Assessing the Economic Impact of Ferrari World Theme Park on the UAE Economy - Coursework Example

Assessing the Economic Impact of Ferrari World Theme Park on the UAE Economy Student Name Tutor Course Code Date Table of Contents Table of Contents 2 Assessing the Economic Impact of Ferrari World Theme Park on the UAE Economy 3 Introduction 3 The cost of building Ferrari World 4 How it was financed 4 The Financier 5 Was any public money used to pay for the project? 5 Government incentives to attract Ferrari World to open in the UAE 5 Impacts of Economic crisis on Construction of Ferrari World 6 Impacts of the project have on employment in the economy, the jobs created and the impacts in UAE GDP growth. 7 The impact on expected tourism numbers into Abu Dhabi and the Impact in Dubai? 11 What other industries in the UAE economy will be affected by this expected increase in tourism numbers. 13 Was there an environmental cost in constructing Ferrari World? If so, what was done to try to limit this? 14 Conclusion 15 Work cited 15 McMeeken, Roxane, 2009, Aldar completes superstructure of Ferrari World, retrieved on December 22, 2010 . 15 Glucker, Jeff, 2010, Ferrari World opening date set, ticket prices revealed, retrieved on December 22, 2010 . 15 Boehmer, Alan & Comet, Renée, 2009, Knack Wine Basics: A Complete Illustrated Guide to Understanding, Selecting & Enjoying Wine, Globe Pequot 16 Ferrari, Angelo, 2010, THE EACH PROJECT - Cultural Heritage, Abu Dhabi Angelo Ferrari. 16 Ghale, Treks, 2010, World’s first Ferrari theme park to open in Abu Dhabi retrieved on December 22, 2010 16 McGinley Shane, 2010, Ferrari World to bring boost to Yas Island real estate. Retreived on December 22, 2010 16 17 17 Assessing the Economic Impact of Ferrari World Theme Park on the UAE Economy Introduction Ferrari World Abu Dhabi was launched in 2010 as the largest and the theme park. It pays tribute to excellence performance, passion, and technical innovation that Ferrari has established for long. It includes 20 sites of attractions designed to attract the attention of people at all age groups. The park is located on Yas Island which was set aside to become a destination of global tourists with a variety of entertainment facilities and accommodation sited on the on the North East side of the mainland of Abu Dhabi. This facility is owned by Aldar properties, Abu Dhabi’s property development, management and Investment Company under the management of International Leisure facilities management and operating company. The press release on December 1, 2010, focuses on a show whose honorable guest was HH Sheikh Mohammed bin Zayed Al Nahyan. After touring the entire place, the guest appreciated the developers for the job well done, he termed their efforts as an outstanding achievements. The structure of the place is designed with uniqueness so as to attract the attention of many visitors across the world. The study below focuses on The Economic Impact of Ferrari World Theme Park on the UAE Economy. Its main interest is on the cost of its development and the individuals involved to its effects on the economic status of the surrounding. The cost of building Ferrari World How it was financed In 2005, Aldar properties and Ferrari made an agreement to construct a World’s Ferrari theme park in Abu. The process started in November 2008 and was completed in November 2010. The two groups had budgeted the plan and agreed on the terms of sharing the expenses; the entire facility was valued at USD 40 billion. The Aldar properties are a good leading property development company with well established investment and management abilities. Many donors were attracted to the project as the construction progressed that they decided to sponsor. The facilities used in some of the departments like the automobiles were imported by the government as unique properties for the construction. Money was also collected from the public by selling shares to those interested both the individuals and the public or private owned organizations (Ferrari & Biggeri, 2009). The Financier The two shareholders; Ferrari and Aldar properties were the main sources of finances for the operation and its president is Luca di Montezemolo. As the process continued some private sponsors became interested thus supporting the implementation of most of the designs, for example, in buying the cars or other important facilities in the operation of Ferrari Park. Because it is a business oriented facility which everyone would sense it potential of earning much income to the economic sector, the public was forced to chip in something as a booster. It got involved in the process of constructing the site through many ways, for example people offered some labor. The public was also involved in the ownership of the by buying shares thus funding the construction of the project (Ferrari & Biggeri, 2009, 78). Was any public money used to pay for the project? The public money was involved in the construction of the park through the contributions and shares of the government owned institutions. For example, Abu Dhabi’s biggest government owned investment organization Mubadala is a five percent stakeholder of the co-operation thus sharing the public money with the private owners of the co-operative. Many other organizations and individuals also bought some shares to be part of the passive owners of the organization. Government incentives to attract Ferrari World to open in the UAE The government provided some incentives for the attraction of the Ferrari theme park to open in the United Arabs Emirates because of the vision and plan that it had drawn for the tourism industry and the economic sectors at large. The short term target was targeted to be implemented by 2012 while the long-term plan was set for a period of five years. By 2012 the number is expected to have improved to two million and three million in five years time and this was to be represented in the economic