Dubai hotel market expands to 158,700 rooms as luxury segment dominates

Dubai’s hotel inventory reached 158,700 rooms across 770 establishments in 2025, with high-end properties accounting for nearly 70 percent of supply.

According to a recent report by Cavendish Maxwell, the emirate added 3,400 rooms during the year, marking annual growth of 2.2 percent, while 10 new hotels opened, up 1.3 percent compared with 2024. A further 4,600 rooms are scheduled for delivery in 2026.

High-end hotels, including Upscale, Upper Upscale and Luxury categories, represented close to seven in ten properties at the end of 2025, while around 30 percent of inventory was in mid-range segments. Nearly 90 percent of upcoming hotel openings this year are expected to be in higher-end categories.

Dubai’s hotel occupancy averaged 81 percent in 2025, rising 3.8 percent year on year. Upscale hotels recorded the largest increase at 4.9 percent, followed by the Luxury segment at 4.5 percent. The highest occupancy rate, at 84.4 percent, was in the Upper Midscale category.

Average daily rates rose to AED746, up 8.7 percentcompared with 2024, with the Upper Midscale segment posting the strongest increase at 10.4%.

Vidhi Shah Director and Head of Commercial Valuation at Cavendish Maxwell said, “Dubai’s tourism and hospitality sectors continued to perform strongly in 2025. The city’s diverse offerings – an expanded events calendar, a growing portfolio of hotels and resorts, adventure experiences, globally-renowned shopping festivals and world-class dining scene – have driven a shift in travel behaviour, with tourists moving beyond traditional sightseeing towards high-impact, experiential travel.”

Dubai welcomed 19.6 million visitors in 2025, with Western Europe accounting for 21 percent of arrivals, followed by the GCC at 15.3 percent, CIS and Eastern Europe at 14.8 percent and South Asia at 14.7 percent.

Across the UAE, Abu Dhabi recorded hotel occupancy of 82.8 percent for city hotels and 78.6 percent for resorts, with average daily rates rising 21.3 percent. Ras Al Khaimah saw occupancy increase 4.6 percent to 75 percent, while Fujairah maintained occupancy of nearly 75 percent with average rates up 12.8 percent.

The report revealed that while geopolitical tensions may create near-term uncertainty, Dubai’s tourism fundamentals and recovery track record continue to support long-term growth in the hospitality sector.

This article was originally published in Arabian Business.