Dubai hotels log strongest December in nearly 20 years

Dubai’s hotel sector delivered its strongest December performance in nearly two decades, as major events and festive-season travel drove both occupancy and rates to new highs, according to a report by CoStar. 

Citywide occupancy for the month reached 84.3%, up 3.4% year-on-year and the highest December level since 2006, while average daily rate (ADR) climbed 11.1% to AED1,042.11 (US$283.76), the highest for a December since 2007 and the strongest rate recorded in 2025. Together, these gains pushed revenue per available room (RevPAR) up 15% year-on-year to AED878.19.

The strong finish to the year came against a robust regional backdrop, with UAE hotel occupancy averaging 79.3% in the first 10 months of 2025, placing it among the highest in the world, according to Minister of Economy and Tourism Abdulla bin Touq Al Marri.

The surge in hotel performance mirrored record traffic at Dubai International Airport (DXB), which handled 8.8 million passengers in December, a 6% increase on the same month in 2024 and the busiest month in the hub’s 65-year history.

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New Year’s Eve marked the peak of trading, according to CoStar, with occupancy hitting 94.1% as visitors flocked to Dubai’s fireworks, live entertainment and countdown celebrations. On the same night, ADR rose to AED2,286.60 and RevPAR reached AED2,151.40, the first time on record that both indicators in Dubai have exceeded the AED2,000 mark, highlighting the city’s ability to command premium pricing on key compression dates.

Demand also proved resilient across the final week of the year rather than concentrating around a single night. For nine consecutive evenings from 23 December, occupancy remained above 80%, while ADR held above AED1,000, signalling sustained strength in leisure and VFR segments during the peak holiday period.

December’s performance capped a record year for tourism, with Dubai welcoming 17.55 million international overnight visitors between January and November 2025, a 5% year-on-year increase, according to the Dubai Department of Economy and Tourism.

To accommodate this growth, Cavendish Maxwell’s Dubai hospitality analysis indicates the city is set to add more than 11,300 new hotel rooms by 2027, lifting total inventory to over 162,600 keys across roughly 770 hotels, with supply forecast to rise by just over 3% annually in 2025 and 2026.

For more information, visit costar.com