Report highlights investment potential in Dubai's hospitality sector

UAE is the second country after Saudi Arabia for hosting the highest number of projects across the Middle East, with Dubai leading the cities across the emirate with 19,200 rooms in the pipeline with 67 projects, a report has said, while delving into the opportunities for investors in Dubai’s hotel industry.

Dubai leads the cities across the UAE with 19,200 rooms in the pipeline with 67 projects, said Les Roches Global Hospitality Education alumnus, a leading hospitality school, said in its report titled, ‘A Clear Roadmap for a Hotel Business Investment in Dubai’.

It highlighted that occupancy levels are expected to sustain an upward trajectory, further solidifying Dubai's position in the global hospitality market.

Occupancy rates have shown consistent growth, hitting a record 90.8% in February 2024, underscoring the strong demand in the market.

Moreover, average daily rates (ADR) and revenue per available room (RevPAR) have risen significantly by 9.3% and 13.1%, respectively, reflecting strong profitability, according to reports from STR and Deloitte.

The city reports consistent month-over-month increases in RevPAR levels, “If we look at the pipeline for the next seven years, 46% of the projected keys fall into the luxury category, 25% go into the upmarket category, and roughly 4% go into the three-star hotel category.

The five-island development, formerly known as Deira Islands, is in line with the UAE's continuous efforts to become a top worldwide destination for visitors and investors,” highlights the report by Fares Yactine, Advisor EBD-FRD at Nesma United Industries, Ronald Homsy, Founder & Co-CEO at Aventra Hospitality, and Mohamad Saade, General Manager at Radisson Hotel Group.

Successful investments in Dubai's hospitality market, such as the $1.4 billion Atlantis The Royal and the expansion of Jumeirah Hotels, highlight the profitability potential in both luxury and mid-range segments.

This continued growth is backed by strong government initiatives like Dubai’s 2040 Urban Master Plan, aiming to boost the city’s appeal as a top-tier tourist and investment destination.

These factors together make Dubai an attractive market for both seasoned and new investors, offering robust returns with the right strategic approach.

According to a KPMG report, Dubai’s government has played a crucial role in fostering this growth, implementing favourable policies like tax incentives, relaxed visa regulations, and infrastructure initiatives under the Dubai Tourism Vision 2025, which aims to attract 25 million visitors annually, further solidifying the city's position as a leading global tourist destination.

The report also highlights key trends, actionable strategies, and the significant potential for investors in one of the world's most dynamic tourism markets.

With valuable insights from industry experts and leading hoteliers, this report provides a comprehensive guide for capitalising on Dubai's booming hospitality industry.

Richard Haddad, Founder and CEO of Aventra Hospitality, a Boutique Hospitality Management and Advisory Firm, emphasised the importance of strategic growth and sustainability in the Dubai market.

“As we continue to expand in Dubai, our focus remains on efficient management, strategic growth in emerging clusters, and a strong commitment to sustainability. We aim to create value for owners by delivering high performance and fostering deep community connections.

“Maintaining alignment with the latest trends, best practices, and balanced relationships with stakeholders remain crucial for driving value creation.”

The report outlines several key takeaways for successful hotel investments in Dubai such as market research and strategic planning, sustainable practices, partnerships and financing; to guide potential investors.

The report recommends developing an investment roadmap, staying informed of market trends, contingency planning, prioritising sustainability, and exploring emerging opportunities.

“The Dubai hospitality industry offers significant investment potential for newcomers and seasoned investors alike,” said the co-authors of the report.

“A comprehensive understanding of market dynamics, thorough feasibility studies, and strategic planning aligned with local regulations are essential.

“By leveraging expert insights, navigating legal frameworks, and embracing sustainable practices, investors can capitalize on Dubai’s growth as a global tourism hub, ensuring long-term success and value creation in the competitive hotel market.”

Summing up the scenario, Sobhi Rifai, Sourcing Director at Al Zorah Development company, said: "Investing in hospitality in Dubai is not just about capital; it's about embracing a vibrant culture and a booming tourism landscape.

“For novice investors, the key is to blend passion with research— understand the market trends, connect with local experts, and seize the opportunity to be part of a truly dynamic industry." – TradeArabia News Service