Drone Strikes on Dubai Sent Luxury Brands Into a Wartime Sales Crisis

Drone strikes damaged Dubai International Airport and ignited a fire at the Burj Al Arab hotel, where a suite costs more than $20,000 a night, bringing tourism to a halt and leaving stranded travelers scrambling for ways to evacuate. The attacks, occurring in the context of Israeli and U.S. strikes on Iran and Tehran's response, also forced airspace closures across parts of the Middle East and shut key airports including Dubai and Doha, disrupting commerce across the region.

The human disruption translated almost immediately into a commercial crisis. Nearly three weeks into the conflict, Dubai Mall, which together with the Mall of the Emirates welcomes more than 140 million visitors annually, had lost most of its crowds. Where those malls once pulsed with international shoppers, only a handful of residents moved through the corridors, some carrying bags, others simply looking around. Many stores were closed or operating with minimal staff.

Bernstein Research projected that luxury sales across the Middle East could be cut in half in March, driven by the collapse in foreign visitor numbers. "If the duration is limited, Dubai could go back to its former glory, and this is just going to be a dent," said Luca Solca, an analyst at Bernstein based in Geneva. "If the war continues, then this would not be the case."

The stakes are considerable. The Middle East accounts for roughly 5 to 6 percent of global luxury sales, according to estimates from Morgan Stanley and Bank of America, a modest share on paper but one that punches above its weight. The UAE alone represents about half of the region's luxury revenues, and most of those purchases are concentrated in Dubai. Just last year, Chalhoub Group, the Dubai-based luxury distributor, declared the sector "unstoppable," reporting that Gulf region sales rose 6 percent to nearly $13 billion in 2024. A 2025 Visa report found that roughly one in nine Dubai residents made at least one luxury retail purchase every three months, a higher per-capita rate than in New York, London, Paris or Singapore.

For luxury conglomerates, Dubai had become far more than a regional outpost. LVMH spent years cultivating relationships there, and in 2014 its chairman Bernard Arnault flew to the UAE for a reception with Dubai's ruler, Mohammed bin Rashid Al Maktoum. The company has since added stores across Dubai's malls and airport and was set to open a Cheval Blanc resort on a nearby private island. Chanel, Gucci and Saint Laurent all maintain flagship presences in the city's major shopping centers.

Some brands face sharper exposure than others. Richemont and Zegna each derive around 9 percent of their total sales from the Middle East, making them among the most vulnerable. Burberry, by contrast, is among the least exposed.

The timing compounds the damage. Brands had been counting on Middle Eastern sales to offset a prolonged slowdown in Asia and Europe. Morgan Stanley analysts warned that the crisis could also disrupt the Ramadan rush, when affluent Gulf residents typically travel to Europe to shop. Supply chains have already frayed, with certain products unavailable due to halted shipments.

The attacks stripped away something harder to quantify than a single quarter's revenue: Dubai's carefully constructed image as a safe, tax-friendly, luxurious haven for the world's elite in an otherwise turbulent region. Rebuilding that reputation, even after a ceasefire, may take longer than rebuilding the airport.