In 1971, a little over 45 years ago, what would go on to become the most heavily frequented and profitable resort in the world, opened its gates for the very first time, and immediately people were hooked. The Walt Disney World Resort in Orlando, Florida soon became the ‘happiest place on earth’.
But things have taken a slight turn over the last few years: North America, once home to multiple high-profile theme parks, and an uncontested leader in terms of growth up until 2013, reported the slowest growth in 2014 at 4.5%1. This slowdown was being attributed to a significant drop in attendance at regional parks, because tourist traffic was being diverted to new, better theme parks cropping up closer to home.
And while the North American market is expected to grow at a compound annual rate of 6.7% up until 2019, its growth will soon be superseded by the Middle East and North Africa (MENA) region: the smallest region in 2014 at only USD 93 million in terms of project spending, MENA will be the fastest-growing region over the next five years with a projected 28% compound annual increase to an estimated project spending of USD 319 million by 2019.
Dubai leads theme-park growth in MENA
The theme park industry in MENA is centered in the UAE, which accounted for 84% of theme park spending in 2014. And with more major parks coming to the UAE, the share is expected to climb up to 92% in 2019.
Most of this projected growth will be concentrated in Dubai where a string of major parks have recently opened up, and with many more scheduled. The emirate, which is within four hours of three billion people, is positioning itself as a major tourist attraction, and theme parks are a critical element of that initiative.
Take for instance Dubai’s USD 1 billion IMG Worlds of Adventure – the largest indoor theme park in the world at 1.5 million square feet, it opened its doors to visitors towards the end of August, and expects to welcome up to 20,000 guests a day2. Dubai Parks and Resorts, meanwhile, which spans three linked theme parks, expects 6.7 million ticketed visits in 2017, which will mark its first full year of operation3.
Dubai inspires international projects
“The phenomenal growth in Dubai is courtesy of a very specific shift in thinking, that we’re only just starting to see in other parts of the word. Dubai’s government views theme parks as an integral part of its plans for national growth and tourism,” explains Bradley P. Sutherland, chief executive of Sanad Capital. The new investment and development company was launched by Dubai-based conglomerate Najibi Group in Australia earlier this year, and has recently announced its very first venture on the nation’s Sunshine Coast – an AUD 400 million active-lifestyle and entertainment destination, inspired by similar projects in Dubai.
“The developers of such projects need to work in conjunction with the local and national governments to ascertain how their vision for their project fits in with that of the region. This way the project becomes so much more than just a commercial entity; it becomes a part of the region’s growth,” adds Sutherland.
Inspired by the success of such collaborative efforts in Dubai, Sanad Capital has done just that for its new development in Australia. Sharing the state’s vision for economic growth upwards of AUD 33 billion by 2033 – nearly triple what it is now – Sanad saw the opportunity to be a part of the region’s growth.
“Sunshine Coast plans to triple its economy, expand its airport to create an international and domestic gateway to the region, and wants to create world-class tourism, sports and leisure experiences. We knew then this was an area we could make a difference in,” says Sutherland.
Sanad is just one developer with a close eye on government plans and it has created an AUD 400 million development, including a sprawling water park complete with extreme water sports facilities and a nine-foot wave reservoir – a first in the world. Phase one has just been submitted for approval with construction due to start early 2017.
In Malaysia, meanwhile, the government established a fund to attract investors to directly invest in theme parks to boost the tourism industry. In 2013, China’s government removed the ban on approvals for new parks, which is leading to a surge in new projects with more than 50 parks currently in the pipeline.
Change in consumer behaviour
Another theory on the shift in theme parks is that consumer behaviour is changing: the modern theme park looks very different from its predecessors.
“People are discerning today, and require theme parks that are the biggest, the best, or incorporate the first of something. Being mediocre, or re-hashing old favourites, doesn’t necessarily yield success. Dubai did this well with independent operators foregoing the norm with the likes of Ski Dubai, Legoland, Aquaventure and Ferrari World. These projects offered something new, but just as thrilling, and now the rest of the world is adopting this approach,” says Sutherland.
He adds: “Developers are also taking into account the changes in lifestyle. Parks are now multi-use and comprise amenities such as entertainment, retail and hospitality options. We’ve identified this and implemented this approach into our newest development.”
While Disney and its main rival Universal still own a big chunk of the market share with 55% and 29% respectively, the industry, and the MENA region specifically, have welcomed a wave of new high quality operators which continue to contribute towards growth.
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