Dubai’s hotel boom: Why is the average daily room rate now Dh745?

Dubai: Dubai’s hospitality sector may have entered a new era of growth, but it has definitely gotten a tad more expensive.

The average daily rate (ADR) across Dubai’s hotels and resorts has topped Dh745, up 5.5 per cent on the same period last year, said a new Cavendish Maxwell report.

Moreover, as peak travel season approaches, 5,000 rooms across 19 new hotels are to open during the second half of the year, said the real estate advisory group. This would bring Dubai’s total inventory to 157,144 keys across 748 hotels. Almost 900 rooms, across five hotels, were delivered in H1 this year.

ADR is a key financial metric that measures the average revenue earned for each occupied room in a hotel over a specific period. During H1, hotel occupancy levels surpassed 81 per cent, and the average daily rate (ADR) reached Dh745.

This performance aligns with a continued rise in international visitors, which climbed to nearly 10 million in the first six months of the year, a 6.1 per cent increase year-on-year.

Market performance, visitor inflow

The H1 2025 report indicates that the average daily rate across Dubai’s hotels and resorts increased by 5.5 per cent compared to the same period in the previous year. This growth reflects the city’s ability to attract visitors and maintain high prices across its hotel inventory.

Vidhi Shah, Director and Head of Commercial Valuation at Cavendish Maxwell, noted that government initiatives and a robust events calendar have contributed to the sector’s performance, leading to increased visitor numbers and hotel revenues.

She said, “Government initiatives, strategic international partnerships, a packed events calendar and new attractions, coupled with sustained ability to attract diverse visitor profiles while consistently elevating guests’ experiences, have led to growth in airport passenger traffic, tourist figures, hotel occupancy rates, ADR levels and overall hotel inventory.”

She added, “With 5,000 new rooms on the way this year – and another 6,000 in 2026 and 2027 – Dubai is set to remain a premium, global destination of choice for both leisure and business travellers.”

Moreover, despite temporary airspace disruption in May and June, Dubai International Airport handled 46 million passengers in H1 this year – a 2.3 per cent increase year-on-year. At Dubai World Central, passenger traffic rose more than 36 per cent.

Hotel expansion continues

The Emirate’s hotel inventory is set to expand further, with 19 new establishments and over 5,000 rooms scheduled to open by the end of 2025. This will bring the total number of hotel keys in Dubai to more than 157,000.

A significant portion of this new supply, approximately 84 per cent, is concentrated in the premium segments, specifically Luxury, Upper Upscale, and Upscale. Notable upcoming projects include the Mandarin Oriental Downtown and Jumeirah Living Business Bay.

The report suggests this trend towards high-end developments is expected to continue into 2026.

What do visitors want?

The report also provides insight into the origin of Dubai’s international visitors. Western Europe remains the most significant source market, accounting for over 21 per cent of all visitors, followed by the CIS and Eastern Europe, and the GCC. The data shows a notable 19 per cent increase in visitors from the GCC year-on-year.

Outside of Dubai, all emirates secured an increase in ADR in H1 2025. Abu Dhabi’s city hotels saw the most considerable increase, of more than 28 per cent, followed by Abu Dhabi resorts at over 21 per cent, supported by luxury experiences, beach tourism and wellness retreats that appeal to domestic and international visitors.

In Ras Al Khaimah, ADR climbed 7.6 per cent, thanks to an increase in adventure tourism, the appeal of mountain resorts and nature-based experiences. At the same time, Fujairah posted a 6.1 per cent increase, fuelled by the attraction of coastal getaways and boutique resorts.

This article was originally published in Gulf News.