The war around Iran cools the Gulf’s tourism momentum: from air routes to luxury stores
The war escalation connected with Iran has changed the mood in one of the world’s most important tourism, aviation and trade hubs. Dubai, Doha, Abu Dhabi and other Gulf cities have in recent years built an economic model in which tourism, international passenger transfers, luxury spending, conferences and the real estate market support one another. Now that model is facing a different kind of risk: not only physical disruptions to traffic, but also a decline in the confidence of travelers, investors and global companies that had considered the region a relatively safe business base.
According to warnings from the European Union Aviation Safety Agency, military strikes by the United States and Israel against targets in Iran on February 28, 2026, triggered Iranian retaliation and opened a period of heightened risk for civil aviation across the Middle East and the Persian Gulf. IATA, the international association of air carriers, states that the consequences soon crossed the boundaries of the immediate war zone because the Middle East is one of the key intersections of global long-haul flights. Such a development particularly affects Gulf economies, which draw a large share of their international visibility and revenue from accessibility, a reputation for safety and a constant flow of passengers.
Air traffic was the first to feel the blow of the crisis
The most visible disruption occurred in air traffic. According to an IATA analysis published after the start of the conflict, in the first ten days after the escalation, 73 percent of available seat-kilometers on flights to and from the Middle East were canceled, while corridors between Asia and the Pacific and Europe through the region were among the hardest hit. IATA specifically warned that the disruption does not apply only to flights to destinations in the immediate vicinity of the conflict, but also to transfers, cargo traffic, fuel prices and crew schedules.
In its bulletins for the Middle East and Persian Gulf area, the European Union Aviation Safety Agency warned operators to assess risks before using airspaces and routes in the region. In practice, such warnings mean longer routes, higher operating costs, additional fuel consumption and a greater likelihood of delays. For passengers, this often looks like uncertainty when booking, more frequent schedule changes and more expensive tickets, while for airlines it means that commercial planning must be adjusted from day to day.
The pressure was also reflected in carriers’ financial results. The Wall Street Journal reported that Qatar Airways posted a 9.9 percent decline in annual net profit, with the company citing disruptions connected with the war in the Middle East, airspace closures and higher jet fuel prices as important factors. European carriers have also warned of a change in passenger behavior: according to Guardian reports, easyJet recorded weaker summer bookings compared with the previous year, while Ryanair warned that passengers are waiting longer before buying tickets, although it currently considers fuel supply for the European market to be stabilized.
Tourism is sensitive to the perception of safety
For Gulf destinations, the biggest problem is not only the number of canceled flights, but impaired predictability. Tourism in cities such as Dubai and Doha relies on the feeling that travel can be planned months in advance, that air connections will function and that business events will not have to be moved at the last minute. When passengers begin to wonder whether airspace will be open, whether a transfer will be safe or whether insurance will cover changed circumstances, demand changes quickly.
The World Travel & Tourism Council estimated that the conflict connected with Iran could reduce international visitor spending in the Middle East tourism sector by at least 600 million US dollars per day. WTTC emphasizes that its estimate is derived from a pre-conflict projection according to which the region was expected to generate about 207 billion dollars in international visitor spending in 2026. Such figures show why even short-term traffic interruptions can have major consequences for hotels, restaurants, transport operators, shopping centers, event organizers and suppliers.
Dubai enters the crisis from a very strong position. According to data from Dubai’s Department of Economy and Tourism, the emirate received 19.59 million international overnight visitors in 2025, five percent more than a year earlier, while average hotel occupancy was 80.7 percent. Dubai Airports announced that Dubai International Airport handled 95.2 million passengers in 2025, making it the busiest year in its history. That is precisely why the blow to confidence is so important: this is a system that rests on a high volume of traffic and a constant rhythm of international arrivals.
Cruises and conferences among the most vulnerable segments
Cruising has proved particularly exposed because voyages in the Gulf depend on the safety of sea routes, port availability and air connections for passenger embarkation and disembarkation. According to reports from specialized cruise media, several companies, including MSC Cruises, TUI Cruises, Celestyal and AROYA Cruises, had to cancel or change itineraries after the escalation of the conflict. World of Cruising cited an estimate that about 15,000 passengers were affected by stoppages and repatriations, while ships temporarily remained in ports such as Dubai, Doha and Abu Dhabi.
For tourism economies, such disruptions have a broader effect than the passengers on the ships themselves. Cruises fill hotels before and after sailings, bring guests into restaurants and shopping centers, create demand for transfers and excursions, and support the seasonal work of local agencies. When sailings are canceled, revenue is lost at several levels, and reputational damage can extend into future seasons as passengers and agents turn to routes they perceive as less risky.
A similar problem affects congress and business tourism. The Associated Press reported that the image of the United Arab Emirates as a safe regional haven has been put to a serious test and that disruptions have affected tourism and international conferences. Business events have a high value per guest because participants often spend on higher-end hotels, restaurants, transport and retail. But organizers of such events are generally cautious and react quickly to security assessments, insurance conditions and corporate travel bans.
Luxury retail depends on high-income tourists
In Dubai and other Gulf cities, luxury retail is not only local consumption, but part of the tourism product. Large shopping centers, fashion houses, jewelry stores and department stores rely on a mix of regional buyers, wealthy tourists, business travelers and high-income residents. When the number of visitors falls or they postpone travel, turnover in luxury stores can fall faster than the total number of arrivals because discretionary spending is the easiest to delay.
Forbes reported in March that the Middle Eastern luxury market had been strongly affected by avoidance of travel to the region, while specialized regional sources recorded weaker traffic in top-end stores and greater uncertainty among brands that had seen the Gulf as one of the most important growth areas. Such reports should be read cautiously because official, comparable and fully up-to-date figures for individual retail chains are generally not publicly available. Still, the trend is consistent with economic logic: luxury shopping is highly sensitive to tourist arrivals, consumer mood and the movement of wealthy international buyers.
