Demand for hotels during the Expo 2020 The UAE is preparing to host Expo 2020 Dubai in October, which is one of the world's largest and most influential events, and will ensure the country is a leading international tourist destination for six months. The UAE is expected to receive millions of tourists during this period. The success of the Expo shows how Dubai can plan for and utilize its scarce resources efficiently. Dubai residents have a clear choice between staycation options in Dubai and going abroad during the winter season. Most residents believe that going overseas might be risky due to covid-19 risks but also, hotel prices in Dubai are lower, services are better and income levels are higher compared to 2020. Given the high demand from UAE residents and foreign tourists, demand for all hotels would eventually rise. DAMAC is planning to produce 6000 rooms that will be selling at AED 2000 per night. With a marginal cost of AED 2000, DAMAC estimates that its average total cost will be around AED 1500 where MC is at par with MR. Some economic experts believe that, although price is currently AED 2000 per room whilst quantity demanded is 6000, if price goes up to AED 2100, demand will fall to 5000 rooms per night. Equally a slight projected increase in income of 10% in early November might help to push demand up by 12.5 per cent. Considering that hotel users also visit shopping malls and food courts, a professor estimates that in January 2022 there can be upto 18% increase in the price of UAE hotels which will automatically result in a decrease of Dubai gift shopping by 24 percent. Exam Questions Q5. Calculate the Income Elasticity of Demand (IED) and explain whether hotels are normal or inferior good. % change in QD/ % change in Income Demand for hotels during the Expo 2020 The UAE is preparing to host Expo 2020 Dubai in October, which is one of the world's largest and most influential events, and will ensure the country is a leading international tourist destination for six months. The UAE is expected to receive millions of tourists during this period. The success of the Expo shows how Dubai can plan for and utilize its scarce resources efficiently. Dubai residents have a clear choice between staycation options in Dubai and going abroad during the winter season. Most residents believe that going overseas might be risky due to covid-19 risks but also, hotel prices in Dubai are lower, services are better and income levels are higher compared to 2020. Given the high demand from UAE residents and foreign tourists, demand for all hotels would eventually rise. DAMAC is planning to produce 6000 rooms that will be selling at AED 2000 per night. With a marginal cost of AED 2000, DAMAC estimates that its average total cost will be around AED 1500 where MC is at par with MR. Some economic experts believe that, although price is currently AED 2000 per room whilst quantity demanded is 6000, if price goes up to AED 2100, demand will fall to 5000 rooms per night. Equally a slight projected increase in income of 10% in early November might help to push demand up by 12.5 per cent. Considering that hotel users also visit shopping malls and food courts, a professor estimates that in January 2022 there can be upto 18% increase in the price of UAE hotels which will automatically result in a decrease of Dubai gift shopping by 24 percent. Exam Questions Q6. Calculate the cross-price elasticity of demand for the projected demand in January 2022 and indicate how the two goods are related. % change in the QD of gift shopping/% change in the price of hotels Demand for hotels during the Expo 2020 The UAE is preparing to host Expo 2020 Dubai in October, which is one of the world's largest and most influential events, and will ensure the country is a leading international tourist destination for six months. The UAE is expected to receive millions of tourists during this period. The success of the Expo shows how Dubai can plan for and utilize its scaree resources efficiently. Dubai residents have a clear choice between staycation options in Dubai and going abroad during the winter season. Most residents believe that going overseas might be risky due to covid-19 risks but also, hotel prices in Dubai are lower, services are better and income levels are higher compared to 2020. Given the high demand from UAE residents and foreign tourists, demand for all hotels would eventually rise. DAMAC is planning to produce 6000 rooms that will be selling at AED 2000 per night. With a marginal cost of AED 2000, DAMAC estimates that its average total cost will be around AED 1500 where MC is at par with MR. Some economic experts believe that, although price is currently AED 2000 per room whilst quantity demanded is 6000, if price goes up to AED 2100, demand will fall to 5000 rooms per night. Equally a slight projected increase in income of 10% in early November might help to push demand up by 12.5 per cent. Considering that hotel users also visit shopping malls and food courts, a professor estimates that in January 2022 there can be upto 18% increase in the price of UAE hotels which will automatically result in a decrease of Dubai gift shopping by 24 percent. 09.Draw a graph showing ATC, AVC, AFC, MC, MR and profit maximizing quantity. Demand for hotels during the Expo 2020 The UAE is preparing to host Expo 2020 Dubai in October, which is one of the world's largest and most influential events, and will ensure the country is a leading international tourist destination for six months. The UAE is expected to receive millions of tourists during this period. The success of the Expo shows how Dubai can plan for and utilize its scarce resources efficiently. Dubai residents have a clear choice between staycation options in Dubai and going abroad during the winter season. Most residents believe that going overseas might be risky due to covid-19 risks but also, hotel prices in Dubai are lower, services are better and income levels are higher compared to 2020. Given the high demand from UAE residents and foreign tourists, demand for all hotels would eventually rise. DAMAC is planning to produce 6000 rooms that will be selling at AED 2000 per night. With a marginal cost of AED 2000, DAMAC estimates that its average total cost will be around AED 1500 where MC is at par with MR. Some economic experts believe that, although price is currently AED 2000 per room whilst quantity demanded is 6000, if price goes up to AED 2100, demand will fall to 5000 rooms per night. Equally a slight projected increase in income of 10% in early November might help to push demand up by 12.5 per cent Considering that hotel users also visit shopping malls and food courts, a professor estimates that in January 2022 there can be upto 18% increase in the price of UAE hotels which will automatically result in a decrease of Dubai gift shopping by 24 percent. Q10. Explain two ways hotel operators in the UAE can increase their profit during the Expo 2020. (Hint: think of solutions relating to cost, price and market conditions)