companies without any affiliation to major hotel chains. The owner exercises complete authority over operations, branding and management.

Hotel management agreements

Hotel management agreements (HMAs) are highly prevalent, particularly among international and regional hotel chains. Under an HMA, the property owner engages a management company to run the hotel on their behalf. The management company assumes responsibility for day-to-day operations, staffing and marketing, while the owner retains ownership of the underlying property and bears financial responsibility.

The owner gains the advantage of the management company’s expertise and brand recognition but relinquishes a degree of control over daily operational matters.

Hotel lease agreements

Hotel lease arrangements are not widely used in the UAE. Under a hotel lease arrangement, the property owner leases the hotel to an operator who assumes full responsibility for all operational aspects and pays rent to the owner. The owner receives consistent rental income with limited operational involvement, while the operator bears all operational risks and benefits.

Franchise agreements

Franchise agreements remain less common in the UAE, though they are gaining increasing attention in industry discussions. Under a franchising arrangement, the hotel owner operates the property under the brand name and standards of a franchisor. The franchisee manages the hotel while adhering to the franchisor’s prescribed standards and practices. The franchisor provides brand recognition, marketing support and operational frameworks. The franchisee benefits from the established brand and support infrastructure but is required to pay franchise fees and comply with rigorous operational standards.

UAE

An HMA establishes the framework governing the relationship between the hotel owner and the operator, delineating their respective rights, obligations and commercial arrangements. The principal components of an HMA are outlined below.

Term of appointment

The term of appointment sets out the duration of the agreement and the conditions under which it may be renewed. The standard initial term for HMAs typically ranges from 15 to 25 years, with renewal terms subject to commercial negotiation between the parties.

Operator’s fees

Operator remuneration is conventionally structured as a two-part fee: a base management fee, expressed as a percentage of the hotel’s total revenue, together with an incentive management fee, expressed as a percentage of gross operating profit.

Operator’s obligations and rights

The operator is obligated to manage the hotel in accordance with a specified standard. To fulfil this obligation, the operator is granted all rights reasonably necessary, including the authority to hire staff on behalf of the owner and to determine maintenance requirements.

The operator is also responsible for preparing operational and capital expenditure budgets and typically exercises exclusive control over the running of the hotel, managing the payment of expenses, fees and returns from designated accounts.

The HMA may additionally confer upon the operator the right to deliver marketing and promotional services in respect of the hotel.

Operators will generally have the right to require property upgrades to maintain brand standards as determined by the operator, although such rights may be subject to time or scope limitations.

HMAs frequently include a right of first refusal in favour of the operator in the event the hotel is offered for sale.

Non-compete and area of protection clauses are commonly negotiated, as are non-disclosure provisions.

Key money

Key money arrangements are less prevalent in the UAE compared to other regions such as Europe, the broader Middle East and Africa, or the Asia-Pacific.

Owner’s obligations

• The owner is responsible for funding the hotel’s operations and maintenance, including insurance payments. The owner is also typically required to establish reserves for fixtures and fittings.

• The owner must provide the necessary funds for hotel operations, encompassing working capital and capital expenditure requirements.
• The owner is required to maintain sufficient insurance coverage for the hotel property.
• The owner must ensure that the hotel operates in compliance with all applicable laws, regulations and standards.
• The owner generally retains approval rights over significant decisions, such as major renovation projects. Rights concerning operational expenditure and budget approval vary, though operators are typically afforded broad discretion in determining appropriate management of the business.
• The owner will commonly seek to obtain a non-disturbance agreement prior to any financing arrangements and to include ratio-restricted financing obligations within the HMA.
• In addition to compliance with applicable laws, owners must ensure adherence to anti-money laundering and sanctions requirements.
• The owner’s obligations frequently include a provision preventing them from exercising undue influence over the hotel operator.

Accounts

A bank account is established in the owner’s name, which is generally administered by the operator. The owner typically provides the initial working capital.