A fall in traffic in luxury zones does not affect only global fashion houses. The retail ecosystem includes shopping center owners, hotels, hospitality businesses, transport services, marketing agencies and seasonal workers. If the crisis is prolonged, the bigger problem could be a shift from a short-term shock to a change in expansion plans: brands may postpone new stores, reduce inventories or redirect marketing budgets to markets that appear more stable.
Real estate between a safe haven and a new risk premium
Dubai’s real estate market has in recent years been one of the most visible indicators of confidence in the region. According to data and analyses citing the Dubai Land Department, 2025 was a record year for Dubai’s real estate market, with a very high number of transactions and strong interest from foreign buyers. Such a market attracts capital seeking a safe location, tax predictability, infrastructure and the possibility of long-term residence.
War risk changes that calculation. In April, the GRI Institute warned that the Iran-United States conflict had prompted a structural reassessment of risk pricing in Gulf real estate, especially if disruptions in the Strait of Hormuz were to last and affect energy, logistics and economic growth. This does not mean that the market is necessarily in decline or that long-term buyers have disappeared. The Financial Times, for example, reported that some major investment houses are continuing expansion plans in the region because they consider the Gulf’s long-term potential stronger than short-term geopolitical shocks.
The biggest change may therefore occur in expectations. Buyers of luxury apartments, funds and family offices could demand a larger discount for political risk, make decisions more slowly or favor completed projects over projects in an early phase. On the other hand, if some capital from neighboring, riskier areas flows back into Dubai, the market can simultaneously record both delays and new inflows. For this reason, analysts increasingly distinguish between the short-term blow to sentiment and the deep structural advantages that have made Dubai a regional center of real estate investment.
Foreign workers and companies are reassessing plans
The initial blow of the crisis is also visible in the behavior of foreign workers, families and companies. According to available media reports, some expatriates temporarily left the region or sent family members to safer destinations, but the scale of such departures has not been officially confirmed and cannot be compared with organized mass emigration. In Gulf economies, where much of the private sector depends on an international workforce, even temporary departures can disrupt schools, housing, consumption and business operations.
Companies are meanwhile considering several types of risk: employee safety, supply continuity, insurance, travel costs and the possibility that regional meetings may be moved to other hubs. The Associated Press states that the UAE still has strong financial buffers, but that the country’s long-standing image as a calm business haven has been seriously tested. This is an important distinction: a crisis does not have to immediately cause an outflow of major companies in order to influence decisions about new offices, conferences, employee relocation or hiring.
Economic risk spreads through fuel, insurance and confidence
The war around Iran is affecting tourism and consumption through energy channels as well. IATA warned that the escalation of the conflict exposed vulnerabilities in global jet fuel supply, especially because the Middle East plays an important role in energy flows. Airlines with good fuel-price hedging programs can cushion part of the blow, but higher costs sooner or later enter ticket prices, profit margins or capacity reductions.
Ryanair and easyJet, according to Guardian reports, are not currently speaking of a broad fuel shortage in Europe, but both examples show how the crisis in the Gulf affects passenger decisions far beyond the region. When consumers begin to wait before booking, tourism companies lose visibility into demand, while hotels and airlines find it harder to optimize prices. In such an environment, even relatively stable destinations can feel a decline because some travelers turn to closer, domestic or western Mediterranean holidays.
For the Gulf states, the question is how quickly they can restore a sense of normality. The formal opening of airspace or the return of flights is not enough if travelers, insurers and corporate security departments still assess the risk as too high. Confidence in tourism is built slowly and lost quickly, especially when a crisis is linked to air traffic, energy and maritime safety.
The region remains strong, but is no longer immune to geopolitical shock
Gulf economies have significant advantages: large financial reserves, strong infrastructure, global airlines, developed hotel capacity and a long-term strategy of diversification beyond oil. Dubai had record tourism and aviation results before the crisis, Doha continued to build its position as an international hub after the World Cup, and Abu Dhabi and Saudi Arabia are investing large sums in tourism, culture, sport and entertainment. For that reason, it is not possible to speak of a simple collapse of the model.
Still, the war around Iran shows that tourism, luxury consumption, real estate and aviation are connected in the same chain of confidence. If a traveler does not feel safe, they do not book a hotel; if flights are rerouted, cruises lose passengers; if shopping centers are quieter, luxury brands reassess expansion; if investors demand a higher risk premium, real estate projects must offer a more convincing calculation. That is why the real economic effect of the crisis will be measured not only by the number of canceled flights or sailings, but also by how quickly the region can again convince travelers, companies and investors that its stability is sustainable in the long term.
Sources:
- European Union Aviation Safety Agency, EASA – bulletins on risks to the airspace of the Middle East and the Persian Gulf (link)
- International Air Transport Association, IATA – analysis of air traffic disruptions to and from the Middle East after the escalation of the conflict (link)
- International Air Transport Association, IATA – analysis of jet fuel supply vulnerabilities in the context of the Middle East conflict (link)
- World Travel & Tourism Council, WTTC – assessment of the conflict’s impact on tourism spending in the Middle East (link)
- Dubai Media Office – official data on Dubai’s tourism results in 2025 (link)
- Dubai Airports – data on record traffic at Dubai International Airport in 2025 (link)
- Associated Press – report on the pressure of the war on the UAE’s image as a safe business and tourism haven (link)
- The Guardian – reports on the impact of the war on bookings, fuel prices and the behavior of European air passengers (link)
- World of Cruising – overview of disruptions in the cruise industry and canceled itineraries in the Middle East (link)
- GRI Institute – analysis of the impact of the conflict on risk pricing and real estate investment in Gulf states (link)