The UAE hospitality market is entering a more mature, investment-led phase as hotel performance strengthens across key cities, according to Knight Frank’s latest review.

Through August, the sector recorded year-on-year gains of 11.9% in both RevPAR (revenue per available room) and average daily rate (ADR), with nationwide occupancy at 78.5%.

Dubai and Abu Dhabi led the upturn, signalling a shift in the UAE hotel market from development-driven growth to strategic capital deployment.

Performance metrics point to sustained demand

Dubai, the country’s largest hotel market, posted a 10.1% rise in RevPAR. Ras Al-Khaimah was close behind at 10%. Abu Dhabi hotels led the field with RevPAR up 24% and ADR increasing 20.2% compared with the same period last year.

Dubai tourism volumes also trended higher: 11.17 million international visitors arrived between January and July, up 5.2%, generating 25.53 million occupied room nights.

These indicators suggest healthy demand across city and resort locations, supporting pricing power and occupancy.

Investment focus shifts to acquisitions and asset upgrades

With headline performance improving, investor attention in 2025 is tilting towards acquisitions, asset repositioning and operational upgrades rather than pure ground-up development.

Knight Frank notes a deeper pool of institutional capital and rising participation from regional family offices and international buyers.

Market participants are prioritising long-term value creation through brand partnerships, efficiency gains and mixed-use integrations.

The trend underscores a more investment-led hotel sector characterised by active transactions and targeted refurbishments.

Supply pipeline and market mix

The UAE has 213,928 existing hotel rooms, comprising 26% upscale, 22% luxury and 21% upper-upscale inventory.

Supply is set to reach 217,853 rooms by the end of 2025 and 235,674 by 2030, with 43% of upcoming keys in the luxury segment—an important marker for the luxury hotels UAE theme.

Dubai remains the powerhouse, supported by the D33 Economic Agenda and the 2040 Urban Master Plan, with 165,339 existing and pipeline keys.

Abu Dhabi counts 37,016 keys, while Sharjah and Ras Al-Khaimah have 14,478 and 11,902 respectively.

As of August, 55.9% of the country’s upcoming hotel supply is concentrated in Dubai, reinforcing the emirate’s central role in the UAE hotel pipeline.

Outlook for the UAE hotel market

Stronger operating metrics, sustained Dubai hotel occupancy, and a visible pipeline suggest stable near-term conditions.

As financing targets shift from expansion to hotel investment and asset repositioning, the UAE hospitality market appears set for a period of balanced growth, with performance in Abu Dhabi and Dubai likely to remain the main drivers.