sector because of the revenue that the industry was expected to earn to the economy. the government also seemed to be supporting the initial operations of the tourism industry hence facilitated to its success although it was not very firm thus those with capabilities realized the potentials of investing in the industry and cooperating with the government officials for the success (Baldwin, 2010 pp 3-4). Impacts of Economic crisis on Construction of Ferrari World The tourism industry in Dubai and Abu Dhabi was initially impacted by natural crisis although they had limited impacts in the `development of the Ferrari Park thus the issue is disappearing in a noticeable way. Economic crisis affected the contribution of the public through the sale and buying of the shares. The two principals had planned to add to the capital of constructing the plan through the sale of the shares to the interested passive owners of the organization as a booster to the finances. Instead of buying the shares the owners would sell them to the organization or third party owners at a throw away price. The financial crisis has effects on any project especially those that require more economic forces. The leisure developments were the most affected: some of the proposals were overlooked while others were delayed or postponed. This is because the finances were not enough to cater for the needs of the public and the prices of raw materials had increased. This had limited effects on the construction of Ferrari theme park because of the good planning and availability of labour as people struggled for opportunities to earn living, thus availability of labour reduced the costs. This project was delayed because according to the proposal the developers had planned to have completed it in 2008. It was sponsored because people could foresee its positive impacts of the economic status of the place. Impacts of the project have on employment in the economy, the jobs created and the impacts in UAE GDP growth. The project had a positive effect in creation of employment, job opportunities were created during the construction process. This is because the building is big occupying 86,000 square meters with the red roof which took the image of Ferrari’s logo prancing horse which covered 200, 000 square meters. According to the plan of the construction, the project was decided to take a maximum of two months thus the developers had to hire more resources both material and human. Many and differing skills are also required in the architectural designing of the structure thus people with different knowledge were given a chance of sharing ideas. Some of the materials used in the construction of the facility were imported thus it earned the government some revenues through the taxation and other expenses More than 45, 000 jobs were created from the foundation stage all through to offer manual work, operate the machines and other architectural services required. More opportunities were also available after the construction process was completed. The airport only provided 5, 900 full time jobs and other more for the part time workers (Ghale, 2010). Ferrari is ranked as the biggest indoor theme park which creates jobs opportunities every day. Its administration reported that towards the end of year 2010 2.5 to 3 million jobs will have been created or secured. This has a positive impact in the economic status of the place because more people are able to earn income based on their capabilities and more money was in circulation. The visitors find it easy to tour the place because it is accessible by water, air and land and its location is noticeable by anyone because it is at the entrance of the Abu Dhabi. It is also located at its most catchment areas whereby most of the visitors would fry for around six minutes to the place and take ten minutes to reach the place from the airport. The theme park is of recent recorded as the leading among the tourist’s attraction centers thus earning thus earning the nation more income. By the beginning of year 2010, the UAE economy was recorded to have contracted by 2.10 % with the increased number of unemployment and many other cases as a result of economic crisis. This facility is seen as a source of revenue to the economy thus boosting the financial status. It is expected that the (GDP Gross Domestic Product) and the end of the year will record a positive index with the creation of many job opportunities and making more money from the business. Jack Associates was involved in designing most of the 20 tourist’s attraction sites in Ferrari. Among them include: carousel, representing the Ferrari traditional featuring prototyped automobiles, Cinema Maranello which was a theatre for entertaining the guests with some of the historical events happening back in 1920’s, a dual launched roller caster called Fiorano GT challenge and Formula Rossa which is presently the biggest across the world running up faster at a distance of 240 kilometers per hour, children’s driving schools and the largest Ferrari gallery across the world (Boehmer & Comet, 2009). Sources of constructing materials and the design or engineering skills used Mapei is the main supplier of the raw materials for the construction of Ferrari theme park. These include adhesives, chemical products used for the building and sealants. The materials from Mapei have been used extensively for many and different applications in the process of constructing Ferrari park. Mapei Company also supplied the waterproofing materials which were used in the construction of the leisure park for covering the 25, 000 square meters. This was done using Mapelastic Smart by the use of a two-component, high flexibility cementations coating for the waterproof surfaces of concrete which are in permanent contact with water like the swimming pools. The company also provided an Alkali-resistant fibre glass mesh which was used to strengthen waterproof protection