UAE Hospitality Sector Growth in 2023: Economic Resilience and Diversification
- Feb. 13, 2024
- FMCG HORECA BUSINESS
JLL's latest report highlights the robust growth of the hospitality sector in the UAE throughout 2023, demonstrating the nation's economic resilience amidst global challenges and its successful diversification away from reliance on oil. The non-oil sector notably flourished, as indicated by the PMI reaching 57.0 in November. Oxford Economics forecasts a doubling of GDP growth to 2.4 percent in 2024.
Across various asset classes, the real estate market in the UAE continued its upward trajectory. Strong demand in the office sector led to rising rents, while residential developers met investor demands, witnessing growth in both primary and secondary markets. Retail malls also adapted dynamic strategies, enriching customer experiences with experiential retail offerings.
In particular, the UAE's hospitality sector sustained its momentum, supported by a well-balanced events calendar. Operators adjusted revenue management strategies to attract diverse business amidst evolving trends, showcasing the UAE's ability to foster a dynamic and flourishing hospitality landscape. The UAE's dedication to excellence in hospitality has solidified its position as a global destination, drawing visitors from around the world.
In 2023, Dubai added 5,000 new hotel rooms, reaching a total of 153,000, while Abu Dhabi expanded its offering by 200 rooms, surpassing 32,500 in total. Looking ahead to 2024, Dubai plans to introduce 7,000 new hotel rooms, with Abu Dhabi anticipating an additional 700.
Moreover, from January to October 2023, Dubai welcomed 13.9 million visitors, marking a 22 percent increase. The hospitality market flourished with well-attended events, driving traffic throughout both low and high seasons.
In November 2023, Dubai's hotels maintained a 77 percent occupancy rate, with a 2 percent decrease in ADR to USD 179, yet maintaining a healthy RevPAR of USD 138. Abu Dhabi sustained a 72 percent occupancy rate with a 20 percent increase in ADR to USD 143, resulting in a 25 percent RevPAR improvement to USD 103.
Ongoing developments such as Saadiyat and Yas Island, coupled with new entertainment concepts, are expected to drive long-term growth in the capital's hospitality sector.