The Entertainment Giant With $10 Billion Revenues That You Probably Haven’t Heard Of

When you think of entertainment conglomerates, Disney, Netflix
, Universal, Warner Bros. et al instantly spring to mind. However, although they are global titans there are regions where neither the Mouse nor its main rivals are the biggest cheese in town. The Middle East is one of them.

Majid Al Futtaim isn’t a household name in the United States and there is good reason for this. The Dubai-based entertainment giant primarily operates in the Middle East and North Africa (MENA) region and there are few people there who haven’t come across it.

It operates in seven sectors stretching from retail and entertainment to energy and real estate. One of the clearest examples of the extent of its reach is that not only does Majid Al Futtaim distribute Warner Bros. movies in the Middle East, it operates many of the theaters they are shown in as well as shops that stock their products, the malls where they are based, the hotels where some of its customers stay on vacation and even the homes they live in. It is a conglomerate and then some.

Malls are the heart of its business and it operates 27 ranging from super local ones inside residential developments to the mega mall which kickstarted the transformation of the Emirate of Dubai from a sleepy port to one of the world’s leading leisure destinations.

The temperature in Dubai hovers close to 100 in winter and in summer it can soar north of 110. It feels like standing in front of a giant hair dryer as the hot air billows down the streets. It becomes uncomfortable after a few minutes so indoor venues thrive. It explains why the malls in the Middle East are more like indoor entertainment centers where families go to spend the day rather than just to shop.

This trend began in 2005 with the opening of Majid Al Futtaim’s cavernous Mall of the Emirates in Dubai. With 630 stores it is one of the world’s biggest malls but this isn’t what made it groundbreaking.

As we have reported, it is also home to an indoor ski resort with a full-size Alpine village and a penguin enclosure. There’s also an event venue, sprawling games arcade with a bowling alley and an outlet of Dreamscape, the cutting-edge virtual reality operator which was part-financed by Warner Bros., Fox, IMAX and Steven Spielberg‎. Its VR outlet in Mall of the Emirates is one of only six worldwide and transports guests to fantasy and sci-fi worlds including one themed to the movie series Men In Black.

It forced rival operators to up their game which led to the development of the Dubai Mall which is the biggest in the world and is home to a full-size ice rink, a Kidzania park an indoor man-made waterfall and one of the world’s biggest aquariums. In turn, Majid Al Futtaim responded by partnering with indoor skydiving operator iFLY which allows visitors to skydive in towering clear cylinders.

Cleverly they are located at the entrance to the Magic Planet entertainment complex in the mall so the motion draws visitors in. Magic Planet isn’t just home to the latest arcade games and midway games but indoor coasters, parachute drop rides, cutting-edge VR games, climbing walls, large-scale simulators, bowling alleys, bumper cars and carousels for kids.

Then come the cinemas. Majid Al Futtaim’s operates 58 cinema complexes totaling over 500 screens through its own VOX brand. VOX even has its own large-format screen, VOX MAX, and holds exclusive rights in the United Arab Emirates (UAE), Oman, Qatar, Egypt and Lebanon to 4DX cinemas with moving seats, smoke, wind and scents. It is on a roll. In 2018, just months after Saudi Arabia lifted a 35-year ban on commercial theaters VOX said it would invest $545 million to open 600 screens in the country over the next five years. It was well-timed as Saudi has since grown to become the Middle East’s largest theater market.

The indoor snow resort has expanded to Oman and Abu Dhabi too to take advantage of the surging interest in experiential tourism. It doesn’t get much more escapist than an indoor snow resort in the middle of the desert and its latest development, Snow Abu Dhabi, takes this to a new level.

Guests enter through a corridor which appears to have been cut through the roots of a tree and has colourful gems embedded into the soil. When they get inside they see the soaring gnarly tree with icy slides snaking out of it. Baubles hang from its branches, birdsong plays in the background and a wooden-looking treehouse sits at the top making it seem like something from the pages of Harry Potter.

The impeccable attention to detail is no coincidence. As Majid Al Futtaim’s entertainment division is run by Ignace Lahoud, one of the theme park industry’s most skilled and seasoned operators. Lahoud made his mark as chief financial officer of Disneyland Paris before Disney bought the resort outright. Keeping its wheels turning without Disney’s riches as one of the toughest jobs in the business but Lahoud made it look like child’s play.

Remarkably, Majid Al Futtaim has another five divisions in addition to malls and entertainment. As we have reported, the Middle East is home to more North American retail chains than perhaps anywhere else in the world outside the US and Canada. These chains are franchises run by local operators to cater for expats who make up the vast majority of the population.

