Hotels in the Gulf region are entering their busiest quarter significantly behind schedule, with operators reporting a sharp decline in leisure bookings. Travelers are holding off on reservations until after the U.S. midterm elections on Tuesday, November 3, while others are canceling existing plans due to concerns over potential regional instability.
UAE hotel occupancy rates dropped to 67.6% in September, down from 79.9% during the same period last year, according to data from CoStar. The decline reflects a broader hesitation among international visitors who are monitoring geopolitical developments closely.
UAE hotel occupancy declines
The slowdown is evident across multiple metrics. Dubai recorded 6.97 million international visitors in the first eight months of the year, a 44% decrease from the previous year, according to the Dubai Department of Economy and Tourism. Short-term rental markets have deteriorated even faster. Data from AirDNA shows that November forward bookings are down 37.5% year over year as of October 30. December and January bookings are approximately 26% behind last year, a steep reversal from the 6% to 8% gap observed in late September.
Compounding the issue is a severe reduction in airline capacity. Major carriers including KLM, Singapore Airlines, Wizz Air, Cathay Pacific, United, Air Canada, Finnair, Luxair, and Virgin Atlantic have suspended flights to Dubai into 2027. This lack of air connectivity makes it difficult for hotels to attract the volume of guests needed to sustain peak season revenue.
Travelers wait out U.S. midterm elections
Geopolitical tensions are a primary driver of the booking freeze. U.S. President Donald Trump stated he would not launch an attack on Iran before the November 3 vote. Although Iran has not attacked the UAE since May, the country suffered significant damage from Iranian missile and drone strikes in March. Guests are now fearful of renewed attacks once the election concludes.
“Is Q4 as good as what we thought in August? No, it’s not,” said Saurabh Tiwari, vice president for the Middle East, Maldives and Sri Lanka at hotel group IHCL, which operates the Taj brand. “Leisure travelers are waiting and watching until after the U.S. midterm elections. They are thinking twice before booking their tickets, also influenced by the high airfares.”
Business travel is also being affected. Reuters reported that ExxonMobil and Chevron reversed executive travel plans to the Adipec conference in the UAE due to security concerns. Analysts estimate that international tourists generate 70% of Gulf hotel revenue, making the drop in leisure and business travel particularly damaging.
Dubai travel bookings respond with incentives
Some segments are providing limited support. Staycations, long-stay guests, and visitors from India, Russia, the UK, and Eastern Europe are helping to cushion the quarter. Dubai has introduced new incentives to attract visitors, including the invitation-only Dubai Access Club. This program offers a five-year multi-entry visa, a SIM card, and AED 2,000 in spending credit.
Despite these measures, some operators do not expect a full recovery until late 2027. The combination of reduced air capacity, high travel costs, and ongoing geopolitical uncertainty continues to suppress demand during what is traditionally the region’s most profitable period.
Source: Skift
