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UNTAPPED POTENTIAL: GCC THEME PARK HOTELS

The rise of several theme parks in the MENA region is highlighting the untapped investment and development potential for theme park hotels.

July 2015

It is a well-known fact that theme parks are a draw card for many leading family tourism destinations. In fact, their very success depends on providing a constant flow of family tourists to an area, positively impacting the hotels that situated within or in close proximity to the parks.

While the MENA region is not lacking in amusement and entertainment centres, the concept of lodging facilities within or close to the destination is still underdeveloped, creating a gap in the market for this asset class to evolve.

However with a number of major theme parks currently under construction in the region, experts believe that an opportunity exists for the hotel industry to capitalise on visitors to the parks with the development of theme park hotels.

UNTAPPED OPPORTUNITY

For JLL’s Chiheb Ben Mahmoud, Executive Vice President, Head of Hotels & Hospitality Group, Middle East & Africa, from an institutional investor point of view, theme park hotels correspond to the strategy of capturing a share of the value created by the park’s investment, while providing a support service/infrastructure that contributes to the destination.

“Historically the Middle East and North Africa region’s destinations can be split in two categories; the leisure driven destinations (Egypt, Tunisia, Morocco) and the business driven destinations (Riyadh, Abu Dhabi). For the leisure destinations of the region, demand is mainly nature based (beach, desert) or culture driven. Therefore amusement parks were limited to a very local population and did not have a regional or destination status,” says Ben Mahmoud.

Even though attractions and waterparks are not a new concept in the Middle East, the region is still considerably undersized compared to the large scale amusement parks around the world.

“For Dubai, theme parks (regional or destination theme parks) are long overdue in the sense that competing destinations such as Hong Kong have had their own theme park offering for quite some time. Wild Wadi, Atlantis’ Aquaventure, MOE’s ski slope have done a lot for Dubai tourism. In order for Dubai, as a destination, to move to the next stage, an adequate theme park offering is required,” says Ben Mahmoud.

Filippo Sona, Director, Head of Hotels for Colliers International MENA agrees. He says that a common concept when developing a leisure attraction is that the Middle East tends to construct it as an added leisure facility within a resort property. The majority of attractions currently operating in the GCC are located in the UAE, primarily in Dubai, followed by Abu Dhabi, Sharjah and Ras Al Khaimah.

“The largest in the region is Global Village, a cultural destination with outdoor retail, dining and entertainment options. Historically these parks were built by the public sector for communities, however, few pioneering companies such as Abdulmohsen Al Hokair Group, brought the theme park concept to Saudi Arabia,” says Sona.

The UAE has several parks which offer entertainment to visitors revolving around a specific theme. Ferrari World in Abu Dhabi has a Ferrari theme incorporated within every aspect, even though there are relatively fewer thrill rides offered as compared to other global theme parks.

However, Sona says a limited number of these attractions have a dedicated hotel catering to visitor demand, i.e. Dreamland Aqua Park in Umm Al Quwain, UAE, provides cabin and tents within the park for overnight guests, primarily catering to families. “Even though the region is not lacking in amusement and entertainment centres, the concept of having lodging facilities within or close to the destination is still underdeveloped,” says Sona.

“There is a genuinely untapped opportunity in the region. By observing global theme park hotels, and their success factors, we are confident that these developments can thrive in this region,” he adds.

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