Hotel Management & Transactions 2026

Last Updated June 24, 2026

UAE

Law and Practice
Trends and Developments

Law and Practice

Authors

Andrew Thompson

Fady Ghanem

Ian Arnott

Raneem Salha

Al Tamimi & Company is the largest and one of the most prominent law firms in the Middle East, offering full‑service legal support across the region. Established in 1989 in the United Arab Emirates, the firm operates in multiple jurisdictions, including the UAE, Saudi Arabia, Qatar, Oman, Bahrain, Kuwait, Egypt, Iraq and Jordan. Al Tamimi advises a broad spectrum of clients, ranging from multinational corporations and financial institutions to government bodies and family‑owned businesses. The firm has strong expertise across key practice areas such as corporate and commercial law, banking and finance, dispute resolution, construction, employment, real estate, intellectual property, and technology, media and telecommunications. Its digital and data practice is recognised for advising on regulatory frameworks, data protection, digital platforms, fintech and emerging technologies. Combining international standards with deep regional knowledge, Al Tamimi delivers pragmatic and commercially focused legal solutions on complex domestic and cross‑border matters.

1. Legal Framework

1.1 Main Sources of Law

UAE

The UAE is a constitutional federation established on 2 December 1971, comprising seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Umm al-Quwain and Ras Al Khaimah (RAK).

The country’s governance structure is rooted in its Constitution, which distributes legislative competence between the federal level and the individual emirates. Federal law prevails over emirate-level legislation. However, the emirates retain authority to legislate in matters not reserved exclusively to the federal government, as well as in areas where federal legislation has not yet been enacted. A notable exception to the general primacy of federal law concerns property matters, where emirate-specific legislation plays a particularly significant role. Outside of property law, civil and commercial affairs are predominantly governed at the federal level. The principal federal laws relevant to hotel transactions include the UAE Civil Code (Federal Law No 5 of 1985), which governs contractual and property relationships, as well as more recent enactments such as Federal Decree-Law No 47 of 2022 on corporate taxation and the UAE VAT framework. Each emirate has additionally developed its own regulatory regime for real estate registration, licensing and land use.

2. Sale and Purchase

2.1 Common Sale and Purchase Structures

Share deals and asset deals are both widely used structures for hotel sale and purchase transactions in the UAE.

2.2 Confidentiality of Terms

Hotel transactions and their associated terms, including the identities of the parties and the sale and purchase price, are not publicly disclosed in the UAE.

2.3 Restrictions on Foreign Acquisition

Dubai

Foreign investors who are not UAE or Gulp Cooperation Council (GCC) nationals may acquire real property in specifically “Designated Investment Areas”, including locations such as Dubai Marina, Downtown Dubai, Palm Jumeirah and Business Bay.

Abu Dhabi

Foreign investors who are not UAE nationals are entitled to hold real property in designated “Designated Investment Zones”, such as Yas Island, Saadiyat Island, Al Reem Island and Al Maryah Island

Designated Investment Areas and Designated Investment Zones, in Dubai and Abu Dhabi respectively, are dynamic and continue to expand over time, with areas/zones being expanded or new areas/zones being introduced as part of ongoing efforts to promote and facilitate foreign investment in the real estate sector.

RAK

RAK has economic zones equivalent to designated investment areas/zones in Dubai and Abu Dhabi. Examples of economic zones in RAK include Al Marjan Island and RAK Maritime City.

3. Hotel Ownership and Management

3.1 Common Hotel Ownership and Management Structures

UAE

Privately owned structures/independent hotels

In contrast to branded hotels, privately owned and independent hotels are relatively uncommon in the UAE. These hotels are owned and run by individuals or smaller companies without any affiliation to major hotel chains. The owner exercises complete authority over operations, branding and management.

Hotel management agreements

Hotel management agreements (HMAs) are highly prevalent, particularly among international and regional hotel chains. Under an HMA, the property owner engages a management company to run the hotel on their behalf. The management company assumes responsibility for day-to-day operations, staffing and marketing, while the owner retains ownership of the underlying property and bears financial responsibility.

The owner gains the advantage of the management company’s expertise and brand recognition but relinquishes a degree of control over daily operational matters.

Hotel lease agreements

Hotel lease arrangements are not widely used in the UAE. Under a hotel lease arrangement, the property owner leases the hotel to an operator who assumes full responsibility for all operational aspects and pays rent to the owner. The owner receives consistent rental income with limited operational involvement, while the operator bears all operational risks and benefits.

Franchise agreements

Franchise agreements remain less common in the UAE, though they are gaining increasing attention in industry discussions. Under a franchising arrangement, the hotel owner operates the property under the brand name and standards of a franchisor. The franchisee manages the hotel while adhering to the franchisor’s prescribed standards and practices. The franchisor provides brand recognition, marketing support and operational frameworks. The franchisee benefits from the established brand and support infrastructure but is required to pay franchise fees and comply with rigorous operational standards.

