Dubai looks back to normal. Beneath the surface it’s a different story

(CNN) — Traffic is building in Dubai again, restaurant tables are filling up and flights have largely resumed. On the surface, life in the Gulf’s tourism powerhouse looks close to normal.

Beneath it, the city is facing a harder reality — although infrastructure is up and running, confidence hasn’t followed. And now, hotels, airlines and hospitality businesses are working harder than ever to persuade visitors to return.

For decades, Dubai has built its global tourism brand on a promise few destinations in the Middle East could match: stability. Even when conflict flared across the region, the emirate remained a luxurious safe haven and efficient global transit point for international visitors.

But months after the conflict involving Iran disrupted airspace across the Gulf and brought drone attacks to some of Dubai’s most recognizable landmarks, the city is facing one of the most significant tests in its modern history as it seeks to restore traveler confidence and revive a tourism sector that has long been a cornerstone of its economy.

For many residents, everyday life has returned. Drone strikes on the UAE are still occurring sporadically, but the wide-scale alerts of the early conflict have ceased — along with the associated distress. The good times are returning, they say.

Return of the party crowd

At Zuma, a stalwart venue of the usually busy lifestyle scene in the Dubai International Financial Centre, some of the party crowd are back, getting down to DJs and knocking back pricy cocktails. But an evening bottomless food and drink deal on offer suggests room for improvement.

Crowds are going out less, as salaries have been reduced for many, and the cost of living continues to rise with the closure of the Strait of Hormuz. Food and gas have both seen significant leaps.

Travel warnings remain in place from several Western governments. Australia has advised citizens not to transit through countries including the United Arab Emirates, while Canada continues to advise against all travel to the UAE and the United States urges travelers to reconsider travel to the country. Although flights have largely resumed, industry experts say rebuilding confidence may prove far more difficult than reopening air routes.

There are tourists, just not the same ones.

Visitors from countries such as Russia and Lebanon seem unfazed by the situation, with the UAE a relative haven compared to home. In recent days, families from around the region were flocking to Dubai’s malls for the Eid al-Adha break, while beauty salons have reportedly seen a constant flow of Russian women coming for a glamorous getaway.

Fatma Ammar lives in Beirut and came to the city to visit her two sons for the Eid Al Adha Islamic holiday. “Dubai still feels like a much safer place for me than Beirut,” she said. “The way the UAE has handled the war is very reassuring and I feel extremely safe being here compared to home, but sadly, I’m used to war, so something like this would not stop me seeing my sons.”

The regional conflict has left its mark though. While Fairmont The Palm has already repaired minor damage from drone strikes and is now trying to lure visitors with special offers, other landmarks like the Burj Al Arab have closed for “refurbishments.”

At Dubai International Airport, more than 40 airlines are still operating, with transit passengers continuing to keep the traffic flowing at what was the world’s busiest aviation hub, albeit in smaller numbers. The airport was also targeted in the early stages of the Iranian conflict but no damage remains visible to passengers.

Abu Dhabi’s Zayed International Airport is also bustling, with passengers thronging around its duty-free shops. But again, some big airlines are noticeably absent.

‘Softer footfall’

Naim Maadad, founder and CEO of Gates Hospitality, which includes resort and restaurant brands like Six Senses Zighy Bay in Oman and Ultra Brasserie in Dubai, said travel warnings have prompted travelers to second-guess the situation.

“I think it has created hesitation rather than fundamentally damaged confidence in the UAE itself,” he said. “International audiences often view the Middle East as one broad region rather than distinguishing between countries, and that perception naturally impacts travel decisions. The UAE, however, continues to demonstrate stability, infrastructure strength and operational continuity.

“Airports, hotels, restaurants and attractions remain fully functional. The bigger challenge is psychological. Travel advisories, insurance limitations and international headlines inevitably influence consumer behavior, even if the reality on the ground is very different. The industry therefore has to work harder to communicate reassurance, transparency, and confidence without appearing dismissive of wider regional sensitivities.”

Maadad said the impact has affected both domestic and international business, resulting in “softer footfall.”

“At the same time, residents have become more cautious with discretionary spending, so the pressure is being felt from both sides.”

Aleksandr Supinski, owner of TicToc Travel, a Dubai-based photo tourism company, said “there is a big gap between how the situation is sometimes presented in Western media and what is actually happening on the ground in Dubai.”

He said reports of a collapse in Dubai’s tourism industry were wrong and that the city was operating as usual with activities like theme parks and tours all open. He admits there is a “slowdown” due to the war and airspace closures. This will be compounded by the upcoming summer season — typically quieter because of the heat.

He said he’d given some employees longer vacations because of reduced demand but was optimistic that the tourism situation would fully bounce back by October.

Victor Abou-Ghanem, CEO of STORY Hospitality, also said travel warnings were affecting the return of visitors. “For a family planning a holiday, a government advisory, an insurance restriction, or the fear of flight disruption can be enough to postpone a trip, even if the destination itself is operating normally,” he said.

