How to open a travel agency on the UAE mainland in six easy steps

27 June 2019 Category :

With tourist numbers on course to hit the government’s Tourism Vision 2020 target of 20 million visitors to Dubai alone, it’s an ideal time to start a travel business in the United Arab Emirates (UAE). Official statistics predict tourism will be worth AED 116bn by 2027 – that’s 5.4% of UAE GDP –directly or indirectly supporting over 750,000 jobs.

The sector is tightly regulated, so if you’re confused about how to open a travel agency business whilst complying with the rules, specialist advice can save you costly headaches down the line.

Let’s examine those crucial steps in the right sequence.

1. Establish your business activity: You’ll have to decide exactly what sort of travel company you want to operate; will you specialise as a travel agency business, an inbound tour operator or an outbound operator? There’s a wealth of activity to choose from across all the different markets you could serve.

Why it pays to use a company formation expert

That decision will dictate which of three separate additional licences you’ll need to apply for later on, if not all three.

Company formation experts can advise what’s best according to your business plan, thereby avoiding the costly mistake of getting those decisions wrong and having to repeat the entire process, or re-write your business plan.

2. Choose a company name: Don’t get too attached to any names before you’re familiar with the rules; words such as ‘global’, ‘international’, ‘East’ or ‘West’ are acceptable but can incur extra fees, and several restrictions apply.

For example, offensive words are understandably proscribed, as is God’s name, either in English or Arabic.

Why it pays to use a company formation expert

The Department for Economic Development (DED), the issuing authority in Dubai, will not issue a trade licence if your company name is remotely similar to another organisation operating in the same sector, so it’s crucial to seek advice on what’s acceptable.

The consequences of undertaking this alone can be time-consuming; the DED won’t grant a business licence if your company name falls foul of the rules, and you can be fined for misusing a name that DED has allowed but subsequently fails to reflect your primary activity.

3. Apply for a business licence: In Dubai, trade or business licences (commercial, professional, industrial and tourism) are issued by the DED. All companies, regardless of sector, must at the very least have a trade licence. The application usually requires your memorandum of association, depending on the legal form of your business, certificate of incorporation and shareholder passport copies.

Certain sectors demand additional licences from relevant issuing authorities, and in the case of tourism, it’s the Department of Tourism and Commerce Marketing (DTCM).

Why it pays to use a company formation expert

With outside help to get it right first time, you can usually complete the process within seven working days, and set-up specialists can keep on top of annual renewals for you – missing them risks fines, backlisting or even involuntary liquidation.

4. Apply for your tourism licence: Your next step is to apply to the DTCM for one of those three additional licences: outbound operator, inbound operator or travel agent.

You’ll need an outline of your business plan, a clean criminal record certificate and, if starting a travel agency in Dubai, a ‘No Objection Certificate’ (NOC) from the Civil Aviation Authority if you plan to sell airline tickets. This must be renewed annually 30 days before expiry.

Why it pays to use a company formation expert

Good set-up specialists will know the intricacies of the UAE’s constantly evolving regulatory system and how to keep on top of them

For example, contrary to much of the advice currently available, tourism licences are now more affordable.

In January the DTCM withdrew the bank guarantee requirement for outbound operators (AED 200,000) and inbound operators and travel agents (AED 100,000).

This means that, if you’re starting a travel business in UAE, you can apply for all three tourism licences for significantly less than it used to cost – good news if you want to set up a one-stop shop.

5. Set up employee visas: Be sure to apply within 30 days of an employee’s entry into the country, at which point they will have received a tourist or visit visa.

Simply register on the Ministry of Interior’s eChannels portal for staff entry permits (another name for a provisional 60-day employment visa). Once issued, employees can perform an ‘in-country status change’ to activate that entry permit, a crucial step to obtaining a full employment visa.

You’ll need your trade licence, passport copies and establishment card – a service that files your company with the General Directorate of Residency and Foreigners Affairs (GDRFA). Remember, it’s also your responsibility to obtain ‘OK to Board’ approval prior to inbound travel for employees from the South Asia Subcontinent.

Why it pays to use a company formation expert

Overlooking important details can lead to headaches down the line if you try and do it alone.

The eChannels portal now makes applying much easier, but you still need to ensure employees’ passports are valid for at least six months at the time of entry and that, ideally, they don’t leave the UAE until entry permits are issued.

6. Open a corporate bank account: No bank will recognise your business without a trade licence, but select your bank wisely; a poor choice may come back to bite you.

Most will require a continuous minimum balance, ranging from AED 1m right down to AED 5,000. In addition, some need proof of residency status for at least one shareholder whilst others don’t.

Why it pays to use a company formation expert

Set-up specialists can save you time making sure you have all the right paperwork. Some banks may require business plans and reference letters from business partners, but most will ask for your trade licence, a board of directors’ resolution and a copy of the company’s memorandum and articles of association.

If you don’t have all the relevant documents specific to your chosen bank first time around, you’re likely to experience costly delays.

Smooth processes save time and money

Six important steps can set you on course to establishing a successful travel business, but they contain substantial paperwork and plenty of hidden traps.

Can you afford to get it wrong?

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here.

About the author: Paul Bryson, Director of Domestic Structuring at Virtuzone.

About the author: Paul Bryson, Director of Domestic Structuring at Virtuzone.

Paul Bryson is the Director of Domestic Structuring at Virtuzone, based in Dubai, UAE. He is also a member of the Board of Directors for the British Business Group, Dubai and Northern Emirates. A knowledgeable and active member of the business community in the UAE, Paul advises large multi-nationals and small startup businesses on how to best establish commercial presence in Dubai and across the rest of the UAE and Gulf region. Before embarking on his career in the Emirates, Paul graduated from the University of the West of Scotland with a Diploma in International Business.