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UAE: As Dubai enters its high season, STRz examines how property managers responded to the travel disruption earlier this year and whether the shift towards flexible monthly stays could have a lasting impact on the market.
In the months following a surge in holiday rental cancellations across the UAE, Dubai’s short-term rental market began to show signs of recovery. However, lower daily rates, shorter booking windows and a move towards longer stays suggest that the market has changed considerably since the start of 2026.
In late February 2026, holiday rental booking cancellations across the UAE more than doubled as tensions in the Middle East disrupted flights and travel plans. At this time, AirDNA recorded 8,450 cancellations on 28 February, compared with a nightly average of approximately 3,100 during the rest of the month. The cancellation rate reached 43.8 per cent, with most of the affected stays scheduled for March.
By the summer, interviews conducted by STRz indicated that demand was beginning to recover. However, the rebound remained uneven, characterised by lower average daily rates, cautious booking behaviour and an increase in mid-term stays. So, how has Dubai’s STR market adapted to the disruption, and where does pressure remain?
The UAE’s wider hospitality sector has shown signs of growth. Dubai hotel occupancy for instance, which fell to 36 per cent during the height of the disruption in March, rose to 66 per cent in August according to Bloomberg figures. Dubai property manager GuestReady has recorded a similar improvement within its own portfolio. The company said March and April were its most affected months, but occupancy has since recovered to an average of approximately 80 per cent over the past three months.
GuestReady said: “At GuestReady, Dubai, March and April were the most affected months following the regional disruption; we’ve seen a steady recovery in occupancy over the past three months, averaging around 80%.” However, the recovery in occupancy has not yet been matched by a return to previous rate levels. It added: “Although ADR remains below both the peak season and last year’s low-season levels, demand is returning, particularly through monthly and mid-term stays, which have traditionally been a key driver during Dubai’s summer months.”
Performance has also varied between property types. GuestReady reported that its villa portfolio was operating at close to full occupancy, suggesting that larger accommodation continues to attract families and groups. The company said: “Our villa portfolio, for example, is currently operating at close to 100% occupancy, highlighting the continued demand for larger residential accommodations for families and groups.”
When interviewed during the summer, GuestReady reported early bookings for stays between October and January, which it viewed as an encouraging indication of returning international demand. However, the company cautioned that it remains too early to determine whether demand will fully return to pre-conflict levels.
For some property managers, recovery has depended on switching towards business travellers, UAE residents and flexible monthly stays. For First Class Property Management [FCPM], the turning point came on 12 March, when occupancy across its portfolio fell to 44.2 per cent. Rather than waiting for international leisure demand to recover, the company repositioned its properties towards UAE residents and business travellers seeking stays of between one and six months.
Luis Santos, co-founder and managing director of FCPM, said: “The escalation in March stopped tourist demand almost overnight. Our single worst day was March 12th, occupancy touched 44.2 per cent, and by then our response was already in motion, repricing and repositioning the portfolio for UAE residents and business travellers on monthly and multi-month stays of one to six months.”
FCPM’s monthly occupancy subsequently increased from 61.9 per cent in March to 83.2 per cent in April and 89.7 per cent in June. However, Santos stressed that the improvement should not be interpreted as a complete rebound in leisure demand. He added: “Recovery for us dates from March 12th, but it is a different demand pool, not a tourist rebound.”
The shift also involved accepting lower nightly rates in return for longer bookings and more predictable income. FCPM recorded an ADR of AED 270 in June, compared with AED 414 during the same month last year. Its RevPAR reached AED 243, down from AED 337 year on year, but remained above the wider Dubai market figure of AED 188 cited by the company. Santos said: “A monthly stay prices below a nightly tourist rate, in exchange the owner gets a full calendar, lower turnover cost and income that arrives every month.” FCPM noted that its 2025 figures reflected a predominantly nightly, tourist-led model, while its 2026 results blended nightly rates across monthly and multi-month stays. Occupancy was measured consistently across both periods, but the company said its ADR figures were not directly comparable year on year.
Ryan Ingram, founder of Vacant Nests, reported a similar shift across the company’s Dubai portfolio. He said several units in Jumeirah Village Circle had continued to operate at close to full occupancy, with an average stay of approximately 28 nights, despite pressure on achievable rates earlier in the year.
Ingram said: “Our approach has therefore shifted from simply maximising the nightly rate to finding the best overall combination of occupancy, length of stay and net income for each property.” He added that Vacant Nests is receiving more enquiries from guests seeking accommodation for several weeks or months, leading the company to accommodate a mixture of traditional short stays and medium-term bookings.
Santos believes the movement towards flexible stays will continue beyond the immediate disruption, supported by demand from residents and business travellers who do not want to commit to annual rental contracts. While international travel disruption triggered the initial decline, property managers said it exposed wider pressure created by Dubai’s expanding holiday-home supply.
