Abu Dhabi's hospitality sector recorded the highest occupancy rates in the UAE in the first half of this year, as hotel operators boosted domestic guest numbers during the fallout from the Iran war.
Occupancy in the UAE capital was estimated at 66.8 per cent in the first six months, remaining steady at 65.2 per cent in June, consultancy JLL said in a report on Tuesday.
The average daily rate in Abu Dhabi was Dh668.30 ($182) in the first half and Dh486.80 in June, marginally down 4.3 per cent and 2.1 per cent, respectively, year-on-year, the firm said.
Revenue per available room – a key gauge of performance for the hotel industry – fell more than 20 per cent to Dh446.60 in the first half. For June, RevPAR was down 12.1 per cent to Dh317.60.
“Abu Dhabi demonstrated relative market resilience in June … supported by steadier domestic and government-linked demand,” the report said.
Dubai hospitality sector recorded occupancy rates of 56.4 per cent and 51.6 per cent in the first half and June, respectively. ADRs were at Dh701.10 and Dh375.60, down 7 per cent and 17.1 per cent, respectively.
RevPAR in the emirate declined more than 35 per cent to Dh395.70 in the first half and nearly 39 per cent to Dh193.90 in June, as long-haul international demand remained subdued, JLL said.
Ras Al Khaimah, meanwhile, had occupancy of 49.6 per cent in the first half, with ADR rising 5.2 per cent to Dh705.60. For June, occupancy declined 33.6 per cent, with ADR down 11.6 per cent to Dh511.60. RevPAR slid by 28.6 per cent to Dh347.70 and by 50 per cent to Dh172.10, respectively.
In the UAE overall, occupancy was at 58 per cent in the first half and nearly 53 per cent in June, with ADRs at Dh680.60 and Dh396.90, respectively. RevPAR for both periods was down by about a third to Dh394.20 and Dh209.40, respectively.
JLL attributed the performance to the sustained impact of the regional conflict, coupled with traditionally quieter summer months. Operators have responded with a domestic demand-focused strategy, introducing discounts, bundles and staycations to help offset the pullback in international arrivals, it said.
“The pace and shape of recovery will likely remain closely tied to how quickly conditions stabilise and traveller confidence rebuilds, suggesting that performance could remain volatile in the near term, even as the sector's underlying fundamentals remain intact,” JLL said.
Government initiatives – such as Dubai’s Dh2.5 billion relief package launched in May to help businesses – have “successfully cushioned the industry from immediate market headwinds”, analysts at JLL said.
Those measures covered exemptions for the Tourism Dirham, and hotel and restaurant fees, “significantly easing cost pressures across hospitality and allied tourism businesses, and preserving liquidity ahead of the market’s recovery”, they added.
The Iran war has tipped the region into one of its worst geopolitical crises in decades, and sectors such as hospitality, aviation and tourism have been among the hardest hit.
The UAE was able to fare better and recover faster due to government programmes designed to support businesses and the economy.
JLL acknowledged that no major hotel projects were completed in either Abu Dhabi or Dubai during the second quarter, noting operators assessed regional conditions and adjusted delivery timelines accordingly.
Casino giant Wynn, meanwhile, set a September 2027 opening date for its mega resort in Ras Al Khaimah, following construction delays linked in part to the Iran war.“
Current market dynamics have prompted a more measured approach to development activity, with hospitality operators adjusting project timelines in response to regional conditions,” JLL said.
“This reflects near-term caution around execution rather than weakening investor confidence in the UAE's long-term tourism fundamentals.”
Abu Dhabi's hotel stock remained steady at 33,650 keys, with about 120 more expected to be delivered by the end of 2026. Dubai's hotel stock stood at around 159,300 keys, with an additional 4,900 to be completed.
Some hotel operators have also used this period to temporarily close their properties for renovations.
“Additionally, operators are focusing on operational cost optimisation to maintain financial resilience throughout the transition period,” JLL said.
“Should conditions stabilise and connectivity fully restore, the combination of government fiscal support, resilient pipelines and pent-up international demand is expected to support a steady path back to pre-disruption performance across the UAE's key hospitality markets.”
