Gulf Hotel Expansion 2026 Slows as Investors Stay Engaged

Hotel operators across the Gulf are slowing the pace of their regional expansion, delaying new openings and becoming more selective about fresh investments following disruption tied to conflict in West Asia, even as investor interest in the region continues. Gulf Hotel Expansion 2026 plans from several major hospitality groups are being pushed back, though industry analysts describe the shift as a recalibration rather than a broader retreat from the market.

Indian Hotels Company, which operates the Taj brand, expects some upcoming projects in Saudi Arabia and Bahrain to face delays, while continuing to evaluate opportunities in Oman, Abu Dhabi and Dubai. Further information on the company is available through IHCL's official website.

Delays Across Multiple Hotel Groups

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 of that year, a delay that has added approximately 600 million dollars to its projected cost.

Saurabh Tiwari, vice president for the Middle East, Maldives and Sri Lanka at IHCL, acknowledged the impact directly. "I would be lying if I said the crisis would not slow down our expansion plans," Tiwari said. "This is a time of survival and being together and supporting our partners." At the start 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 Makkah by early 2029, a hotel in Diriyah near Riyadh, two greenfield hotels in Bahrain, and one each in Ras Al Khaimah and Dubai. The company currently operates three properties in the Gulf, all in Dubai.

Tiwari said some of these projects could face delays of three to six months, noting that Bahrain has also been affected by the conflict. Despite the setbacks, IHCL is now looking to open one of its signature restaurants in Bahrain within the next three to six months. "When you cannot change the wind, you change the sail," he said.

Radisson and Marriott Report Mixed Impact

Chema Basterrechea, global president and COO at Radisson Hotel Group, confirmed that 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."

Marriott International, by contrast, reported continued momentum. The company's operations across the Middle East and Africa, including Türkiye, comprise more than 410 properties and nearly 90,000 rooms, with over 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," said Sandeep Walia, COO for MEA at Marriott International, adding that 2026 has already seen the opening of W in Riyadh and Edition in Red Sea, with The Ritz-Carlton Amala set to open soon.

A Reset in Pace, Not a Retreat

Industry analysts describe the broader trend as a recalibration rather than a pullback from the region. "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."

A recent JLL report found 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. "Current market dynamics have prompted a more measured approach to development activity, with hospitality operators adjusting project timelines in response to regional conditions," the report noted. "This reflects near-term caution around execution rather than weakening investor confidence in the UAE's long term tourism fundamentals."

Investors Remain Engaged Despite Delays

The Leela Palaces Hotels & Resorts, meanwhile, said in its earnings call that it remains 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. The chain had previously received board approval in October last year to acquire a 25 percent stake in the property, with private funds managed by Brookfield acquiring the remaining 75 percent stake. "So far, it appears to be maintaining its long-term conviction despite the near-term softness," Jayaprakasan said. The Leela declined to comment further when approached.

Tiwari of IHCL confirmed that investor appetite for the region has not disappeared. "The investments are still coming in. We are still getting calls from investors," he said, noting 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, a sentiment echoed elsewhere in the industry as hospitality operators globally navigate a period of financial recalibration, not unlike the challenges recently faced by Strathmore Hotels during its administration proceedings in Scotland.