3.2 Hotel Management Agreements

UAE

An HMA establishes the framework governing the relationship between the hotel owner and the operator, delineating their respective rights, obligations and commercial arrangements. The principal components of an HMA are outlined below.

Term of appointment

The term of appointment sets out the duration of the agreement and the conditions under which it may be renewed. The standard initial term for HMAs typically ranges from 15 to 25 years, with renewal terms subject to commercial negotiation between the parties.

Operator’s fees

Operator remuneration is conventionally structured as a two-part fee: a base management fee, expressed as a percentage of the hotel’s total revenue, together with an incentive management fee, expressed as a percentage of gross operating profit.

Operator’s obligations and rights

The operator is obligated to manage the hotel in accordance with a specified standard. To fulfil this obligation, the operator is granted all rights reasonably necessary, including the authority to hire staff on behalf of the owner and to determine maintenance requirements.

The operator is also responsible for preparing operational and capital expenditure budgets and typically exercises exclusive control over the running of the hotel, managing the payment of expenses, fees and returns from designated accounts.

The HMA may additionally confer upon the operator the right to deliver marketing and promotional services in respect of the hotel.

Operators will generally have the right to require property upgrades to maintain brand standards as determined by the operator, although such rights may be subject to time or scope limitations.

HMAs frequently include a right of first refusal in favour of the operator in the event the hotel is offered for sale.

Non-compete and area of protection clauses are commonly negotiated, as are non-disclosure provisions.

Key money

Key money arrangements are less prevalent in the UAE compared to other regions such as Europe, the broader Middle East and Africa, or the Asia-Pacific.

Owner’s obligations

The owner is responsible for funding the hotel’s operations and maintenance, including insurance payments. The owner is also typically required to establish reserves for fixtures and fittings.

The owner must provide the necessary funds for hotel operations, encompassing working capital and capital expenditure requirements.
The owner is required to maintain sufficient insurance coverage for the hotel property.
The owner must ensure that the hotel operates in compliance with all applicable laws, regulations and standards.
The owner generally retains approval rights over significant decisions, such as major renovation projects. Rights concerning operational expenditure and budget approval vary, though operators are typically afforded broad discretion in determining appropriate management of the business.
The owner will commonly seek to obtain a non-disturbance agreement prior to any financing arrangements and to include ratio-restricted financing obligations within the HMA.
In addition to compliance with applicable laws, owners must ensure adherence to anti-money laundering and sanctions requirements.
The owner’s obligations frequently include a provision preventing them from exercising undue influence over the hotel operator.

Accounts

A bank account is established in the owner’s name, which is generally administered by the operator. The owner typically provides the initial working capital.

Revenue derived from hotel operations is deposited into designated accounts. Operating costs, including payroll, utilities and supplies, are disbursed from these accounts.

Profits are distributed in accordance with the terms of the HMA, following an agreed priority of payments from those accounts.

Termination and default events

Standard contractual provisions govern termination in circumstances of insolvency, judgments against a party, or material breach.

Cross-termination provisions, triggered by the termination of other related agreements, are commonly included.

Owners may exercise termination rights where the operator fails to meet the performance test or where the hotel is sold to a third party. Such termination is often subject to a specified time period and/or the payment of a break fee.

Performance test

A performance standard is frequently imposed on the operator, and failure to meet this standard may entitle the owner to terminate the agreement.

This test commonly comprises two elements:

a comparison of the hotel’s revenue per available room (RevPAR) against a designated competitive set of hotels; and
a comparison of actual total revenue against budgeted total revenue.

Cure rights are typically afforded to the operator, although the specific terms of such rights vary between transactions.

Dispute resolution procedures

HMAs typically include provisions addressing the appropriate method of dispute resolution depending on the nature of the dispute, whether fee-related or concerning early termination.

Where the dispute concerns fees or accounts, it may be referred to an independent expert. For other disputes, it is common to provide for an escalation process comprising good faith negotiations, followed by mediation and then arbitration, often within the Abu Dhabi Global Market (ADGM) or the Dubai International Finance Centre (DIFC).

3.3 Hotel Lease Agreements

Hotel lease agreements are not widely used in the region (see 3.1 Common Hotel Ownership and Management Structures).

Dubai

Short-term leases (those with a duration of less than ten years) must be registered with the Real Estate Regulatory Agency through the Ejari system. Long-term leases (those with a duration of between ten and 99 years) must be recorded on the Real Estate Register maintained by the Dubai Land Department.

Abu Dhabi

Short-term leases (those with a duration of less than four years) must be registered through the Tawtheeq system. Long term leases (those with a term of more than four years) must be registered with Abu Dhabi Real Estate Centre (ADREC). Any leasehold interests situated within the ADGM must be registered with the ADGM Land Registrar.

The key clauses and provisions in commercial lease agreements typically address rent, duration, renewal rights and dispute resolution mechanisms.

3.4 Hotel Franchising Agreements

UAE

Franchising agreements entail the licensing of a brand’s name and operating systems to the franchisee, who independently operates and manages the hotel.

