Dubai, Israel, and the impact of the Iran war on hospitality

He had migrated far from home, leaving behind his family and children, sending them money each month.

We kept in occasional contact, but when the war with Iran erupted, he wrote to me saying he had lost his job and asked if I could help. At that moment, it became strikingly clear just how fragile the position of foreign workers in the Gulf truly is.

Now, with a ceasefire in place, early signs of recovery are beginning to emerge, but for workers like Suri, the damage has already been done.

In 2025, the city welcomed 19.59 million international visitors, operated 154,264 hotel rooms across 827 properties, and achieved an average occupancy rate of 80.7%.

Within the first weeks of the conflict, sharp signs of slowdown appeared. More than 80,000 short-term rental bookings were canceled. An early indicator of collapsing demand.

Hotels experienced an even more dramatic shift: according to CoStar, occupancy rates dropped sharply to just 20%-30%, with some properties falling as low as 5%, levels not seen since the COVID-19 pandemic.

The human impact was immediate and widespread. As of April 2026, industry estimates indicate that tens of thousands of foreign hospitality workers have been placed on standby without active employment.

Across many hotels, including five-star luxury properties, large portions of staff have been sent on indefinite unpaid leave, often without a clear return date. In some cases, only 3-4 employees remain active out of an original team of 30.

For those still formally employed, the situation is no less precarious.

Many remain housed in staff accommodations, yet must cover their own food expenses despite having no income. Others continue to work on reduced schedules, facing salary cuts of 20% to 50% as hotels struggle to survive the downturn.

Rather than implementing mass layoffs, many hotels have chosen to keep workers in a suspended “standby” status, preserving a labor pool for the eventual recovery.

It is a strategy driven by operational logic: rehiring and retraining an entirely new workforce would take time and resources. Yet for employees, this limbo creates deep uncertainty.

However, industry insiders stress that a full recovery of international tourism is expected to take time, particularly given the erosion of traveler confidence. Bookings may be reappearing, but confidence has not fully followed, leaving Dubai’s recovery uneven, driven more by proximity than by trust.

At the peak of tensions, industry estimates suggested that the cost to the Middle East tourism sector could reach approximately $600 million per day, highlighting the scale of the shock even for a powerhouse destination like Dubai.

In response, the Dubai government announced a relief package of around AED 1 billion (approximately $272 million), including deferred fees and payments for hotels, in an effort to stabilize the sector.

Despite this support, foreign workers remain the most vulnerable group, with many fearing permanent job loss or even deportation if the crisis extends into the summer season.

Yet beyond the numbers lies a deeper story – the story of the workforce. Unlike most destinations worldwide, Dubai’s hospitality industry is built almost entirely on foreign labor.

Workers from India, the Philippines, Indonesia, Bangladesh, and beyond form the backbone of the system, from housekeeping and kitchens to front-of-house service.

The hotel sector alone employs approximately 240,000 foreigners, as part of a broader tourism workforce of around 800,000. In luxury hotels, 95% of those who provide service are not locals.

In the early weeks of the crisis, field reports revealed empty restaurants, silent entertainment districts, and taxi drivers reporting steep declines in income, often the first visible signal of collapsing demand.

For many of these workers, employment is not just a job – it is their entire living framework. Housing, meals, health insurance, and transportation are typically provided by the employer.

This model enables high efficiency and operational flexibility, but it also creates near-total dependency. When employment disappears, so too do housing, healthcare, and the ability to remain in the country.

In Dubai’s employment model, workforce reductions rarely take the form of public layoffs. Instead, they unfold quietly: shifts are reduced, bonuses disappear, and employees are placed on unpaid leave or left waiting for contracts that may never be renewed.

At the same time, a process of departure begins. Workers without permanent status or social safety nets are often forced to leave within a short period if they cannot secure alternative employment.

The countries of origin for many of these employees were not silent during the war. The Philippines stood out, repatriating roughly 1,500-2,000 nationals from Dubai as part of a broader effort that evacuated more than 6,700 citizens across the region.

Most other governments, however, limited their response to advisories, leaving tens of thousands facing uncertainty.

Now, as stabilization begins, a more complex picture is emerging. Some hotels are cautiously considering rehiring or bringing back former staff, yet industry voices warn that workers who have already left the country may not return quickly.

The implication is striking: if demand rebounds faster than expected, Dubai may face a labor shortage, the opposite scenario of the initial crisis.

A comparison with Israel highlights the structural differences.

In Israel, even when hotels emptied of tourists or were repurposed to house evacuees, workers did not simply disappear from the system.

Many were placed on unpaid leave, received government unemployment benefits, or remained employed through adjusted frameworks in an industry where the vast majority are local workers.

The state played a central role in maintaining employment continuity. In Dubai, by contrast, responsibility rests almost entirely with the employer.

When work disappears, that responsibility dissolves just as quickly. Workers do not transition into unemployment; they enter a state of immediate and near-total dependency.

A particularly telling example of Israel can be found in Eilat, where 1,500 hotel employees commute daily from neighboring Jordan.

Despite not being Israeli citizens, these workers are employed under Israeli labor law and are entitled to full social benefits, including pension contributions, paid vacation, and health-related rights.

Even during periods of crisis, their employment status is not immediately severed, reflecting a system that, while not without complexity, offers a level of protection and continuity largely absent in more employer-dependent models.

Dubai’s employment framework was designed to be efficient, flexible, and highly responsive. Yet that same flexibility is also its core vulnerability.

The recent crisis demonstrated just how quickly the system can contract. But with the ceasefire now in place, a new question emerges: how quickly can it rebuild?

With the summer off-season approaching and the hope for relative calm with Iran, Dubai’s extreme heat, which naturally suppresses international demand, may temporarily ease pressure on the sector.

Israeli travelers, typically undeterred by 40-45° temperatures, are likely to take advantage of the increasingly attractive rates on offer in this less demanding period in the Emirate.

Suri, the Indonesian worker, still hopes to return to his job.

But the larger question is no longer just what happens when demand disappears; it is whether the workforce the system has lost will still be there when the world returns next winter.