Why Disney is smart for building a theme park in Abu Dhabi

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It was earlier this month when Disney $DIS ( ▼ 0.76% ) announced that it would build a theme park in Abu Dhabi, UAE. Abu Dhabi is the capital of the UAE, and it’s a 6-8 hour flight from 80% of the world population. The CEO, Bob Iger, said that within a 4-hour plane trip, there are 500 million people who can afford a trip to Disneyland.

The unique thing about Disneyland Abu Dhabi is that it will be located on Yas Island, a man-made landmass that hosts the Formula 1 Abu Dhabi Grand Prix, Ferrari World, Yas Waterworld, Warner Bros. World, and SeaWorld Yas Island.

If you’re curious about what Yas Island looks like, here’s an aerial photo of it from Wikipedia. The building that stands out the most is Ferrari World.

I find Disney’s decision to build a theme park in the UAE to be smart and something I was expecting for a long time. The Middle East acts as a crossroads for the world. A significant portion of the world relies on the Middle East for energy, and many countries have their people working there. Those workers are known for having lots of disposable income and have less financial anxiety than those who work in Western countries like the UK and the US. The quality of life there is one of the highest in the world because of its safety and cleanliness. With all of that, it makes sense why consumers in the UAE and Saudi Arabia have some of the highest growth in consumer spending intentions.

On top of that, for the UAE economy, these theme parks are a great way to diversify its revenues away from oil sales. With the expectation that tickets will be cheaper than Disney World Orlando or Disneyland Anaheim, many Disney fans globally will make frequent trips to Abu Dhabi and experience the magic of Disney. With emerging markets rapidly expanding and more people entering the middle class, opening theme parks in the UAE is one of the best ways for companies to capitalize on this trend.

The intriguing part of this development is Disney won’t be spending any money on building this theme park. Instead, it will license its IP to Miral, who will both develop and operate the theme park. Disney will receive royalties from the theme park. It was wise for Disney to partner with Miral when considering that Miral operates Seaworld Abu Dhabi, which broke the world record as the largest indoor marine life park in the world. Plus, because this park is being built from scratch, theme-park designers will have the flexibility to let their imaginations run wild. The experience that Disneyland Abu Dhabi will bring will be unique when considering that the experience will have to be indoors due to the desert heat.

What do you think about Disney’s decision to build a theme park in Abu Dhabi? Do you think it’s a cool idea, or do you think the park will be a major flop?

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I am an independent personal finance writer and blogger. I do not have any formal training or certifications in finance, but I have a deep passion for the subject and have been researching and writing about personal finance topics for several years.

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