JEDDAH: The UAE’s hospitality sector is shifting from development-led expansion to a more mature investment phase, with Dubai and Abu Dhabi leading growth, a new analysis showed.
According to Knight Frank’s UAE Hospitality Market Review, hotel performance improved across the board, with revenue per available room and average daily rates both up 11.9 percent year on year through August, while occupancy reached 78.5 percent.
Dubai, the UAE’s largest hospitality market, saw RevPAR rise 10.1 percent, followed by Ras Al-Khaimah at 10 percent, while Abu Dhabi led the sector with RevPAR up 24 percent and ADR increasing 20.2 percent year on year.
This expansion reflects broader regional growth driven by strategic diversification across Gulf Cooperation Council member states, highlighting the bloc’s commitment to strengthening hospitality infrastructure and services.
Faisal Durrani, partner and head of research at Knight Frank, said: “The hospitality sector in the UAE is going from strength to strength, with record tourist arrivals into cities like Dubai being a testament to the emirate’s meteoric rise as one of the world’s most visited cities.”
Dubai welcomed 11.17 million international visitors between January and July, up 5.2 percent from the same period of 2024, resulting in 25.53 million occupied room nights.
He added: “Elsewhere in the sector, the UAE hotel transaction market is entering a new phase of maturity in 2025, particularly in Dubai, where investor focus is shifting from development-led expansion to strategic acquisitions and asset repositioning.”
Durrani emphasized that this evolution reflects a more sophisticated investment landscape, shaped by years of rapid growth and a deepening pool of institutional capital.
Knight Frank’s market review showed that of the UAE’s 213,928 existing hotel rooms, 26 percent are upscale, 22 percent luxury, and 21 percent upper-upscale. Supply is expected to rise to 217,853 rooms by the end of 2025 and 235,674 by 2030, with 43 percent of the new rooms in the luxury segment.
Dubai remains the sector’s powerhouse, supported by its D33 Economic Agenda and 2040 Urban Masterplan, with 165,339 existing and upcoming keys.
Abu Dhabi followed with 37,016 keys, with Sharjah having 14,478 and Ras Al-Khaimah with 11,902 keys. As of August, 55.9 percent of the UAE’s upcoming hotel supply is in Dubai, according to Knight Frank.
Oussama El-Kadiri, the firm’s partner and head of hospitality, tourism, and leisure advisory, noted that the maturing UAE hospitality market is attracting a broader range of investors — from regional family offices to international players — seeking long-term value through operational enhancements, brand partnerships, and mixed-use integrations.
“As the UAE transitions from a development-heavy cycle to a more balanced, investment-led phase, hotel transactions are expected to remain active. The market’s maturity, depth and resilience are positioning it as a leading destination for hospitality capital in the region,” El-Kadiri added.