Franchise agreements typically require brand operators to pay royalties calculated as a percentage of sales or total revenue. They also generally grant the licensor a right to conduct inspections of the hotel on a periodic basis.

In the UAE, hotel franchising agreements are subject to various licensing and regulatory requirements that differ depending on the emirate in which the hotel is located.

4. Financing

4.1 Financing Options

In the UAE, real estate acquisitions are typically financed through equity (the purchaser’s own capital) and/or bank financing.

4.2 Restrictions on Foreign Financing

Lenders are only authorised to extend credit in the UAE if they are locally incorporated and regulated by the UAE Central Bank.

5. Tax

5.1 Main Tax Implications

Sale and Purchase of a Hotel

The sale of a hotel in the UAE may attract corporate tax, levied at 9% on the gain recognised in the financial statements.

A top-up tax may arise bringing the entity’s effective corporate tax rate to 15% where the entity falls within the scope of the OECD Pillar Two regime.

The transferor may also be required to apply VAT at a rate of 5% on the sale unless the transaction qualifies as a transfer of a going concern and the necessary conditions are satisfied, in which case the transfer would fall outside the scope of VAT.

No stamp duty or other similar transfer taxes apply. However, the transfer of the underlying real estate asset is subject to a transfer fee of 4% in Dubai and 5% in the DIFC. In Abu Dhabi, the transfer fee ranges from 1% to 4%, while in the ADGM it is 2%.

Hotels are also required to apply various additional charges, including the tourism dirham fee and municipality fees.

Entering Into HMA, Lease Agreement or Franchise Agreement

Income received under an HMA, lease agreement or franchise agreement is generally subject to corporate tax at 9%. Where the entity is in the scope of Pillar Two, the domestic minimum top-up tax regime may apply to increase the effective tax rate to 15%.

The entity making the relevant payment should be entitled to take a deduction for the payment when calculating their own corporate tax liability, provided that, where the parties are related, the payment represents an arm’s length amount in compliance with the transfer pricing rules.

No withholding tax is required to be operated on any such payments to overseas parties at present as the rate of withholding tax is 0%. However, should this rate change in future, withholding tax may apply unless relief was available under a double tax agreement.

Depending on the circumstances, VAT at 5% may need to be applied to invoices issued under the HMA, rental agreement and franchise agreement.

Tax Incentives

There are no specific corporate tax or VAT incentives available for hotel projects.

However, the Dubai government has indicated its intention to waive the 10% municipality tax levied on hotels in order to stimulate growth in the emirate’s hospitality sector.

6. Planning, Zoning and Licensing

6.1 Zoning

Hotels in the UAE are required to obtain the relevant licences and permits from local authorities and must comply with applicable building codes and standards to satisfy zoning requirements. Zoning classifications and the procedures for obtaining derogations vary by emirate. The relevant municipality in each emirate is typically responsible for determining zoning classifications.

6.2 Building and Development Regulations

The requirements applicable to hotel construction or refurbishment are subject to frequent change. However, the general guidance in certain key emirates is as follows.

Dubai

Hotels in Dubai must comply with the Dubai Building Code (the “Code”) and the regulations of the Development Authority. The principal building and development regulations for hotels in Dubai include the following.

Height – the Code does not prescribe a maximum building height, which varies according to location.
Density – no specific regulations apply.
Floor area ratio – no specific regulations apply.
Parking requirements – the Code stipulates particular parking requirements for hotels: there must be one bay for every five standard rooms and every two suite rooms; and one bay per 50 square metres of hospitality space and 20 square metres of function space.
Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice.

Disability and accessibility – the Code prescribes a comprehensive range of accessibility requirements, including provisions for exits, pathways, access control barriers and protruding objects.

Abu Dhabi

The building and development regulations applicable to hotels in Abu Dhabi are governed principally by Administrative Resolution No 182 of 2017 Concerning the Executive Regulations of Law No 4 of 1983 Regulating Building Works in the Emirate of Abu Dhabi (the “Abu Dhabi Building Regulations”), issued by the Department of Municipal Affairs and Transport. The principal requirements include the following.

Height – no maximum building height is prescribed.
Density – no specific regulations apply.
Floor area ratio – development regulations are determined during the information provision process and are based on the facility type, plot scale and the surrounding urban context.
Parking requirements – these are governed by the Abu Dhabi Parking Standards.
Fire protection – buildings must comply with the UAE Fire and Life Safety Code of Practice. No building or structure may be occupied prior to the Abu Dhabi Civil Defence Authority issuing a permit and conducting inspections confirming compliance with the applicable fire and life safety requirements. All required permits must be obtained from the Abu Dhabi Civil Defence Authority before commencing any construction or related activities, and issued permits must be kept on-site and made available for inspection at all times.
Disability and accessibility – the Code sets out extensive accessibility requirements, including provisions for exits, pathways, access control barriers and protruding objects.

