Despite the political problems of some areas, the Middle East attractions and amusements industry, particularly in the GCC, continues its impressive development. And Dubai still stands out in many ways.

Two years ago InterPark took a look at the situation for the attractions and amusement industry in Dubai and the wider Middle East market place. It was a time when all the great plans for numerous theme parks and other attractions in Dubai had come to a screeching halt due to the effects of the global recession, with many delayed indefinitely and others cancelled completely.

Two years down the line we revisit the market in Dubai and the surrounding region and ask a number of industry experts with experience of the business in this part of the world how things have changed since those days when the problems within the world economy came crashing into town, gave Dubai one massive reality check and brought further focus to the region as a whole.

'A partygoer with a bad hangover.' That was how some described Dubai when the global recession finally reached the emirate, which had been 'partying' for almost 10 years, in 2009. Having been freely throwing billions and billions of dollars at spectacular – some might say outrageous – and unique developments for many years, things came to an abrupt halt when the booming real estate market, on the back of which so many park and attractions projects were to be built, hit a brick wall.

The knock-on effects of the floundering real estate and troubled financial markets were disastrous for Dubai's 'masterplan' of developments. Unlike other regions, Dubai does not have huge oil reserves to fall back on and was clearly bent on, among other things, developing a substantial tourism industry with all that was being planned. So where are we now and how has the situation moved on in the past couple of years as far as developments (both outdoor and indoor) in the attractions/amusement industry are concerned, in the whole of the Middle East region and in particular in Dubai? Is Dubai 'back on track' as far as some projects are concerned or is it still awaiting renewed investment, etc?

"While there is talk of projects restarting and there have been some studies and reviews of designs commissioned in the past 12 months it is far from back on track," says David Camp, principal of economics at AECOM in London. "There remain a number of fundamental issues relating to Dubai and the markets that need to work through the system first.

"The most important of these is the oversupply of residential properties, offices and retail centres and the fact that developers cannot cross-subsidise the creation of attractions through development profits as had previously be planned. Unless funds for stand alone attractions can be found then there is unlikely to be much development of any significant scale for the next few years. This isn't to say there is not demand. There is room for one medium-sized theme park in Dubai."

"There are two fundamental changes that I see," notes Phil Taylor at Team Leisure, based in Dubai. "The first is that the gold rush fever has gone and has been replaced by a much more cautious approach to leisure projects. One benefit of this is that a lot of the froth has gone.

"There are still good leisure projects in the pipeline throughout the Middle East but overall there are a lot less projects being announced. Developers are chewing a lot more these days than they used to before they swallow.

"The second change, which obviously has an impact on the first, is that access to financing is still very difficult and only companies with a strong operating cash flow and proven model tend to be moving forward. In this regard, Dubai appears to be still very much waiting for financing to be available for leisure projects and the number of design and contracting companies with a presence here tends to be still contracting.

"The impact and uncertainty that the Arab Spring has created in some markets is also another factor to consider, with a number of major leisure projects by leading developers in countries like Egypt on hold until the picture becomes clearer."

"Things have not really changed a lot," comments Prakash Vivekanand, president of Amusement Services International LLC (ASI), based in Dubai. "The number of new projects did slow down but in early 2012 we have seen a revival in indoor projects with more being announced and those that were postponed starting up again. There have been a lot of FEC projects in the last six months.

"Tourism numbers in Dubai are up and revenues in most entertainment venues are also up, including in FEC venues," he adds.

Vivekanand notes remodelling work that has taken place at Ferrari World and the unique leisure offering at Ski Dubai with the introduction of a new penguin experience and continues: "There have been a lot of changes and developments throughout the GCC. Bahrain is still developing despite the problems there, for example.

Footfall in malls is down in the evening after 8pm but in the day it is up between 10am to 8pm. Outside the GCC, Jordan has a number of leisure and shopping projects planned, including a Star Trek based leisure attraction being planned by Rubicon Group Holdings under a licence agreement with CBS Consumer Products, as part of the Red Sea Astrarium (TRSA), a 184-acre themed entertainment resort located in Aqaba, Jordan. (The attraction is inspired by the 2009 hit movie, Star Trek. The "Star Trek" attraction is being creatively developed by Paramount Recreation).

"The Arab Spring has benefitted Dubai and Egypt looks the healthiest of countries which has had revolutions. It will be the fastest to come back. There are also developments taking place in Iraq and an increase in international visitors there, notably in the Kurdish region. It could be a big market in the future. The sanctions on Iran are affecting that country.

"As far as Dubai in general is concerned, it is not 100 per cent back on track but it is getting to be so. Hotel accommodation is dramatically up with many hotels showing 100 per cent occupancy in January and February this year."

"Yes and no," states Silvio Liedtke, general manager of Landmark Leisure, also in Dubai, and operator of the Fun City FEC brand which is enjoying significant increases in turnover at all its sites in the Middle East, and most notably in Dubai, in the past year. "I've been here for five years and seen two years of crazy growth for the business in the Middle East when you didn't have to be a genius to make money. Then the recession came so everything slowed down a bit. But I don't think the FEC market suffered so there was a lot of competition at the end of the recession.

