Two huge events in the Middle East could be the spark to ignite a host of visitor attraction projects to ease the region’s reliance on oil and gas income. Paul Milligan examines the plans.
The visitor attraction market in the Middle East has always been of great interest because it has always offered opportunity. Often that was financial but during 1990-2000 there was also a creative freedom to design and build fantastical projects, the scale of which would be unheard of in North America or Europe. This was all driven by oil and gas revenues, which has made Qatar, Saudi Arabia and the UAE among the most cash-rich countries in the world. But oil revenues are not as dependable as they used to be, the Covid pandemic saw oil prices reach a 20-year low in 2020 and lying ominously ahead is a time when oil will run dry. GCC countries have begun to build for the future, and tourism has been chosen as the path to ensure these countries remain prosperous.
Dubai was the first to put this into action in the 1990s and has since created a successful niche for itself as an all-year-round destination for high-end European travellers. That plan is far from finished and later this year, in a bid to boost tourism, will host World Expo 2020 (postponed from last year due to Covid) which opens in October and runs for 182 days. Not to be outdone, Qatar is to host the FIFA World Cup in late 2022 (the first Middle East country to do so), and now Saudi Arabia has released extraordinary plans to create huge new cities full of leisure and entertainment projects to help it become less oil and gas reliant. The fact that the hugely conservative Saudi establishment is even considering tourism from outside the country shows how vital this future income is going to be. In this piece we will look at some of those mega projects in the planning and speak to those on the ground to ask if everything is as optimistic as it sounds.
The two stand out events on the horizon are the World Expo and FIFA World Cup, but there are a whole host of other projects that are interesting because of their scale or ambition, and that will play a big part in making the Middle East a popular tourist destination. It’s tempting to think the easiest way to do this is to turn somewhere like Dubai into the next Orlando, and fill it full of water parks and rollercoasters, after all it has the all-year-round weather to do that, but the plans (thankfully) are more sophisticated than that. Later this year the Museum of the Future is to open in Dubai and will house an ‘incubation centre for new inventions coupled with a museum of prototyped ideas’.
Another significant cultural project will be the opening of the Guggenheim art museum in Abu Dhabi in 2022. These projects follow on the back of opening of the National Museum of Qatar (see Inavate Feb 2021 issue). According to project tracking platform MEED Projects, €97 billion worth of GCC contracts is anticipated to be awarded during 2021, which is more than triple the size of contract awards last year and double those of 2019. Saudi Arabia is anticipated to be the biggest market for new contract awards of €30 billion by the end of 2021, followed by Qatar (€26bn) and the UAE (€24bn). After infrastructure, a healthy chunk of this money is being spent on leisure and entertainment projects to help drive tourism. Qatar opened its first theme park (Desert Falls Water and Adventure Park) in late 2020 and has just opened its first indoor theme park (Quest) on July 1 in Doha. The biggest project in the Middle East right now outside of Expo/World Cup is undoubtedly Qiddiya, located 40 miles from Riyadh City in Saudi Arabia. Qiddiya is one of the Kingdom's giga-projects – the others are Neom, Amaala, and the Red Sea Project – to be rolled out as part of Vision 2030, the framework which aims to diversify the income of the country. The numbers involved in Qiddiya are incredible, and it is just the tip of the iceberg of what is to come.
The Six Flags Qiddiya theme park is scheduled for opening in 2023 during the first phase. It will be three times the size of Walt Disney World in Orlando and stretches 28 rides over 32 hectares of land. The overall Qiddiya project will also eventually feature a sports stadium, a water park, a safari park, theatres, residential units, and hotels. Qiddiya is part of ambitious plans laid out by Saudi Arabia Crown Prince Mohammed bin Salman which would make the Public Investment Fund (PIF) the largest sovereign wealth fund in the world. It has assets worth €340bn, this would increase it to €930bn by 2025 and €1.7 trillion by 2030. The PIF is spearheading efforts to increase tourism to KSA with a goal that visitors eventually contribute 10% of the GDP by 2030. Going on holiday to Saudi Arabia may seem a strange concept to many Europeans, but there is also a local population of 35 million to cater for too.
The other giga-projects are just as incredible in outlook and scale. Thanks to a €420bn investment from the PIF, Neom will be a futuristic new city 33 times the size of New York City. Built along the Red Sea, Neom is aiming to be Saudi Arabia’s answer to Silicon Valley and will include towns, cities, research, education zones, and tourist attractions. Amaala and The Red Sea Project will be luxury tourist destinations centred around some of the world’s (until now) most hidden natural treasures. The first phase of the Red Sea Project, scheduled for completion in 2022, includes 14 luxury hotels providing 3,000 rooms across five islands, an airport, and marinas, along with residential properties and recreational facilities. This amount of construction is unsurprisingly going to give an incredible boost to the Saudi entertainment and amusement sector. According to US-based company Research and Markets the sector will grow from €20 million in 2020 to €1bn by 2030, rising nearly 50% per year. As you would expect this level of activity has attracted the attention of AV suppliers in the region (and from those further afield).
The potential for AV companies to make money in the region is clearly there in the next five to ten years even if only half of these very ambitious plans actually see the light of day.
