MENA leisure industry seeks government support


April 22, 2020 | By RetailME Bureau

As COVID-19 has severely impacted MENA’s leisure and tourism industries, the Middle East and North Africa Leisure Attractions Council (MENALAC) is seeking government support to minimise financial impact. The COVID-19 outbreak has forced all theme parks, amusement parks and family entertainment centres to lockdown from the second week of March 2020.

The regional leisure and tourism industries are estimated at $237 billion. The leisure and entertainment industry is losing an average of $6.71 billion (AED24.64 billion) per month in business due to the COVID-19 outbreak. And the sector – including theme parks, amusement parks and family entertainment centres – collectively employs 5.4 million people, whose jobs are now at stake. Amidst this situation, MENALAC has asked its members to assess their daily and monthly losses in order to seek alternative remedies from the respective governments.

“The leisure and attractions industry is an important part of the economy in the Middle East and its contribution to the region’s gross GDP is quite significant. It also employs a large number of professionals – making it one of the largest employers in the economy,” said Silvio Liedtke, vice president, MENALAC. “Prior to this crisis, our sector was emboldened by a number of new theme parks and entertainment offerings that were being planned in different parts of the Middle East, especially Saudi Arabia to cater to the growing entertainment and experience needs of residents and tourists. Our industry was in growth mode. With the complete shutdown, our industry is currently in an extremely difficult position and if this crisis lingers for a prolonged period of time, many leisure entertainment attractions may will find it very difficult to operate in a sustainable way and will have to reassess their business models and viabilities.”

International visitor impact on MENA’s leisure tourism industry is estimated at $102 billion (AED375 billion), of which 79%, or $80.58 billion (AED295.7 billion) is in the leisure tourism industry, according to the World Travel and Tourism Council (WTTC). This means losses for the MENA leisure, entertainment and attractions industry due to lack of visitors is around $80.58 billion (AED295.7 billion) annually, and $6.71 billion (AED24.64 billion) per month.

“Ours is one of the most vibrant and fastest-growing leisure, entertainment attractions industry in the world with massive investment planned to develop new indoor leisure destinations, mixed-use leisure resorts as well as theme parks and waterparks across the Middle East and North Africa in the next few years. Most theme park, amusement park and indoor leisure entertainment centre operators are assessing their daily losses and overheads which are piling up to a level that might be difficult to manage if it continues for a longer period. Like many other industries, we have never planned for a situation that cashflow from operations cease to zero over a prolonged period of time. We are in an industry that is human resource heavy as we need such trained work force to ensure the safety and experience of our guests,” added Prakash Vivekanand, secretary-general, MENALAC

“Our industry is very sensitive to such health-related outbreaks and we had witnessed 50-80% revenue losses from operations since the second week of February before going into complete temporary closure in March 2020 as mandated by the authorities. When we eventually re-open, it will take us a period of time before normal cashflow from the business resumes,” he stated. “Given the nature of our industry, the period leading to re-opening itself will require additional investment into sanitisation, PPE, additional staff training and many other such measures to ensure the safety of our guests.”

“We urgently need support from our governments in the form of debt relief, repayment waivers, rent waivers, utility rebates and a cashflow support to meet our immediate staff and operating costs, sanitisation and upkeep of our facilities. The governments in the region have already initiated some steps in this direction and we are indeed thankful and grateful to them. Reduction in residence visa costs, a VAT holiday until the end of the year, import duty rebates will all help our industry to revive and also pass on incentives to the consumer, who is also affected by this crisis,” Vivekanand continued.

Prior to the Coronavirus pandemic, Middle East and Africa was expected to be the fastest-growing region in overall spending in the leisure and entertainment sector, with a projected 18% CAGR increase, according to Wilkofsky Gruen Associates (WGA).

Although falling short of expectations, the report said that the region is expanding from a small base as new parks open. It had predicted that spending in MENA’s theme parks, amusement parks and family entertainment centres will more than double from $266 million (AED976 million) in 2018 to $609 million (AED2.23 billion) by 2023. The theme and amusement park market in the Middle East and Africa was expected to grow 33.77% from $302 million (AED1.1 billion) in 2019 to $404 million (AED1.48 billion) in 2020.

 

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