The Middle East region is expected to see a significant expansion of tourism services as countries and emirates aim to replace oil revenues with hospitality and leisure.
And the scale of growth is revealed in a new report from agents Knight Frank, which predicts that an additional 26,832 new hotel rooms will be built and added to the market across the UAE by 2030. This will increase the total market to 238,412 rooms. they estimate.
A development of this scale will support the local government’s vision to attract 40 million tourists to the UAE in 2030. The tourism and hospitality sector performed well in 2023, growing by 26% and now accounting for 11.7% of the UAE’s GDP. . This equates to a total economic value of $59.8 billion, a figure the government hopes to more than double by the end of the decade. The sector currently supports approximately one in nine jobs in the country.
Demand appears to be responding to efforts to promote the region as a destination. According to Knight Frank data, hotel occupancy rates across the UAE averaged 76% in the first half of 2024, an unparalleled strong performance across the globe. This was achieved through a 5% year-on-year increase in room rates, resulting in a 7.4% return in 2023.
Across the region, Dubai will account for around two-thirds of new hotel supply, with a pipeline of 17,750 rooms. The city-state has set a further goal of being among the top three leisure and business destinations in the world by 2033. New developments such as Palm Jebel Ali and Dubai Islands alone will provide sites for 160 hotels and resorts, Knight Frank says. .
For companies looking to develop new hotels, the biggest opportunities lie in the lower segments of the market. To date, developers and operators have concentrated on the luxury hotel, upper luxury hotel, and luxury hotel segments, which account for 69% of existing hotel supply. To achieve its tourism goals, the UAE needs to expand its tourist appeal to other demographics.
International hotel brands are signing deals with more hotels in the region than ever before. Currently, around two-thirds of existing hotels are international brands, and it is estimated that by 2030, this proportion will rise to 82%.
Accor and Marriott lead the way in international brand presence, with Accor set to increase the number of rooms by 2,700 rooms from its current 17,380 and become Dubai’s largest operator by 2030. This is followed by Marriott, which currently has 16,620 rooms and plans to build a more modest 704 rooms in Dubai.
Elsewhere, Abu Dhabi is also gearing up for more international tourist arrivals, with a development pipeline of 37,148 hotel rooms. And in Ras Al Khaimah, another 8,764 rooms will be added by the end of the decade.