Majid Al Futtaim’s portfolio of brands includes Canadian athletic apparel company Lululemon Athletica
, upscale US clothing retailer Abercrombie & Fitch
, as well as its sister brand Hollister, and Crate & Barrel, a high-end furniture retailer from Northbrook, Illinois. It also has the local franchise to Carrefour, a French hypermarket chain which anchors most of its malls.

Many of the malls are so big that they have hotels connected to them as travelers come from afar to spend days there. Majid Al Futtaim operates the hotels too and many of their brands are well-known Stateside such as Sheraton, Westin, Hilton and Le Meridien.

They all look like exemplars of the chains as they are fitted-out to an extremely high spec and are maintained impeccably regardless of their rating. Majid Al Futtaim even has an energy services division which supplies its properties and helps them hit environmental, operational and financial targets.

However, perhaps its most ambitious developments are its five residential districts in the UAE and Oman. These lavish communities are master-planned by Majid Al Futtaim and draw on all of the expertise in its other divisions as there are high-end hotels, shops and leisure facilities on site.

The style of the developments is sublime and they are built in breathtaking locations with the grandest perhaps being Oman’s sea front resort Al Mouj, meaning The Wave. Around 6,000 homes with 19,000 residents sit on this 2.6 million square meter site alongside seven hotels, crowned by the five star Kempinski with a St Regis soon to open. It doesn’t stop there.

Al Mouj is also home to the largest marina in Oman and an 18-Hole signature championship golf course which has been recently profiled by the New York Times
. It is one of the finest examples of resort master-planning in the Middle East and is on the crest of the wave. Residents started moving into Al Mouj in 2006, 16 years before Disney announced that it too will get into the planned community sector with its Storyliving by Disney division which is due to open its inaugural development in California in 2024.

Majid Al Futtaim’s diverse revenue streams and the high quality of its assets have enabled it to maintain healthy margins and kept customers streaming through its doors despite purse strings being pulled tighter due to increases in inflation. In 2022, its underlying profit, also known as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), increased 4% to $1.1 billion (AED 4.1 billion) on revenue which rose 12% to $9.9 billion (AED 36.3 billion).

As shown in the diagram below, the lion’s share of the revenue is generated by retail which rose 7% to $7.6 billion (AED 28 billion) driven by the easing of COVID-19 restrictions as well as a rebound in travel and tourism. Footfall to its malls increased by a staggering 16% to 212 million visitors, in stark contrast to other nearby countries in Europe where bricks and mortar retail has been decimated by the pandemic and online shopping.

Next up was revenue from the properties which rose by 43% to $1.6 billion (AED 5.8 billion). It was followed by a 23% increase in entertainment revenue to $435.6 million (AED 1.6 billion) which was driven by the relaxation of restrictions in cinemas. This is set to soar even higher as Majid Al Futtaim secured distribution rights for Universal movies in 14 countries in the MENA region from February this year.

Pent-up demand coupled with the easing of the pandemic also drove up Majid Al Futtaim’s lifestyle revenue by 38% to $218.1 million (AED 801 million) whilst its hotels also benefited from the EXPO 2020 Dubai and the Qatar soccer World Cup as many spectators stayed in the emirate and commuted to matches. This led to revenue per available room (RevPAR) rising 50% and average occupancy going up by 14% whilst the revenue of the overall hotels division increased 48% to $182.7 million (AED 671 million).

The bottom line was a different story as Majid Al Futtaim’s properties division alone generated $816.8 million (AED 3 billion) of its underlying profit. It said that one of the driving forces behind it is the “robust performance” of the communities business which explains why Disney is making a play in this space.

“Overall, Majid Al Futtaim delivered balanced growth through 2022,” said its chief executive, Ahmed Galal Ismail. “Positive contributions from across our portfolio, bolstered by the inherent strength of the UAE economy, have enabled the group to achieve double digit revenue growth despite the ongoing macroeconomic challenges.

“The potential impact of these headwinds has been further lessened by the outstanding performance of our properties portfolio, which has contributed 74% of total EBITDA.”

The company’s standing is perhaps best summed up by an accolade bestowed on it by credit rating agencies Standard & Poor’s and Fitch. By awarding Majid Al Futtaim a BBB grade they made it the highest-rated privately owned company in the region. Disney et al should perhaps be grateful that it doesn’t operate farther afield.