On the iconic artificial island of Palm Jumeirah, synonymous with Dubai luxury, five-star resorts are once again filling up on weekends and holidays — but now mostly with local residents. Special “locals only” offers have become a lifeline for the emirate’s premium hospitality sector.

With an annual tourist flow of 19.5 million visitors, Dubai has long been one of the Middle East’s top destinations and a magnet for the rich and famous. According to Henley & Partners’ ranking of the world’s wealthiest cities, Dubai is home to a large concentration of millionaires and has consistently ranked among the global leaders in high-net-worth residency.

“I had never stayed in hotels on the Palm before because the prices were insane,” says Fadi Iskandarani, a doctor in his 60s, who recently spent a weekend at a luxury Palm resort for the first time.

The Lebanese-born resident, who has lived in Dubai for five years, decided to book the stay only after seeing one of the island’s elite hotels cut prices by four times. He says the hotel was not fully occupied, with some floors closed due to lack of guests. Still, the pool area was busy with visitors enjoying luxury that had long been out of reach.

“Luxury in Dubai has become accessible to ordinary residents. Before, it was only for the very, very wealthy,” he notes.

Rocket attacks and a fragile truce

Before the crisis began, Dubai’s 827 hotels — including 173 five-star flagships — enjoyed occupancy rates above 80%. But the military conflict that erupted on February 28 after US and Israeli strikes on Iran shattered the Gulf’s reputation as a stable tourist haven.

The United Arab Emirates reportedly came under missile and drone attacks, which struck areas including hotels on Palm Jumeirah and the iconic Burj Al Arab.

After a fragile ceasefire came into effect on April 8, foreign tourists began slowly returning, but hotels continue to rely mainly on domestic guests, says Michael Robinson, general manager of Anantara The Palm Dubai Resort.

The luxury property, with its overwater villas, artificial lagoons, and Thai-inspired design, now actively targets Dubai residents with discounts of up to 50%. According to Robinson, weekend occupancy reaches 70–90%, but drops to 20–30% on weekdays. This new local demand has helped the resort maintain positive cash flow and avoid layoffs.

Long-term risks: “Staycations are one-night stays”

Despite current stabilization, the staycation model cannot sustain the industry indefinitely.

“Local tourism is a one- or two-night business, and that’s it… whereas international guests used to stay for at least a week,” Robinson explains.

If foreign tourists do not return by July, when school holidays begin and many expatriate families leave the country for the summer, hoteliers may face another downturn.

Some iconic hotels, including the Burj Al Arab, have temporarily closed for renovations amid the slowdown. Others have reduced staff or cut salaries, with downtown business hotels particularly affected.

One hotel employee, speaking anonymously, said his salary was cut by 40% during and after the conflict, only recently returning to normal. Another worker in Abu Dhabi reported being placed on unpaid leave for two months before resuming full pay.

While negotiations over the conflict continue and sporadic strikes still occur in the Gulf region, pressure on tourism remains. Still, Robinson remains optimistic:

“If we see a final political resolution in the next month, tourists will return much faster than people expect.”