layers, cementitious smoothing, anti-fracture membranes and leveling layers. For the provision of more integrity and penetrated corners, a tape made of rubber with alkali-resistant fabrics was considered. This waterproofing system was lastly over coated with the Elastocolor waterproof; a water based acrylic resin paint for the provision of the appearance of the aesthetic that was required (McMeeken, 2009, pp 2). Mapei Company supplied the construction with more than 16 different building materials including the grouts ranges used for various types of applications such as ceramics, porcelain, marble and glass mosaic. BASF’s Plastic Fasteners supply the construction of the Ferrari with Secure Metal Roof. The red-silver aluminum roof which covers over 200, 000 square meters is an unordinary structure which is in place with the aid of the mounting brackets made of plastic Ultramid from BASF’s. This largest and most unique roof was installed by the Interfalz Company of Oranienburg. The company also provided the aluminum panels formed from roll stock seamed during the process of installation and fastening together, a glass fibre empowered polymide 66 from BASF. The plastic brackets were used to replace their metal predecessors The international, master planners, award winning, and designers Benoy worked with Aldar properties on Ferrari theme park. These designs came up with the plan of turning the desert to a more resourceful land by designing a veritable leisure sanctuary. The park consists of a number of distinct areas each offering unique services for each the area devoted to premier retail. This means that although under one roof, various departments have to be planned in designs different from the others. The Benoy group of designers says that they were forced to apply all the creative inspiration from the Ferrari stands so as to come up with a quality design to produce the required. Derived from the classical double curve of the Ferrari shell of the body Benoy was able to interpret the essence of the form and represent it in a scetch although it was a bit difficult for the constructors especially if they were not well skilled. They reinterpreted the essence of the form, colour and detailing in the efforts of transforming unique plans like the automobile designs to architecture. The scope of Benoy designers in the plan was to include the master planning of Yas Island scheme, concept design of the Ferrari shell structure and concept through to detail design of the Retail component. Benoy’s Executive Design Director Nick Lamb said that Yas Island is an extraordinary setting meant to offer all luxurious services that Aldar has assembled. Compared to the other theme parks in the area, Ferrari is considered to be the most unique especially in its architectural design. The building was modeled after the side profile of Ferrari GT. Ramboll was entitled the responsibility of providing the master planning, urban design and engineering. The Ferrari logo is represented by the roof of the building although it is the biggest logo to have been created since history (McMeeken, 2009, pp 3-4). The number of visitors accommodated by the park and the cost of ticket Ferrari is considered to the biggest theme park in the world occupying a space of 86, 000 square meters and its height is 20 to 25% higher than most of the other related facilities in the world thus one can easily think that the area is not roofed. Its red roof is 200, 000 square meters, and is 35 and 50 meters above the head room. This space can hold more than 20, 000 people per visit and all be engaged in certain leisure activities. The cost of the tickets from AED225 ($62) for the guests OVER 1.5m and AED 165 ($ 46) for the guests under 1.5m. All the revenues will be taxed including the transportation of the guests and all other expenses especially on the purchases made. The entire organization will them be taxed for all its operations and purchases (Glucker, 2010 pp 2-3). The impact on expected tourism numbers into Abu Dhabi and the Impact in Dubai? The recovery of the tourism industry in Abu Dhabi and Dubai have their signs detected and the vision being implemented with the launching of Ferrari park, one of the biggest theme parks in the world that attracts more tourists in the country due to its various attraction sites. In UAE and most of the other parts of the rest of the world, this industry is highly affected by the natural crisis such as outbreak of fatal diseases like Swine flu and other crisis like recession and wars. The factor which distinguishes UAE and the rest of the world is its ability to positively deal with some of the natural crisis thus more tourists attraction cites are being construction and efforts are put to cater for the interests of the tourists. The expected increase in the number of visitors touring Abu Dhabi as a result of the construction of the theme park is expected to have a positive impact in the industry. Abu Dhabi has a plan of ensuring that the industry is fully improved in the next five years; by 2012 the number is expected to have improved to two million and three million in five years time. This is a contributing factor to the success of the industry because all institutions in the nation are struggling hard to see its improvement, for example the government is eager on the security sector while the health personnel are much concern about the public health thus minimizing the occurrence of the natural crisis like disease outbreak and insecurity (Martin, 2008, pp 3). Increase in the number of the tourists is expected to have positive impacts not only in the economic sector but also in the social and political because the residents will have a chance of interacting with the visitors and create a good relationship with them thus exchanging ideas on all life aspects. The leaders will be able to acquire or share some leadership qualities especially those applied in the nations which are