RAKThe building and development regulations applicable to hotels in RAK include the following:

Height – the ground floor level must not exceed 1.20 metres above the approved design level. The roof parapet height must be between 1 metre and 1.80 metres after final finishing. Architectural facades are exempt from these requirements.
Density – no specific regulations apply.
Floor area ratio – this is regulated by the relevant department of the municipality.
Parking requirements – these are regulated by the relevant department of the municipality.
Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice.
Disability and accessibility – at a minimum, hotels must provide one accessible room on the first floor where there are fewer than 100 rooms, and two rooms where there are more than 100 rooms. These rooms must be fully equipped in accordance with internationally recognised standards for persons with disabilities or accessibility needs.

Fujairah

The building and development regulations applicable to hotels in Fujairah are governed principally by Fujairah Executive Regulation No (11) of 2001 Regulating Buildings (the “Fujairah Building Regulation”) and Fujairah Decision No (10) of 2001 Concerning the Procedures and Regulations of Licensing and Inspecting the Buildings. No person may build, construct, alter, demolish or otherwise modify any building or land without first obtaining a licence from the Buildings Section of the Municipality of Fujairah. The principal requirements include the following.

Height – no maximum building height is prescribed under the Fujairah Building Regulation. However, the ground floor level and roof parapet heights are subject to the specifications set out in the approved planning conditions for the relevant plot.
Density – no specific regulations apply.
Floor area ratio – this is determined by the planning conditions applicable to the relevant plot as specified by the Municipality.

Parking requirements – car parks must be indicated on the building drawings within the legal boundaries of the plot, proportionate to the number of users and the nature of the building’s activity. Public buildings are required to comply with global standards for car park provision.
Fire protection – all fire protection products and systems must conform to the UAE Fire and Life Safety Code of Practice. The engineering office responsible for the building design must ensure compliance with the protection and safety conditions prescribed by the competent Civil Defence authority. A building completion certificate will not be issued without a certificate from the competent Civil Defence authority confirming that the building satisfies all applicable security and safety conditions.
Disability and accessibility – the engineering office responsible for the building design is required to provide technical conditions for persons with special needs in accordance with the Fujairah Building Regulation.

Sharjah

The building and development regulations applicable to hotels in Sharjah are governed principally by Executive Council Resolution No 12 of 2002 Concerning the Building Conditions and Specifications Regulation in the Emirate of Sharjah. No building licence may be issued unless all the conditions and specifications prescribed by the Resolution have been satisfied. The Executive Council retains the authority to exempt public buildings erected by the Emirate from all or some of such conditions and specifications.

Ajman

The building and development regulations applicable to hotels in Ajman are governed principally by Local Order No (4) of 2006 Concerning the Regulation and Conditions of Building in the Emirate of Ajman. A building permit application must be submitted through the Ajman Municipality’s digital platform (the Amar System), accompanied by executive architectural and structural drawings, approvals from relevant service entities (including the Federal Water and Electricity Authority, Emirates Telecommunications Corporation, Ajman Sewerage and the General Administration of Civil Defence), appendices to the supervision and contracting contracts, and approval of the new project for the contractor and consultant. No building may be constructed on any plot in the Emirate of Ajman until a site plan has been issued by the General Administration for Technical Affairs of the Municipality and Planning Department, identifying the applicable planning conditions and requirements in respect of use, height, area, recession and protrusion.

6.3 Building Permits

The requirements for obtaining building permits for hotel refurbishment or new construction in the UAE are subject to frequent change. However, an application must generally be submitted to the Department of Tourism and Commerce Marketing, which is responsible for granting written approval for the construction of a new hotel or the conversion of an existing property.

The average duration of the approval process varies depending on the complexity of the project and the specific emirate in which it is located.

6.4 Objections to Building Permits

There is no established formal procedure for raising objections to a building permit in the UAE.

6.5 Restrictions on Conversion

Converting a hotel to an alternative use in the UAE necessitates a change in zoning classification, which requires a formal application to be submitted. Any such conversion must comply with local building standards and receive approval from the relevant authorities.

6.6 Heritage Protection

The UAE’s National Policy for Preserving the Modern Architectural Heritage encompasses significant hotel landmarks. This policy ensures that heritage sites are maintained and preserved for future generations. The demolition, removal or modification of buildings and architectural elements of historical value that are classified as heritage is prohibited.

6.7 Operating Licences

Dubai

To operate a hotel in Dubai, a company must first register with the Department of Economy and Tourism. Following registration, clearance from the Department of Tourism and Commerce Marketing is required.

The Department of Tourism and Commerce Marketing issues a hotel licence upon completion of its inspections.

Within the DIFC, licences are granted once the hotel has been registered and a site inspection has been conducted.

Abu Dhabi

Hotel licences in Abu Dhabi are issued by the Abu Dhabi Tourism Authority.

The ADGM Registration Authority is empowered to issue commercial licences to hotels operating within the ADGM.

RAK

Hotel licences are issued once the hotel has been registered with the hotel classification system and all services offered have been formally classified.

