How to set up a travel agency in the UAE
Setting up a travel agency in the UAE can be a viable and profitable business opportunity. The UAE has a large expatriate population, most of whom have a large disposable income, and many residents take advantage of their location to regularly travel to nearby countries in the Middle East, Asia, and Europe.
According to a 2021 report by the UAE's Ministry of Economy, travel and tourism contributed 11.5% of the country's GDP in 2019. The report also revealed that UAE residents took over 19 million trips abroad in 2019, with the top destinations being India, Saudi Arabia, the United Kingdom, the United States, and Egypt.
Moreover, the UAE is also a popular tourist destination itself, with attractions such as the Burj Khalifa, Dubai Mall, and Sheikh Zayed Grand Mosque attracting millions of visitors each year.
When combined with the UAE’s excellent infrastructure for air travel, with two major international airports in Dubai and Abu Dhabi, as well as several smaller airports throughout the country, it’s easy to see the potential a travel agency business in the UAE has.
What licences are required to set up a UAE travel agency?
The licences that are required for a travel agency depend on the types of services you intend to offer. The following are some of the ones that you may need:
- Trade licence for UAE Travel Agency: The Dubai Department of Economic Development (DED) licence is the primary licence that allows you to operate a business in Dubai. You can obtain a trade licence from the DED or the relevant free zone authority.
- UAE Tourism licence: This licence is issued by the Department of Tourism and Commerce Marketing (DTCM) or the relevant free zone authority. It allows you to offer travel-related services such as booking flights, hotels, tours, and holiday packages.
- Air Travel Agent (ATA) licence in UAE: This licence is issued by the General Civil Aviation Authority (GCAA) and allows you to sell air tickets and operate as a travel agent for airlines.
- UAE Commercial licence: This licence is required if you plan to sell travel-related products such as travel insurance, car rentals, or other related products.
What is the process to set up a travel agency in the UAE?
The following are some of the main steps and considerations when forming a company in Dubai and setting up a travel agency in the UAE:
1. Choose a UAE company legal structure and jurisdiction:
Choosing the right legal structure for a UAE travel agency can depend on various factors, such as the size and nature of the business, liability protection, tax considerations, and ownership structure. Some of the most common legal structures for travel agencies in the UAE are:
Limited Liability Company (LLC): LLC company setup in Dubai is the most popular way of establishing a company in Dubai. This structure offers limited liability protection for the owners, as well as flexibility in terms of ownership structure and management. LLCs are regulated by the DED in the respective emirate where the business is established.
Sole Establishment: This structure is suitable for a small travel agency owned by an individual. It is a simple and cost-effective way to start a business, but the owner is personally liable for the company's debts and obligations. Sole establishments are also regulated by the DED in the respective emirate.
UAE Free Zone Company: Free zones offer a range of benefits such as 100% foreign ownership, tax exemptions, and simplified procedures for company formation. Travel agencies operating in free zones are subject to specific regulations and requirements from the respective free zone authority.
Branch of a Foreign Company: If the travel agency is part of an international business, it can establish a branch office in the UAE. A branch office, however, is considered a legal extension of the foreign parent company which means that it can only engage in activities that match those on the parent company’s licence.
2. Determine the travel agency activities and services you want to offer:
Decide on the type of travel services you want to offer, such as air ticketing, hotel bookings, holiday packages, visa services, etc. Also, will you be catering to the domestic market, the international market, or both? And will you be offering travel services to tourists, business travellers, local residents or a combination of all three?
The Department of Tourism and Commerce Marketing (DTCM) is the governing body for travel and tourism-based activities in Dubai and recognises four main activities. These are:
Appointed General Agent for Airline/Airlines: This is a person who is appointed as a commercial agent for one or more airlines, is licensed by law, sells air tickets for destinations outside of the UAE, and organises outbound tourism programmes offered by these airlines or his own tourism programmes.
Travel and tourism Agent: A Person who sells air tickets for destinations outside of the UAE and provides related services such as processing of residency and visa applications, organising tours and providing transportation, and selling tourism programmes organised by outbound tour operators.
Outbound Tour Operator: A Person who organises tourism programmes outside of the UAE and sells such programmes through travel and tourism agents.
