The owner of Dubai Parks and Resorts is to cut costs after posting a wider-than-expected first-quarter loss. DXB Entertainments missed analysts’ forecasts after incurring high expenses.
The net loss in the three months ending March 31 was DHS292 million ($79.5m), compared with a DHS38m during the same period last year when none of its three theme parks were open. Combined visits to those parks were 586,355 visits during the first quarter of 2017.
The Egyptian investment bank EFG Hermes had forecast a DHS110m loss for the period. However, general, administrative and operating expenses rose to DHS333.9m in the first quarter, up from DHS39.6m in that period during 2016.
“Our loss for the first quarter of 2017 reflects the normal trajectory of a business in its early phase of development,” DXB chief executive Raed Al Nuaimi said in a statement on the Dubai Financial Market. “A key strategic imperative for the business for the year is to reduce our operational cost base by 20 per cent compared with initial projections.”
A company spokesman adds that it has been able to identify efficiencies by streamlining some functions across the parks. DXB Entertainments said revenue more than doubled to DHS160m in the first quarter from DHS76m in the fourth quarter of 2016.
Dubai Parks and Resorts guests spend DHS214 per park
Around 40% of theme park visitors were from outside the UAE. Each park on average earned DHS214 ($58) per visitor, lower than current advertised ticket prices for a single park. About DHS14.4m came from the retail and dining district Riverland Dubai. The Lapita Hotel, which opened in January, generated DHS10.4 million, with with an average occupancy rate of 21%.
“In the coming two quarters we expect to experience a dip in attendance as we go through Ramadan and the summer months,” noted Mr Al Nuaimi.
Hope on the horizon for DXB Entertainments
The picture looks brighter long term, however, stresses the DXB chief executive: “We are well advanced in our sales and marketing plans and are actively generating demand for Dubai Parks and Resorts internationally and domestically.”
The last remaining rides and attractions at Dubai Parks and Resorts are expected to open in the coming quarter. The resort is home to Legoland Dubai, Motiongate movie park and Bollywood Parks Dubai. Close to 90% of the design work has now been completed for Six Flags Dubai theme park. Set to open in late 2019, it will be the first Six Flags park in the Middle East.