Knight Frank: UAE To Add 27,000 New Hotel Rooms Due In By 2030

The UAE’s hospitality sector is set for further growth, with 26,832 new hotel rooms due to be completed by 2030, a 12.7% increase on 2024, which will take the total number of hotel rooms to 238,412, according to global property consultancy Knight Frank’s annual UAE Hospitality Market Review for 2024.

Knight Frank expects the new supply to support the government’s vision of hosting 40 million tourists by 2030. Two-thirds of the new supply, or 17,750 hotel rooms are being developed in Dubai.

The tourism and hospitality sector grew by 26%, representing 11.7% of the Emirates’ GDP in 2023, translating into a record-breaking AED 219bn (US$ 59.8bn) of economic activity. The government has set a target to grow this further still to US$ 123bn target by the end of the decade.

Citing STR data, Knight Frank says that between January and July 2024, the UAE emerged as a standout performer, with an average hotel occupancy rate of 76% – the highest level in the region. This figure was matched by RevPAR levels of US$ 131, which is 7.4% higher than the same period in 2023. Similarly, the average daily room rate (ADR) increased by 5% to US$ 172, while average occupancy levels increased by 2% to 76%, when compared to the same period last year.

Faisal Durrani, Partner – Head of Research, MENA, added: “The tourism and hospitality sector is a cornerstone of the UAE economy and has been for some time. This is best reflected in the fact that 809,000 jobs nation-wide were supported by the sector during 2023, a rise of 5.3% on 2022. This translates into one in nine jobs in the country, highlighting the strategic significance of the hospitality and tourism market.

“As the D33 Agenda unfolds, there will undoubtedly be more hotel developments being unveiled in Dubai, particularly if it is to hit its 2033 target of emerging as a top 3 global destination for leisure and business. The city is already home to in excess of 151,000 rooms. Going forward, the Palm Jebel Ali and Dubai Islands, which together boast plans for 160 hotels and resorts will likely be key contributors to Dubai’s 2033 targets”.

According to Knight Frank, 69% of existing hotel supply in the UAE falls into the luxury, upper upscale and upscale category, highlighting the importance of continued development of more mid-low hotel accommodation to cater to budgets at all levels.

67% of the existing supply comprises of internationally branded operators with 24% belonging to local brands. By 2030, 82% of the country’s hotel supply will be operated under international brands, with the proportion of local brands slipping to just 10% of market share, according to Knight Frank.

The UAE’s top hotel operators, Accor and Marriott International combined, manage over 46,000 keys in the UAE with a further 5,400 keys in the pipeline, due by 2030.

DUBAI

Dubai, as a global destination, is known for its luxury accommodation with an estimated 52,995 luxury 5-star hotel rooms, and 14 Michelin-star restaurants.

Turab Saleem, Partner – Business Development – Hospitality, Tourism & Leisure Advisory, MEA, says: “The emirate currently has just over 151,420 hotel keys, higher than London, or New York, while hotel occupancy levels have been the amongst highest in the world, averaging 77% between January and July 2024. According to our sources, the number of international tourists in Dubai has grown by 8% in H1 2024 translating into 10.62 million visitors. Dubai’s top source visitor markets comprised Western Europe at 20%, followed closely by South Asia at 17% and Eastern Europe (14%).”

In 2023, international visitor spending in the UAE surged by nearly 40%, exceeding AED 175bn, which is 12% higher than 2019. This highlights the UAE’s continued appeal as a leading global tourism destination, says Knight Frank.

Oussama El Kadiri, Partner – Hospitality, Tourism & Leisure Advisory, MEA, says: “Dubai’s emergence as a prominent global tourist destination can be attributed primarily to the significant contribution of the world’s largest international carrier, Emirates Airlines. Since its inaugural flight in 1985, Emirates has played a pivotal role in facilitating convenient access to Dubai, contributing to its rapid ascent on the global tourism stage. Dubai International Airport has been the world’s busiest gateway since 2013 and has hosted 86.9 million passengers in 2023.

“Dubai’s universal appeal and constant reinvention mantra is key to draw repeat visitors, and this is what sets the city apart from many other global locations.”

According to Knight Frank, Dubai is set to see the addition of 17,750 rooms by 2030. The UAE capital, Abu Dhabi, however, has a larger development pipeline of 37,148 keys, with another 8,764 new rooms expected in Ras Al Khaimah by the end of the decade.

In Dubai the ADR increased by 3.9% to AED 679 between January and July, while average occupancy remained high at 77% (STR Global). Consequently, the RevPAR grew by 6.1% to AED 569.

Daniel Pugh, Partner – Head of Hospitality & Leisure Valuation & Advisory, concluded: “The historic twin announcements in April this year to transfer all operations from Dubai International to Al Maktoum International as well as the commencement of construction on the first phase of the new US$ 35bn airport marks in a momentous milestone in Dubai’s epic rise over the last 50 years as a global commercial, trade, finance and tourism centre. Dubai’s global appeal, world class attractions, infrastructure and plethora of outstanding accommodation options look set to be further bolstered by the addition of 17,750 rooms, driving the city’s total hotel supply to 169,165 keys by 2030 – and that’s what we know about so far.”

Knight Frank’s analysis also reveals that the Accor Hotel Group will is the leading hotel operator Dubai with 17,380 existing rooms under management and a further 2,700 keys planned by 2030. Marriott International with 16,620 existing rooms and 704 rooms in the pipeline set to complete by 2030, follows in second place.