The problem isn't tourism

Let's separate two things that get sold as one: Dubai's hotel industry, and the hotel apartments developers sell to investors.

The hotel industry is doing very well. Dubai welcomed 19.59 million international overnight visitors in 2025, its third record year in a row. Hotel occupancy averaged 80.7%, and the average daily rate rose 8% to AED 579.

So I'm not betting against tourism. My problem is with the hotel apartment as an investment. Those numbers belong to the hotel industry. They don't tell you what lands in an owner's account.

You're buying into a business, not a property

When I buy a regular apartment, I own an asset, and every decision about it is mine. I can:

• rent it out long-term

• hand it to a company to run as a short-term let

• replace that company if it underperforms

• leave it empty

• sell it to an investor, or to someone who wants to live in it

A hotel apartment works differently. My income depends on how the hotel performs, and the hotel is run by an operator I didn't choose and usually can't replace. I own the unit, but I don't control the business it sits inside. In practice, I've become a silent partner in a hotel.

The costs that sit between the hotel and you

Before anything reaches the owner, the hotel's revenue passes through a long list of deductions: management fees, operator fees, developer fees, operating expenses, and contributions towards running and maintaining the hotel.

That's why an 80% occupancy rate for the city tells you very little. A hotel can be full and still pay its unit owners a thin return, because the owner is paid last.

The exit

This is the part most buyers think about too late.

When you sell a regular apartment, your buyer pool is wide: investors, end users, anyone who likes the location. When you sell a hotel apartment, your buyer isn't buying a home in a good location. They're buying a business model, and you have to convince them it works before they'll pay for it. Many never get past that step.

A smaller pool of buyers means a slower sale and less negotiating power. In my experience, it also means these units rarely appreciate the way comparable residential apartments do.

The bar it has to beat

The fair comparison is a regular apartment. Gross yields on ready apartments run at about 6 to 7%.

So if I'm giving up control, tying my income to an operator and a seasonal business, and accepting a smaller pool of buyers, I need a clearly higher return to make up for it. Not the same return. A higher one.

That's where the guaranteed return comes in. Some developers offer one, an 8% guarantee for example. Before that number means anything, ask four questions:

1. Is it net, after every fee and deduction, or gross?

2. Is it a percentage of the full price you paid?

3. How many years does it last?

4. What happens to your income when it ends?

An example of why this matters: if the 8% is before fees, and fees take a quarter of it, you're left with 6%. That's what a regular apartment can already earn, without giving up control. And if the guarantee only covers the first few years, your average return over the life of the investment can end up below a regular apartment's.

The only case I'd consider

There's one situation where I'd look at a hotel apartment seriously. The project has to be finished and operating for at least three years, and I need to see its real numbers:

• the net income actually paid to unit owners in each of those years

• the building's own occupancy rate, not the city's

• its average daily rate

• every fee deducted before the owners were paid

If the net return over three years clearly beats a regular apartment in a comparable location, it's worth a conversation. If the seller can't show those numbers, you have your answer.

Tourism can boom while the owner earns less than a tenant-occupied flat down the road. Buy the asset, not the story. If you've been offered a hotel apartment and want a second opinion on the numbers, send them to me.