UAE: A sporting business

Shailesh Dash (Economic Beat)
Filed on April 9, 2014
UAE: A sporting business

Hosting participants, spectators contributes a lot to economy

In between the glamorous malls and tall skyscrapers is a flourishing sports scene in the UAE. Sports such as falconry, horse racing and camel racing have been an integral part of the Arab culture, some since ancient times. Given the predisposition to competitive sports, it is only natural that the UAE is home to some of the biggest sporting events in the world. The Dubai World Cup, which offers the largest prize money ($10 million) for horse racing in the world, has been around since 1993 and has become a flagship event for Dubai. In 2007, Abu Dhabi and Formula 1 announced an agreement to host the Grand Prix from 2009-16 at the Yas Marina Circuit. The Omega Dubai Desert Classic, which regularly sees golf greats such as Tiger Woods and Ernie Els play on its course, recently celebrated its 25th year. Dubai is home to the headquarters of the International Cricket Council, acts as a de facto home ground for the Pakistani cricket team and this month, the UAE will be hosting 16 of the Indian Premier League matches at three venues, in Dubai, Abu Dhabi and Sharjah. These are only a few examples of the many major sporting events played here, and the list is quite comprehensive from niche sports like swimming and skydiving to mega sports like tennis and football; overall it shows the UAE’s commitment to being a top sporting destination in the Middle East.

UAE: A sporting business (/assets/oldimages/mey_0407.jpg)

The Meydan Race Course is home to the Dubai World Cup — the richest in the world with a $10 million purse. It attracted 80,000 spectators from all over the world this year, providing developers with a pool of potential investors to pitch to. — KT file photo

Several of these sports and events have huge fan bases, both regionally in the Middle East as well as internationally, and they are willing to invest considerable time, money and resources to see their favourite players and events. Similar to music concerts, it is quite common to see visitors from India, Pakistan, China and the GCC attending major sporting events here in the UAE. The attention generated by these world-class sporting events as well as the influx of visitors who come to witness and/or participate in these events forms a captive market which is then exposed to the various facets of the country from tourism to the infrastructure and the ongoing developments in the area. It highlights local offerings across multiple industries like real estate, finance, aviation, logistics, etc, and gives the UAE an opportunity to market itself to an international audience.

Tourism is an important sector to the UAE. In 2013 it contributed Dh117.4 billion or 8.4 per cent of GDP, and the same number is set to rise to Dh167 billion this year. Tourism is especially important in Dubai, contributing Dh182 billion in 2012 to the local GDP. Hosting the participants and the spectators of the various sporting tournaments held in the UAE helps contribute to the tourism segment. To capitalise on the opportunity that sporting events present, the travel industry benefits by designing their packages around these events. For example, the Abu Dhabi HSBC Gold Championship pushed up the occupancy levels, revenue per available room and the average room rate in hotels in Abu Dhabi for the month of January (in 2014) by 5.4 per cent, 7.6 per cent and 16 per cent, respectively. There was a conscious effort to develop tailored packages as hotel providers teamed up with other travel service providers to highlight Abu Dhabi’s potential as a Golf destination.

Sports tourism as an industry has immense potential that can be tapped through focused marketing and catered tour packages especially if it’s done by combining the synergistic benefits of various industries such as banks, real estate companies, tourism companies, airlines, etc. Sports tourism also highlights the local infrastructure and aids developers in highlighting the vast potential for growth in the country. Developers such as Meydan City Corporation and Aldar have benefited from the prestige of building the Meydan Racecourse and the Yas Marina Islands. Every time an event is held, they have an opportunity to make an impression to the audience. The Dubai World Cup 2014, held at Meydan, attracted 80,000 spectators from all over the world, providing developers with a pool of potential investors to pitch to. The same can be applied to other major developers such as Aldar, developer of Yas Marina, and Dubai Properties, developer of the $4 billion Dubai Sports City.

Not only is the UAE host to several events, it is now a mainstay on the golf, Formula 1, tennis and rugby circuits, which has introduced the Dubai and Abu Dhabi brands to the international sporting community. Helping to propagate the UAE brand internationally are the nationally-owned Etihad and Emirates airlines. Dubai-based Emirates sponsors various international events and clubs such as Fifa, Arsenal, AC Milan, the US Open, Emirates Australian Open and the ICC Cricket World Cup. Similarly, Abu Dhabi-based Etihad also sponsors several high-profile international events such as Major League Soccer in the US, Manchester City FC and Harlequins RFC, to name a few. Through its national airlines, Dubai and Abu Dhabi have become household names outside the country. With branding comes product identity and reliability both of which are qualities that investors seek. As per a survey by Cluttons, Dubai is the second most-popular real estate investment destination after London. Cluttons is not alone in their findings; as per a ranking table released by the Reputation Institute in 2012, Dubai and Abu Dhabi were the two best cities to invest in beating out other major destinations like New York, Sydney and Geneva. Thus sponsoring sporting events as well as hosting them directly contributes to creating a recognisable image and brand for the UAE.

The travel and tourism industry is not only a big contributor to GDP, but as seen in countries like Canada, income from sports tourism can be used to provide stability to the economy. Over the last two years, sports tourism has been identified as the fastest-growing segment within the tourism industry in Canada and in an effort to capitalise on the opportunity at hand, the country has been making a conscious effort to educate its various municipalities on how they can benefit from it. Similarly, with its year-long sunny weather, modern and sophisticated sporting infrastructure and year-long offerings of sports events, the UAE is ideally positioned to develop its sports tourism industry into a major contributor towards GDP. Taking another step in this direction, the Dubai Sports Council has hired top consultancy firm TSE to better understand the impact of hosting sports events and how to align it with Dubai’s goals and objectives.

Through developing its sports tourism, the country benefits from the revenue and branding, all of which cycles back to increased demand for development and investments for the country. In terms of future growth, the UAE, through its success at hosting world class events and having a modern infrastructure in place, would have the capacity and the capability to win and host major sporting events like the Olympics. Just as winning the World Expo showed Dubai and the UAE’s impact on global commerce, a winning bid for the Olympics will show that combining sports with the overall economic and social offering is a compelling way to grow a country and build a lasting legacy.

The writer is the chief executive officer of Al Masah Capital.

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