Iran conflict threatens Gulf tourism, undermining years of investment

2026-03-04 - 00:04

Damage to Dubai’s airport and Burj Al Arab raised concerns among international tourists who spent an estimated US$194 billion last year. (EPA Images pic) DOHA: Middle East tourism, worth some US$367 billion annually to the region, is taking a hit from the widening conflict between US-Israel forces and Iran, putting at risk the region’s carefully-constructed image as a safe and high-end vacation hotspot after billions in investment in recent years from Abu Dhabi to Dubai. Flights at major hubs, including Dubai, the world’s busiest international airport, have been largely grounded, stranding tens of thousands of passengers in the worst crisis for air travel since the Covid-19 pandemic. The airport and landmark Burj Al Arab hotel also sustained damage, alarming international tourists who spent an estimated US$194 billion in the region last year, World Travel & Tourism Council data show. Cancellations for vacation rentals in the United Arab Emirates more than doubled on Saturday to around 8,450 units after the initial attacks, according to data firm AirDNA. Most were for stays scheduled in March. “There’s a big collapse in bookings to the Middle East,” Michael O’Leary, CEO of budget carrier Ryanair, told reporters on Tuesday, adding the fallout had driven a surge in demand for short‐haul flights to places like Portugal, Italy and Greece ahead of the Easter holiday period. Still, he noted the Middle East has historically rebounded from bouts of regional instability. “I suspect it won’t go on long and therefore I suspect it won’t have any long-term trends, but I think there’s no doubt that it has undermined confidence in air travel to the Gulf.” Dubai’s tourism office said in a statement on Tuesday that visitor safety was its highest priority and hotels had been asked to support affected guests, citing the city’s experience managing “periods of global disruption”. Potential US$56 billion hit Between 23 million and 38 million fewer people could travel to the Middle East this year versus the expected numbers, depending on the duration of the conflict, consultancy Tourism Economics said. “This includes expected lingering sentiment impacts beyond the immediate conflict period,” the consultancy’s Helen McDermott and Jessie Smith wrote in a note, pegging the potential loss in visitor spend at some US$34 billion to US$56 billion. Benjamin Jacobi, Germany head for travel giant TUI, which operates cruises and flights to the region, said bookers hope the situation calms down, though “that’s not in sight” for the moment. Prices for flights between Asia and Europe were surging after Middle Eastern hubs closed as people booking trips tried to work around the disruptions. “There will certainly be a dip in demand. However, this depends very much on how this armed conflict develops,” he told Reuters in Berlin, adding the firm was seeing a “certain shift” among vacationers towards choosing the western Mediterranean. “Everything is very volatile at the moment.” Keeping calm Thousands of people scrambled to get out of the region after the conflict erupted, with the US on Monday telling Americans to leave, days after the first strikes on Iranian targets. Ambra Chessa, who had been in Dubai, said she eventually boarded an unscheduled charter flight home to Italy. “As soon as I arrived at the airport, they said to me, ‘Get on board immediately, you’re leaving in an hour’,” she said. Some, however, said they were enjoying their vacation, adding that they’d come back to the region despite the risks. Ingrid Oellers was on a cruise calling at the port city of Doha in Qatar when she saw military aircraft and helicopters circling above the city. “It was an eerie scene,” she said, though she said the situation was “pretty normal” aboard the ship. “Many people are still afraid, they are worried, and of course I am too. But no one here is overreacting. Everyone is calm.” British IT worker David, 42, travelling with his wife and two children on a cruise that included Dubai, said the situation felt surreal, rather than frightening. People on board were still relaxing and dancing the conga in their bathing suits along the boat’s deck, according to a video seen by Reuters. “It’s my first time in Dubai, but I don’t feel unsafe,” he said. “I don’t think it would put me off. Well, at the moment it wouldn’t.”