UAE Hotel Demand Drops Faster While Saudi Arabia Holds Up Better

The war involving the US, Israel, and Iran is affecting hotel markets across the Middle East, but not in the same way.

According to Radisson, Saudi Arabia is holding up better than the UAE because it has stronger domestic demand, fewer hotel rooms relative to its population, and some cities that are less exposed to the current conflict. The UAE has been hit harder because its hotel sector depends much more on international visitors and transit travelers.

Hotel supply gives Saudi Arabia a stronger cushion

The UAE has built a much larger room base, especially in Dubai, where hotels are designed to serve high volumes of international visitors. Saudi Arabia has fewer rooms compared with the size of its population, so it is under less pressure when foreign demand weakens.

That gives Saudi hotels more protection in a downturn. They do not need the same level of inbound tourism to stay active. In the UAE, the market is more exposed because performance depends heavily on international arrivals, flight connectivity, and traveler confidence.

Leisure travel has weakened, but some business demand remains

Radisson says not all hotels are performing the same way. In Dubai, central hotels are facing more pressure, while some suburban properties are doing slightly better because they still attract long-stay corporate guests.

The same pattern can be seen across the wider region. Some countries are seeing heavier cancellations, while others are holding up a little better. But even markets that are not directly affected can still suffer when international travelers see the whole region as risky.

Hotels are protecting rates and cutting costs

Radisson says it is not responding with deep discounts. The company believes sharp price cuts would hurt long-term value without doing much to bring travelers back. That shows the problem is weak demand, not pricing.

Instead, the focus has shifted to cost control. Radisson says it is trying to avoid layoffs, but it is using temporary steps such as shorter working hours and unpaid leave to reduce wage costs.

Projects are still moving, but recovery may take time

For now, Radisson says its hotel pipeline in the region is still moving ahead. Openings have not been delayed, and planned deals have not been canceled.

The pressure on UAE hotels also fits a wider regional pattern, where the main problem is no longer only cancellations, but weaker travel confidence across the whole Gulf travel system. Middle East flight disruption has made routes less predictable and increased uncertainty for travelers moving through hubs such as Dubai, Doha, and Abu Dhabi.

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