Revenue derived from hotel operations is deposited into designated accounts. Operating costs, including payroll, utilities and supplies, are disbursed from these accounts.

Profits are distributed in accordance with the terms of the HMA, following an agreed priority of payments from those accounts.

Termination and default events

Standard contractual provisions govern termination in circumstances of insolvency, judgments against a party, or material breach.

Cross-termination provisions, triggered by the termination of other related agreements, are commonly included.

Owners may exercise termination rights where the operator fails to meet the performance test or where the hotel is sold to a third party. Such termination is often subject to a specified time period and/or the payment of a break fee.

Performance test

A performance standard is frequently imposed on the operator, and failure to meet this standard may entitle the owner to terminate the agreement.

This test commonly comprises two elements:

• a comparison of the hotel’s revenue per available room (RevPAR) against a designated competitive set of hotels; and
• a comparison of actual total revenue against budgeted total revenue.

Cure rights are typically afforded to the operator, although the specific terms of such rights vary between transactions.

Dispute resolution procedures

HMAs typically include provisions addressing the appropriate method of dispute resolution depending on the nature of the dispute, whether fee-related or concerning early termination.

Where the dispute concerns fees or accounts, it may be referred to an independent expert. For other disputes, it is common to provide for an escalation process comprising good faith negotiations, followed by mediation and then arbitration, often within the Abu Dhabi Global Market (ADGM) or the Dubai International Finance Centre (DIFC).

Hotel lease agreements are not widely used in the region (see 3.1 Common Hotel Ownership and Management Structures).

Dubai

Short-term leases (those with a duration of less than ten years) must be registered with the Real Estate Regulatory Agency through the Ejari system. Long-term leases (those with a duration of between ten and 99 years) must be recorded on the Real Estate Register maintained by the Dubai Land Department.

Abu Dhabi

Short-term leases (those with a duration of less than four years) must be registered through the Tawtheeq system. Long term leases (those with a term of more than four years) must be registered with Abu Dhabi Real Estate Centre (ADREC). Any leasehold interests situated within the ADGM must be registered with the ADGM Land Registrar.

The key clauses and provisions in commercial lease agreements typically address rent, duration, renewal rights and dispute resolution mechanisms.

UAE

Franchising agreements entail the licensing of a brand’s name and operating systems to the franchisee, who independently operates and manages the hotel.

Franchise agreements typically require brand operators to pay royalties calculated as a percentage of sales or total revenue. They also generally grant the licensor a right to conduct inspections of the hotel on a periodic basis.

In the UAE, hotel franchising agreements are subject to various licensing and regulatory requirements that differ depending on the emirate in which the hotel is located.

In the UAE, real estate acquisitions are typically financed through equity (the purchaser’s own capital) and/or bank financing.

Lenders are only authorised to extend credit in the UAE if they are locally incorporated and regulated by the UAE Central Bank.

Sale and Purchase of a Hotel

The sale of a hotel in the UAE may attract corporate tax, levied at 9% on the gain recognised in the financial statements.

A top-up tax may arise bringing the entity’s effective corporate tax rate to 15% where the entity falls within the scope of the OECD Pillar Two regime.

The transferor may also be required to apply VAT at a rate of 5% on the sale unless the transaction qualifies as a transfer of a going concern and the necessary conditions are satisfied, in which case the transfer would fall outside the scope of VAT.

No stamp duty or other similar transfer taxes apply. However, the transfer of the underlying real estate asset is subject to a transfer fee of 4% in Dubai and 5% in the DIFC. In Abu Dhabi, the transfer fee ranges from 1% to 4%, while in the ADGM it is 2%.

Hotels are also required to apply various additional charges, including the tourism dirham fee and municipality fees.

