DXB Entertainments, the operator of the Dubai Parks and Resorts, is looking at areas where it can potentially boost revenues to mitigate higher-than-anticipated costs.
Sandesh Pandhare, the company’s chief financial and investment officer, told The National that “the reason for the increase in cost is partly because of the slightly higher number of employees [and] the higher cost per employee, as well as the training and recruitment related to that”.
He said that facilities management costs were also higher than when budgeted at the time of its IPO, when it had to make a “high-level estimate” of maintenance costs.
“The facilities management increase is again on account of certain areas where we think it is critical for us to maintain the overall visitor experience,” he said.
He said that DXB is looking at ways of mitigating both of these and enhancing its forecasted revenues.
The current revenue target is to generate Dh2.4 billion in its first full year of operation, but Mr Pandhare said there may be scope for that to improve.
“On [leisure and dining district] Riverland lease revenues we have seen a positive uptick, on sponsorship revenues we have seen a positive uptick on what we have projected. Although its not an indicator at this point, we are seeing a fairly good level of in-park spend per visitor.”
The company posted a Dh116.2 million loss for the three months to September 30 compared with a loss of Dh29.6m a year earlier as pre-opening costs ramped up ahead of the first park opening.
Losses for the nine-month period stood at Dh238.2m, up from Dh65.6m in the same period last year.
Despite this, he said the company remains on track to deliver the remainder of the project within its Dh10.5bn capital budget for phase one.
Legoland Dubai and Riverland Dubai were the first parts of the Dubai Parks and Resorts project to open, on October 31. The Bollywood Parks theme park is expected to open its doors on Thursday. The Legoland Water Park is expected to open shortly after and the Motiongate Dubai theme park is due to open on December 16.
The company’s shares fell by 2.6 per cent today to finish at Dh1.50 per share.
An analysts’ note from EFG Hermes revised its profit estimate for the park’s first year of operations to Dh465.7m, while initial guidance from the company had been about Dh650m. It also lowered its target price on the company’s shares to Dh1.51 from Dh1.56 previously.
Ayub Ansari, a senior analyst with Bahrain-based Securities and Investment Company, maintained his target price for the stock of Dh1.25 per share.
He said that with the project delivery phase now almost complete, the next quarter will be “critical” for the company.
“Now they’re at the actual project execution phase in terms of what the customer response will be to this unique offering in Dubai. Bollywood Parks is going to open this weekend. That’s going to be big, so let’s see what the response to that is. It’s something which is very interesting – a new concept.”
Another potential revenue stream for the company could be project management.
It has just been appointed to deliver majority shareholder Meraas Holding’s new 20,000-capacity Dubai Arena project. Mr Pandhare said it was also “exploring additional Meraas projects” and would be open to working for third parties.
“Of course, we would not expect this to be a huge revenue generator but it is something in addition to what was originally contemplated,” he said.
However, Mr Pandhare said that it has been agreement on a project to bring a Six Flags theme park to Saudi Arabia on top of the one being delivered at Dubai Parks & Resorts by late 2019.
“We’ve been approached by different people from different quarters of Saudi Arabia for various projects but we cannot comment on Six Flags.”
mfahy@thenational.ae
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