Hotel operators are adjusting their Gulf expansion strategies in response to regional conflicts and disruptions. Indian Hotels Company is delaying some projects in Saudi Arabia and Bahrain while assessing new opportunities in Oman and Dubai. Other hotel chains are also experiencing delays in their project timelines, reflecting a cautious approach toward openings. Despite these delays, investor interest remains robust, with talks for new projects ongoing in several Gulf markets.
Dubai / New Delhi: Hotel operators are slowing the pace of their Gulf expansion, delaying new openings, pushing back project timelines and becoming more selective about new investments following regional disruption amid West Asia conflict, even as investors continue to assess new opportunities.
Indian Hotels Company (IHCL), which operates the Taj brand, expects some upcoming projects in Saudi Arabia and Bahrain to face delays, but continues to evaluate opportunities in Oman, Abu Dhabi and Dubai, its top regional executive told ET.
Also read: Dubai hotels filling up again but rates yet to recover
Lemon Tree Hotels exited its Dubai operation a few months ago, while Wynn Al Marjan, a multi-billion-dollar casino resort in Ras Al Khaimah, has pushed back its opening to September 2027 from the first quarter, with the delay adding about $600 million to its projected cost.
“I would be lying if I said the crisis would not slow down our expansion plans,” said Saurabh Tiwari, vice president – Middle East, Maldives & Sri Lanka at IHCL. “This is a time of survival and being together and supporting our partners.”
At the beginning of the year, IHCL had been targeting at least 10 operational hotels in the Gulf over the next two to three years, including a property in Saudi Arabia’s holy city of Makkah by early 2029, a hotel in Diriyah, near Riyadh, two greenfield hotels under development in Bahrain, and one each in Ras Al Khaimah and Dubai. Currently, it operates three properties in the Gulf region, all in Dubai.
Tiwari said there could be a three-six months’ delay in some of these projects, noting that Bahrain is also impacted by the conflict.
The company is now looking to open one of its signature restaurants in Bahrain within the next three-six months. “When you cannot change the wind, you change the sail,” he said.
Chema Basterrechea, global president and COO at Radisson Hotel Group, also said the major Middle East markets have been “heavily impacted.”
“Saudi Arabia is not as heavily impacted as other neighbouring countries, but the major UAE markets have been severely affected,” he said. “We cannot neglect what is happening. We have more than 50 hotels in the region and many in the pipeline. There can be delays due to the financial commitments and obligations of owners.”
Experts noted that while hotel project pipelines are expected to remain sizable, operators are likely to stagger openings as they reassess project economics, demand and the timing of fresh investments.
“What we are seeing is a reset in pace, not a retreat from the Gulf,” said Akshay Jayaprakasan, associate partner at Redseer Strategy Consultants. “Companies are moving away from chasing footprint and becoming much more selective about the asset, partner and timing. I expect announced pipelines to remain large, but actual openings will probably be more staggered than operators originally envisaged.”
He said the opportunity remains attractive even as growth targets are becoming less aggressive.
Marriott International’s operations across the Middle East & Africa (including Türkiye) comprise over 410 properties and nearly 90,000 rooms in operation, and more than 250 projects in the pipeline. "In 2025, the company opened more than 35 properties and over 6,500 rooms to our operations in the MEA region. We also added over 14,000 new rooms in our development pipeline," Sandeep Walia, COO for MEA at Marriott International.
"2026 has also seen the opening of W in Riyadh, Edition in Red Sea and it will also have soon to open, The Ritz Carlton Amala," he added.
The Leela Palaces Hotels & Resorts in its earnings calls said it stays on course to take over a 23-acre beachfront resort property in Dubai’s Palm Jumeirah in 2027 and relaunch it under The Leela brand in 2028.
“So far, it appears to be maintaining its long-term conviction despite the near-term softness,” Jayaprakasan said.
In October last year, the chain had said it received board approval to sign binding agreements to acquire a 25% stake in the luxury beachfront resort in Dubai’s Palm Jumeirah. Private funds, managed by Brookfield, will acquire the balance 75% stake, it had said.
The chain declined to comment on queries sent by ET.
JLL, in a recent report, noted that no new hotels entered the Abu Dhabi or Dubai market in the second quarter of 2026, with limited completions expected through year-end as operators adjust timelines while focusing on upgrading existing stock and await demand restoration before launching new properties. “Current market dynamics have prompted a more measured approach to development activity, with hospitality operators adjusting project timelines in response to regional conditions. This reflects near-term caution around execution rather than weakening investor confidence in the UAEs long term tourism fundamentals,” it said.
Tiwari of IHCL said investors are still interested. “The investments are still coming in. We are still getting calls from investors,” he said, adding that the chain is in talks with investors in Oman and Abu Dhabi. “We are looking at another property in Dubai. We are sustaining it for now and getting ready for the long term,” he added.
(Join our ETNRI WhatsApp channel for all the latest updates)
(Catch all the Business News, Breaking News, and Latest News Updates on The Economic Times.)
Subscribe to The Economic Times Prime and read the ET ePaper online.
...more