Entering Into HMA, Lease Agreement or Franchise Agreement

Income received under an HMA, lease agreement or franchise agreement is generally subject to corporate tax at 9%. Where the entity is in the scope of Pillar Two, the domestic minimum top-up tax regime may apply to increase the effective tax rate to 15%.

The entity making the relevant payment should be entitled to take a deduction for the payment when calculating their own corporate tax liability, provided that, where the parties are related, the payment represents an arm’s length amount in compliance with the transfer pricing rules.

No withholding tax is required to be operated on any such payments to overseas parties at present as the rate of withholding tax is 0%. However, should this rate change in future, withholding tax may apply unless relief was available under a double tax agreement.

Depending on the circumstances, VAT at 5% may need to be applied to invoices issued under the HMA, rental agreement and franchise agreement.

Tax Incentives

There are no specific corporate tax or VAT incentives available for hotel projects.

However, the Dubai government has indicated its intention to waive the 10% municipality tax levied on hotels in order to stimulate growth in the emirate’s hospitality sector.

Hotels in the UAE are required to obtain the relevant licences and permits from local authorities and must comply with applicable building codes and standards to satisfy zoning requirements. Zoning classifications and the procedures for obtaining derogations vary by emirate. The relevant municipality in each emirate is typically responsible for determining zoning classifications.

The requirements applicable to hotel construction or refurbishment are subject to frequent change. However, the general guidance in certain key emirates is as follows.

Dubai

Hotels in Dubai must comply with the Dubai Building Code (the “Code”) and the regulations of the Development Authority. The principal building and development regulations for hotels in Dubai include the following.

• Height – the Code does not prescribe a maximum building height, which varies according to location.
• Density – no specific regulations apply.
• Floor area ratio – no specific regulations apply.
• Parking requirements – the Code stipulates particular parking requirements for hotels: there must be one bay for every five standard rooms and every two suite rooms; and one bay per 50 square metres of hospitality space and 20 square metres of function space.
• Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice.

• Disability and accessibility – the Code prescribes a comprehensive range of accessibility requirements, including provisions for exits, pathways, access control barriers and protruding objects.

Abu Dhabi

The building and development regulations applicable to hotels in Abu Dhabi are governed principally by Administrative Resolution No 182 of 2017 Concerning the Executive Regulations of Law No 4 of 1983 Regulating Building Works in the Emirate of Abu Dhabi (the “Abu Dhabi Building Regulations”), issued by the Department of Municipal Affairs and Transport. The principal requirements include the following.

• Height – no maximum building height is prescribed.
• Density – no specific regulations apply.
• Floor area ratio – development regulations are determined during the information provision process and are based on the facility type, plot scale and the surrounding urban context.
• Parking requirements – these are governed by the Abu Dhabi Parking Standards.
• Fire protection – buildings must comply with the UAE Fire and Life Safety Code of Practice. No building or structure may be occupied prior to the Abu Dhabi Civil Defence Authority issuing a permit and conducting inspections confirming compliance with the applicable fire and life safety requirements. All required permits must be obtained from the Abu Dhabi Civil Defence Authority before commencing any construction or related activities, and issued permits must be kept on-site and made available for inspection at all times.
• Disability and accessibility – the Code sets out extensive accessibility requirements, including provisions for exits, pathways, access control barriers and protruding objects.

RAKThe building and development regulations applicable to hotels in RAK include the following:

• Height – the ground floor level must not exceed 1.20 metres above the approved design level. The roof parapet height must be between 1 metre and 1.80 metres after final finishing. Architectural facades are exempt from these requirements.
• Density – no specific regulations apply.
• Floor area ratio – this is regulated by the relevant department of the municipality.
• Parking requirements – these are regulated by the relevant department of the municipality.
• Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice.
• Disability and accessibility – at a minimum, hotels must provide one accessible room on the first floor where there are fewer than 100 rooms, and two rooms where there are more than 100 rooms. These rooms must be fully equipped in accordance with internationally recognised standards for persons with disabilities or accessibility needs.

