Friday, August 19, 2005

Confident of high Dubailand returns?, I'm not.

Extract:

The Dubai government hopes its Dubailand project, which includes several theme parks, will lift the number of international tourists visiting the emirate from 6m this year to 15m in 2010.

Salem bin Dasmal, chief executive of Dubailand, says the resort will be "one of the top five destinations in the world for family entertainment, tourism and leisure". The project was inspired by the Walt Disney World resort in Florida where Disney operates a cluster of parks that have helped make the US state one of the world's top tourist destinations. "It's what we want to do in Dubai - develop an all-encompassing leisure destination for tourism," he says.

Although the Dubai government is providing the infrastructure for Dubailand, private operators are being contracted to run the attractions and other facilities, which include a dinosaur park run by the UK's Natural History Museum and a Manchester United football academy.

Mr bin Dasmal says Dubailand, at 3bn sq ft (270m sq m), will be three times the size of Disney's Orlando resort.
. . .
The project will include opportunities for hotel development, which could offset the costs of building the theme parks and remove some of the investment risk associated with such projects.

Mr bin Dasmal is confident that Dubailand will be profitable because demand for tourism in the Middle East is growing at such a rapid rate.

"Theme parks in more mature markets will achieve [annual returns of] 3 or 4 per cent," he says. "A well-designed theme park in Dubai would achieve better returns than an international equivalent because there is little local competition and lots of demand. We are on target to hit 15m tourists in Dubai by 2010. All these families are coming here and they need entertainment."
15m by 2010 from a base of 6m in 2005? I am doubtful the past rate of growth can be sustained. A park 3 times the size of Disney World? The small mind of this mere economist boggles.

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