Dubai's Hotel Expansion: 2700+ New Rooms with 75% in Luxury Space

In the first half of 2024, Dubai welcomed over 2,700 new hotel rooms, with an additional 10,100 expected by the close of 2025. This growth trend is highlighted in a recent report from Cavendish Maxwell, a prominent real estate advisory and property consulting firm. The city added 12 new hotels to its roster between January and June 2024, increasing the total number of hospitality establishments to 716, which collectively offer nearly 149,750 rooms. Furthermore, the report indicates that 40 more hotels are set to be introduced by the end of 2025, with an expected influx of 4,748 additional rooms in 2026 and 2027.

Growth in Hotels

The report reveals that the 4-star hotel segment experienced the most significant growth compared to the previous year, with 436 new rooms added in the first half of 2024—marking a remarkable 216% increase year-on-year. The 5-star category also saw a substantial rise, with 1,681 new luxury rooms becoming available, reflecting an increase of 111% compared to the same period in 2023. Data sourced from Cavendish Maxwell’s H1 2024 hospitality market performance study.

Hotels, STR, Dubai Tourism, and the Department of Economy underscore that high-end accommodations continue to dominate Dubai’s hospitality landscape, with 67% of the total inventory categorized as luxury, upper upscale, or upscale by June 2024.

Luxury and Upscale Hotel Openings

Notably, over 75% of the new hotel supply introduced in the first half of 2024 fell within the luxury and upper upscale segments, amounting to 2,054 newly opened rooms. Significant luxury additions this year include The Lana Dubai Dorchester Collection, SIRO One Za’abeel, One & Only Za’abeel, FIVE Lux JBR, and the Address Palace Dubai Creek Harbour. Additional luxury hotels are scheduled to open this year, including Ciel Dubai Marina, Viceroy Dubai Business Bay, Port De La Mer hotel, and the Marbella and Berlin hotels at the Heart of Europe.

Occupancy Levels on the Rise

Occupancy rates in Dubai remained robust, averaging 78% in the first half of 2024—exceeding the pre-COVID occupancy levels of 2019. The luxury and upper mid-scale segments reported the most significant increases, with gains of 2% and 1.6%, respectively. In contrast, hotels in Abu Dhabi City reported an occupancy rate of 83%, up from 76% in 2023, also surpassing pre-pandemic levels. Other emirates showed positive trends, with resorts in Abu Dhabi reaching 72%, Fujairah hotels at 76%, and Ras Al Khaimah also at 72%.

Record Average Daily Rates

Dubai's Average Daily Rate (ADR) in the first half of 2024 reached approximately AED 720, marking the highest rate in six years, with an increase of 4.6% compared to H1 2023. The upper and upper mid-scale hotel segments experienced the most considerable rises in ADR, at 10% and 7%, respectively. Abu Dhabi recorded an 11% increase in ADR across the board, with city hotels averaging AED 341 and luxury hotels reaching AED 764. Ras Al Khaimah also experienced a nearly 11% increase, with ADR hitting AED 591, while Fujairah's ADR rose by almost 3% to AED 368.

Visitor Demographics: A Snapshot

In terms of visitor demographics, Western Europe emerged as the largest source market in H1 2024, contributing to 20% of Dubai’s total of 9.31 million visitors. South Asia followed closely, accounting for 17%, with Eastern Europe at 15%. Tourists from the GCC made up 14%, while visitors from the MENA region represented 12%.

Gergely Balint, Associate Partner, Commercial Valuation and hospitality real estate expert at Cavendish Maxwell, said: “Dubai’s world-leading, record-breaking hospitality sector continues to flourish, thanks to the emirate’s robust economy, growing investment in infrastructure and increased focus on experience-based tourism. A global hub for business, events, tourism and leisure, Dubai welcomed 9.31 million visitors in H1 this year, with Dubai International Airport handling a record 44.9 million passengers in the same period.”

“Hospitality is firmly established as a cornerstone of Dubai’s economic diversification, and, with around 15,000 new rooms set for delivery between now and the end of 2027, shows no sign of slowing down. However, with rising construction costs and growing competition, the industry will need to prioritise innovation, sustainability and unique experience to sustain the momentum. Adapting to evolving trends, sustaining its unrivalled capacity for diversity and innovation, and leveraging emerging opportunities will further enhance Dubai’s position as a world-leading hospitality destination, and help the city achieve its Dubai Economic Agenda D33 objective of becoming one of the top three global tourism destinations.”