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The UAE's hospitality industry has been working hard to keep occupancy rates up amid attacks from Iran.
Businesses have shelved some operations as the industry heads towards the summer off-peak season. Cruise liners have been severely impacted by regional tensions, with major UAE operators MSC, Celestyal and TUI cancelling sailings and repatriating passengers from docked ships.
Cut-price hotel deals with credits for food and beverages are being offered to attract those looking for a staycation, while other holiday letting agencies are aiming for residents seeking short-term rentals in an uncertain property market.
Vinayak Mahtani, chief executive of bnbme Holiday Homes, an award-winning lettings agency in the UAE with 50 staff, has seen his business drop from 90 per cent occupancy rates to below 20 per cent in recent weeks.
“Cancellations have been coming in from online travel agencies, who are forcing us to cancel guests who booked non-refundable bookings," he said.
“OTAs are simply accepting cancellations from guests, claiming this is a force majeure. Guests really should go to the insurance company and seek a refund rather than getting it from us, so we’re struggling on that front.”
Mr Mahtani has been operating the firm since 2018, and said around half of his staff are either on unpaid leave or reduced pay. Other costs have been slashed, such as marketing budgets and his own personal income, to survive the current downturn.
“The positive aspect is the industry's coming together, trying to work with each other on how collectively we can survive,” Mr Mahtani said. “Short-term, we have unfortunately put certain team members on unpaid leave, others have voluntarily taken a salary cut.
“Traditionally, February, March and April are three of the strongest months, then it starts to taper down because of summer. In reality, I don't know how many people are going to come out of this towards the end of summer if occupancy stays below 30 per cent. We can survive three months of this, but not seven.”
Superior force measures
Cancellations on existing hotel bookings are being made under force majeure measures.
The term is a contractual clause freeing parties from liability when extraordinary, unforeseen events beyond their control, such as natural disasters, wars or pandemics, prevent them from fulfilling obligations.
“When it's impossible for people to travel and we need to invoke force majeure measures, as is currently the case with the UAE, we do everything we can to minimise further impact for travellers and our partners,” said a representative for Booking.com.
“This means exploring different options, including changing the dates of the reservation, receiving a voucher for a future stay or providing free cancellation of the booking. When force majeure is applicable, this also includes non-refundable reservations.”
While some hotels have given them the option of unpaid leave, others have taken the opportunity to refurbish. Rove operates eight hotels in the UAE and was a destination for many passengers transiting through Dubai when the regional conflict broke out on February 28.
While international bookings slowed significantly, occupancy rates elevated temporarily to around 75 per cent during Eid Al Fitr, with residents taking up special staycation deals. “All of our hotels and outlets remain open,” said Paul Bridger, chief executive of Rove Hotels.
“We’ve focused on optimising staffing through smarter rostering, cross-utilisation of teams, and aligning resources across the hotels based on demand. At the same time, we’re using this period productively by bringing forward planned refurbishments and investing in training and development.
"We’re also encouraging colleagues to take annual leave, while working closely with our suppliers and partners to ensure alignment across the wider operation. The UAE has consistently demonstrated a strong ability to bounce back, which gives us confidence in the outlook.”
Flexible bookings
Airlines such as Emirates, Saudia and Etihad have introduced more lenient rebooking policies that waive change fees for flights routed through potentially volatile zones.
They are also expanding agreements to offer seamless connections via stable hubs, such as Oman Air via Muscat and Royal Jordanian via Amman, as insurance against airspace closures. Meanwhile, more flexibility is being offered on premium economy and business class travel, with corporations willing to pay a premium for refundable or changeable tickets, even at higher fare classes, to preserve options.
To maintain that flexibility, hotels in the UAE and Saudi Arabia are moving towards dynamic rate structures with extended cancellation windows, and special rates to business travellers who wish to extend their stays. Business travel to the region is also likely to be negatively impacted, as conferences are postponed until later in the year and annual meetings move online.
Specialist business travel bookings for Meetings, Incentives, Conferences and Exhibitions (Mice) involve collective arrangements for venues, hotels and services for organised group events. They have become a vital component of the UAE’s travel sector. Packages usually cater for professionals, corporations and education, rather than leisure, and are often high-value and planned months in advance.
Stan Klyuy, chief commercial officer of business travel specialists Tumodo, said that while there had been changes in trends, sentiment remained strong. “Our data shows that confirmed Mice bookings and event-related travel have remained stable, with a 7.2 per cent increase compared to the same period last year,” he said.
“However, the composition of travel has changed, with shorter lead times, often under 10 days, and a 15 per cent rise in visa support requests, indicating a rush to secure travel before potential restrictions tighten.” Mr Klyuy said there has also been a marked preference for direct flights over hub connections vulnerable to airspace closures.
Tumodo has also pre-negotiated force majeure‑flexible contracts with main hotel and airline partners across the region, so last-minute cancellations avoid penalties. “We are maintaining full staffing levels but reorienting our team structure,” Mr Klyuy added.
“We have temporarily increased the ratio of 24/7 crisis-response specialists and reallocated resources from routine booking support to scenario-planning and real-time re-routing. Rather than downsizing, we view this period as a test of operational resilience.”