6.8 Environmental Compliance

UAE

The Department of Tourism and Commerce Marketing mandates that sustainability standards relating to energy and water efficiency be maintained. This includes the implementation of energy-saving measures, water conservation practices and initiatives to reduce carbon emissions.

Dubai

The Dubai Department of Economy and Tourism has introduced the Dubai Sustainable Tourism Stamp, a sustainability initiative designed to recognise hotels that meet the highest sustainability standards. These standards encompass a broad range of areas, including energy efficiency, water conservation, waste management and staff engagement. In addition, Al Sa’fat — the Dubai Green Building System — imposes mandatory requirements on all new buildings to achieve at least the Silver Sa’fa rating. Higher performance levels may be attained through compliance with additional requirements to achieve the Golden or Platinum Sa’fa. Al Sa’fat fosters innovation in the integration of green systems and technologies into building design, resulting in enhanced performance, decreased energy consumption and improved efficiency of electrical and mechanical systems, thereby reducing the building’s carbon footprint.

The DIFC has made sustainability commitments that are taken into account when evaluating development proposals.

Abu Dhabi

Abu Dhabi has published a series of Sustainability Guidelines addressing water management, energy, waste and transportation. In addition, Abu Dhabi introduced the Pearl Rating System (PRS), a framework developed by the Abu Dhabi Department of Urban Planning and Municipalities to advance Estidama ‒ a sustainable urban planning initiative for the sustainable design, construction and operation of communities, buildings and villas. All buildings must achieve a minimum Pearl Rating of 1, government buildings must achieve a Pearl Rating of 2, and developments situated in Masdar ‒ an eco-city ‒ are required to achieve a Pearl Rating of 3. The highest Pearl Rating that can be achieved is 5. The PRS focuses on energy efficiency, water conservation and waste management, among other factors, to promote sustainable development within the emirate.

The ADGM has made sustainability commitments that are considered in the assessment of development plans.

RAK

The RAK Tourism Development Authority (RAKTDA) has issued guidelines and protocols under a “Green Hotel Rating” initiative to regulate sustainability standards and practices. In addition, the Barjeel Green Building Regulations, launched in 2019, impose mandatory requirements across five categories: energy and water efficiency, renewable energy, recyclable materials and resources, and comfort and wellbeing.

7. Employment

7.1 Employment Law Requirements

In the UAE, specific employment law requirements apply to hotel transactions. The applicable legislation depends on the location of the hotel. Federal Decree-Law No 33 of 2021 Regarding the Regulation of Employment Relationships and its Amendments (the “UAE Labour Law”) applies onshore in the UAE and in most free zones, including to the employment aspects of hotel transactions. However, hotels situated in the DIFC or the ADGM are subject to separate employment legislation.

Transfer of employment – where employees must transfer from one entity to another in connection with a hotel transaction, the transfer is effected through a process of termination and re-engagement. New employment contracts must be executed with the new employer, and new visas and work permits must be obtained. The termination of the employee’s existing employment technically triggers the payment of termination entitlements, including end of service gratuity. In practice, however, it is generally possible to roll over and defer these payments.
Harmonisation of benefits – the provisions of the UAE Labour Law must be considered when implementing any harmonisation of employee benefits. Any amendments to employment contracts require the express consent of the affected employee.
Share sale – in a share sale, existing employment contracts remain in force and are treated as continuous. The new employer assumes responsibility for prior liabilities and must ensure ongoing compliance with the UAE Labour Law and existing contractual obligations.
Owner/operator model – in the UAE, it is common for employees to be directly employed by the hotel owner while being managed by the hotel operator. Parties to a transaction should be mindful of this arrangement and ensure that employment-related documentation is structured accordingly.

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Trends and Developments

Authors

Andrew Thompson

Fady Ghanem

Ian Arnott

Anna White

Introduction

The UAE’s hospitality sector enters 2026 from a position of remarkable strength, having recorded successive years of record-breaking visitor numbers, sustained hotel occupancy rates above 80% in key markets, and a robust development pipeline. Dubai alone, home to over 800 hotels and approximately 150,000 keys with a pipeline projected to reach 165,000 by 2030, welcomed over 18 million visitors in 2024 and continued that trajectory through 2025, while Abu Dhabi, Ras Al Khaimah (RAK) and the northern emirates each advanced distinct tourism strategies that have broadened the nation’s appeal to an increasingly diverse global audience.

However, 2026 has also introduced new variables. The geopolitical escalation involving military operations in the wider Gulf region in early 2026 tested market confidence, while the approaching opening of the UAE’s first integrated resort with a gaming component has accelerated regulatory development. Against this backdrop, the hospitality investment landscape has become more sophisticated, demanding greater legal and commercial rigour from all stakeholders.

