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Middle East hotel performance heats up

  • Automatic
  • 1 October 2025
  • 5 minute read
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This article was written by Hospitality Net. Click here to read the original article

Despite the summer heat, hotel performance has accelerated across the six Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates).

In August, revenue per available room (RevPAR) grew 11.7% year over year with gains in both occupancy and average daily rate (ADR).

— Source: STR— Source: STR
— Source: STR

August’s strong performance was not an outlier, as the region’s RevPAR growth stood at +7.8% year to date. In the first eight months of 2025, occupancy and ADR rose 3.3% and 4.3%, respectively.

Two major factors are driving these increases, and as with most discussions about the Middle East hotel market, it makes sense to begin with supply.

Supply slowdown

Well-stacked pipelines and high supply growth are a hallmark for most GCC countries, but 2025 has been different. Supply growth for the six countries sits at 0.6% year to date, which is well below the 4.5% long-term average. The slowdown in new supply has limited new competition and allowed for greater pricing power among existing hotels.

— Source: STR— Source: STR
— Source: STR

That’s not to suggest, however, that the supply boom is over for the region. Pipeline activity across the six countries remains strong with 67,000 rooms currently under construction. If all those rooms come to market, the region’s supply would increase 14%.

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The balance of development has started to shift, though, with Saudi Arabia expecting the most growth in hotel supply as the Kingdom’s ambitious Vision 2030 plans loom ever closer. Saudi Arabia accounts for 67% of the region’s rooms under construction, with more than 45,000 keys in the pipeline.

Saudi Arabi’s supply growth has been limited this year, falling 0.5% relative to 2024. A disproportionately high number of hotel closures in the Holy Cities have caused the decline. Al Khobar, Riyadh, and Jeddah continue to report nearly 4% supply growth year over year, with much more to come over the next six to 12 months.

Leisure boom

Leisure demand is the second major factor driving 2025 RevPAR growth. Summer weekends across the three markets have shown exceptional RevPAR growth as short- and long-haul demand makes its way into the region.

Salalah and Ras Al-Khaimah continue to raise their profiles regionally and have done well in attracting drive-to demand from across the region.

Meanwhile, Abu Dhabi has stepped onto the world stage. A complete renaissance now has the UAE capital competing with the likes of Dubai, London, and other major metro destinations globally.

— Source: STR— Source: STR
— Source: STR

Increased marketing, a plethora of family-friendly attractions, and a constant stream of concerts and other events have helped lift Abu Dhabi’s room rates higher than even Dubai over the summer. While the pace of growth is likely to decelerate over the coming months, the market’s outlook remains bright.

Looking ahead

While the first eight months of the year have been nothing short of impressive, the next four are no less hopeful. Summer is technically the slow season for the GCC countries, as the weather is uncomfortably warm. It’s the temperate winter months that tend to welcome a bigger influx of travelers of all types.

Cooler weather brings more events as well. Leisure travelers can look forward to the WFC Rally in Jeddah, the season-ending Formula 1 race in Abu Dhabi and the MDLBEAST Soundstorm festival in Riyadh.

Corporate travelers will flock to the Dubai Airshow, the ADIPEC trade fair in Abu Dhabi, and Foodex Saudi in Jeddah.

About CoStar Group, Inc.

CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with thirteen million average monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. OnTheMarket is a leading residential property portal in the United Kingdom. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. Thomas Daily is Germany’s largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group’s websites attracted over 163 million average monthly unique visitors in the third quarter of 2024. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.

This news release includes “forward-looking statements” including, without limitation, statements regarding CoStar’s expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that future media events will not sustain an increase in future occupancy rates. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2023, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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