Tailoring ongoing investments in GCC’s Leisure and Entertainment could generate USD 3.4bn annually

• Strategy& conducts survey to understand GCC consumers’ consumption levels and preferences in the Leisure and Entertainment sector
• Saudi Arabia is driving major initiatives with the aim of building a thriving L&E sector
• GCC countries plans  focus primarily on further developing visual arts and live entertainment scenes; while GCC consumers engage more in lighter offerings such as neighborhood recreation and sports activities
• Strategy& research outlines three priorities for GCC governments to align L&E offerings with consumers’ demands: Increase sensibility to arts and culture, focus on neighborhood-based entertainment and offerings, invest more carefully in theme parks
• Current L&E investments in GCC countries are ambitious. By working in partnership with the private sector, GCC governments can further develop this sector

Gulf Cooperation Council (GCC) governments can generate an incremental of US$3.4 billion annually by aligning investments in the leisure and entertainment sector (L&E) with consumers’ needs, according to a new insight by the Ideation Center, the leading think tank for Strategy&, part of the PwC network. GCC countries are investing significantly to develop leisure and entertainment sectors to improve quality of life, celebrate national identities and diversify national economies.

Bahjat El-Darwiche, partner with Strategy& Middle East, said: “L&E activities impact society’s well-being positively in a number of ways, through engaging nationally relevant culture and art activities, increasing citizen’s participation in recreational events and affirming belonging among diverse groups of people – which all leads to a higher quality of life. However, to get the most from their L&E initiatives, GCC governments have to prioritize investments to match the specific needs of the sector’s consumers.”

The GCC has ambitious aspirations for its sector

According to the report, Saudi Arabia is investing heavily and introducing major changes with the aim of building a thriving L&E sector and a comprehensive offering across segments, in line with Saudi Vision 2030, the national development program and quality of life program. As part of this effort, the government has created new entities such as the Ministry of Culture, the General Entertainment Authority, and the General Sport Authority - and there will soon be 11 more culture subsector bodies that will focus on developing areas such as visual arts, performing arts, film, and music.

The United Arab Emirates, Qatar and Bahrain, all include L&E in their national visions and plans, with a primary focus on celebrating culture, heritage, and national values by investing and promoting their arts and culture ecosystem. Kuwait and Oman, however, consider the economic impact of these activities, indirectly.

Strategy& conducts a survey to understand public consumption levels and preferences in L&E sector

To understand what the public’s current consumption levels and preferences are, the Ideation Center surveyed 1,200 consumers in the six GCC countries, and included nationals, as well as Arab, South Asian, and Western expatriates. For this purpose, the L&E sector was defined as comprising of six categories of activities, namely: home recreation, visual arts, live entertainment, neighborhood recreation, mega parks, and sports. The survey highlighted key findings in relation to L&E consumption preferences and levels:

• GCC citizens and residents place a premium on access to L&E options. Two-thirds of respondents see L&E as a “must” for quality of life and prosperity.
• Moreover, respondents see value in improving the quality and selection of L&E offerings. Among the primary benefits they perceive are a better lifestyle and increased happiness (69 percent of respondents), stronger family ties (50 percent of respondents), and stronger social connections (39 percent of respondents).
• Interestingly, GCC consumers reported generous spending on L&E activities, and that they are willing to spend more. 
• Overall, GCC consumers claim to spend an average of 6.2 percent of income on L&E. By comparison, the average household in the U.K. spent around 4.2 percent of its income on the same L&E categories in 2018, according to government reporting.

Karim Sarkis, Senior Executive Advisor with Strategy& Middle East added: “Based on consumers’ self-reporting, an improvement in L&E offerings could potentially lead to an increase in spending by over $3.4 billion a year across the GCC. More than 78 percent of respondents showed willingness to increase their spending on L&E if the offerings were more aligned with their needs. This would correspond to an average increase in spending on L&E activities of 8.5 percent per household.”

Supply of L&E in the GCC

An assessment of the current and planned supply of offerings (in absolute and in proportional values) across visual arts, live entertainment, neighborhood recreation, sports, and theme parks was conducted, providing an understanding of the value proposition of each country.

UAE
The UAE already has a strong existing supply of recreational activities and mega parks, coupled with renowned visual arts and live entertainment offerings.

Bahrain
Bahrain leads the region in terms of supply of cultural and neighborhood entertainment, especially its live entertainment sector (theaters and festivals).

Saudi Arabia
Saudi Arabia has a limited supply of L&E offerings relative to its population size. Yet if it achieves its 2030 plans, its overall L&E offerings, excluding sports, will be the richest and most diverse in the region in absolute terms.

Qatar
The supply of sports and visual arts offerings is well advanced and a priority in the country.

Kuwait
Providing cultural offerings is a main focus in Kuwait, with an emphasis on building libraries, and promoting visual arts, as well as accessible recreational options, especially outdoor parks.

Oman
Oman is notable for offering prestigious national and international opera performances, as it is home to the region’s oldest opera house.

All countries also have plans to further develop the visual arts and live entertainment scenes.

Alice Klat, director of the Ideation Center, said: “We compared available and planned offerings with GCC consumers’ consumption levels and preferences. Our survey findings show that there is a lower level of engagement with the cultural activities, as GCC consumers favor lighter L&E activities such as neighborhood recreation and sports. Based on survey results, this is due to the limited awareness, variety and cultural relevance of current activities.”

The survey also shows that these trends are likely to further intensify, as respondents aim to increase their consumption of sports activities, neighborhood recreation and theme parks. In contrast, engagement levels for visual arts and live entertainment are likely to remain flat or even decrease.

Opportunities for GCC governments

GCC governments have several opportunities to increase L&E demand and returns on investment, and grow sector economic contribution in the region. The Ideation Center has identified three priorities for GCC governments. These include:

1) Increase sensibility to arts and culture

GCC consumers are not sufficiently engaged in arts and culture. GCC governments should start by making arts and culture offerings more available and accessible, publicizing them in dedicated public spaces. They should then encourage peoples’ participation through the creation of immersive and engaging experiences.

2) Focus on neighborhood-based entertainment offerings

GCC governments should also incentivize investments to build a comprehensive neighborhood entertainment offering. Family entertainment centers should be prioritized for their high profitability (ROI of 20 percent or more). Outdoor urban parks should be made more available and accessible, especially closer to prime city locations.

3) Invest more carefully in theme parks

While there is a growing demand for theme parks, GCC governments need to assess any opportunity carefully. Theme parks require large and complex investments, and there is typically a lengthy period before they break even, in part because of high operating costs. However if successful, they can crease jobs, attract tourism, and increase tax revenues.

“The current L&E investments under way in GCC countries are ambitious. By working in partnership with the private sector, GCC governments can develop the L&E sector so that it also opens the region to an influx of domestic and international tourists. In turn, this could unlock significant economic potential for the region, helping countries to fulfill their national development objectives,” concluded Melissa Rizk, senior fellow with the Ideation Center.