Inbound Tour Operator: A Person who organises and conducts domestic tours; and makes arrangements for inbound tourism, including incentives, conferences, exhibitions, and local events
tourism. Such arrangements include processing visa applications and providing transportation, hotel accommodation, and similar services.
3. Choose a trade name for the UAE Travel Agency:
The trade name that you choose for your travel agency should comply with the UAE's naming conventions and nor be offensive or contain any religious or political connotations. It should also be relevant to the products or services offered by your company which will help with branding and marketing efforts. It’s also important to ensure that your intended trade name is not currently in use by another company. You can check the UAE trade register to determine availability.
4. Obtain necessary licences for a Travel Agency in the UAE:
The main licence required to carry out commercial activities in Dubai is issued by the DED or the relevant free zone authority for free zone registered entities. In order to obtain the trade licence, you’ll need a Memorandum of Association (MOA), a certificate of incorporation and copies of passports and Emirates IDs for all shareholders.
As well as this, you’ll be required to obtain a tourism licence from the DTCM which is the authority responsible for regulating tourism-based activities.
The process for obtaining the tourism licence is now easier than ever, thanks to regulatory changes made by the DTCM authority in 2018. They have removed the previous requirement for a bank guarantee of between AED100,000 and AED200,000 and also eliminated the requirement to lease an office space of at least 300 square foot and to provide educational certificates.
5. Secure office space for the UAE Travel Agency:
Choosing appropriate business premises is an important decision that can impact the success of your company. You should choose an office space that meets the requirements of your chosen legal structure and licence type and then look for a central location that is easily accessible to your target customers and close to major transportation links. You should also look at competition in the area and consider whether there is enough demand to support another provider of similar services to your own.
6. Register with the relevant UAE authorities:
As well as registration with Dubai Tourism, the government authority responsible for regulating the tourism industry in Dubai, you may also have to register your agency with the General Authority of Civil Aviation (GCAA) if you intend to sell airline tickets.
Other key considerations for setting up a Travel Agency in the UAE:
What insurance do I need when setting up a UAE travel agency?
In Dubai, travel agencies are required to have certain types of insurance in order to operate legally. The specific types of insurance required may vary depending on the type of travel agency and the services offered. The following are some that you may need to consider:
1. Professional indemnity insurance: This type of insurance is designed to protect the travel agency against claims of negligence, errors or omissions, and professional misconduct. It provides financial protection for the travel agency in the event that a client suffers a loss as a result of the travel agency's actions or advice.
2. Public liability insurance: This type of insurance provides coverage for the travel agency in case a third party, such as a customer or visitor, suffers an injury or damage to their property while on the travel agency's premises or as a result of the travel agency's services.
3. Employer's liability insurance: If a travel agency has employees, it is required by law to have employer's liability insurance. This type of insurance provides financial protection to the travel agency in case an employee suffers an injury or illness while on the job.
4. Cyber liability insurance: This type of insurance protects the travel agency against losses arising from cyber-attacks, data breaches, or other cyber-related incidents. It can cover costs such as data recovery, loss of income, and legal expenses.
5. UAE Travel insurance: If the travel agency offers travel insurance to its customers, it may also be required to have its own travel insurance policy to protect itself against claims related to travel disruptions, cancellations, or other issues.
Supplier relationships for UAE travel agencies
Supplier relationships are crucial for a travel agency as they can directly impact the agency's ability to provide quality services to its clients. A good supplier relationship can provide a travel agency with access to exclusive deals and discounts on travel-related products and services such as flights, hotels, tours, and activities. This can help the agency offer competitive prices to its clients and increase its sales. It can also help with quickly resolving customer issues and maintaining a good reputation. For example, if a flight is delayed or cancelled, the travel agency can rely on its relationship with the airline to provide alternative arrangements for its clients.
Setting up any business in Dubai requires a combination of business acumen, industry knowledge, and customer service skills. In addition to this, for a travel agency there are multiple licences and approvals that must be obtained before the business can begin operating legally.
How can PRO Partner Group help?
PRO Partner Group has in-depth knowledge of the UAE market and close connections with government departments and freezone authorities. We can streamline the company incorporation process, managing all aspects from licensing to visa, labour and immigration approvals.
If you need assistance with setting up a travel agency in Dubai or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at email@example.com or complete the contact form below and we will be delighted to assist you.