The UAE’s hospitality market experienced a challenging first half of 2026 as regional disruptions impacted international travel demand and airline operations, according to a report by CBRE, a global leader in commercial real estate sector.

Based on data from Co-Star, UAE hotel occupancy rates fell by 27.7 percentage points year-on-year through June, while revenue per available room (RevPAR) tumbled by 31.8%, it stated. 

Dubai recorded the sharpest declines, while Abu Dhabi benefited from stronger domestic demand and events-led tourism activity, said CBRE in a statement.

While non-oil sectors such as tourism and retail have experienced softer performance, commercial real estate fundamentals across office and industrial markets have continued to show resilience, it stated.

Despite current pressures, operators have responded proactively through domestic tourism campaigns, staycation packages and refurbishment programs designed to strengthen market positioning ahead of an anticipated recovery in international travel, it added.

Matthew Green, Head of Research at CBRE Mena said: “The second quarter marked a notable shift in the UAE's economic and real estate landscape, as regional geopolitical developments began to weigh on business activity, tourism flows and broader market sentiment.”

“While several sectors have seen a moderation in performance, the impact has been uneven, with office and industrial markets continuing to benefit from limited supply and sustained occupier demand,” remarked Gereen.

“What remains particularly noteworthy is the speed and scale of the UAE's policy response, from supporting business continuity and trade flows to advancing economic partnerships and diversification initiatives. Although near-term conditions are likely to remain challenging, the country's long-term growth trajectory remains supported by structural reforms, strategic investment and its position as a leading hub for trade, capital and talent,” he added.-TradeArabia News Service