Dubai set to have 12,800 new hotel rooms by 2027

Dubai saw the addition of over 2,700 new hotel rooms in the first half of 2024, with plans to introduce another 10,100 by the end of 2025, according to research by Cavendish Maxwell.

From January 1 to June 30, 12 new hotels opened in Dubai, raising the total number of hospitality establishments to 716, with nearly 149,750 rooms available. An additional 40 hotels are expected to be completed by the end of next year, adding 4,748 more rooms in 2026 and 2027, based on Cavendish Maxwell’s H1 2024 hospitality market performance report.

Among the new hotels, four-star properties showed the most significant growth compared to 2023, with 436 new rooms delivered in the first half of 2024, marking a 216% increase from the same period last year. Five-star hotels also saw a substantial rise, with 1,681 new rooms added, a 111% increase from H1 2023.

Luxury accommodations continue to dominate Dubai's hospitality sector, comprising 67% of the inventory as of June 2024. The upper midscale and midscale segments represented 27% of the total, while the economy category accounted for 5%.

Of the new rooms opened between January and June, over 75% were in the luxury and upper upscale categories, totaling 2,054 rooms. Notable luxury additions this year include The Lana Dubai Dorchester Collection, SIRO One Za’abeel, One & Only Za’abeel, FIVE Lux JBR, and Address Palace Dubai Creek Harbour.

Several other high-end hotels, such as the Ciel Dubai Marina, Viceroy Dubai Business Bay, Port De La Mer Hotel, and the Marbella and Berlin hotels at the Heart of Europe, are set to open later this year.

Hotel occupancy in Dubai remained steady at 78% in the first half of the year, surpassing pre-COVID-19 levels of 2019. The luxury and upper midscale segments experienced the most significant increases, with gains of 2% and 1.6%, respectively.

Elsewhere in the UAE, Abu Dhabi City hotels achieved 83% occupancy, up from 76% in 2023 and exceeding pre-pandemic levels. Occupancy in Abu Dhabi resorts reached 72%, while hotels in Fujairah and Ras Al Khaimah recorded 76% and 72%, respectively.

Dubai’s Average Daily Rates (ADR) in the first half of 2024 averaged AED720, the highest in six years, reflecting a 4.6% rise compared to H1 2023. The upper and upper midscale hotels saw the largest increases in ADR, at 10% and 7%, respectively.

ADR in Abu Dhabi increased by 11%, reaching AED341 for city hotels and AED764 for resorts. Ras Al Khaimah’s ADR climbed nearly 11% to AED591, while Fujairah saw a 3% rise to AED368.

Western Europe was the leading source market for Dubai in H1 2024, contributing 20% of the emirate’s 9.31 million visitors. South Asia followed with 17%, Eastern Europe with 15%, GCC tourists with 14%, and MENA visitors with 12%, according to data from the Department of Economy and Cavendish Maxwell.

Gergely Balint, Associate Partner and hospitality real estate expert at Cavendish Maxwell, highlighted Dubai’s hospitality sector's continued growth, supported by the city’s strong economy, investment in infrastructure, and emphasis on experience-based tourism.

He noted that with around 15,000 new rooms set to be delivered by 2027, Dubai’s hospitality sector remains robust but faces challenges such as rising construction costs and increased competition.

Balint emphasized the need for innovation, sustainability, and unique experiences to maintain Dubai’s momentum as a world-leading tourism destination and help achieve its Dubai Economic Agenda D33 goal of becoming one of the top three global tourism destinations.