Money is also a factor, he added, with oil prices affecting air tickets.

“In uncertain periods, many travelers become more price-sensitive. Some will privilege cheaper destinations, shorter flights, or places closer to home.”

‘Effective shutdown’

The disruption has extended beyond hotels and attractions. Arabian Travel Market, the Middle East’s largest travel and tourism trade exhibition, was postponed until September to give organizers additional time as airlines, travel companies and regional airspace networks worked to restore normal operations.

Economists warn the impact could linger long after any sustained ceasefire. Hotel occupancy was forecast to plunge to just 10% in Dubai for the second quarter, from 80% pre-conflict, according to financial services company Moody’s. “This represents an effective shutdown of large parts of the hospitality sector,” it said.

Dubai’s leadership has responded with an ambitious package of support measures aimed at accelerating recovery.

These include suspending the nightly hotel tax charged at higher-end properties, removing the 7% municipal fee applied to hotel and restaurant bills, postponing hospitality-related sales fees and waiving permit postponement and cancellation charges for events.

Authorities have also allowed hotels, hotel apartments and holiday homes to defer payment of sales fees on accommodation and food and beverage operations for three months in an effort to ease pressure on operators while visitor numbers recover.

Across the city, businesses have responded with promotions and incentives rarely seen during Dubai’s post-pandemic tourism boom.

An Arab fashion designer who has lived in Dubai for nearly 20 years, and who asked to remain anonymous, said the scale of discounts now being offered across the emirate is unlike anything he has seen outside the Covid-19 pandemic, particularly in the J1 Beach resort district. “Many of these places which used to be packed are doing these super discounts,” he said.

“Many of these places that were impossible to get into before are now trying hard to attract customers. The city is still functioning, people are still going out, but businesses are having to work harder for every customer.”

Some larger hospitality companies have been redeploying staff out of the region to soften the impact of fewer customers, even as they claimed a resurgence in business since the initial downturn at the start of the conflict.

Yannis Stanisière, chief operating officer at international dining destination COYA, which has branches in both Abu Dhabi and Dubai, said his business had sent employees to company venues in Barcelona and Ibiza to “keep the talent in the network.” LEVA Hotels, which runs a 178-room and suite property in Dubai, also said it had retained its full workforce.

Luxury hotel discounts

Hotels have still had to compete aggressively for guests, meaning there are deals to be had. The Ritz-Carlton Dubai in Jumeirah Beach Residence is promoting two-for-one afternoon tea packages, while the Mandarin Oriental Jumeirah is offering discounts of up to 20% for guests staying two nights or more. LEVA said it was offering more dynamic pricing to react to the market.

Other properties have pivoted into the nomadic working market. Rove Hotels, which operates a string of properties in the emirate, recently launched a “workation” package alongside affordably priced rooms. The Marina Byblos Hotel has advertised month-long stays from AED3,800 ($1,035), a rate that would have been difficult to imagine during the city’s tourism boom.

Luxury resorts have introduced some of the most generous incentives. During the Eid holiday period, Fairmont The Palm offered guests resort credit equal to 100% of the room cost, effectively allowing visitors to reclaim the value of their accommodation through spending on restaurants, spa treatments and leisure facilities. The resort has also promoted special long-stay and resident rates from AED595 ($162) per night, including credits redeemable across dining, wellness and recreational facilities.

Despite the promotions, there are signs that parts of the hospitality sector are beginning to stabilize. Some residents say they’ve recently been benefiting from discounts or are finding it easy to score normally hard-to-get tables at exclusive venues like Zuma, but these are getting harder to pin down.

Nevertheless, many businesses continue to struggle with weaker demand and some places, like the prestigious Atlantis venues, have tactically closed for renovations to prepare for better times ahead.

Tourism analysts say the challenge facing Dubai extends beyond occupancy rates or restaurant bookings. The emirate has successfully navigated previous crises, from the global financial downturn to the Covid-19 pandemic, largely through financial strength, infrastructure investment and swift policy responses. The aftermath of the Iran war presents a different test because it strikes directly at the perception of security that underpins the city’s appeal to millions of international visitors.

The city remains heavily reliant on international tourism and transit traffic, with its aviation sector serving as a gateway between Europe, Asia and Africa.

And while long-term forecasts remain robust, the priority seems to be rebuilding the confidence of a market that once thought of the UAE as an untouchable haven in a region beset by conflict.

“The UAE continues to maintain a very strong reputation globally as one of the most stable, and best-connected destinations in the region,” said JS Anand, the founder of LEVA Hotels.

“What we are noticing is not necessarily a loss of confidence in the UAE itself, but rather a shift in traveler behavior, where people are booking closer to their travel dates and taking a more cautious approach until global conditions become more predictable.”

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