Geopolitical Resilience and Market Confidence

The military escalation involving strikes on Gulf Cooperation Council (GCC) countries in early 2026 introduced a period of short-term uncertainty for the regional hospitality sector. In the initial days of the conflict, investor sentiment shifted towards caution, with off-plan transactions and speculative investments experiencing a temporary slowdown. Short-term rental and hospitality assets in tourism-heavy areas faced immediate pressure as flight connectivity contracted sharply, with daily flights to and from the UAE declining from approximately 2,500 to around 1,000, predominantly operated by UAE-based carriers. Domestic staycations and regional visitors from Saudi Arabia, Oman and other GCC states provided a critical buffer, sustaining demand particularly for resort properties, while transit tourism showed early signs of revival.

Critically, however, business operations across the UAE remained functional throughout. Government authorities moved swiftly to reassure markets, deploying incentive packages comparable to those introduced during the COVID-19 pandemic and launching targeted marketing campaigns through high-profile sporting events and entertainment programming to revitalise corporate and leisure hotel demand. Confidence in the professionalism of both public and private sector institutions proved well-founded, and within weeks, market sentiment steadied and transaction activity resumed.

For hotel owners and operators, the episode prompted a comprehensive review of contractual protections. Force majeure clauses, war risk provisions, termination rights triggered by prolonged operational disruption, and business interruption insurance coverage all received heightened scrutiny. Operators examined hotel closure rights and the potential impact on performance test calculations, while owners assessed whether reduced occupancy during the disruption period warranted adjustments to performance benchmarks.

Importantly, the consensus among legal practitioners has been that the disruption did not constitute a force majeure event for the purposes of most commercial agreements, given the absence of any sustained interruption to business operations. Stakeholders have been advised against suspending financial obligations and instead encouraged to engage constructively with counterparties to agree reasonable extensions or adjusted performance schedules where logistical difficulties arose.

The episode has reinforced the importance of robust risk allocation in hospitality agreements and has prompted many parties to revisit and strengthen war risk, terrorism, and geopolitical disruption provisions in hotel management agreements, franchise agreements, and financing documents.

Gaming Regulation: From Framework to Implementation

The regulatory framework for gaming in the UAE has advanced significantly in 2026. With the Wynn Al Marjan Island integrated resort on track for its anticipated 2027 opening, the regulatory architecture has moved from conceptual to operational.

At the federal level, the General Commercial Gaming Regulatory Authority, established in 2023, has progressed its work on licensing standards, operational compliance requirements, and responsible gaming protocols. At the emirate level, RAK’s Department of Entertainment and Gaming Regulation has continued to refine local oversight mechanisms, including detailed guidance on gaming floor operations, anti-money laundering compliance specific to gaming activities, and the interface between gaming regulation and existing hospitality licensing frameworks.

For investors and operators in integrated resorts, the key development in 2026 has been the increasing clarity around licensing timelines and compliance obligations. Parties negotiating hotel management agreements or development agreements for properties with gaming components must now address a distinct layer of regulatory risk, including the possibility of licensing delays, conditions imposed on gaming operations, and the reputational considerations associated with gaming activities in a jurisdiction where such activities were previously prohibited.

The gaming regulatory framework also intersects with broader considerations around Sharia-compliant investment. Investors with Islamic financing structures must carefully assess whether participation in integrated resort projects, even where the investor’s interest is limited to non-gaming components, creates compliance concerns under their financing arrangements or investment mandates.

Branded Residences and Hotel Room Investments: Structural Complexity

The branded residences model has continued its expansion in 2026, with several new projects announced across Dubai, Abu Dhabi, and RAK. The integration of branded residential units with hotel operations remains attractive to developers seeking early capital recovery and to purchasers seeking brand association, service standards, and potential capital appreciation.

However, the structural and legal complexity of these arrangements has intensified. Joint ownership regimes require careful navigation, particularly in aligning the operational requirements of a hotel with the proprietary rights of individual unit owners. Developers and operators must prepare comprehensive joint ownership declarations, management statements, and association by-laws that achieve an appropriate balance between the operator’s authority to maintain and enforce brand standards and service quality, on the one hand, and the proprietary rights of individual unit owners to use, occupy, and enjoy their units, on the other.

In parallel, the model of selling individual hotel rooms to investors under mandatory rental programmes has gained further traction. Under this structure, fully furnished hotel rooms are sold to individual purchasers as investment assets, with the developer retaining operational control and the property being managed by an international operator pursuant to a conventional hotel management agreement. Purchasers are entitled to a proportionate share of room revenue generated by the rental pool but are generally prohibited from residing permanently in the unit or exercising any independent control over its use.

The legal considerations surrounding these investments are considerable. Title structuring frequently involves hybrid ownership models that combine elements of freehold, leasehold, and contractual rights linked to a rental pool arrangement. Investors must undertake a thorough assessment of the nature of the title being offered, fully understand any restrictions on personal use, transfer, and resale, and appreciate that operational control over the asset will typically vest in the developer or operator rather than the individual purchaser. Ongoing compliance with the evolving regulatory framework governing real estate ownership and hospitality operations remains essential to preserving and safeguarding the value of the investment.

