Demand Is Firming, But Still Far From Normal
Hotel performance in the Middle East has stabilized somewhat since the conflict first rattled travel, though it remains under pressure. Patrick Scholes, who covers lodging and leisure at Truist Securities Inc., put it this way: conditions are "not as weak as when the conflict first started," but they are "still deeply negative."
Seasonality should help. Projections indicate Marriott's RevPAR will be roughly 70% higher in Q4 than in Q2, and Hilton's should rise by about 65% over that interval. That matters because cooler weather brings the region's busiest months, and historically about 35% of Marriott's Middle East revenue lands in Q4. Even so, with no clear end to the war in sight, a full return to pre-war strength looks distant.
"There has been a recovery, but it's not a V-shaped recovery," said Margaux Constantin, a partner at McKinsey.
Who's Traveling Now, and What's Propping Up Occupancy
Hotels have leaned on nearby demand as international travel rebuilds unevenly. Saudi Arabia, in particular, has been supported by domestic and intra-regional trips, resilient business travel, and religious tourism. Rylan Henriques, a partner at Boston Consulting Group, said domestic and regional travelers acted as a strong "shock absorber," helping provide a baseline level of occupancy.
Marriott reported a 43% decline in Middle East RevPAR in the second quarter, though the drop wasn't as steep as the company had anticipated thanks to domestic leisure travelers. McKinsey's Constantin said international visitors are trickling back more among those seeing friends and relatives or traveling for work, while promotions are pulling in bargain hunters and pressuring revenue at the high end.
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Flights, Headlines and Events Will Shape the Next Stretch
Getting long-haul routes back is a big part of reviving overseas demand. British Airways Plc plans a limited return to Dubai starting in November, while it is keeping Abu Dhabi off its schedule for now. Deutsche Lufthansa AG aims to be flying to Dubai again in late October. The KLM unit of Air France-KLM does not expect to operate services to Dubai, Riyadh or Dammam until after October ends.
"If you're a long-haul traveler and you see your own home carrier not flying to the destination, even if you might have not flown with them, it doesn't give you a comforting signal," Constantin said.
Traveler nerves were also tested by last week's incident in which a FlyDubai pilot was assaulted by a colleague in the cockpit on a Dubai to Tel Aviv flight; passengers intervened to prevent a fatal outcome. The airline has paused flights to and from Israel while it investigates.
A busy calendar could add support through year-end: November and December will feature Formula One stops in Doha and Abu Dhabi; the Guggenheim Abu Dhabi is slated to debut in December; and Abu Dhabi Finance Week plus several Dubai World Trade Centre gatherings round out the rest of 2026.
Supply Pipelines Stay Full, Even As Recovery Lags 2025
Context helps: 2025 was a blowout year, with nearly 100 million international arrivals to the Middle East, up 39% from 2019, and Dubai alone welcoming a record 19.6 million visitors, according to UN Tourism. Against that high bar, STR's Kostas Nikolaidis expects RevPAR across Dubai, Abu Dhabi, Jeddah and Riyadh to be roughly 30% below the prior year's level in Q4 2026. "At this point we don't forecast the region to reach its 2025 levels until 2028," he said.
Among global players, France's Accor SA has the biggest Middle East exposure versus major peers, whereas Marriott and Hilton face less impact. Accor stated in July that this year's RevPAR growth will miss its mid-term targets, citing the conflict. Accor's room mix skews toward the Middle East, Africa and Asia-Pacific, based on company disclosures dated June 30, 2026.
Despite the turbulence, expansion plans keep rolling. Accor's pipeline includes 47 developments that collectively account for upwards of 11,400 rooms within Saudi Arabia, while InterContinental Hotels Group Plc has plans for 62 additional hotels nationwide. Dubai is on track to bring another 9,300 rooms online by 2028, according to Cavendish Maxwell. As Nikolaidis put it, "That is obviously a testament to the confidence that hotel operators have in this region."
For your wallet, here is the read: peak-season demand and marquee events should lift results into Q4, but forecasts still point to softer RevPAR late in 2026 versus 2025 and a multi-year climb back to those 2025 highs. If you follow travel and leisure names, the story right now is steady seasonal tailwinds meeting a slow, uneven recovery.
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