This lucrative sector could unlock an estimated $3.4bn annually in increased spending
It is a great time to be a leisure and entertainment (L&E) consumer in the GCC, as governments are making significant investments to improve quality of life in the region. Major initiatives are underway to increase offerings in areas such as the visual arts, live entertainment, neighbourhood recreation, theme parks and sports
However, governments in the GCC will only get the most from these investments by understanding the preferences and spending patterns of L&E consumers. In doing so, they can unlock an estimated $3.4bn annually in increased spending.
The GCC governments are planning large-scale investments in L&E. For example, L&E is a central pillar of Saudi Vision 2030, and the Saudi government has created new entities such as the Ministry of Culture, the General Entertainment Authority, the General Sport Authority, and specialised cultural bodies representing areas such as the visual arts, performing arts, film and music. UAE and, to a lesser extent, Bahrain also include L&E in their national visions and plans. These plans have a primary focus on celebrating culture, heritage and national values by investing and promoting their arts and culture ecosystem.Quality of life
We analysed GCC governments’ L&E offerings and surveyed 1,200 consumers in the region. Our results show that GCC citizens and residents place great value on L&E options. Two-thirds of respondents see L&E as a “must” for their quality of life and prosperity. Further, people in the GCC spend a larger portion of their discretionary income on these activities than people in other markets and they are willing to spend even more. GCC consumers claim to spend an average of 6.2 percent of income on L&E, compared to 4.2 percent in the UK for the same L&E categories in 2018. This means there is a real social and economic opportunity at stake, one that governments are intent on capturing. To make sure that current investment programmes deliver the maximum possible payoff, governments should focus on three priorities.
First, they should make L&E offerings more accessible and better integrated into people’s daily lives. Right now, many GCC consumers are not sufficiently engaged with the arts and culture. Governments should create more visual arts and live entertainment activities that are attractive, modern, participatory and fun. Some programmes in other regions show what is possible. For example, cities including Helsinki, Naples, and Paris participate in Nuit Blanche, an annual, all-night festival in which a city centre is transformed into art galleries that showcase installations and performances. Museums and other cultural institutions are usually open for free.
“Consumers love theme parks and if they are successful, they can increase tax revenues, create jobs and attract tourism”
Second, governments should focus on neighbourhood-level offerings. Family entertainment centres such as Magic Planet and Kidzania are typically highly profitable and relatively easy to develop, making them attractive to the private sector. Similarly, consumers increasingly enjoy outdoor urban parks, which is why governments should make them more available and accessible by developing new options closer to prime city locations. The Greater London Authority sets clear criteria for different types of parks, size guidelines, distances from homes and other aspects. This makes the process transparent and straightforward for local builders, buyers and developers.
Third, governments should tread carefully regarding large theme parks. Consumers love them, and if they are successful, they can increase tax revenues, create jobs and attract tourism. However, they require large and complex investments and have a long break-even period, in part because of high operating costs. A complicating factor is that most GCC countries do not have large enough markets to sustain a theme park. Saudi Arabia is a notable exception, and the country is already taking steps to become a hub for theme parks in the GCC, with Al Qiddiyah Entertainment City development project near Riyadh. To attract the private sector to help build such theme parks, the Saudi government can provide regulatory support or transportation infrastructure. It is also critical to streamline visa processes for regional or international tourists to visit the park once it opens.
By understanding consumer preferences and aligning the supply of new offerings to demand, governments can maximise the impact of their investments and tap into new economic growth, celebrate national identities, and improve their residents’ quality of life.
Additional input by Alice Klat and Melissa RizkBahjat El Darwiche, partner at Strategy& Middle East, part of the PwC networkKarim Sarkis, senior executive advisor at Strategy& Middle East, part of the PwC network