How to Start a Hospitality Services Business in Dubai

How to Start a Hospitality Services Business in Dubai

Hospitality services is a name that describes a format rather than a trade, which is why two companies holding it can be doing completely unrelated things. The reading that makes it a business rather than a label is this: the company supplies the operation, and somebody else owns the room. A hotel owner who does not want to run his own restaurant, a developer with a clubhouse nobody is using, a corporate campus with a dining floor, a venue with a licensed kitchen standing idle four nights a week, a wedding in a ballroom — in each case there is a space, a licence attached to that space, and an owner who wants service to happen inside it without becoming an operator himself.

That is a genuine business with a clear product: trained people, a service standard, a rota, a supply chain and somebody accountable at the end of the night. It is also a business whose licensing position is decided by one question that has nothing to do with how good the service is, and getting it wrong is the expensive mistake in this line. The question is whose name is on the food licence for the premises the food leaves from.

What this line covers is running hospitality for somebody who owns the venue

The activity covers providing hospitality operations, staffing and service to third parties: managing a food and beverage outlet on behalf of its owner, supplying service brigades and front-of-house teams to venues and events, running banqueting and event service in premises the client holds, providing a hospitality management function to an owner who holds the asset, and training and supervising service staff to a standard the client has specified.

It does not cover opening your own restaurant, which is CZ 344 and carries its own premises and its own food approvals. It does not cover a counter-service outlet of your own, which is CZ 220. And the honest caveat belongs here rather than at the end: this is a broad name, what a licensing authority will accept under it differs between emirates and jurisdictions, and the service list has to be written down and put to the authority rather than inferred from two words. The sequence below is what settles it.

The closing line is the point. A contract can allocate responsibility between two commercial parties, and it cannot move a regulatory obligation off the premises it attaches to. The licence holder for a kitchen answers for what comes out of that kitchen whoever is standing in it, which means an operator supplying a brigade into somebody else's outlet is being trusted with another company's licence — and that is the thing the client is really buying, far more than the service standard.

One variation catches people, and it is the row above the closing line. An arrangement where the operator also buys the food, takes the revenue and pays the owner a share starts to look less like a service and more like running the outlet. That is a question of substance rather than of what the agreement is called, and in several emirates it changes the activity required. It is worth settling before the first event rather than at the first inspection.

The buyer owns a room and does not want to run it

Four buyers recur, and the sales cycle is completely different for each.

The asset owner with an under-performing outlet. A hotel, a club or a developer with a space that loses money or stands empty. The sale is long, it is made to an asset manager rather than a chef, and it is won on a credible operating plan and on references the buyer can telephone. These are the contracts worth having: a term, a fee, and a venue that pays for its own staff.

The venue with peaks it cannot staff. A ballroom with four hundred covers twice a month, a stadium, a conference centre. It needs brigades on named dates, pays per event, and buys on reliability above everything — an operator who is short three waiters at seven o'clock does not get called again, whatever the price was.

The corporate client feeding its own people. A campus, a labour facility, an office building. The buyer is procurement, the contract is tendered, the margin is thin and predictable, and the relationship outlasts everybody who signed it.

The private host. Weddings and large private events. Highest value per occasion, bought on reputation and word of mouth, and almost impossible to forecast.

The route to all four is the same and it is slow: a reference somebody will actually pick up the telephone about. This trade has no advertising route worth the money, because no client hands over the keys to a licensed kitchen on the strength of a brochure.

The conditions here attach to the food and to the people, and both outlast the contract

Nothing in this line is unregulated simply because the premises belong to somebody else. Food safety follows the food: handlers need training and health cards wherever they are working, temperature and hygiene discipline is a continuing obligation on the operation rather than an occasional inspection, and the municipality's food control is the authority behind all of it in Dubai. An operator whose staff fail an inspection in a client's outlet has damaged the client's licence, not its own, which is why the better firms train above the minimum and keep their own records in parallel.

The people are the second standing condition and the larger part of the business. Service staff, including those supplied for a single evening, are employees with work permits, contracts and wage obligations behind them, and an operator staffing peaks on an informal basis is carrying an exposure that has nothing to do with hospitality. Where staff are hired through a supplier, the supplier's compliance becomes the operator's problem in practice if not in law. Accommodation and transport for a brigade working late are real costs that are routinely left out of a first bid and are the usual reason a tendered contract turns out to be unprofitable.

Two further matters are settled for the specific arrangement rather than assumed. How value added tax applies differs between a management fee, a staffing charge and a share of food revenue, and so does how the income is treated for corporate tax — the same commercial deal can be structured three ways with three answers. And whether a mainland or free zone licence is the right form depends on where the client venues are, since an operation supplied into premises across the city is mainland work. ConsultZone confirms the service list, the licence form and the emirate against the actual contracts in prospect before the licence is applied for.

References

1. Dubai Municipality — food control, food handler training and health cards, and the hygiene obligations attaching to a kitchen and to the people working in it. Dubai Municipality
2. Ministry of Human Resources and Emiratisation — work permits, labour contracts and wage obligations for service staff, including staff supplied for single events. Ministry of Human Resources and Emiratisation
3. Federal Tax Authority — how value added tax applies to a management fee, a staffing charge and a share of food revenue, and corporate tax enrolment and filing. Federal Tax Authority