Today's Edition
MUDHI ALOBTHANI (ABU DHABI)
The UAE's hospitality industry is marking a new phase of expansion in 2025, with rising tourist arrivals and hotel bookings driving record revenues.
Hotels across the country generated an estimated Dh26 billion in the first half of the year, reflecting not only the sector's resilience, but also its growing role in the national economy.
Dubai led the market with an impressive 81% occupancy rate, up 4.5 points year-on-year, supported by a 6.1% increase in visitors, bringing the city close to 10 million arrivals in just six months.
According to Dr. Mohamed Youssef Afifi, Senior Researcher in Economic Studies at TRENDS Research & Advisory, the hospitality sector's impact extends beyond revenues.
"Sector hospitality, through hotel and transport spending, strengthens consumer demand across a wide range of goods and services in the local economy. While part of this demand is met through imports, an important share is satisfied by domestic production, thereby contributing directly to GDP growth."
This surge in demand reflects the success of the UAE's long-term strategy to position itself as a global tourism hub. Tourism Vision 2031, visa reforms, and investment in infrastructure and cultural attractions are paying dividends, ensuring a steady pipeline of visitors across leisure, business, and Meetings, Incentives, Conventions and Exhibitions (MICE) segments.
Luxury hotels still account for the largest market share, but serviced apartments are gaining momentum, reflecting travellers' evolving preferences for flexibility and extended stays.
Dr. Afifi also highlighted the sector's fiscal benefits: "Support to the federal budget, through higher tax revenues and fees (including visa charges and airport revenues) represents an important contribution of the hospitality sector to the UAE economy.
"Notably, the federal tax law is reinforced through taxation on the booming profits of hotels, motels, tourist centres and shopping malls."
Digital platforms are also transforming the sector, with online travel agencies and direct booking channels driving growth and offering greater accessibility to both regional and international travellers. Dubai continues to dominate the hospitality landscape, holding more than 62% of market share, while Ras Al Khaimah is emerging as a fast-growing destination thanks to integrated resort developments and rising connectivity.
At the same time, investment dynamics are evolving. Dr. Afifi points out: "Booming demand is a driver for higher hotel revenues, accompanied by increased investment in maintenance, renovation and renewal, as well as stockpiling hospitality supplies to reduce the impact of fluctuations in food and service costs on sector stability."
With visitor spending projected to climb to $62.20 billion in 2025 - a 37% increase over 2019 levels - the UAE hospitality sector is set to remain a cornerstone of the country's diversification agenda. But sustainability remains a key consideration.
As Dr. Afifi notes: "The growth of tourism and hospitality in the UAE shows high potential for long-term sustainability thanks to strong investment capacity, climate commitments, and a favorable regulatory environment. Yet sustaining this momentum depends on building resilient supply chains and navigating geopolitical challenges in the region."
The sustained growth in tourist numbers, bookings, and international interest reinforces the UAE's reputation as one of the world's most dynamic and welcoming destinations - anchored by a hospitality sector that is both economically vital and globally competitive.
