How to Setup a Travel based Startup in UAE

by Zaara 08, Nov 2017

Nearly 78 Million people travel using the Dubai International Terminal. UAE received 14.87 Million visitors in 2016, and outbound tourism has grown by 5% over the last year, and more than 3.5 Million people traveled from the Middle East. All these statistics are the indication that Tourism holds the key to the developing interest of the people in Emirates and outside emirate for greater connectivity and transport. So what has changed over the years in tourism? The answer to this question helps us understand the role of new age businesses in this field and the role of startups in Dubai and the UAE, which play an essential role to fulfill the need of the growing population.

Outbound tourism is when local tourist leaves the country for foreign destinations and inbounds is when tourists arrive in UAE for touristic activities. Over the years startup like the Holiday me, Almosafer, Wego and Flyin have tried to capture the domestic market and offer personalization, an innovation of the 21st century.

To have a travel startup, the cheat sheet for an entrepreneur is quite simple. An appropriate tourism license in the first obligation to start a travel based company. The following are the licenses available:

  1. A travel company license
  2. Travel agency license
  3. Inbound travel operator license
  4. Outbound travel operator license

After receiving the specific type of license for the entrepreneurial activity, the requirement for opening a travel startup or agency is quite simple. Apart from experienced professional in travel and tourism for running the operations, a travel license is mandatory. To obtain a travel license following are the prerequisites:

  1. A lease contract and blueprint of the location where the travel agency/ company will operate.
  2. Approval fee for the trade license
  3. Approval for trade name
  4. Insurance policy.

Most travel companies open their shop in Dubai or Abu Dhabi due to the location advantage. However, the cost of operation in these locations is higher than the other emirates. Positioning/ location of the startup/ company also matters to attract customers and increase visibility. It is advisable for the entrepreneur to consider the runway cost before deciding to put the company either in prime locations or other emirates.

Company Structure: The most common structure employed to set up a travel agency in UAE is the limited liability company. The other forms of company structure are incorporated in partnership with a resident (Emirati) or formed in one of the numerous free zones for full ownership.

The local government and support: To create a standard of excellence the government enhances the public processes for citizens through their star rating program which uses private sector standards for the quality of service delivery and private sector approach to identify problems. So newly formed companies come under the purview of government for a routine check and are given a plaque with their classification and evaluation report with recommendations to improve their level of service delivery. Hence it is of utmost importance to know the rules and regulations before starting a service based business.

Marketing, Network and Digital Affect:

Travel Startups and companies work because it serves a need for the consumer. Since the nature of the work is service oriented, to get sales and start the business rolling it is natural to build networks fruitful for the organization. Social Media and website marketing are the most effective ways to get organic traffic and build a potential client base. What pleases the eye also delights the heart, hence an efficient way to reach out is through a medium which regularly used by today’s generation- mobiles, tablets, and laptops. Also, effective partnerships with local companies for corporate and leisure travel helps to establish the company further.

The UAE, and specifically Dubai, positions itself as a luxury travel destination/market through brilliant PR and marketing, therefore one should leverage from the booming tourism industry in Dubai. It is surprising that UAE is price sensitive. It is necessary to understand the market and decide whether the company is looking for low-margin volume or quality traffic with customers that are happy to pay more for service.  This matters explicitly in the case of corporate and leisure travel businesses. However, opening a company in the travel segment is often challenging when it comes to the local due diligence, regulations, paperwork, and location. Whether to start your business in a free zone or a prime location in the heart of Dubai, all these decisions are critical to the survival of the company. Check out our previous blog on Planning to start your travel based business in Dubai.

Our specialists in Commitbiz Business Setup Consultants Dubai provide you this support and fill the gaps for new age businesses and entrepreneurs. To know more about our consulting services, write to us at [email protected]