UAE hospitality shifts from construction to consolidation

The UAE’s hospitality sector is undergoing a structural shift from “build-at-all-costs” expansion to a mature, investment-led market focused on strategic acquisitions, repositioning, and asset optimization. A new autumn review by Knight Frank and analysis from Stirling Hospitality Advisors describe the change. Dubai and Abu Dhabi are leading it.

In the year to August 2025, revenue per available room (RevPAR) and the average daily rate (ADR) in the UAE each rose by 11.9%. Abu Dhabi, often overshadowed by Dubai, recorded a 24% increase in RevPAR; the emirate is strengthening its position in the hotel market.

Institutional capital increasingly flows into existing hotels, which family offices also target for investment. Investors aim to raise hotel values through rebranding, operational overhauls, or conversions from luxury to lifestyle formats.

“The market’s maturity is positioning it as a leading destination for hospitality capital,” says Faisal Durrani of Knight Frank. The shift in investors’ focus from ground-up development to improving yields from existing hotels is characteristic of a developed real estate market.

Despite the change in investment priorities, 235,674 new rooms are forecast by 2030. The luxury segment accounts for 43% of upcoming supply. Dubai expects 22 million tourists by the end of 2025.