Accor expects full recovery for Dubai hotel market next year

• Recovery predicted by Q2 2027
• Occupancy rebounds before rates
• Luxury hotels likely to bounce back first

Dubai’s hotel market is unlikely to recover fully from the impact of the Iran-US conflict until the second quarter of next year, according to a senior executive at one of the world’s largest hotel operators.

Accor, which has headquarters in Paris and runs about 85 hotels in the UAE, expects occupancy to recover first followed by room rates, after property owners slashed prices during the war.

Duncan O’Rourke, Accor’s CEO for the Middle East, Africa and Asia Pacific’s economy, midscale and premium brands, acknowledged Dubai was hardest hit in terms of the war derailing tourism.

“It’s no question that this crisis affected Dubai [and] Abu Dhabi,” he told media at a roundtable in the city last week.

“What I can tell you is this: We managed to protect our hotels and keep them positive, not losing money. Occupancies and rates during weekends have been high, and then it closes down,” he said, referring to occupancy on weekdays.

Official visitor numbers are difficult to come by as the emirate’s tourism authority stopped releasing its numbers at the end of January, but aviation statistics provide some insights.

Five days into the war, aviation analytics company Cirium said 56 percent of inbound flights to the region – more than 10,000 services – had been cancelled since the airstrikes began. That equates to 2.2 million seats lost on arrivals.

National carrier Emirates cut half a million seats from its June schedule.

O’Rourke expects recovery in Dubai to begin after the seasonally quiet summer. “For Q4, I think we’ll see the volumes coming back, but we won’t see the pre-[conflict] rates immediately. I think by end of Q1, Q2 next year, we’ll get close to where we were,” he said.

Luxury will come back first, he added. Five-star hotels make up 37 percent of Dubai’s total room inventory, according to government data, with four-star properties another 28 percent.

“Generally, when you have these crises, the first segment to rebound is high-end luxury, we saw that with Covid. Fairmont [on the Palm] is well positioned to do that despite being the most talked about Fairmont in the world for a couple of months,” said O’Rourke, referring to the hotel which suffered damage from a missile attack during the Iran war.

“Volume will come in, but not the rates yet, you’ll see that in Fairmont and Sofitel [two high-end brands owned by Accor], but to a lesser extent than economy and midscale hotels,” he added.

Numerous Dubai hotels have temporarily closed for refurbishment, including one of the city’s most famous: Jumeirah Burj Al Arab. O’Rourke said Accor had shut four hotels in Dubai for refurbishment.

O’Rourke wouldn’t provide details on layoffs but said staff were being relocated to other properties in the region as needed.

• UAE hotels get a glow-up as regional conflict hits tourism
• Dubai hotels urged to hold rates after Iran war occupancy drop
• British visitors likely to drive UAE tourism recovery

Global group deputy CEO Jean-Jacques Morin said at the roundtable: “We kept as many people as we could,” when asked about staff in the UAE.

On March 16 AGBI reported on Dubai hotels being urged not to slash rates to avoid a race to the bottom. O’Rourke said Accor hasn’t done that.

“I don’t think we’ve ever discounted existing business, we’ve been very astute in how we set prices,” he said.

At Fairmont The Palm, a night’s stay this coming weekend costs about AED650 ($177) for two people without breakfast. The average price of a hotel room in the city in January was AED775.