In 18 months’ time, Expo 2020 will kick off in Dubai. Hotel benchmarking company STR says there are still 30,000 more hotel rooms expected to enter the Dubai hotel market before the event gets under way on 20 October 2020. 

Following the Arabian Hotel Investment Conference 2019, held in April in the emirate of Ras al-Khaimah, STR compared facts and figures from previous world events – the last three Olympic Games; the last two Fifa World Cup tournaments; and the last two expos, which were held in Shanghai in 2010 and Milan in 2015 – to reveal what the impact of Expo 2020 Dubai might be for the emirate’s hotels.

Shanghai, Milan and Dubai differ significantly in terms of their geographic locations, languages, cultures and economies, and it is also important to note that while both the Shanghai and Milan expos took place during a single calendar year, the Dubai event will span two, running from October 2020 to April 2021. 

Hotel room availability also differs significantly between the three cities. Shanghai had 192,000 available rooms to sell every night during its expo. But there were also 200 million Chinese people living within a two-hour drive of Shanghai, resulting in about 85 per cent domestic Chinese visitors during the expo, which ran from May to October 2010.

Over the event, Shanghai experienced a 39 per cent increase in demand, compared to the same period the year before. The average daily rate (ADR) during Expo 2010 was 30 per cent higher than the previous year, and it was 26 per cent lower in 2011. In the year following the expo, the city opened almost 11,000 new hotel rooms, despite demand remaining flat. 

Milan had a significantly smaller pool of available hotel rooms at the time of its expo, which ran from May to October 2015. It had 34,000 available rooms to sell each night during the event – 20 per cent of what had been available in Shanghai.

Milan relied heavily on flying in visitors to Expo 2015 – a strategy that is shared by Dubai. Approximately 75 per cent of all visitors to the Milan event came from outside Italy. 

Hotel demand in Milan increased during the expo period, but only by a third of what was recorded in Shanghai, with a 12 per cent year-on-year increase. During Expo 2015, Milan commanded an ADR that was 27 per cent higher than the same period in 2014, and this fell 17 per cent in the same period of the year after the event. 

Outlook for Dubai

As of April 2019, Dubai has 111,000 hotel rooms to sell every night and is already trading at a similar level of occupancy to Shanghai and Milan during their expo periods, which stood at 76 per cent and 77 per cent, respectively.

At the end of 2018, Dubai had an occupancy rate of 75 per cent and an ADR of $172. This was $40 more than the ADR recorded in Shanghai during Expo 2010, and only $10 lower than the ADR of $182 achieved during Expo 2015 in Milan.

In addition, demand in Dubai continues to grow every year. It was up 3.6 per cent in 2018 and up 6.4 per cent in the first two months of 2019.

However, the main challenge for Dubai is the pace at which new supply is expected to enter the market. As previously noted, an additional 30,000 hotel rooms are expected by the event. 

During Expo 2020, from October 2020 to April 2021, it is expected that Dubai will maintain – or perhaps increase – its current occupancy levels, and achieve some good ADR growth over the course of the event. 

Sarah Duignan is STR’s director of client relationships and is based in London