The UAE’s hospitality sector is showing signs of maturity, with investor activity now shifting from rapid development to strategic acquisitions and long-term asset planning, according to a new market review by Knight Frank.
The analysis highlights strong year-on-year growth in hotel performance, led by Abu Dhabi and Dubai, as the country continues to benefit from rising visitor numbers and increased global investor interest.
Hotel performance up
Across the UAE, revenue per available room (RevPAR) and average daily rates (ADR) rose by 11.9% in the first eight months of 2025, with hotel occupancy averaging 78.5%.
Abu Dhabi recorded the strongest growth, with RevPAR up 24% and ADR rising 20.2% compared to the same period last year. Dubai followed with a 10.1% increase in RevPAR, while Ras Al-Khaimah posted a 10% rise.
“Record tourist arrivals into cities like Dubai are a testament to the emirate’s meteoric rise as one of the world’s most visited cities,” said Faisal Durrani, partner and head of research at Knight Frank.
Dubai welcomed 11.17 million international visitors between January and July 2025, up 5.2% from the same period in 2024, generating more than 25.5 million occupied room nights.
Shift in investment focus
Knight Frank’s report says the UAE is moving into a new phase of hospitality investment, especially in Dubai, where buyers are now targeting asset repositioning and strategic acquisitions over new developments.
“The UAE hotel transaction market is entering a new phase of maturity in 2025,” said Durrani.
“This evolution reflects a more sophisticated investment landscape, shaped by years of rapid growth and a deepening pool of institutional capital.”
Oussama El-Kadiri, partner and head of hospitality, tourism, and leisure advisory at Knight Frank, said: “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.”
Hotel supply growth
The UAE currently has 213,928 hotel rooms, with 26% in the upscale category, 22% luxury, and 21% upper-upscale. The national supply is expected to reach 217,853 rooms by the end of 2025 and 235,674 by 2030, with 43% of upcoming rooms in the luxury segment.
Dubai leads with 165,339 existing and planned rooms, driven by initiatives such as the D33 Economic Agenda and 2040 Urban Masterplan. It also accounts for nearly 56% of the UAE’s upcoming hotel supply.
Other emirates include Abu Dhabi with 37,016 keys, Sharjah with 14,478, and Ras Al-Khaimah with 11,902.
“As the UAE transitions from a development-heavy cycle to a more balanced, investment-led phase, hotel transactions are expected to remain active,” El-Kadiri added.
“The market’s maturity, depth and resilience are positioning it as a leading destination for hospitality capital in the region.”
tanvir@dubainewsweek.com