According to FCPM’s analysis of PriceLabs data, market occupancy fell from 68 per cent in March 2025 to 40 per cent in March 2026. April occupancy was also reported at 40 per cent, compared with 87 per cent one year earlier, while RevPAR declined from AED 475 to AED 161. Santos said: “This was a demand shock first. April tells you everything, market occupancy was 40 per cent against 87 a year earlier, RevPAR down two thirds. No supply effect produces that in one month, the conflict switched tourist demand off.”
However, Dubai entered the disruption with around 3,000 more active holiday-home listings than one year earlier, meaning the reduced pool of demand was spread across more available properties. He added: “Supply set the starting conditions, roughly 3,000 more active listings than a year earlier meant a smaller pool spread across more units, and June adds the summer low season on top.”
FCPM’s analysis shows that active listings peaked at approximately 36,500 in January before falling to 33,000 in June and 31,800 in July. Santos said the decline reflected hosts delisting properties, moving them into the annual rental market or exiting altogether.
Ingram also questioned whether competition is currently the main factor placing pressure on rates. Based on Vacant Nests’ portfolio and conversations with property owners, he said some rent-to-serviced-accommodation businesses had ceased trading, reduced their portfolios or returned units to landlords, particularly in Downtown Dubai and Business Bay. He said: “The main challenge has not necessarily been increased competition, as a number of operators have reduced their portfolios or exited the market. Instead, guests have continued to expect lower pricing, and operators have had to remain flexible in order to maintain occupancy while protecting owner returns.”
However, experiences vary across the market. Meera Timsena, general manager of Vihaan Holiday Homes Rental, said that competition remains intense for those still operating in the market, with demand failing to keep pace across some locations and property types.
She said: “From an operational perspective, the effects are still being felt. Booking windows have shortened, guest spending has become more cautious, and competition has intensified as operators started to reduce rates in order to maintain occupancy. Many property owners and managers – including myself – continue to experience lower-than-expected booking levels despite maintaining high-quality listings. This suggests that the market has yet to regain the momentum many expected.”
Price competition has also changed booking behaviour. Timsena reported that some guests are cancelling existing reservations after finding similar properties at lower prices, while others are negotiating further discounts before confirming their stay.
She warned: “However, today’s market demands patience, adaptability, and data-driven decision-making. Continually discounting to secure bookings is not a sustainable strategy; it risks eroding both profitability and the long-term value of the asset.”
The disruption has also changed how property owners assess performance. Rather than focusing primarily on headline nightly rates, property managers said owners are paying closer attention to occupancy, cash flow and the reliability of their management partner. GuestReady said owner sentiment strengthened as 2026 progressed, with the number of owners moving to long-term rentals or leaving the market slowing from April. The company recorded an Owner Net Promoter Score of +44 in July, which it said reflected returning confidence in Dubai’s short-term rental sector.
However, sentiment remains mixed across the wider market. Timsena said Vihaan Holiday Homes lost some properties after conditions weakened and owner confidence declined. She said: “The year began with strong confidence, driven by expectations of another exceptional year for tourism and short-term rentals. However, as market conditions became more challenging, confidence gave way to a more measured and pragmatic outlook.”
Santos has observed a similar reassessment among FCPM’s owners, including some who initially moved their properties into the annual rental market before returning to flexible stays. He said: “Owners are becoming more realistic, less anchored to headline rates, more focused on whether the unit is actually earning.”
As Dubai enters its high season, current performance will provide a clearer indication of whether international demand and owner confidence have been fully restored. GuestReady is already seeing bookings for stays between October and January, pointing to renewed forward demand from international travellers. However, the company cautioned: “The biggest risk remains geopolitical uncertainty. While demand has proven resilient, it is too early to assume that the coming high season will fully match pre-conflict performance.”
Santos expects tourist demand to rebound quickly once regional conditions stabilise, but believes property managers able to serve both nightly and monthly guests will be best positioned to benefit. He said: “When the regional situation stabilises, tourist demand will return fast, Dubai has proven that repeatedly, and the operators who can run nightly and monthly models side by side will take the recovery first. The risks are a prolonged conflict, continued rate pressure in commodity stock, and the exited supply flooding back the moment tourist demand returns, compressing the recovery for everyone.”
Dubai’s long-term tourism appeal continues to underpin confidence in its short-term rental sector, but the recovery taking place is more complex than a return to previous conditions. Occupancy has improved for some property managers, although often through lower rates and a greater reliance on monthly and mid-term stays. The high season will test whether international leisure demand has fully recovered, but the experience of 2026 has already shown that flexibility and sustainable pricing will be central to navigating future disruption.
