Dubai hotels filling up again but rates yet to recover

Dubai | New Delhi: Dubai hotels are seeing occupancy recover towards the pre-disruption levels ahead of the winter season, but room rates are likely to remain under pressure, with operators estimating discounts of up to 15% from last year as they prioritise filling rooms over maximising average daily rates. In fact, Indian travellers have emerged as an important source of demand due to proximity, amid continued disruption in international flight operations, they said.

Hotel executives at Taj Dubai, NH Collection Dubai The Palm and Dukes The Palm said that occupancy at their properties has recovered to around 70% and could rise to 80-85% in December, traditionally the peak month for Dubai hospitality.

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But the recovery in room rates is expected to take longer, with hotels forecasting average rates to remain below 2025 levels.

“It has been a roller coaster ride this year. The fourth quarter (October-December) looks very decent for us…although it will not be the same as Q4 2025. We are forecasting a 10-15% drop in rates, but occupancies should remain very similar to the previous year, said Saurabh Tiwari, vice president - operations (Middle East, Sri Lanka & Maldives), IHCL, which operates the Taj brand. “The game changers for us will be Diwali, Dussehra, Christmas and New Year. The festive season brings in a lot of revenue, although ADR will be slightly affected,” he added.

Dubai's hotel occupancy reached 66% in August, up from 36% in March, equivalent to 89% of the August 2025 levels, according to the Dubai Department of Economy and Tourism.

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Ahmad Shaban Fernandez, cluster general manager at Dukes The Palm and NH Collection Dubai The Palm, said the market had moved decisively out of the crisis phase, although a full recovery was still some distance away.

“The market is back in full swing compared with the past six to seven months. Have we recovered? No, we have not recovered yet,” Fernandez told ET on the sidelines of Arabian Travel Market in Dubai.

The two hotels, with a combined 1,100 rooms, are currently running at about 70% occupancy, he said, with occupancy expected to reach 80-83% in December. Revenues, however, are expected to remain 10-15% below 2025 levels.

“We expect to see the same levels of occupancy as last year, but the average rate component will be lower. It is going to take us some time to recover the average rate,” Fernandez said.

He noted that the return of international air connectivity was critical to the recovery, particularly for leisure-heavy properties.

With several international flight routes still recovering and some global carriers yet to fully resume their Gulf operations, India remains an important source market for the UAE hospitality sector.

Indian travellers are emerging as an important source of returning demand, particularly in leisure, MICE and weddings.

“The Indian market has always been among the top three source markets for Dubai as a whole destination. What we have witnessed now is a stronger entrance of the Indian market into the leisure segment,” Fernandez said.

“We are seeing an uplift in numbers from that market, especially in MICE and weddings for the upcoming season,” he added.

Hotels noted that the current focus remained occupancy levels and not revenues to that extent. “We are maintaining rate integrity across all three hotels, but we are trying to make sure the occupancy box is ticked, even if the average-rate box is not,” said Tiwari. IHCL operates three hotels in Dubai, including Taj Business Bay, and Taj Exotica The Palm.

As for December, the peak month for the hospitality sector, hotels are expecting around 80% occupancy levels this year. “Given the crisis situation, we don't think we would have a 100% occupancy, but if we are at 75-80% occupancy, it will be great,” said Tiwari.

Fernadez of NH Collection said, “We expect to see the same levels of occupancy as last year, but the average rate component will be lower. It is going to take us some time to recover the average rate.”

The strategy is being supported by packages and staycation offers around the winter events calendar, including the Dubai Shopping Festival, GITEX and the Abu Dhabi Formula 1 weekend.

“We are also seeing 30-60% discounts for resident and GCC staycation promotions. Clearly, the primary objective is to boost occupancy as Dubai heads into the peak season,” said Anuj Kejriwal, CEO-Retail & CEO EMEA, ANAROCK Group.

Nandivardhan Jain, founder and CEO of NOESIS Hotel Advisors, expects Dubai's Q4 RevPAR to remain 15-20% below last year's level, with full-year ADR at about AED600-675.

“For the Indian traveller, this is the best value Dubai has offered in three years,” Jain said.

Hotels rebuild workforce

The recovery in occupancy is also prompting hotels to rebuild their workforces after redeploying staff to other markets during the disruption.

“We are hiring big time,” Tiwari said, adding that IHCL had redeployed employees to markets including the UK, South Africa, Sri Lanka, Maldives and Bhutan.

“We have also sent some of our best staff to Frankfurt, and we can bring them back when the season starts in mid-October,” he said.

Fernandez said his hotels had retained staff during the downturn and were now gradually bringing them back.

“We learned from the mistakes during Covid. We did not let go of any of our workforce. We just gave them the time to relax and spend time with their families, but they are still with us on our books, and they are coming back slowly,” he said.

“If we cannot source from within the company, then we will look at new talent coming from outside.”

Kejriwal said some major chains were already hiring front-desk, dining, housekeeping and kitchen staff as occupancy improves, while others were waiting for greater certainty around winter bookings before undertaking large-scale rehiring.

Jain Dubai will land in the low to mid 70s for the quarter, with December in the 80s.

"But rate is where the real intelligence lies. Through the worst of it, Dubai's ADR fell only 7% while occupancy fell nearly 25 points. This market refused to discount its way out of a crisis. That single decision is worth more than any stimulus package," he added.