Dubai's new Dh1 billion ($272 million) support package is offering a lifeline for small businesses struggling with a liquidity crunch and will help free up cash for them to continue operations despite the war, owners have said.
The package, effective from April 1, will help critical sectors including tourism and hospitality.
“The three-month deferral of hotel sales fees and the Tourism Dirham fee represent a meaningful and welcome reduction of immediate cash flow pressure,” Julien Bergue, co-founder and managing partner for Middle East, Africa & Asia at Valor Hospitality Partners, told The National.
The company, which manages a portfolio of hotel assets across the emirate, will benefit “directly from these measures, as will the thousands of hospitality professionals employed across our properties”, Mr Bergue said.
The package, announced by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Deputy Prime Minister and Minister of Defence, will serve as a stimulus for the business sector over the next three to six months, Dubai Media office said on Monday.
It includes deferral of payment of a group of government fees to alleviate the financial burden on companies and free up much-needed cash.
The incentives include the deferral of the Tourism Dirham fee, a government levied charge on guests staying in hotels in Dubai, as well as an extension of grace periods for customs data from 30 to 90 days – extendable for similar periods.
Support measures also include the provision of competitive advantages to streamline procedures for issuing and renewing residencies, helping talented people, the media office said.
Vulnerable sectors
Sectors including tourism, hospitality and aviation have experienced a slowdown since the Iran war broke out on February 28. The UAE closed its airspace for a few days following attacks by the US and Israel on Iran. Tehran responded by launching attacks on its Arab neighbours that forced UAE airlines to suspend operations temporarily, as a safety measure.
Mr Bergue, however, said more needs to be done to support the hospitality sector as it is “witnessing an acute workforce emergency”.
“Thousands of skilled hotel professionals, many of whom have built their careers and their lives here, are now facing redundancy, salary cuts, or unpaid leave,” he said.
Staff at risk include cooks, front desk teams, engineers, housekeepers, and managers who have dedicated years of service to building Dubai’s reputation as the world’s finest hospitality destination, he added.
Their loss is not merely a short-term human cost, it is a strategic risk to the speed and quality of Dubai’s recovery, he said.
“When demand returns – and it will – the city must have its people in place to deliver the five-star experience that has made it globally iconic.”
By deferring hotel sales fees and the Tourism Dirham, the authorities are providing “much-needed fiscal support to the hospitality sector", said Raki Phillips, regional president of Accor's premium, midscale and economy division in the Middle East, Africa and Turkey.
“This proactive stance by the government is a powerful signal to owners and international partners," he added. "It proves that Dubai doesn’t just grow during the good times, it has the strong mechanisms to safeguard its ecosystem during uncertainty."
Previous stimulus package
During the coronavirus pandemic, Dubai also announced a Dh7.1 billion stimulus package to support emirate's businesses.
Incentives for businesses were announced in phases between 2020 and 2021. They included exemptions from some fees and a reduction in rents for some sectors, refunds of customs fees and extending the renewal of commercial licences.
The Covid-19 stimulus was divided into five packages of Dh1.5 billion, Dh3.3 billion, Dh1.5 billion, Dh500 million and Dh315 million announced between March 2020 and January 2021.
Ruth Bradley, owner of Ruth Bradley Consulting, said the new package is a “step in the right direction to businesses getting the support they need to survive”.
“Our DET [Department of Economy and Tourism] trade licence and our rent are due for renewal and with this comes a whole wealth of issues related to our banking, visas, telecoms,” she said.
“So this was honestly music to my ears that we can possibly defer these fees, and I hope it will cover the trade licence, Ejari and all of these elements related to our business continuity.”
Proactive approach
Ashish Panjabi, chief operating officer of Jacky's Group, also welcomed the initiative.
“It's good to see the government never slowing down in terms of supporting the private sector wherever they can,” Mr Panjabi said. “Cash flow management is critical at this stage and whatever support the government can give is always welcome.”
Other businesses such as Market Buzz International, which specialises in providing communication and digital marketing content for SMEs in the Middle East, also supported the new move.
“As a small business that has been operating in the UAE for 25 years with a very lean, remote team, the biggest pressures we are seeing right now are cash flow, delayed payments, client uncertainty and the overall rising cost of doing business,” said Mita Srinivasan, founder of Market Buzz International.
“So measures like fee deferrals, extended customs grace periods and smoother residency processes do make a difference because they help with short-term cash flow and reduce administrative pressure.”
Jen Blandos, founder and chief executive of entrepreneurs' group Female Fusion, said the support package was a strong and timely move. But she suggested other moves to help businesses continue to grow, including removing the office space requirement, which she said was among the “most outdated and quietly damaging barriers for SMEs in the UAE”.
“In a world where remote and hybrid work is the norm, this requirement costs entrepreneurs money they simply cannot afford right now," Ms Blandos said. "Removing or relaxing it would be an immediate, practical relief with zero cost to the government.”
Amending the payment cycle from government entities would also boost smaller businesses, she said. “The standard 60 to 90-day payment cycle that small businesses experience when working with government entities is ... devastating for cash flow. Moving to 14 or 30 days would be a lifeline for hundreds of businesses immediately,” she added.
Continued growth
The new measures come as Dubai's economy continues to grow amid diversification strategies. In 2025, the emirate's gross domestic product rose by 5.4 per cent to exceed Dh937 million, according to a Dubai Media office statement on Monday.
Tourism arrivals also continued to increase, supporting Dubai's economy.
The emirate attracted 19.59 million international overnight visitors last year, a 5 per cent annual increase, with hotel room inventory and occupancy also on the rise.
The city welcomed more than two million visitors in December, the first time it has reached that figure in one calendar month, data published by the DET showed in February.
Dubai's property sector has also been growing to support the economy.
The Dubai Economic Agenda D33, launched in January 2023, aims to double the size of the emirate's economy to Dh32 trillion by 2033.
Meanwhile, Abu Dhabi Islamic Bank launched an initiative, Sanadna, to support the nation’s front-line personnel in the UAE Armed Forces, the defence and interior ministries, police, civil defence and emergency medical services with financial relief measures and banking benefits.
In parallel, the bank extended Sanadna to support small and medium‑sized enterprises that play a critical role in powering the national economy.
The initiative provides SMEs with practical solutions designed to enhance business continuity and flexibility during challenging periods. These include instalment deferral options of 30 to 60 days on request from April to June 2026 and takaful protection to help safeguard businesses against unforeseen events, according to a statement from the bank on Tuesday.
