Business | Features
Riding Dubai's boom
When completed, Dubailand will play a special role in the emirate's transformation as an entertainment and leisure destination for the well-heeled
- By Michelle Grant, Special to Gulf News
- Published: 23:45 October 21, 2008
The slogans on the billboards dotted along Emirates Road near Arabian Ranches in Dubai only hint at the shape of things to come. "The Fun is Building", declare the posters with their enormous depictions of the Incredible Hulk, Captain Marvel and Spider-Man.
What they don't tell you is that along this stretch of desert will be built the world's biggest amusement park, twice the size of Walt Disney's flagship World Resort in Florida. Measuring some 300 square kilometres, Dubailand will, when completed, be the same size as a developed Singapore and feature some 45 attractions, including hotels, shopping malls and cultural and sporting facilities.
Major amusement park players have already signed up to the Dubailand dream, anxious to be part of what has been dubbed the "Las Vegas of the Middle East".
Six Flags, Universal Studios, Seaworld and Dreamworks have all signed on the dotted line to open Dubailand parks, their first in the Arab world.
To say that this project is ambitious is an understatement. Where else in the world would an economy be confident enough to pour some $60 billion-plus into its tourism industry and audacious enough to plan to build life-size replicas of the Eiffel Tower, the pyramids, the Taj Mahal, the Great Dubai Wheel - an even bigger version of the London Eye - and a 1.4 million square feet snow dome. It represents the culmination of Dubai's efforts to more than double its number of tourists. Last year more than 7.7 million holidaymakers visited the emirate, but Dubai expects 15 million to come each year by 2015. And it is hoped that by visiting Dubailand they will extend their stay from the current average of just 2.4 days, with the primary focus on shopping, to seven days and even longer. Tourism accounts for 19 per cent of Dubai's revenue, a figure expected to rise to 35 per cent by 2020. On a longer term basis, Dubailand is one of the projects designed to phase out Dubai's dependence on oil by establishing a sustainable economy through higher value-added services.
Surprisingly, there is very little criticism to put a dampener on Dubailand's expectations. Certainly Gulf-based developers have enthusiastically committed millions of dollars to build the parks, with US entertainment firms benefiting from licences and management deals with a minimum of financial commitment. Neither does there seem to be any fears that Dubailand may suffer a similar fate to Hong Kong's Disneyland which, since it opened last year, has failed to pull in the expected number of tourists. Some of Dubailand's attractions are already up and running. These include the Ernie Els golf course, Autodrome, Outlet Mall, Al Sahra Desert Resort, Global Village and Dubai Sports City.
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Dubailand is upbeat about meeting its deadline. Mohammad Al Habbai, Dubailand's senior vice-president, said recently he was confident of meeting the Phase 1 deadline of 2010, which would include Universal Studios. Al Habbai said the only setback may be procuring materials, but it would not be a major delay. He said: "The 24 projects currently on-site are progressing well. We anticipate that from now until 2020 most of our Phase 1 projects will be open and operating." The consensus among industry observers seems to be that if a theme park complex of these proportions can be built anywhere in the world, then Dubai, with its undeniable drive, is the place to do it.
American-based consultancy Globalysis, which recently conducted research into Dubai's tourism and leisure sector, believes Dubailand will be crucial to the emirate's continued success as a tourist destination.
Truly remarkable
Jonathan Galaviz, a partner in Globalysis, says Dubailand's philosophy for increasing demand is simple: "You build it, they will come."
Galaviz says: "Dubailand is clearly deploying a strategy of increasing demand by creating ample supply of tourism-related developments in Dubai. The emirate continues to gain a foothold in the minds of globally-minded tourists and Dubailand is obviously seeking to capitalise upon the increasing tourist profile that seeks entertainment during their leisure vacation.
"Dubai remains a truly remarkable 21st century phenomenon in terms of ambition and scale. It stands to achieve its goals of developing a first-of-its-kind world-class destination - one that is strikingly free from the ebbs and flows of the global oil economy."
However, Galaviz has some words of caution for the development's future. He believes there are still significant risks to Dubailand's real estate developments even if Dubai itself is a successful tourist destination. He says: "Dubailand must ensure that it produces dynamic and compelling entertainment developments."
Peter Goddard, managing director of Dubai-based TRI Hospitality and Consultancy, believes that despite the sheer size and ambition of Dubailand, many of its projects will go ahead. "Historically, the doomsayers in Dubai have been proven wrong, but I can see that there will be significant delays with some ill-conceived projects being canned if it is found that they are not economically viable. The key to successful resort and tourist development is to ensure that each project is market supportable."
Sven Gade, director and head of marketing of PKF/The Consulting House, believes there will be changes in the project's original mix until Dubailand is finally completed. This, he says, is natural and may occur for a number of reasons, not the least of which is changes created by the mix of private sector investors.
Gade adds: "This may mean that a particular attraction or park may change or not get built, but also that others will be added in turn. Looking back at the mix of Dubailand over the past five years is a demonstration of this but, overall, Dubailand has stayed the same."
Dubailand anticipates that by 2015 it will be hosting 11 million of the 15 million tourists expected to visit Dubai. The company says it has the marketing strategy plans in place and believes it will get its visitors through international and national exhibitions, advertising and other promotions.
Most tourists are expected to come from a five- to six-hour aeroplane ride of Dubai, with North America seen as a secondary catchment area. The one area that the experts believe that Dubai may struggle with initially will be its provision of hotel rooms. Dubai has one of the highest hotel occupancy rates in the world, largely due to undersupply. But with the advent of Dubailand there will be an extra 55 hotels with more than 50,000 rooms. Chief among Dubailand's hotels will be the five-star, 6,500 room Asia-Asia, expected to be one of the largest hotels in the world. It will form part of Las Vegas-style boulevard of 31 hotels along a 10-kilometre long strip of land. Dubai's Department of Tourism and Commercial Marketing (DTCM) says the emirate is on track to fulfil its hotel requirements. It anticipates that by 2010 there will be 531 hotels and hotel apartments with 69,620 rooms. These figures are expected to rise by 2016 to 562 and 129,620 respectively.
A DTCM spokesman said: "This all shows that the private sector, with the support and cooperation of the public sector, is actively working towards the same goal of the DTCM - have more tourists and achieve the ambitious target set by the department. As far as the fundamentals are concerned, they are very encouraging for the projects under question, with all their novelties and theme parks are part and parcel of the big scheme to attract more tourists and massive development in infrastructure is to meet the extra influx of tourists, workers and a growing population."
Concerns
TRI's Peter Goddard, however, believes that in the short term Dubai will not cope with a huge increase in the number of tourists and occupancy levels within the emirate will continue to remain high. However, in the medium term, he sees the anticipated increase in supply ensuring that there will be sufficient rooms available.
These concerns are echoed by Sven Gade, who says Dubai's requirements for hotel rooms are being constantly monitored and analysed by the Dubai Department of Tourism and Commerce (DDTM) and the region's tourism and hospitality experts. He says: "I believe there may be some short-term troughs, such as now, and spikes, perhaps in two or three years' time, but overall the supply is well balanced with demand and this can be adjusted as we go along."
Certainly, over the next 10 years Dubailand will have its setbacks and delays, which is only to be expected from a project of such magnitude. But few people can criticise Dubailand for lacking in imagination, ambition and courage. However, perhaps Dubailand pales slightly into insignificance when you learn that just down the Emirates Road at Sports City plans are being drawn up apace to put together a proposal for Dubai to host the 2020 Summer Olympics. Well, as the billboards say, 'The fun is building."
- The writer is a freelance journalist based in Dubai.
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