An Arabian nights or an Arabian party theme is supposed to create a sense of mystique and intrigue surrounding thieves, princes, princess, kings and queens.
Your aim is to recreate the desert of Morocco. So you should try and host your party at night, at the beach. This is not essential though, you could hold it in your back garden or in a local park.
The biggest and best feature for your Arabian party theme would be the Bedouin tent. You can rent them, they come in all shapes and sizes and will be an awesome venue for your party.
For your costume, you could go for an Aladdin or princess Jasmine look. Such a costume is easy to make or rent. Think turbans, pointy slippers, slinky harem pants and gold bracelets.
If you have gone for the tent, most of your furniture needs to be as low down as possible, your guests will preferably be sitting on the floor. So get plenty of nice rugs and cushions. Get some patio lanterns and candles to light your tent and hang crescent moons and stars from the ceiling.
Some added optionals which would be budget dependant would be a hena artist, belly dancer, snake charmer, fortune teller or a fire eater. Try and get a goat too! Tie the little thing up to a post outside for authenticity.
The food should ideally be served on the floor off platters while everybody is sitting on the floor on cushions and rugs. Look into making some traditional middle eastern dishes.
In Arabia, it is traditional before eating to bathe your fingers in scented water. For this, simply put a few drops of essential oil in a bowl of water.