Are hotel rating systems obsolete?

Dubai currently has around 720 hotels with nearly 150,000 rooms between them. In H1 this year, 2,700 new rooms came to the market – and another 10,000 are set to delivered by the end of 2025.

Our latest research shows that hotels in the 4-star category saw the biggest growth this year compared to 2023. There’s also been a surge in new 5-star rooms, with more than 1,680 opening between January and June.

But what exactly do these star-ratings mean? A 5-star hotel in Dubai – and other parts of the Middle East – is not equivalent to a hotel with the same rating elsewhere in the world. The same goes for 4- and 3-star establishments, which offer inconsistent levels of service and amenities depending on their location.

Dubai’s Burj Al Arab was unofficially labelled the world’s first 7-star hotel when it opened 30 years ago: perhaps an early indication of the need to overhaul existing rating systems. 

Tourism is evolving at pace: gone are the days when the main reason for booking a hotel was for a break in the sun or a business conference.

A steady rise in tourism subsectors – think wellness, adventure, experiential, sports and volunteering – is not only diversifying hospitality offerings, but changing the expectations of travellers, too. As a result, the current hotel star rating system is, arguably, no longer appropriate.

Hotel ratings were originally introduced to help guests understand the quality and facilities at their chosen destination, and later became important valuation tools for hotel brands and properties.

Ratings differ across the globe: Europe uses stars while the USA has diamonds. With tourism becoming more globalised, international rating systems – such as Booking.com’s stars and the Michelin Guide’s keys – have emerged, but even these assess different criteria within their rating methodology. TripAdvisor’s bubble system assesses the overall guest experience, while Forbes Travel Guide looks at quality of facilities and level of service. The Green Star system only considers sustainability, while the Crescent Rating initiative applies only to Halal-friendly hotels, which are given between one and seven crescents.

In the Gulf, where countries and some cities have their own systems, ratings are now so out of kilter with those in Europe and the USA that international comparisons are becoming impossible. Saudi Arabia’s unprecedented investment in tourism is likely to further highlight the lack of appropriate, comparable international rating systems. Many hotels opening in Saudi will provide facilities that are a generation ahead of traditional 5-star establishments elsewhere in the world. 

Potential solutions? Independent organisations’ publishing of ‘equivalent’ ratings between jurisdictions, rather like ‘exchange rates’, would be a welcome first step, albeit a temporary – and no doubt highly contested – measure. Longer term, existing international rating systems could gradually replace national ratings, bringing in a uniform set of criteria that all stakeholders would trust and understand.

Clearly, it’s time for hospitality industry stakeholders to come together to explore a new approach. Changes will take time – and require challenging decisions. There will be winners and losers. Luxury hotels in the Gulf would benefit from a shift towards 6- and 7-stars. Existing ratings systems may not survive if they don’t adapt promptly, while others may emerge to take their place.

But the real winners will be tourists, who, with a clear, consistent system in place, will be able to make more informed decisions when it comes to travel plans.

* The writer is Associate Partner, Commercial Valuation and hospitality real estate expert, Cavendish Maxwell  

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