Dubai’s hospitality sector is booming. A strong economic recovery, an influx of people from across the Middle East and north Africa region as political conflict spreads, and superb marketing that draws tourists from all over the the world, are injecting life into the sector.

The sector is appealing for investors, whether it is buying stakes in restaurants or hotels, investing in new concepts, or building a hotel from scratch.

The fourth quarter of 2013 saw just over 1000 additional hotel rooms enter the market in Dubai, and another 5500 additional rooms are due for completion in 2014. At present, there are 60,300 rooms available. New scheduled hotel openings include Sofitel Dubai Downtown, Intercontinental Dubai Marina and the Palazzo Versace at the end of the year. The first quarter of 2014 will see the opening of the Waldorf Astoria on the Palm.

Last year was also a record year for tourist arrivals in Dubai, according to data from Jones Lang LaSalle, a real estate advisory company. Unsurprisingly then, the hotel sector thrived. The sector registered 80% occupancy rates between January and September 2013, a 3.9% increase on 2012, at an average daily rate of $241, 5.2% growth on 2012. The resulting revenue per room increased 9.3% on a citywide sector basis.

Visitors also stayed for longer, the average stay increasing from 3.5 nights in 2012 to 3.9 nights between January and September 2013.

Another boon to the tourism sector comes from Dubai securing the Expo 2020 bid. The emirate expects to attract 25 million total tourists between October 2020 and April 2021, 17.5 million of whom are expected to come from overseas, according to Jones Lang LaSalle. The Expo is expected to spur hotel developments even further. 

Medical tourism is also on the upswing. For example, Surgery Planet, a San Francisco-based company that arranges medical tourism, is considering establishing a joint venture in the Middle East, as reported by mergermarket. A suitable partner could be an insurance company, through which it can source patients, a clinic or a hospital. Given its rapid growth, Dubai could well benefit from this or similar investments. 

Lucia Dore is the head of GCC and Middle East at mergermarket. E-mail: lucia.dore@mergermarket.com