Fujairah

The building and development regulations applicable to hotels in Fujairah are governed principally by Fujairah Executive Regulation No (11) of 2001 Regulating Buildings (the “Fujairah Building Regulation”) and Fujairah Decision No (10) of 2001 Concerning the Procedures and Regulations of Licensing and Inspecting the Buildings. No person may build, construct, alter, demolish or otherwise modify any building or land without first obtaining a licence from the Buildings Section of the Municipality of Fujairah. The principal requirements include the following.

• Height – no maximum building height is prescribed under the Fujairah Building Regulation. However, the ground floor level and roof parapet heights are subject to the specifications set out in the approved planning conditions for the relevant plot.
• Density – no specific regulations apply.
• Floor area ratio – this is determined by the planning conditions applicable to the relevant plot as specified by the Municipality.

• Parking requirements – car parks must be indicated on the building drawings within the legal boundaries of the plot, proportionate to the number of users and the nature of the building’s activity. Public buildings are required to comply with global standards for car park provision.
• Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice. The engineering office responsible for the building design must ensure compliance with the protection and safety conditions prescribed by the competent Civil Defence authority. A building completion certificate will not be issued without a certificate from the competent Civil Defence authority confirming that the building satisfies all applicable security and safety conditions.
• Disability and accessibility – the engineering office responsible for the building design is required to provide technical conditions for persons with special needs in accordance with the Fujairah Building Regulation.

Sharjah

The building and development regulations applicable to hotels in Sharjah are governed principally by Executive Council Resolution No 12 of 2002 Concerning the Building Conditions and Specifications Regulation in the Emirate of Sharjah. No building licence may be issued unless all the conditions and specifications prescribed by the Resolution have been satisfied. The Executive Council retains the authority to exempt public buildings erected by the Emirate from all or some of such conditions and specifications.

Ajman

The building and development regulations applicable to hotels in Ajman are governed principally by Local Order No (4) of 2006 Concerning the Regulation and Conditions of Building in the Emirate of Ajman. A building permit application must be submitted through the Ajman Municipality’s digital platform (the Amar System), accompanied by executive architectural and structural drawings, approvals from relevant service entities (including the Federal Water and Electricity Authority, Emirates Telecommunications Corporation, Ajman Sewerage and the General Administration of Civil Defence), appendices to the supervision and contracting contracts, and approval of the new project for the contractor and consultant. No building may be constructed on any plot in the Emirate of Ajman until a site plan has been issued by the General Administration for Technical Affairs of the Municipality and Planning Department, identifying the applicable planning conditions and requirements in respect of use, height, area, recession and protrusion.

The requirements for obtaining building permits for hotel refurbishment or new construction in the UAE are subject to frequent change. However, an application must generally be submitted to the Department of Tourism and Commerce Marketing, which is responsible for granting written approval for the construction of a new hotel or the conversion of an existing property.

The average duration of the approval process varies depending on the complexity of the project and the specific emirate in which it is located.

There is no established formal procedure for raising objections to a building permit in the UAE.

Converting a hotel to an alternative use in the UAE necessitates a change in zoning classification, which requires a formal application to be submitted. Any such conversion must comply with local building standards and receive approval from the relevant authorities.

The UAE’s National Policy for Preserving the Modern Architectural Heritage encompasses significant hotel landmarks. This policy ensures that heritage sites are maintained and preserved for future generations. The demolition, removal or modification of buildings and architectural elements of historical value that are classified as heritage is prohibited.

Dubai

To operate a hotel in Dubai, a company must first register with the Department of Economy and Tourism. Following registration, clearance from the Department of Tourism and Commerce Marketing is required.

The Department of Tourism and Commerce Marketing issues a hotel licence upon completion of its inspections.

Within the DIFC, licences are granted once the hotel has been registered and a site inspection has been conducted.

Abu Dhabi

Hotel licences in Abu Dhabi are issued by the Abu Dhabi Tourism Authority.

