Dubai’s luxury hotel boom: Over 11,000 new rooms to open by 2027, high-end stays dominate

Dubai: Dubai’s hotel sector is experiencing an impressive expansion, with over 11,300 new rooms expected to enter the market by 2027. Nearly 4,620 rooms are set to open in 2024 alone as the city continues to attract global attention, especially for a large group of high net-worth individuals (HNIs). Property consultant Cavendish Maxwell said the city added 4,255 rooms across 19 hotels in 2024, reflecting a nearly 3 per cent year-on-year growth.

By the end of the year, Dubai’s hospitality landscape will feature 724 hotels and 151,245 rooms. The market is poised for further growth, with projections indicating a 3.1 per cent increase in hotel inventory in 2025 and 3.4 per cent in 2026. By 2027, Dubai is expected to boast over 162,600 rooms across 769 hotels, solidifying its position as a leading global destination for leisure and business travellers.

The report states that high-end accommodation continues to dominate Dubai’s hotel offering. In 2024, almost 70 per cent of room supply fell in the high-end (Luxury, Upper Upscale and Upscale) category and of the upcoming supply for 2025, nearly 70 per cent will also be in the Luxury and Upper Upscale segment.

Gergely Balint, Associate Partner, Commercial Valuation and Hospitality expert at Cavendish Maxwell, said, “Dubai’s world-leading hospitality and tourism sectors set more records and reached new milestones in 2024, with 18.72 million overnight visitors, adding a string of prestigious new tourism-industry awards to its name and 4,255 new hotel rooms coming to the market.” He said, “We can look forward to continued strong performance in 2025, with another 20 hotels and resorts due to open.”

Growing tourist numbers  

The number of overnight visitors to Dubai grew 9.1 per cent last year, up from 17.15 million in 2023. At the 31st Annual World Travel Awards in late 2024, Dubai was named the world’s leading shopping and exhibition destination, Mina Rashid took the title of world’s leading cruise port and Dubai International Airport was recognised as the world’s leading airport.

Balint said, “This continued international recognition strengthens investor confidence and further cement Dubai’s status as a premier hub for hospitality and real estate development.” In 2024, tourism contributed Dh236 billion, up from Dh220 billion in 2023, to the UAE’s economy, representing 12 per cent of the nation’s GDP. Balint said, “This growth highlights the sector’s significant impact, reinforcing its vital role in the country’s economic expansion.”

Occupancy rates and ADRs

As far as occupancy rates – a metric to measure the number of occupied rooms in a property at a given time- are concerned, Dubai’s hotel occupancy levels remained steady, rising to 78 per cent in 2024 – an increase of 1 per cent in 2023 – with the Luxury and Upper Mid-scale segments seeing the biggest gains of 3 per cent and 2.4 cent respectively.

Meanwhile, Dubai’s average daily rate (a unit that measures the average rental revenue earned for an occupied room per day) reached Dh690, a slight increase of 0.2 per cent in 2023, indicating “pricing stability in Dubai’s hospitality market”.

Average RevPAR (Revenue Per Available Room) rose by 1.3 per cent in 2024 compared to 2023, primarily driven by higher occupancy levels. While all segments saw growth, the Upper Midscale category led at around 1.9 per cent.

There was, however, a slight drop in occupancy in Ras Al Khaimah, where new openings such as the Anantara Mina Al Arab Resort and the Sofitel Al Hamra Beach Resort brought more rooms to the overall offering. RAK achieved a record 1.28 million visitors last year, up nearly 5 per cent year-on-year.

This article is originally published in Gulf News.