In Sharjah, newly introduced regulations on development projects and the use of escrow accounts, first issued in late 2024 and amended further in 2025, now impose additional compliance obligations on developers of branded residence and hotel room investment projects. These requirements are expected to be further refined in 2026 as the regulatory authority gains experience with enforcement.

Operator Agreement Trends: A Continued Rebalancing

The rebalancing of power between hotel owners and operators, which has been a defining trend in recent years, has continued to evolve in 2026.

Shorter initial terms have become increasingly standard, a trend which may further be accelerated by the geopolitical uncertainty arising from the regional conflict in early 2026. This shift reflects not only intensified competition among operators seeking to secure prime assets and strategic locations, but also a heightened awareness among owners of the need to preserve flexibility in an environment where geopolitical risk, market volatility, and evolving regulatory conditions may necessitate changes in branding strategy, operational positioning, or asset disposition at shorter intervals than historically contemplated. In parallel, leasing structures have gained traction for small and medium-sized hotels, reflecting a broader market adaptation in which owners seek more predictable income streams and operators accept greater revenue risk in exchange for operational autonomy.

Performance testing provisions have become more sophisticated. Owners are negotiating measurable RevPAR and gross operating profit targets with clearly defined competitive sets, specified cure periods, and unambiguous termination triggers. The geopolitical disruption of early 2026 has further highlighted the importance of clear drafting around force majeure carve-outs and performance test holiday periods during extraordinary events.

Owner oversight rights have expanded, with owners increasingly requiring approval or consultation rights over annual budgets, capital expenditure programmes, key personnel appointments, technology infrastructure investments, brand standard modifications, renovation timing and scope, and sales and marketing strategies. Owners are also negotiating enhanced reporting obligations, including monthly operating reports, detailed variance analyses, and real-time access to property management system data. ESG obligations are now being formalised as substantive contractual commitments within hotel management agreements, with operators required to meet specific sustainability targets, implement measurable energy efficiency and waste reduction programmes, and report periodically on compliance. The cumulative effect of these expanded oversight mechanisms is a more collaborative governance framework, though one that requires careful drafting to avoid operational inefficiencies or conflicts between owner approval rights and the operator’s ability to manage the property effectively on a day-to-day basis.

The franchise and hybrid operating model has continued to gain ground, particularly among luxury lifestyle brands. These structures provide owners with brand leverage and marketing reach while preserving greater operational independence and control over profit margins. For operators, franchise arrangements offer a lower-risk entry into new markets without the capital commitment and operational exposure of a full management engagement.

ESG: From Aspiration to Obligation

Environmental, social, and governance considerations have transitioned from aspirational marketing points to substantive operational and investment criteria in 2026. Investors are increasingly conducting ESG due diligence as a standard component of hotel acquisitions, and lenders are incorporating sustainability metrics into financing conditions.

At the regulatory level, Dubai’s Al Sa’fat green building system continues to impose mandatory sustainability requirements on new developments, while Abu Dhabi’s Pearl Rating System requires minimum sustainability standards for all buildings. Ras Al Khaimah’s Barjeel Green Building Regulations similarly mandate compliance across energy efficiency, water conservation, and materials sourcing.

For hotel transactions, the practical implications are significant. Acquirers of existing assets must budget for retrofitting costs to meet current sustainability standards, while developers of new projects must integrate green building compliance from the design stage. Hotel management agreements increasingly allocate responsibility for sustainability compliance between owner and operator, with disputes arising where capital expenditure is required to achieve sustainability targets that were not contemplated at the time of the original agreement.

The Dubai Sustainable Tourism Stamp and similar emirate-level initiatives are also influencing brand positioning and guest expectations, creating commercial incentives that reinforce regulatory requirements.

Secondary Markets: Maturation and Differentiation

The northern emirates have continued their trajectory of differentiation and maturation in 2026.

RAK has consolidated its position as the UAE’s most dynamic secondary hospitality market. Beyond the Wynn integrated resort, the emirate has attracted significant investment in adventure tourism, wellness retreats, and luxury beachfront developments. The Ardee Al Marjan Island masterplan, spanning 2.5 million square feet of mixed-use development adjacent to the Wynn project, exemplifies the scale of ambition. Market participants anticipate that the planned casino will materially increase investor demand and asset pricing across the emirate, with potential spillover effects in neighbouring emirates. Notwithstanding these opportunities, the investment landscape presents material challenges, including a gaming regulatory regime that remains in its formative stages, a local real estate legislative framework that continues to undergo significant development, and the inherent structural and contractual intricacies associated with the public-private partnership arrangements upon which a substantial portion of the emirate’s infrastructure programme depends.

Sharjah has deepened its focus on cultural heritage and eco-tourism, with new boutique hotels in the heritage district and luxury desert retreats near archaeological sites. The emirate’s stricter cultural preservation guidelines and design approval processes create longer lead times but enhance destination integrity. Developers must also comply with Sharjah’s recently introduced escrow and development project regulations.

