Dubai’s hotel sector among top performing markets internationally

22 March 2023 Consultancy-me.com 3 min. read

The global pandemic had a major impact on the tourism industry, with many popular destinations experiencing a sharp decline in visitor numbers. Dubai's hotel market however has for a large part managed to buck the global trend, and ranks as one of the better performing markets worldwide, according to new research by Deloitte.

The rebound of Dubai’s hotels sector post-pandemic was driven by pent-up demand from travelers and increased spending by residents.

In 2022, hotel occupancy rates reached their highest point in 15 years, with occupancy hitting over 90% in the tourism hotspot month of March, and averaging 70% of the full year, up from 59% for the same period the year previous.

Dubai hotel market performance, January to September 2022

Over the twelve months of 2022, Dubai welcomed more than 11 million overnight visitors, with the highest number of international guests arriving from India at 1.4 million and more than double the number of visitors from Oman, Saudi Arabia and the United Kingdom.

Notably, Dubai has positioned itself as a leading destination for luxury tourism, offering a blend of quality destinations, world-class amenities, cultural experiences, entertainment, and relaxation.

The country is also a global hub for business. Many multinational corporations have set up their regional headquarters in Dubai, making it a popular destination for business travelers.

However, international visitors were in 2022 still slightly lower than pre-pandemic levels, with a total of 12 million people visiting Dubai’s shores during 2019. According to Deloitte, this means that there is still “significant potential for the hospitality industry in Dubai to continue its upward trend” – and eventually surpass pre-pandemic levels as holiday destination capacity has in the meantime been ramped up further.

Dubai ADR and occupancy vs international markets, YTD September 2022

The average daily rate (ADR) of Dubai hotels skyrocketed by an impressive 37% last year, reaching a peak of AED 641.

Scarcity in hotel room availability in peak periods was the main driver, although the Qatar World Cup played its part in driving higher hotel fees, with many football fans (and corporate fans) branching out to Dubai for their stay during the five-week football frenzy period, in the process driving up local consumption.

Compared to other global destinations, Dubai’s hotel scene emerged out of 2022 as a global top performer. While Paris, Rome, and New York lead in terms of average daily rates, Dubai performs above peer cities such as Hong Kong, Madrid and Sydney. Meanwhile, Dubai’s 70% occupancy level was the second highest of all cities explored by Deloitte, ranking only behind Los Angeles (71%) in the US.

Deloitte’s findings echo a recent report by KPMG, which handed Dubai’s hotel market a ‘sunny outlook’ status for 2023.