Hostel living is set to open up more options for short-stay travellers to keep pace with surging demand from Dubai's booming population.
As the city continues to grow as a go-to destination for digital nomads, remote workers and young people seeking fresh opportunities, the hospitality market is evolving to keep pace with change.
Following a government crackdown on illegal subletting and partitioned apartments for low-cost, multiple occupancy tenants, businesses have stepped up to fill shortages of legal budget beds.
Dubai's strict housing rules prevent hostel-type businesses from operating inside existing residential buildings.
But an amended hostel licence has opened the door for businesses to operate from villas or other purpose-built buildings, allowing a new enterprise model to emerge.
One businessman forced to shut down his previously unregulated hostel chain is hoping to take advantage of the amendment.
Rayan Hanna, chief executive of Next'House, is confident $10 million investment funding from private equity firm EightClouds can revitalise his ambitions for expanding Dubai’s short-term accommodation market.
Next'House operated several dormitory-style hostels inside residential buildings across Dubai, but these were ordered to close by Dubai Municipality.
The high-end, short-term lets attracted digital nomads and visiting professionals for a cut-price stay in prime locations in Business Bay, Jumeirah Beach Residence and Dubai Marina.
With the EightClouds funding, Mr Hanna aims to resurrect plans to establish a new hostel chain in the UAE.
“Ideally, locations need to be close to a Red Line Metro station, or to the beach,” Mr Hanna told The National.
“Hostels would need to be either a lifestyle location where you can justify not having public transportation nearby, or somewhere with close transport links so guests can travel easily around the city.
“It's very important for the kind of people we are aiming to attract. From the guest numbers we had previously, only three to five per cent had cars, so were reliant on public transport.”
Mr Hanna was close to securing a Dh2.5 million ($680,700) property in La Mer in Jumeirah One to develop into a multi-bed hostel, but was outbid by a rival developer.
An amended hostel licence under approval from the Dubai Department of Economy and Tourism will allow Next'House to operate multi-occupancy accommodation, if the company owns the building outright, he said.
“This licence has to be linked to a piece of real estate − that's the challenge − and it needs to be approved as a hotel asset,” he said.
“We need to look at the right zoning, the right asset with the right facilities, the right amenities, plus the right location.
“Once we have a suitable building, we aim to be operational within six to eight weeks.”
Luxury property
A similar hostel model is already operating in Al Barsha, and is managed by Nas House.
The company offers a shared living and work space inside a five-bedroom villa, with a pool, gym, communal gardens and even a cat room. Rooms with a shared bathroom start at Dh249 per night.
Deirdre van den Dool, general manager of Nas House, which opened in August 2024, said the hostel concept is in demand across Dubai.
“We were the first official youth hostel licence in Dubai,” she said. “Our concept is a little bit different, as we do private villas and also shared villas.
“We wanted to have a space where people could come and connect with others. A lot of people were very confused because it is a new concept in Dubai, but it has been very popular.”
Nas House operates six villas with capacity for 46 guests. So far, it has attracted many digital nomads, mostly aged 20 to 40.
The average stay is between five nights and two weeks, with prices ranging from Dh180 a night for a twin room, to Dh300 for a premium room.
“Our rooms are now more popular than the private villas, so it's nice to see,” said Ms van den Dool, whose background is in hospitality, working in major hotels.
“I do think if licensing becomes easier, we would see a lot more youth hostels open up around Dubai.
“Maybe people are scared this concept is partition-style living, or maybe multiple people in the same room, which is what we don't do at all.
“Your room is yours and private, you just share the common spaces.
“This is not like a European-style hostel, it is a much more luxurious experience, but still affordable.”
Tourists continue to flood into Dubai, with increasing demand for short-term lets.
Dubai Economy and Tourism figures showed 18.72 million people stayed overnight in the city in 2024, a nine per cent increase in 12 months.
In the first half of 2025, there were 9.88 million tourists staying at least one night in Dubai, a six per cent rise in the same period in 2024.
According to short-term lettings agency AirDXB, in the first six months of 2025, 24 per cent of visitors seeking short term rentals were from the UK, followed by 14 per cent from Russia, and 11 per cent from India.
Significant interest in short-term rental options are contributing to Dubai's tourism boom. Property Finder data showed 22,000 searches for short-term rentals in Dubai in 2025, indicating high demand for flexible living.
Mark Aitchison, founder and chief executive of EightClouds, said the company’s $10 million investment into Next'House aims to take Dubai’s hostel living to the next level.
“We see a big gap in the market, as this segment of hospitality is not really being served at the moment,” he said.
“We've seen some very big brands around the globe in the hostel market that have been really successful, particularly around the Bali-inspired hostel concept.
“That’s what you think about when you consider a high level hostel concept for nomadic travellers.
“Every area of hospitality in this market is growing and, generally, the market is booming. But this is a particular segment that is underserved right now, so we're excited to invest.”
Regional plan
Next'House aims to eventually introduce hostels across the GCC by blending the casual and social atmosphere of traditional hostels with the upscale amenities and stylish design typically found in boutique hotels.
The first Dubai location will feature modern co-living spaces, private rooms, and communal work areas equipped with high-speed internet, catering to the needs of remote workers and digital entrepreneurs.
“We are looking at boutique size accommodation − so from 30 keys all the way up to 100 keys,” said Mr Aitchison. “I think the hostel accommodation model could be really big here in Dubai.”
The Department of Economy and Tourism and Dubai Land Department were approached for comment.
