Analysis by Kelsey Fenerty
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).
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.
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.
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%.
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 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.
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.
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.