Emirate said to have less to fear than other cities that have incurred debt after staging world events
If the World Expo 2020 was held in Dubai it could become one of the most successful international events ever staged, in terms of the impact on the host city, a top economist has told Arabian Business.
Putting on world extravaganzas such as the Olympics and football World Cup have historically left host countries with multi-billion dollar losses thanks to bloated construction costs, unnecessary infrastructure, poorer-than-expected tourism revenues and underutilised buildings.
But not in Dubai, according to London Business School Professor of Economics and deputy dean Andrew Scott.
“Dubai has less to fear from the inefficiencies of hosting the Expo, which are unwanted infrastructure, buildings and housing, and has a lot more to gain from indirect benefits of hosting an international event,” Professor Scott said.
Dubai this week passed two further stages in its bid to host the six-month long event.
The emirate is considered to be a front runner against the other contenders, Ekaterinburg (Russia), Izmir (Turkey), and Sao Paulo (Brazil). Thailand’s Ayutthaya was cut from the competition this week over concerns the city’s bid did not have enough support from the government.
Professor Scott said the direct economic impacts of hosting an international event was two-fold.
“The building of infrastructure and [other] investments ... brings benefits to the economy in the short-term but that’s where things get negative in the long-term because you get stuck with cycling stadia and swimming pools that aren’t going to be used in the longer-term,” he said.
“The second direct benefit is greater tourism, but what tends to happen there is all the people who over the next three to four years thought of [going to the city] end up coming during the event, so you’ve got this big blip at the cost of later travel.”
But Dubai’s geographical and economic position in the world – with almost half the global economy to the east and the other half to the west - would reduce the negative impacts, while enhancing the positive.
It also was already building what will be the world’s largest airport, as well as expanding ports and other transport facilities and sporting stadia.
“Dubai already has a lot of the infrastructure needed [to host the Expo] and they’re trying to really get infrastructure going again, so this is a great opportunity to reignite it,” Professor Scott said.
“[Dubai also] can convert the infrastructure more easily.
“[Also] the symbolism of the event, I think, will be tremendous for Dubai and [the emirate’s bid to] position itself as one of the key global cities.”
There also were indirect benefits including symbolism and the improved position of the city globally and domestically – although such sentimentality often faded quickly.
“[The repositioning] as a global city has a big plus and already Dubai is in a great position to do that given how the world is changing and where Dubai is based on its previous actions,” Professor Scott said.
“You can [also] use it to explain more to the resident population what your role in the world is and the function of the economy within that. The resident population tend to like these events; it tends to make them feel happy, important, at the heart of things – like hosting a good party.”
The exact impact of the most recent Olympics, in London, which cost about 10 billion pounds, is yet to be realised, but reports show the boost to hotel guest arrivals in other Olympic cities was not realised.
Hotels in Sydney experienced a 6.3 percent fall in the number of guest arrivals in 2000, while hotels in Athens experienced a 5.3 percent decline in arrivals in 2004, Beijing’s fell 39 percent August 2008, the Games month, compared with August 2007.
The US predicted it would make a $4bn profit after hosting the 1994 World Cup but ended up losing $9bn. South Africa also end up with a debt, although it’s not known exactly how much, and Germany only broke even despite already having most of the infrastructure needed.
Dubai’s Minister of State and managing director of the Higher Committee for Hosting the World Expo 2020, Reem Al Hashimy, said a year ago that it could cost the UAE $4bn to host the World Expo 2020 but the event would attract 25m tourists and create opportunities for small and medium sized businesses.
More metro lines, ports, infrastructure services, tourism and entertainment facilities also would need to be built in time for the event.
Dubai’s vision for the Expo, which would be held at a yet-to-be built exhibition site at Dubai Trade Centre - Jebel Ali, includes an open plaza called Al Wasl (the connection), with three zones branching out to symbolise the sub themes of sustainability, mobility and opportunity.
Inspired by traditional Arab souks, the proposed site integrates the UAE's architectural heritage with the requirements of the Expo to foster the fundamental principles of innovation, partnership and collaboration between participants and visitors.