"The whole leisure market in the region grew by over 20 per cent in 2009 and in Dubai World, for example, 25 per cent of added capacity came in leisure revenue in2009. And in the last two years there has not been much competition meaning all leisure businesses saw growth.

And he continued: "The Arab Spring (the democratic uprisings that arose independently and spread across the Arab world in 2011) saw tourists from Saudi Arabia and elsewhere coming to the UAE so combining all these things, here most companies had a storming year last year. The first quarter of 2012 has been very strong too – we saw a 30 per cent growth over the Easter holiday period for example.

"You must also remember that the population continues to grow and that 40 per cent of the population in the Middle East is under 30 years old. Disposable income for leisure is almost twice as much as it is elsewhere, so with this in mind the market will always be dynamic. From my perspective, all leisure businesses have done well in the last year and when I was at the DEAL show (held as usual in April) orders were being placed which speaks for itself. From our own point of view we will triple the number of stores we have over the next five years."

And what about some of the manufacturers directly serving the Middle East market? "The big thing to note is the drop off of large outdoor projects," comments Andrea Munari at IE Park/SOLI Bumper Cars in Italy, which has been involved in numerous projects throughout the region for many years. "Developers also need to look at the way projects are planned and the costs involved, while also interpreting what the word 'leisure' actually means. I think a more simplified approach to outdoor projects would also be more productive.

"In the past two or three years there has been a consolidation of the large groups involved, so the market here is becoming quite mature – up to 70 per cent of the indoor market is operated by five or six major groups/companies. Stand-alone attractions such as panoramic wheels may also come into the area in the future so there will be three different markets, three different scenarios within the sector.

"As far as Dubai is concerned, it is encouraging that the flow of tourists here is still going well, although the 'shockwave' of the last few years has still not been fully digested yet."

"Generally speaking the market had problems linked to the political instability of some countries and, in Dubai, the crisis of the real estate market," observes Adrea Cielo at fellow Italian company Antonio Zamperla Spa. "Despite this, however, there are some countries with lots of interesting projects. We have good relationships with groups that own or manage FEC chains that represent the core of the market. Regarding Dubai, most of the big projects are still in stand-by."

"I can tell you that 2011 was the worst (DEAL) show in Dubai since the show has existed (I've attended all of them)," comments Jose Saus at Spanish kiddie ride manufacturer Falgas, following his annual visit this year to the DEAL trade show. "Coinciding dates with what was called the Arab Spring troubles was a real disaster. This year's show, however, has been completely different in a positive sense, with people liking to do things, new openings scheduled, etc."

New developments

Clearly, much development continues to take place in the region, in particular in relation to indoor attractions of varying sizes and descriptions and in many different countries.

"There's a fair bit of interest in attraction development in Saudi," says Camp. "It's an underserved market with the largest resident population base in the Middle East and it's a very family-orientated market. There are significant cultural sensitivities to be aware of there but it does offer opportunities."

And Taylor concurs. "Saudi Arabia is probably the most active market in the region at the moment with a number of major leisure projects known to be in the pipeline, even if not all of them have been announced yet," he says. "Abu Dhabi has also recently confirmed that a number of its flagship projects, such as the museums on Saadiyat Island and Yas Island Waterpark, will now progress. Even though these were all originally announced some years ago it's reassuring that they are now going ahead and should be taken as an early sign that liquidity in the region is slowly improving again."

Liedtke, meanwhile, picks up on another angle. "I think you have to make a clear distinction between those countries that are perceived to be safe and stable and those that are not. For example, the UAE, Qatar, Saudi Arabia, Kuwait and Oman, where there is robust growth, are all ok, but with places like Bahrain, Syria and Egypt, people are not sure what's going to happen."

Saus comments too that "In my opinion the most active country in this sector in the GCC is still Saudi Arabia," while Zamperla's Cielo also points to Saudi Arabia as currently being a main area for growth.

"In Saudi Arabia there are many interesting projects. Other countries, such as Iraq, are solving their internal problems and they demonstrate the will to create new parks. For example, we are working on the development of Sindbad Land in Bagdad. Phase one of the park is going to be ready soon with many family rides and phase two will start immediately after."

"Saudi Arabia, where there has been a considerable quiet period for two or three years, is now investing and will continue to lead," notes Munari. "Iraq, for other reasons, will progress and the UAE is coming back at a slower pace. Official export figures from Italy to the region also show significant increases, with Saudi, Qatar and the Emirates leading the way."

As everyone knows, the climate clearly dictates the type of venues being built in this part of the world, while the fact that the main requirement is for a 'total' family day out experience of shopping, entertainment and food and drink means indoor FECs and larger park style venues dominate the industry in the region. But what type of projects are currently being developed? Is it mainly FECs and other indoor attractions or are some major theme parks still being planned?

