Top 10 reasons to invest in Dubai’s hotel sector

With record-breaking tourism arrivals, world-class infrastructure, and consistently high returns on investment (ROI), Dubai remains an ideal destination for those looking to capitalise on the growth of the city’s hospitality industry.

Here are the top 10 reasons why investing in Dubai’s hotel sector makes strategic sense:

1. Booming tourism industry

Dubai consistently ranks among the world’s most-visited cities, attracting millions of visitors annually. In 2024, the city welcomed a record 18.72 million international arrivals, marking a 9% increase compared to 2023. The government’s proactive efforts to enhance the city’s appeal – through cultural attractions, luxury shopping, and year-round events – continue to attract a steady influx of visitors, driving demand for quality hotel accommodation.

2. Sustained economic growth

Dubai’s economy is robust and diversified, with strong contributions from tourism, trade, and real estate. The emirate’s business-friendly policies, tax incentives, and foreign investment initiatives are proving a strong lure for hotel investors. For the past three years, Dubai has been recognised as the world’s top city for attracting Greenfield Foreign Direct Investment (FDI) projects. In the first half of 2024, Dubai secured 508 Greenfield FDI projects, accounting for 6.2% of all projects worldwide, up from 5.7% a year earlier.

3. Strategic location and global connectivity

Situated at the crossroads of Europe, Asia, and Africa, Dubai is a leading aviation hub, with Dubai International Airport (DXB) – the world’s busiest international airport, welcoming a record 92.3 million passengers in 2024 – and Al Maktoum International Airport facilitating seamless travel. Its strategic position attracts business and leisure travellers, increasing hotel occupancy rates.

4. Government support and investor-friendly policies

Dubai offers 100% foreign ownership, tax-free returns on investment, and streamlined regulations for real estate investors. Furthermore, property investors in Dubai now qualify for residency visas for themselves and their families, with the application process renowned for its simplicity and efficiency.

5. High-performing hospitality sector

Dubai consistently reports some of the highest hotel occupancy rates globally. The city’s tourism diversification strategy has spurred massive growth in its upscale hotel sector, which The First Group specialises in. As a result, Dubai’s revenue per available room (RevPAR) and average daily rates (ADR) regularly outperform many international markets. According to the latest government data, ADR rose slightly YoY to AED538 (US$146) in 2024, while RevPAR increased 2% YoY to AED421. Meanwhile, the average occupancy rate reached an impressive 78%, while occupied room nights hit a record 43 million.

6. Massive infrastructure investments

Dubai’s ongoing infrastructure expansion, including new tourism districts, smart city projects, and transport networks, bolsters the hospitality industry. Bold macroeconomic initiatives such as Dubai Economic Agenda – D33 and the Dubai 2040 Urban Master Plan, which call for large-scale, sustainable investments to expand the city’s hospitality and leisure offerings, further enhance the industry’s long-term investment prospects.

7. Diverse market segments and year-round appeal

While Dubai built its reputation as one of the world’s premier luxury tourism destinations, in recent years, the city’s hospitality sector has diversified its offerings to include more affordable options designed to attract solo travellers, families and bleisure guests. This shift aligns with the city's rapidly evolving tourism landscape, which features everything from world-class theme parks and cultural precincts to eco-tourism experiences. Boosted by a dynamic calendar of festivals and events, Dubai has cemented its position as the region’s leading year-round destination, ensuring consistently high hotel occupancy rates across all seasons.

8. Strong ROI and competitive yields

Hotel investments in Dubai offer attractive returns, with net yields ranging between 6-10% – higher than many other global hospitality markets. As one of the world’s fastest-growing tourism and business hubs, Dubai's hospitality market still holds significant potential for expansion in the coming years.

9. A fast-growing MICE and major events hub

Building on the success of Expo 2020, Dubai continues to strengthen its position as the region’s leading events hub, securing a record number of international conferences and events for 2024. Dubai Business Events (DBE), the city’s official convention bureau, secured 437 new events – marking a 20% increase from 2023. These events are expected to attract approximately 210,731 delegates to Dubai in the coming years. Additionally, consumer events such as the Dubai Shopping Festival and Expo City initiatives continue to drive spikes in hotel demand, ensuring a steady revenue flow for the hospitality sector.

10. A sustainable hospitality leader

Dubai is committed to sustainability and innovation in hospitality, with eco-friendly hotels, AI-driven guest services, and smart energy initiatives being rolled out across the city. Its investment in green-certified hotels and sustainable tourism aligns with global trends and evolving industry demands, reinforcing Dubai’s position as a leading destination for responsible investment.