Gloomy 1H for hospitality sector as summer slowdown meets regional turmoil

The hospitality sector’s woes continued in 1H as a regional conflict-induced dip in tourism inflows collided with the usual summer slowdown, leading hotel revenue per room (RevPar) to dip 31.8% YTD across the UAE in 1H, according to JLL’s UAE hospitality market dynamics 2Q report. Occupancy levels came in at 57.9% emirate-wide, down 22.2% YTD.

ICYMI- The GCC could lose as much as USD 32 bn in tourism revenues due to the war, Secretary General Jasem Albudaiwi previously said. Analysts had also not predicted a full recovery in tourism flows until 2029, and inbound arrivals could be down as much as 27% y-o-y for 2026.

Ras Al Khaimah (RAK) took a harder hit than others, with RevPar plummeting 49.9% m-o-m in June. The downturn is sobering for an emirate harboring ambitions of real estate and tourism driving growth, with the pre-war forecast bolstered by megaprojects like the USD 5.8 bn Wynn Resorts. Still, the average daily rate was up YTD in RAK at 5.2%, making it the only emirate to record growth and signaling robust fundamentals for its tourism sector.

Dubai also saw a significant dip, with RevPar down 38.7% m-o-m and 35.2% YTD, while state-linked demand and steadier domestic inflows helped Abu Dhabi record a more muted 20.3% YTD decline.

Authority intervention offered some relief, with support packages from Dubai and Ajman, as well as wider fee deferrals, helping to ease liquidity pressures. Hospitality players were also doing their best to keep luring in customers during the period through reductions on room rates and package offers. Firms also turned to restoration and upgrades, as we previously reported, to take advantage of the lull and tax rebates to do so.

Projects initially slated for rollout by year-end are likely to be delayed until 2027 on the back of a more cautious development approach due to current conditions. 2Q saw no new hotel deliveries in Dubai or Abu Dhabi, as developer timelines were stretched. That’s something we’ve already seen with the Wynn Al Marjan Island resort, the opening date for which was pushed back from early 2027 to September 2027.

The outlook: Hospitality players are looking more toward domestic demand to offset the downturn in international inflows. Stock remained steady, with Dubai set to add 4.9k keys by the end of the year and Abu Dhabi expected to add 120. However, stretched timelines are more a question of execution feasibility right now than of weakening confidence in the sector.