Dubai welcomes the world, and hotels are benefitting


Since 1851, World Expos have showcased some of the world’s greatest innovations in some of the world’s most influential cities. Currently, Dubai has the honor of welcoming the world as the COVID-19 pandemic forced the event to be postponed from its originally scheduled 2020 start. While Dubai was already recovering better than most major, global markets, the start to the six-month “mega event” in October was a welcome sight for hoteliers with delegates, business travellers and leisure guests accounting for more than 1 million visits during the event’s opening weeks (according to event organizers).

In this latest piece, STR analyzes the impact this major exposition has already had on Dubai hotel occupancy, average daily rate (ADR) and revenue per available room (RevPAR). We also look back with a comparison to previous Expo host, Milan, and look forward at occupancy on the books for the remainder of the event in Dubai.

Best levels in three years

As to be expected with the boost in hotel demand, Dubai’s ADR and RevPAR during the early Expo months have been significantly higher than comparable periods in previous years. Add in the recent Cricket World Cup to the equation, and Dubai’s ADR has reached as high as AED981 on 29 October, which was a level most comparable with a typical New Year’s Eve in the market. Overall, that ADR was the highest in the market since 1 January 2021 and contributed to October 2021 being Dubai’s best ADR and RevPAR month in three years. Occupancy, which peaked at 90% on 21 October, hasn’t been too far behind as October was the market’s best occupancy month since January 2020 and just 3% below the pre-pandemic comparable from October 2019.

How much business is left to capture?

When looking at data from Forward STAR, Dubai is set to see continued success in the final months of 2021 with occupancy on the books eventually spiking on 31 December thanks to New Year’s Eve festivities. In 2022, levels are sitting consistently around 20%, which offers a solid base for which to grow upon

As is common for many markets right now, booking windows, the gap between making a booking and arrival, remain short. Dubai’s hotel pickup, the difference in bookings from one Forward STAR reporting period to the next, hits a high of 18% in November. It can therefore be expected that as we move closer to the end of the year and into 2022, occupancy levels shall continue to rise.

Milan comparisons

Dubai’s ability to run the event in 2021 after its initial postponement has been lauded by the hospitality industry’s stakeholders, especially considering the challenges remaining around international travel restrictions, quarantines and testing requirements. To get a sense of the event’s current success, we compare Dubai’s early occupancy performance to that of previous Expo host, Milan, in 2015. The global capital of fashion and design comfortably eclipsed 80% hotel occupancy in 2015, however, it should also be noted that levels fluctuated dramatically throughout the event period, and the city’s strongest performance came near the end of Expo. Considering Dubai’s already fast start, a late-event spike in performance would push to levels to new heights.

Conclusion

Despite the many logistical challenges faced, Dubai has managed to successfully kickstart this world-renowned exposition, and the local hotel industry is thriving as a result. The added benefit of hosting the Cricket World Cup has also helped to bolster hotelier pricing confidence and ability to drive RevPAR through room rates. While forward-looking data shows Dubai behind Milan’s pace in occupancy, there is plenty of time and indications for greater pickup over the coming months.

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About STR

STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.





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