The Rising Tide of Hospitality and Tourism in the UAE
When we step back and view the hospitality and tourism sector in the UAE, what we see is something far more than hotels simply being built. We see a strategic engine of economic growth. According to the Ministry of Economy & Tourism (UAE) (MOET), in 2022 the travel and tourism sector contributed roughly AED 167 billion to the national GDP – which equated to approximately 9 % of the total economy that year. Ministry of Education+1
In 2023 this contribution rose to about AED 220 billion, roughly 11–12% of GDP. In 2024 the figure climbed again to AED 257.3 billion, representing about 13% of GDP. Arabian Business
What these numbers underline is that tourism and hospitality have become core industries in the UAE economy—not simply ancillary. At the same time, the country has ambitious targets: under the UAE Tourism Strategy 2031 the aim is to reach AED 450 billion in tourism contribution and to welcome 40 million hotel guests by 2031.
And when we turn to the hotel-rooms side of the equation: in 2022 there were about 203,000 hotel rooms across roughly 1,189 hotels in the UAE.
So here’s the message for all stakeholders—from owners to operators, from consultants to guests: the UAE isn’t just adding hotels. It is scaling up an entire hospitality ecosystem, and that means every hotel project carries regulatory, commercial, operational and community dimensions.
Why Hotel Classification Matters – The Dubai Example
Let’s bring the concept of hotel classification into sharper focus through what happens in the emirate of Dubai. Why does classification matter? Because it is the regulatory gateway: it determines how a property is viewed by the authority, how it is marketed to guests, what brand it can carry, what operational standards it must uphold—and it has real commercial implications for owners and operators.
1. The Classification Pathway
Imagine an owner, who owns land in Dubai and wishes to build a five-star hotel. The journey begins with setting up a development company (on the Dubai mainland) through which the project will be executed. From a legal standpoint you would advise this owner to conduct full KYC, ensure the land is correctly owned, company structures are compliant, trade licence is in place, and annual fees (such as those via the Dubai Land Department for “Tarakheesi” system) are understood and paid.
Once the company is in place, construction commences under a Technical Service Agreement (TSA) if an operator is involved—ensuring the design, build and operation will ultimately meet the classification standard set by the Dubai Department of Economy & Tourism (DET). The building must be constructed, approved by the Dubai Civil Defence (for fire‐safety etc), and a Building Completion Certificate (BCC) obtained. Only then can you move to the next tier of steps.
Following BCC you apply for initial approval and trade name reservation at DET. If the property carries a branded operator’s name then the operator must provide its NOC for trade‐name use. With initial approval and trade name formally reserved (valid for six months) you then register on DET’s classification portal, complete the hotel classification application—uploading title deed, POA (if relevant), trade name reservation, initial approval, building details (rooms, suites, F&B outlets, meeting space), as well as a NOC from the Security and Interiors Regulation Authority (SIRA) confirming the surveillance/security system.
After the classification certificate is issued, the owner must contract a waste-management company (accredited by the Dubai Municipality) submit the waste‐management NOC via the Municipality portal, and then finalise the trade licence via DET (classification certificate + NOC + fees paid) before the hotel can welcome its first guest.
2. Sustainability is now built-in
In recent years, classification is no longer only about “stars” and rooms; it is about how the hotel operates in the wider context of sustainability, community and resource efficiency. DET’s “Hotel Classification System – Sustainability Requirements” (2025 version) lays out 27 requirements across four main themes: sustainability management; socioeconomic impacts; cultural impacts; environmental impacts (covering energy & water conservation, waste & emissions reduction, sustainable procurement, guest & staff engagement, biodiversity, digital accessibility).
Moreover, the initiative called the Dubai Sustainable Tourism Stamp honours hotels that attain high adherence to sustainability criteria. At the time of writing about 70 hotels in Dubai have been awarded this stamp. Meetings International
What this means in practice is: Owners and operators need to budget not only for the building and the brand—but for ongoing operational compliance. Did you plan for a sustainability committee, monitoring systems for emissions, regular staff training on sustainability, waste-segregation systems, cultural heritage preservation, accessibility for disabled guests? If not, someone will have to catch up—and catch‐ups are costly.