termed to be victorious like United Kingdom. Dubai as one and the second largest among the seven emirates of Arab is a business oriented state which requires more interaction with anybody in the outside world thus with the aim of expanding its marketing. This is the main reason for the support of the tourism industry by preservation of the attraction centers and working together as the residents to ensure that the visitors are comfortable with the products and services that they receive. As the plans and the budget of the year 2010, the number of the cruise tourists visiting Dubai was expected to increase by a figure close to 80% in the period between 2008 and 2010. This is in the efforts of trying to boost the economic status of the place since improvement of the industry would have a positive impact in the business world (McGinley, 2010 pp 5). As the numbers of tourists continue to flock in the areas they increase the number of the projects which can be seen as developments in the economic system. These come with the revenue as a result of the high taxation rates that they pay and job opportunities which improves the living standards of most of the people as well as the area. What other industries in the UAE economy will be affected by this expected increase in tourism numbers. The international trade is one of the major industries that are affected by the expected increase in number of the tourists as they visit Ferrari theme park. As people move from their motherland to their countries of interest, they have an opportunity to interact with the others thus improve the marketing of their products or services. Dubai is one of the well known for its business operations thus most of the businessmen want to visit the state for the discovery of the skills or tricks which are used by the locals. They are also interested in purchasing the products such as vehicles and selling them to the other nations at interest. The transportation networks are also enlarged by the construction of good ways of letting in the tourists, for example, the airport in the Ferrari theme park can also be used as an outlet or inlet of the business products like the flowers and medicine while other modes like trains and automobiles can be considered for the transportation of the tourists as well as the other heavy and bulky commodities. Development in the tourism industry has positive effects in almost all sectors as the developers struggle to make the tourists more comfortable (Niles, 2010, pp 2). Was there an environmental cost in constructing Ferrari World? If so, what was done to try to limit this? Although Ferrari is built on a desert, its construction still had negative effects in the environment. This process affected the normal living styles of the area since the concentration of most of the people was focused on the construction of the park. The process also pollutes the environment because of dust and noise of the machines. The impacts of constructing the park were reflected in the economic, social and political life aspects. The prices of commodities increased and some doubled because of the taxation rates leveled on the purchases as the investors targeted the foreigners in the place. The social aspect was affected by the interruption of the original cultures of the indigenous, the interaction of people from different origins resulted to a formation of a new culture which would fit all the people and some of the activities which were considered to be unworthy in some of the communities. The political sector was also affected because the foreigners affected the leadership styles of the indigenous, for example, some of the activities were termed to be crimes in some nations may not be to others thus the government had difficulties trying to force the foreigner to behave as per their laws (Ferrari, 2010). To handle these costs the government interference was seriously needed for example to control the prices of the commodities to avoid oppressing the common people, it would also ensure that laws are well implemented especially to the foreigners to understand them and behave accordingly. HH Sheikh Mohammed paid tribute to the vision of President His Highness Sheikh Khalifa bin Zayed Al Nahyan, "Who is keen on turning the UAE into a global magnet of sports and recreational tourism through a diverse portfolio of projects that will have substantial impact on the national economy and social development." Conclusion Ferrari theme park is considered to be the world largest leisure facility in Abu Dhabi under the leadership of president is Luca di Montezemolo. The site was constructed within two years from year 2008 to 2010 when it was launched. It is considered to be having the greatest positive impacts on the economic status of the place by attracting more tourists than any other natural site and the job opportunities that it has created. Work cited McMeeken, Roxane, 2009, Aldar completes superstructure of Ferrari World, retrieved on December 22, 2010 . Glucker, Jeff, 2010, Ferrari World opening date set, ticket prices revealed, retrieved on December 22, 2010 . Ferrari, Guido & Biggeri, Luigi, 2009, Price Indexes in Time and Space: Methods and Practice, New York: Springer. Martin, Keith, 2008, Sports Car Market magazine - July 2008, Abu Dhabi: Keith Martin   Baldwin, Derek, 2010, Ferrari World to put tourism in the fast lane, retrieved on December 22, 2010 Niles, Robert, 2010, Ferrari World Abu Dhabi opens (actually, not), retrieved on December 22, 2010 Boehmer, Alan & Comet, Renée, 2009, Knack Wine Basics: A Complete Illustrated Guide to Understanding, Selecting & Enjoying Wine, Globe Pequot Ferrari, Angelo, 2010, THE EACH PROJECT - Cultural Heritage, Abu Dhabi Angelo Ferrari. Ghale, Treks, 2010, World’s first Ferrari theme park to open in Abu Dhabi retrieved on December 22, 2010 McGinley Shane, 2010, Ferrari World to bring boost to Yas Island real estate. Retreived on December 22, 2010 Read More