"The climate makes indoor attractions more attractive than outdoor ones and the ongoing development of retail centres means that attractions that can work within or alongside retail environments are being created," explains Camp. "Developers are constantly on the lookout for the next big idea as they see attractions and entertainment offers as helping to differentiate their retail centre."

"There is no doubt," says Taylor, "that as a result of the ongoing uncertainty in the market smaller, indoor projects like FECs continue to move forward, while many of the bigger, often Government-led projects, like theme parks, although still on the drawing boards, are showing no real signs of progress.

"Nothing stays still for long, however, and a number of new, major leisure projects are beginning to emerge in the region that are at the master planning and feasibility stage," he adds.

"Majid Al Futtaim, Al Hokair, Landmark (with its Fun City outlets) and Al-Othaim (with the Saffori Land brand) are all driving growth of the leisure business in the GCC," states Vivekanand. "All are expanding and most of the FECs are being done by these big four. There are not so many new investors. Others are looking for operators to come in but it all augurs well for the future."

"It would cost a fortune to build a park outdoors that would really work, especially when you consider how long it could fully operate for in a 12 month period given the climate," observes Liedtke. "Stand alone, indoor leisure venues would not work, so the shopping mall route with all its associated leisure options is the way to go. In the Middle East people go to the malls to eat, entertain their children, go to the cinema, etc., as well as to shop and they spend all day there in a climate controlled environment. So indoor FECs linked to the malls and the other leisure offerings they have are the way forward. And of course ROI is much better on an FEC than an outdoor park in this climate."

IE Park's Munari also sees FECs and indoor parks developed by the main groups in the market, among them those companies already mentioned by Vivekanand, taking a leading role in the growth of the sector. Saus concurs that most of the new projects are based on indoor entertainment, while Cielo comments: "Most of the projects are FECs but, as for example in Bagdad, there are still some new outdoor projects. The actual trend seems to be the construction of bigger FEC venues in order to include also a thrill area with bigger rides than usual. We don't know the waterpark situation."

Bringing things full circle, the ambition just a few years ago was to make Dubai 'the' major international leisure destination in the region? So do our interviewees think this is still the case?

"The ambition remains but the crash has led to a reality check," says Camp. "But Dubai still has substantial numbers of international tourists, a strong image around the world and significant appeal to tourists. And there is still not enough to do there. Over a quarter of a million tourists to Dubai travelled to Abu Dhabi to visit Ferrari World last year as there is not enough to do in Dubai. So there remains demand for a park in Dubai."

"Visiting the penguins at Ski Dubai yesterday or walking around Dubai Mall last week and seeing the crowds everywhere I'd say that Dubai is already 'the' major international leisure destination in the region," Taylor comments. "One more flagship project, such as an international standard theme park, and I'd say its crown will be certain. Though, of course, we all know one can't rest on one's laurels for long in the leisure and tourism market.

"In this light, even though there are few external signs that projects like Universal Studios Dubai are moving forward, I doubt for one minute that the ambition or the goal has changed. Dubai may have lost its easy access to finance but in my mind it certainly hasn't lost its vision and leadership in the regional leisure market!"

"Definitely," affirms Vivekanand. "Dubai's leaders and government have done well to put Dubai on the international map with positioning it as an inspirational place for people to come at least once in their life time.

"The second thing was to extend visitors' stay-anditisnowaneightto10dayplaceto visit. It has many world class resorts, hotels and venues and they have succeeded in making it an international destination. And I don't think the government has given up on doing more too. We'll probably see some parks coming in the future."

"Look at it like this," says Liedtke. "Dubai probably has a population of around two million and there are over 500 hotels here, providing around 100,000 rooms. The majority are five star or higher. In the last six months (Liedtke was speaking in April) hotel occupancy has been in the high 90 per cents. Our parent company Landmark also owns hotels and their occupancy has been close to 100 per cent in the last three months. When events take place in Dubai, exhibitions for example, it's hard to find a room, so this all gives an indication of what's happening. You can say what you want about Dubai, but you'd find it hard to find a place with such a diverse leisure offering, great restaurants and shopping, the weather, etc. There is a big percentage of tourism from many different countries coming to Dubai."

Without prejudice to any other areas, Munari believes Dubai already is the major international leisure destination for tourists to the region and will continue to be so in the future.

"And with oil at over US$100 we keep pumping money into the region so we will have to see who manages it all the best," he says.

Saus notes: "It seems that the 'ambition' is still there with added interest for convention business too. It's the sole country in the area prepared to receive and accept in a proper way a tourist or businessman."

Cielo: "For sure, Dubai has become a tourist destination, thanks also to some interesting amusement projects, but unfortunately many of the planned projects probably will never see the light of day."

Things are clearly moving very much in the right direction in the region as far as the attractions and amusements industry is concerned, and while there may not yet be the various outdoor theme park projects that were once talked about, one or two may yet come to fruition at some point in the future. Other leisure and attraction projects will also certainly be created in the coming years to ensure the Middle East market continues to grow and become an increasingly significant player within the industry.