The Legal-Commercial Lens: Why It Matters for You
From your vantage point—as legal counsel specialising in hospitality law—this whole ecosystem matters deeply. Here’s why:
• Every hotel project is a commercial partnership: owner, developer, operator (or franchise brand) all signed up in something like a “marriage”. The TSA, the franchise/management agreement, the sub-contracts—all must reflect the classification obligations, sustainability obligations, and trade-licence path. If the operator hands over rooms that don’t meet classification specs (say fewer suites, or fewer meeting rooms, or F&B outlets) the owner may have a claim—but only if the contract allocated that risk properly.
• The cost base of a hotel is heavy and rising. Wages, water, electricity, maintenance, sustainability systems, retrofits: hotels are cost-intensive. When you model the investment for your client, you must make them aware—this is not like a simple residential rental investment. The fiscal modelling must include classification compliance and periodic upgrades.
• Company structures matter. The development company you help set up becomes the vehicle: it may own the land, may enter into construction contracts, may engage with the operator. Ensuring the correct legal entity, shareholder agreements, investor protection, assignment rights, exit strategy—all these need to be drafted with the classification/licence/regulatory timeline in mind.
• CSR, employee welfare and training, health & safety are no longer optional add-ons. The classification and sustainability frameworks implicitly require hotels to engage with local community, demonstrate staff training, accessible facilities, waste management, cultural protection. These are commercial reputation and regulatory risk factors.
• Finally, timelines and regulatory delays matter. The classification process is not plug-and‐play. The DET portal, initial approvals, trade name reservation, SIRA NOC, Municipality waste NOC, classification inspection, final trade-licence: each step may contain delays. As you counsel owners/operators, you must emphasise the sequencing, the risk of delay, the cost of idle inventory and financing charges.
Why the Audience Should Care
If you are reading this as an investor, a hotel operator, a brand looking to expand, or simply a stakeholder in the hospitality ecosystem in the UAE—here is what you need to know:
• The UAE is making hospitality and tourism a cornerstone of its economy: growth targets are aggressive; the infrastructure, from airports to hotels, is being scaled; regulatory frameworks are tightening.
• If you want to launch a hotel in Dubai, classification is not a side issue—it is front and centre. It determines your star-rating, your trade-licence, your ability to open, your marketing narrative, your brand alignment.
• You must build your project with the end-state in mind. The hotel is not just four walls and rooms: it needs the correct number of suites/outlets/meeting space, the correct design spec, the correct sustainability systems, the correct operational agreements.
• You must structure your legal agreements (TSA, franchise, management) so that responsibilities are clearly allocated: Who meets classification specs? Who funds retrofits when classification standards evolve? Who ensures sustainability monitoring? What happens if classification is delayed or downgraded?
• You must allow for and expect higher operational cost, compliance cost and sustainability cost. The economics of hospitality in the UAE today demand this.
• And finally: you must think long-term. Classification is not a one-time event; sustainability requirements are evolving, guest expectations rising, regulatory frameworks tightening. Your hotel must remain compliant, competitive and compliant.
Concluding Thought
In essence: the UAE’s hospitality industry is not just booming—it is being re-engineered. From adding rooms to upgrading operations, from attracting guests to committing to sustainability, from licensing to classification—it is all interconnected.
For you, as an advisor, as a partner in this journey, your role is to guide the owner and the operator through the whole lifecycle: corporate structuring, negotiations, regulatory compliance, classification, sustainability, operations, exit strategy.
And for the audience, the message is: if you want to be part of this wave, you must treat classification and compliance not as a regulatory hurdle—but as a strategic imperative. Because in this economy, every hotel room, every guest night, every waste-management plan matters. And when all pieces align, you don’t just build a hotel—you build a value-asset that contributes to the economy, to society, to the local community—and to the long-term success of the UAE’s hospitality vision.
