UAE Hotels Face Regional Headwinds As RevPAR Falls 31.8% in 2026: JLL

JEDDAH: UAE hotel revenue per available room fell 31.8 percent year to date through June, while occupancy dropped 22.2 percentage points to 57.9 percent, according to JLL. 

The consultancy said sustained regional tensions and weaker international arrivals compounded the impact of the traditionally slower summer season, pressuring hotel performance across the UAE. 

Government support has helped cushion the sector from the downturn, with a 2.5-billion-dirham ($681 million) relief package easing cost pressures across Dubai’s hospitality industry, according to the real estate services firm. 

Introduced in two phases, the initiative included exemptions from the Tourism Dirham as well as hotel and restaurant fees, helping preserve liquidity across hospitality and related tourism businesses. 

The UAE’s hotel performance also weakened more sharply than the broader Middle Eastern market tracked by major international hotel operators, with InterContinental Hotels Group reporting a 19 percent year-on-year decline in Middle East RevPAR in the second quarter.

In June alone, the UAE recorded a 33.9 percent decline, according to JLL. 

The report stated: “Sustained regional tensions compounded the impact of traditional summer seasonality, particularly affecting international arrival levels.” 

It added: “Operators continued to roll out discounted room rates, staycation bundles, and value-added incentives aimed at UAE and Gulf Cooperation Council residents to offset the pullback in international arrivals.” 

Several properties also introduced dining credits, spa access and extended-stay offers aimed at UAE and GCC residents to lift occupancy during the traditionally slower summer period, while some operators brought forward renovation plans to upgrade existing properties. 

Abu Dhabi outperforms Dubai 

Abu Dhabi showed greater resilience in June, with occupancy reaching 65.2 percent and RevPAR declining 12.1 percent year on year, compared with a 38.7 percent drop in Dubai and a 49.9 percent decline in Ras Al Khaimah. 

JLL attributed Abu Dhabi’s relative resilience to steadier domestic and government-linked demand, while Dubai and Ras Al Khaimah were more exposed to weaker long-haul international demand. 

UAE occupancy fell 22.2 percentage points year to date through June to 57.9 percent, while average daily rates declined 5.6 percent to 680.6 dirhams, according to JLL. 

On the supply side, no major hotel projects were completed in Abu Dhabi or Dubai during the second quarter of the year, with several projects expected to be deferred into 2027 as operators reassess delivery timelines amid current market conditions. 

Abu Dhabi’s hotel stock remained at 33,650 keys, with around 120 expected to be delivered by year-end, while Dubai had 159,300 keys, with about 4,900 in the pipeline for the remainder of 2026. 

JLL said the more measured approach to development reflects near-term caution around execution rather than weakening investor confidence in the UAE’s longer-term tourism fundamentals. 

The report also noted that temporary hotel closures for renovations remained a key cost-management strategy, with some operators bringing forward renovation timelines to capitalize on lower tourism levels and enhance service standards after reopening. 

Recovery hinges on stability 

The consultancy said the hospitality sector’s recovery will remain closely tied to the trajectory of regional tensions, the restoration of air connectivity and a recovery in traveler confidence. 

At the same time, diversified demand across international, regional, and domestic segments, together with continued destination investment, is expected to support a recovery once conditions stabilize. 

JLL said the combination of government fiscal support, resilient hotel development pipelines and pent-up international demand should support a steady return toward pre-disruption performance across the UAE’s key hospitality markets as regional conditions improve.