The Ebb and Flow of the Middle Eastern Theme Parks.
The Challenges Ahead for Saudi Arabia's Entertainment Ventures……..What Lessons are There to be Learned Thus Far?

There has been a lot of buzz, both positive and negative, about the upcoming theme parks and other leisure attractions that are planned and being constructed in Saudi Arabia. For the manufacturing sector of our industry, these projects have been a boom to their businesses just as China performed for several years. The Saudi’s have put many of the rides and attractions manufacturers at capacity for several years, which is not a bad thing at all! Too many projects too soon can have disastrous results, as we saw in Dubai with an overload of projects opening far too quickly before the market backing and infrastructure to support was in place.

Let’s take a look at Dubai. Dubai, an amazing city synonymous with innovation and grandiose projects, ventured into the theme park industry with high hopes of immediately becoming a global entertainment hub. However, the reality of DXB's theme parks turned out to be a stark contrast to the visionary dreams that fueled their creation. Now, as Saudi Arabia embarks on a similar journey, the lessons from Dubai's experience offer critical insights into the potential pitfalls that lie ahead.

In the mid-2010s, Dubai launched several ambitious theme park projects under the banner of DXB Entertainments. The city's vision was to diversify its tourism offerings beyond luxury shopping and skyscrapers. Parks like Motiongate Dubai, Bollywood Parks Dubai, and LEGOLAND Dubai were designed to attract millions of tourists annually, promising a unique blend of entertainment, culture, and thrill.

Despite the grandeur of their designs and the substantial financial investments, DXB's theme parks struggled to achieve the anticipated success, losing 8.16 billion Durans, or $2 billion, $221 million dollars. Several factors contributed to this outcome.

Importantly, there was a huge overestimation of attendance demand. The projections for visitor numbers were exceedingly optimistic. The parks failed to attract the expected influx of tourists, partly due to the region's extreme summer temperatures, which deter outdoor activities. Also, there were enormously high unanticipated operating costs necessary in maintaining world-class theme parks in a desert environment. This proved to be an incredibly expensive endeavor. There were other excruciatingly high operational costs as well, including energy consumption for cooling and water supply, which cut deeply into operating profits.

There was also an underestimation that there were existing high level global theme park giants, like Disneyland and Universal Studios with their well-established global brands and vast loyal customer bases, that overshadowed Dubai's new overestimated parks. Their product offerings were not on par with the big two operators.

On top of other underestimated issues, the fluctuating economic conditions in the region, including the impact of oil price volatility, affected discretionary spending by both locals and tourists, particularly China where travel was cut back substantially by the government causing a severe cut back in Asian travel.

The Dubai parks also struggled with cultural differences, attempting to cater to the diverse tastes of the international audience while balancing local cultural sensibilities. This led to a diluted overall appeal, teaching them that you cannot be everything to everybody! Most importantly, there was a lack of local visitation particularly by the expat working community who could not come close to affording the costs to visit.

And now, we turn to Saudi Arabia's ambitious plans for their entrance into the leisure and theme park industry. Typical of the Saudi’s approach, they always attempt to “one-up” everyone and at warp speed!

Saudi Arabia is now embarking on a similar path with its Vision 2030 initiative, aiming to reduce its economic dependence on oil by developing various sectors, including tourism and entertainment. Projects like Qiddiya, an entertainment city near Riyadh, and other mega-developments are set to feature theme parks, sports facilities, and cultural attractions. Recently, there has been an awakening by someone in Saudi Arabia, as they have begun cutting budgets on leisure projects after years of unbelievable spending.

While Saudi Arabia's ambitious plans are commendable, several challenges echo the issues faced by Dubai, raising concerns about their potential success. Like Dubai, Saudi Arabia's harsh climate could be a significant deterrent for visitors, particularly during the peak summer months, with temperatures reaching 122-125 degrees Fahrenheit! Just like Dubai, ensuring visitor comfort will require substantial investment in cooling technologies, adding horrifically to operational costs.

Now already with established local and global players dominating the theme park industry in the Middle East (successful or not), Saudi Arabia will need to offer truly unique experiences to draw tourists away from more familiar destinations.

Although Saudi Arabia is making strides towards economic diversification, its economy remains susceptible to oil market fluctuations, which could impact consumer spending on entertainment. This issue is sure to come into play early in the startup of this excess of attractions especially with “Drill Baby Drill” on its way from the USA anticipated to affect world oil prices. There is only so much market to accommodate these types of enormous investments, as seen in Dubai.

Another huge factor that is necessary to understand is cultural sensitivity, balancing international appeal with local cultural norms. This will be crucial to adoption and acceptance of their leisure activities. The challenge lies in creating attractions that are both globally competitive and locally respectful.

Now, add to this the infrastructure necessary to develop a comprehensive tourism infrastructure, including transport, hospitality, and ancillary services, which are essential to support the theme parks ensuring a seamless visitor experience. In other words, being able to “get there”, as well as being serviced once in the designated tourist zones. Things like ingress, egress, general access to amenities, retail, on-site accommodations, and food and beverage. These must be in place and established to support the product offerings.

As we have seen, the story of DXB's theme parks serves as a cautionary tale for Saudi Arabia's burgeoning entertainment sector. While the ambition and vision behind these projects are laudable, the challenges they face are formidable. Learning from Dubai's experience, Saudi Arabia must carefully navigate the complexities of market demand, operational costs, climate challenges, and cultural integration to realize its dream of becoming a global entertainment destination. Only time will tell if Saudi Arabia can overcome these hurdles, and project realistic timetables for completion of work, achieving sustainable success in its leisure and theme park ventures.

I have found through the years of my service in the industry that the common denominator among all peoples is - “Everybody Wants to Have Fun”. With that thought in mind, I stress that, while we want this region to be successful, it must be kept in mind that Orlando Florida, which is the mecca of our industry is celebrating 54 years of growth and existence. Orlando has been built on supply and demand. It did not happen overnight. The same factors are applicable in The Middle East.