Despite the intense summer heat, hotel performance across the six Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—has shown remarkable improvement. In August, revenue per available room (RevPAR) increased by 11.7% year-over-year, driven by gains in both occupancy and average daily rate (ADR).
RevPAR Growth Trends
August’s robust performance was not an isolated event, as the region’s RevPAR growth stood at 7.8% year-to-date. During the first eight months of 2025, occupancy and ADR rose by 3.3% and 4.3%, respectively. Two primary factors are fueling these increases: a slowdown in supply growth and a surge in leisure demand.
Supply Slowdown
Typically, GCC countries are known for well-stocked pipelines and high supply growth. However, 2025 has seen a shift, with supply growth for the six countries sitting at 0.6% year to date, significantly below the 4.5% long-term average. This slowdown in new supply has reduced competition, allowing existing hotels to exercise greater pricing power.
Despite this, the supply boom is not over for the region. Pipeline activity remains robust, with 67,000 rooms currently under construction. If all these rooms come to market, the region’s supply would increase by 14%. Saudi Arabia is expected to lead this growth, accounting for 67% of the region’s rooms under construction, with over 45,000 keys in the pipeline.
Saudi Arabia’s supply growth has been limited this year, decreasing by 0.5% compared to 2024. This decline is largely due to a high number of hotel closures in the Holy Cities. However, cities like Al Khobar, Riyadh, and Jeddah report nearly 4% year-over-year supply growth, with more expected in the coming months.
Leisure Demand Surge
Leisure demand is the second major factor driving RevPAR growth in 2025. Summer weekends across the three markets have shown significant RevPAR growth as both short- and long-haul demand have increased. Destinations like Salalah and Ras Al-Khaimah have successfully attracted regional drive-to demand.
Meanwhile, Abu Dhabi has emerged as a global competitor, rivaling destinations such as Dubai and London. Enhanced marketing efforts, numerous family-friendly attractions, and a steady stream of concerts and events have helped elevate Abu Dhabi’s room rates above those of Dubai during the summer. Although the growth pace may slow in the coming months, the market outlook remains optimistic.
Future Outlook
While the first eight months of the year have been impressive, the outlook for the remaining months is equally promising. The summer is typically the slow season for GCC countries due to the extreme heat. However, the cooler winter months usually attract a larger influx of travelers.
The winter season also brings a greater number of events. 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 attend events like the Dubai Airshow, the ADIPEC trade fair in Abu Dhabi, and Foodex Saudi in Jeddah.
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