The ADGM Registration Authority is empowered to issue commercial licences to hotels operating within the ADGM.

RAK

Hotel licences are issued once the hotel has been registered with the hotel classification system and all services offered have been formally classified.

UAE

The Department of Tourism and Commerce Marketing mandates that sustainability standards relating to energy and water efficiency be maintained. This includes the implementation of energy-saving measures, water conservation practices and initiatives to reduce carbon emissions.

Dubai

The Dubai Department of Economy and Tourism has introduced the Dubai Sustainable Tourism Stamp, a sustainability initiative designed to recognise hotels that meet the highest sustainability standards. These standards encompass a broad range of areas, including energy efficiency, water conservation, waste management and staff engagement. In addition, Al Sa’fat — the Dubai Green Building System — imposes mandatory requirements on all new buildings to achieve at least the Silver Sa’fa rating. Higher performance levels may be attained through compliance with additional requirements to achieve the Golden or Platinum Sa’fa. Al Sa’fat fosters innovation in the integration of green systems and technologies into building design, resulting in enhanced performance, decreased energy consumption and improved efficiency of electrical and mechanical systems, thereby reducing the building’s carbon footprint.

The DIFC has made sustainability commitments that are taken into account when evaluating development proposals.

Abu Dhabi

Abu Dhabi has published a series of Sustainability Guidelines addressing water management, energy, waste and transportation. In addition, Abu Dhabi introduced the Pearl Rating System (PRS), a framework developed by the Abu Dhabi Department of Urban Planning and Municipalities to advance Estidama ‒ a sustainable urban planning initiative for the sustainable design, construction and operation of communities, buildings and villas. All buildings must achieve a minimum Pearl Rating of 1, government buildings must achieve a Pearl Rating of 2, and developments situated in Masdar ‒ an eco-city ‒ are required to achieve a Pearl Rating of 3. The highest Pearl Rating that can be achieved is 5. The PRS focuses on energy efficiency, water conservation and waste management, among other factors, to promote sustainable development within the emirate.

The ADGM has made sustainability commitments that are considered in the assessment of development plans.

RAK

The RAK Tourism Development Authority (RAKTDA) has issued guidelines and protocols under a “Green Hotel Rating” initiative to regulate sustainability standards and practices. In addition, the Barjeel Green Building Regulations, launched in 2019, impose mandatory requirements across five categories: energy and water efficiency, renewable energy, recyclable materials and resources, and comfort and wellbeing.       

In the UAE, specific employment law requirements apply to hotel transactions. The applicable legislation depends on the location of the hotel. Federal Decree-Law No 33 of 2021 Regarding the Regulation of Employment Relationships and its Amendments (the “UAE Labour Law”) applies onshore in the UAE and in most free zones, including to the employment aspects of hotel transactions. However, hotels situated in the DIFC or the ADGM are subject to separate employment legislation.

• Transfer of employment – where employees must transfer from one entity to another in connection with a hotel transaction, the transfer is effected through a process of termination and re-engagement. New employment contracts must be executed with the new employer, and new visas and work permits must be obtained. The termination of the employee’s existing employment technically triggers the payment of termination entitlements, including end of service gratuity. In practice, however, it is generally possible to roll over and defer these payments.
• Harmonisation of benefits – the provisions of the UAE Labour Law must be considered when implementing any harmonisation of employee benefits. Any amendments to employment contracts require the express consent of the affected employee.
• Share sale – in a share sale, existing employment contracts remain in force and are treated as continuous. The new employer assumes responsibility for prior liabilities and must ensure ongoing compliance with the UAE Labour Law and existing contractual obligations.
• Owner/operator model – in the UAE, it is common for employees to be directly employed by the hotel owner while being managed by the hotel operator. Parties to a transaction should be mindful of this arrangement and ensure that employment-related documentation is structured accordingly.