That is in the future, but what is the current state of investment in visitor attraction projects right now? The message is mixed, depending on geography. For some, like Peter Cliff, global creative director from Holovis, GCC countries are leading the charge through the visitor attraction industry, “Abu Dhabi is picking up, Qatar is busy, and Saudi is incredibly big in growth potential for visitor experiences.” Stuart Taylor, managing director from Kraftwerk Middle East agrees, “the outlook is substantial, the whole region is looking really positive. Especially in our main areas of activity (leisure and entertainment). There's a growing demand for technology and a reliance on technology as these projects come along. Abu Dhabi has invested 30 billion dirhams into the cultural/museum side of things and the Department of Culture and Tourism is key in driving that. Qatar is a really small region but has put €4bn into the tourist industry.” The outlook doesn’t seem as bright in Dubai however, as outlined by Nour Assafiri, CEO, Venuetech: “A new wave of crisis was starting right before Covid, we noticed in the second half of 2019 things started to slow down. Nothing was cancelled but it was slow. The only investment in now is to close what is currently on-going with (already) allocated budgets.”
A mixture of Covid and failed, over-ambitious ventures has left many wary of going again says Steve Lakin, Protec founder and CEO: “Everything they've done in Dubai in terms of the theme parks has been pretty much a disaster. The numbers are just ridiculously low. They’re putting a lot of money into the World Expo but is it going to be successful? We don't know.”
Has the presence of the World Expo and World Cup helped to drive other visitor attraction investment in the region? “The Expo is a springboard for the next 10 -to-15 years for how and why visitors would come to this area,” says Taylor. “And the same for the World Cup, alongside the massive stadiums they're looking at all the other attractions to get them finished. The thinking is we’ve got these people here, let's keep them here for a holiday for two to three weeks. Let's make them want to come back. So they are key projects for the for the whole Middle East.” What the two global events has done is speed up investment rather than create new investment says Cliff.
“Clients are saying because the World Cup is happening we want our thing to be open by then too. This is a big positive because if anyone's ever worked in the Middle East, they know the biggest challenge is there's no real deadline, because it's defined by a few personalities rather than corporations. And money comes from very different places.” Big events of this kind only really appeal to the international market says Robert Cole, CEO, Integrated Automation Design, “And Dubai has already done that. With the World Cup it’s not going to attract the big international visitors like the UAE did. What you're seeing is that Saudi is really trying to step up in the region to take the reins of being an international hub for companies to come.”
What sort of products have been getting off the ground in GCC countries in the last five years? Is it all waterslides and splash parks? Not quite says Cliff. “Across Saudi there are hundreds of entertainment opportunities we’re engaged in but there are also a lot of experiential projects too. Not every destination in Saudi is to do with entertainment, it’s about cultural and heritage and sucking people into a vision of the future.” You might not associate Dubai automatically with culture, but that doesn’t mean the rest of the GCC isn’t steeped in history. “When you look into the business model, and when you talk to people from the PIF, the cultural attractions you have here in Saudi like AlUla (a Unesco World Heritage site), which is at least the same size as Petra, will drive people to Saudi Arabia,” says Matthias Maurer, COO at Hwadi. A successful tourism economy will offer water parks and museums alike he adds. “The leisure industry is there to develop projects to make tourists stay longer here and also spend their money. That is what the PIF is focusing on, it's not either or, it’s to have that parallel.”
Will we see more cultural projects, like the National Museum of Qatar, appearing in GGC countries? It seems likely. “Culture and history is massively important, we need to build on history and display it in a way that makes it very interesting and thought provoking,” says Taylor. “There's a lot of projects going on in Saudi Arabia, where they're protecting the historical site but developing the visitor centres to go with that. We're bringing in exciting technology to bring that history and cultural alive”. Maurer adds that when he looks at the requests he has on his table many are “in the direction of edutainment”.
When we think of oil-rich countries such as the GCC it’s easy to imagine the budgets are a case of “money’s no object”, and “build me the biggest and best”, but is this the reality? Not anymore says Maurer: “The policy of the KSA government changed, for two to three years [in entertainment projects] it was nearly unlimited budgets, now we submit budgets to two government entities. We are always asked for the ROI you have as a target, you need to at least have a 30% ROI in your budget, if you can’t prove that they will not grant 100% of the money anymore.”
A lesson from projects past has also been learned adds Cliff. “Within the entertainment sector a lot of the people who are now leading these projects are the people who used to be in Dubai and Abu Dhabi and have learned the lessons of big pockets. I think they know better now how to develop something that ticks the marketing box of being big and bold, but also just doesn't end up being a vacuum of money for no real return.” That isn’t to say big and bold doesn’t still have its place in the GCC, it very much does. One integrator I spoke to said he was continually being asked by clients to check on the Guinness Book of Records to see how it could break the record for the largest firework display or largest drone display etc. Patriotism and local pride often come to the fore when it comes to planning big events or buildings says Taylor. “They are always looking at what their neighbours are doing. How can we push the envelope on what hasn't been done before? We want this rollercoaster to have the greatest number of turns, we want to build the tallest building etc.
That attitude is more prevalent here than it is in North America or Europe.” The upside to this for AV companies is that it is part of the chain that is paid to deliver these record breaking projects. The opportunity for AV companies in the Middle East to be involved in visitor attraction projects in the next five to ten years, especially in Saudi Arabia, is massive. There are barriers to success, you will need a local presence (Kraftwerk has just opened a new regional office for example) and local partners to help win projects. You will need to deal with impossible timescales and possible shortages in specialist skills because of your location, but none of those aspects would phase 99% of system integrators, for it’s part of their daily jobs already.