Fujairah continues to develop its niche as a marine and coastal destination, with dive-focused hospitality offerings and eco-friendly coastal developments. The development landscape in Fujairah presents distinct challenges, including specialised planning controls, stringent environmental permitting obligations for coastal projects, and restrictions on foreign ownership that necessitate close and sustained engagement with the relevant local regulatory authorities.

Across all secondary markets, investors should conduct detailed due diligence on land title regimes, foreign ownership restrictions, and local development control regulations. Given that the jurisprudential landscape in these jurisdictions remains considerably less developed than in Dubai and Abu Dhabi, parties are well advised to adopt a particularly rigorous approach to the structuring of contractual protections and the anticipation of potential legal and commercial risks.

Transaction Structuring: Prevailing Approaches

Transaction structuring in the UAE hospitality sector continues to reflect the jurisdiction's unique legal landscape. The depth of the market was underscored in 2025, which saw nine significant hotel transactions in Dubai alone, with an aggregate value of approximately AED4.7 billion. Prime hotel yields have settled in the range of 7–8%, reflecting the maturity and relative transparency of the Dubai market. Notably, the vast majority of hotel transactions continue to be conducted on an off-market basis, with sales processes typically extending over six to 12 months and involving detailed due diligence, curated buyer lists, and staged bidding procedures.

For greenfield investments, Musataha agreements remain the instrument of choice where freehold title is not available, granting development and use rights for up to 50 years on a renewable basis. Key drafting considerations include renewal mechanics, compensation on expiry or early termination, permitted use restrictions, and the allocation of obligations relating to maintenance, insurance, and regulatory compliance throughout the term.

For secondary transactions, share deals remain the preferred acquisition structure, enabling buyers to acquire the entity holding the hotel asset rather than purchasing the underlying real estate directly. This approach preserves existing operational licences and avoids potential disruptions, including temporary hotel closures, that may arise during licensing transitions. Notably, however, land transfer fees continue to be triggered in most emirates upon indirect changes of ownership effected through equity transactions, and these costs must be carefully assessed and incorporated into overall deal economics.

The Opco/Propco structure has emerged as the prevailing model for hotel investments in the UAE, whereby the operating company is separated from the property-owning entity. This structural bifurcation enhances operational flexibility, facilitates more efficient financing arrangements, and enables investors to calibrate risk and return profiles with greater precision across distinct asset and operational layers. Acquisition financing typically involves leverage of 40–60% loan-to-value, with valuations predominantly based on ten-year discounted cash flow analyses. The complexity of Dubai Land Department documentation requirements and the turnaround times associated with sale and purchase agreement processes remain a source of transactional friction, and parties are well advised to engage specialist counsel early in the process to anticipate and mitigate potential delays.

Regulatory Developments

Dubai’s regulatory landscape has continued to evolve following the consolidation of the Department of Tourism and Commerce Marketing with the Department of Economic Development to form the Department of Economy and Tourism. Operators now manage hospitality permits through centralised digital portals that integrate economic licensing and compliance reporting. Enhanced compliance monitoring, stricter penalties for unlicensed operations, and updated requirements for guest registration, safety standards, and sustainability initiatives reflect the authority’s focus on service quality and consumer protection.

At the federal level, the gaming regulatory framework continues to develop, with the General Commercial Gaming Regulatory Authority progressing its work on nationwide licensing and operational standards. The interaction between federal gaming regulation and emirate-level oversight remains an area requiring careful monitoring by investors and operators in integrated resort projects.

Outlook for Q2 2026 and Beyond

The UAE hospitality market is expected to maintain its growth trajectory through the remainder of 2026 and into 2027, supported by several structural drivers. The anticipated opening of Wynn Al Marjan Island in 2027 will represent a transformative moment for the sector, introducing a new asset class and visitor segment to the UAE market. The continued expansion of branded residences and hotel room investment products will sustain developer capital flows, while the maturation of secondary markets will broaden the geographic distribution of hospitality investment. Increased activity is anticipated in the small-to-medium capitalisation segment, where pricing revisions are expected to attract a broader range of investors. A notable emerging trend is the repurposing of secondary hotel assets in peripheral locations into medium and long-stay serviced apartment operations, driven by competitive pressure from residential rental stock and short-term rental platforms, and accelerated by the market disruption of early 2026.

However, stakeholders must navigate an increasingly complex environment. Geopolitical risk, while managed effectively to date, remains a background consideration that demands robust contractual protections. The gaming regulatory framework, while advancing, still presents uncertainties around licensing timelines and compliance requirements. ESG obligations will continue to intensify, requiring capital allocation and operational adaptation. And the rebalancing of owner-operator relationships will demand sophisticated legal structuring to protect the interests of all parties.

The UAE’s hospitality sector in 2026 is characterised by its resilience, sophistication, and continued capacity for innovation. For investors, developers, and operators prepared to engage with the legal and commercial complexities of this dynamic market, the opportunities remain compelling.