The Gulf’s tourism sector is expected to face a short-term slowdown as regional conflict disrupts air travel, affects traveller confidence and leads to widespread flight cancellations. More than 5,000 flights were cancelled within the first 48 hours, with large sections of regional airspace closed, impacting one of the world’s fastest-growing travel corridors.
Research by Oxford Economics and Tourism Economics estimates inbound arrivals to the Middle East could decline by 11% to 27% in 2026, compared to earlier projections of 13% growth. This could translate to 23 million to 38 million fewer international visitors and a loss of $34 billion to $56 billion in visitor spending.
Despite the disruption, Gulf tourism markets are entering this period from a relatively strong base. Dubai recorded 19.59 million international overnight visitors in 2025, a 5% increase year-on-year, with hotel occupancy remaining above 80% across more than 154,000 rooms. Analysts say this reflects sustained underlying demand.
S&P Global has reaffirmed the credit strength of the United Arab Emirates, citing strong reserves and policy flexibility. While UAE real GDP growth is now projected at around 2.5% in 2026 and 2027, down from an earlier forecast of 4.2%, economists describe this as a moderation rather than a structural shift. Government spending is expected to increase by more than 7% in 2026, indicating continued investment.
The pace of tourism recovery will depend on how long the conflict lasts. If tensions ease within one to three weeks, Tourism Economics projects an 11% decline in arrivals and a $34 billion drop in spending. If the situation extends to two months, the decline could reach 27% with losses of up to $56 billion.
Gloria Guevara of the World Travel & Tourism Council noted that past security-related disruptions have shown tourism can recover within a few months when coordinated measures are taken to restore confidence. Previous rebounds following events such as the 2008 financial crisis, the Arab Spring and the COVID-19 pandemic support this view.
Oxford Economics expects the broader global economic impact to remain limited, with world GDP growth in 2026 projected to be only 0.1 percentage points lower than earlier forecasts. For the Gulf, growth is expected to strengthen to 5.2% in 2027, while the UAE’s GDP is projected to reach 6.8%, exceeding both pre-crisis expectations and the 5.5% recorded in 2025.
Analysts note that while conflicts can temporarily disrupt tourism flows, continued investment in aviation, hospitality and destination infrastructure supports recovery once conditions stabilise.
