Funding of Tourism Projects

INTRODUCTION

Funding tourism project is aimed at analyzing and identifying possible

sources of funds that most of the projects are making use. It can be taken

as opportunity for project developers because of the difference between

planned funds and actually utilizing funds. There are sections and lists

obtained for possible sources of funds and amount that can be achieved

when planning tourism projects.

Tourism project developers are nowadays dividing their projects into

phases and determining their value and amount of fund that will be

required. This is to ensure exact amount of funds summing up totally

during finalization. The factors that are influencing facts of funding are

importance and sources.

The objectives of funding tourism project are:

• To identifying meaning and concept of funding.

• To analyze importance and needs of funding tourism projects.

• To identify government project and research its information.

• To identify nongovernment project and research its information.

The overall purpose is related to the concept of funding and tourism

projects sources of findings. Usually, tourism projects are funded by

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 Funding of Tourism Projects
owners of projects and there are possibilities that extra funds are obtained

from banks or investors.

FUNDING

The term project funding is referred to as capital investment in tourism

projects by government or nongovernment bodies. It might include

shortage or surplus of funds in project phases. It is the financial or capital

amount that is invested in tourism projects for managing and obtaining

human or material resources. The possible sources of funding are cash

reserves, sales of assets, borrowing from bank, issuing debentures, raising

share capital, collaborating with other companies, etc. (Lock, Dennis,

2007).

Funding is also known as financing and tourism project financing requires

careful and detailed analysis of financial engineering. This is to overcome

risks and obtain rewards (Finnerty, John, 1996). When there are mistakes

and careless analysis of financial requirements in projects it affects

project continuation. Tourism project owners will make use of sources of

funds for obtaining funds for continuation of projects.

Example:

Dubai Metro is government project and funding of projects by government

are easy and due to their status they will be able to obtain financial

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 Funding of Tourism Projects
support when there are financial crisis in continuation of project. There

are various sources that are open for government projects and they can

obtain finance and funds easily. Nevertheless, this might be different in

the case of nongovernment projects.

FUNDING IMPORTANCE

Tourism funding projects are important due to the following reasons

(Leifer, Richard, Christopher M. McDermott, and Gina Colarelli O'Connor,

2001):

• Comparing with funds required and potential profit.

• Determining possible reserves that are required.

• Analyzing project feasibility.

• Supporting project for resources requirements.

• Completing project operating status.

FUNDING PROJECTS SOURCES AND DISTRIBUTION

Dubai Metro

Dubai Metro is a road and transport authority project which will solve

traffic issues and problems in Dubai. It will include 4 lines (red, green,

purple and blue) of metro network (ABQ Zawya Ltd., 2008).

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 Funding of Tourism Projects

The sources of funds for Dubai Metro are from government body funded

by road and transport authority. The funds of Dubai Metro are divided and

distributed into four phased schedule:

Phase Schedule Description

2009 Red Line expected to be completed

2010 Green Line expected to be completed

2013 Purple Line expected to be completed

2014 Blue Line expected to be completed

The funds value of Dubai Metro is divided as per contract value below:

Project Name Contract Value

Dubai RTA - Dubai Metro - Blue Line USD 3,000,000,000
Dubai RTA - Dubai Metro - Green Line USD 1,090,000,000
Dubai RTA - Dubai Metro - Green Line - Extension -
Dubai RTA - Dubai Metro - Purple Line USD 2,700,000,000
Dubai RTA - Dubai Metro - Red Line USD 2,480,000,000
Dubai RTA - Dubai Metro - Red Line - Depots -
Dubai RTA - Dubai Metro - Red Line - Extension -

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 Funding of Tourism Projects
FUNDING PROJECTS SOURCES AND DISTRIBUTION

Dubai Snowdome

Dubai Snowdome is one of its first kinds in Middle East that is located in

United Arab Emirates (Dubai). The visitors will experience winter and snow

experience (Ten Real-estate, 2007). It is private tourism project and the

developer is Emirates Star Properties.

Dubai Snowdome is one of the Dubai’s mega tourism projects that are

developed for tourist attraction locally or internationally. The winter

environment is created artificially but with shows complete and real

winter experience with wide range of entertainment activities that is

suitable for all age groups, nationalities, gender, etc. (SkiDubai, 2009). It

can be called as snow city that involves various activities so people can

experience change from desert environment to snow environment. It is

also known as indoor resort of snow activities.

Dubai Snowdome project is funded and managed by Emirates Star

Properties which is private sector. The funds are provided and invested by

Emirates Star Properties management.

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 Funding of Tourism Projects

The funds are used for developing various activities: ski dome, residential

towers, hotels, a shopping mall, restaurants, coffee shops and other retail

outlets in Snowdome. The money is used for getting return from it where

visitors will enjoy entertainment and leisure activities.

Dubai Snowdome development will cover an area of 1.4 million square

feet (130 thousand square meters) which is part of fund and money

distribution. The investment and project will contain and ice and snow

activities that is suitable for children and adults (SkiDubai, 2009).

RECOMMENDATION

Funding and sources of funding are important parts of tourism project.

When government or private are not having ability to fund their projects

they usually take support of bank.

The banks are good sources for funding tourism projects. Most of the

projects are relying on banks but it shouldn’t be the only source because

there are possibilities that the banks will not provide good interest rate

and payback period. This might bring pressure over projects and payback

of funds. The financial sponsors and investors funds are excellent sources

of funds rather than banks because there is no interest rate and

discussions include mutual benefits agreement.

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 Funding of Tourism Projects

CONCLUSION

We have discussed Dubai Metro and Dubai Snowdome projects and their

sources of funds along with distribution of money in project activities upon

completion. By the end of project, recommendations are provided with

proposed sources of funds which seem more positive than others. Funding

is essential part of project requirements and without it activities cannot be

continued or completed.

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REFERENCES

ABQ Zawya Ltd. 2008. Dubai RTA - Dubai Metro. [WWW]

<URL:http://zawya.com/projects/project.cfm/pid160608082751> [Accessed 16

January 2009.]

Finnerty, John. 1996. Project Financing: Asset-Based Financial Engineering.

New York: John Wiley & Sons Australia, Limited.

Leifer, Richard, Christopher M. McDermott, and Gina Colarelli O'Connor.

2001. Radical Innovation : How Mature Companies Can Outsmart

Upstarts. New York: Harvard Business School P.

Lock, Dennis. 2007. Project Management : 9Th Edition. Grand Rapids:

Ashgate Publishing, Limited.

SkiDubai. 2009. Dubai Sunny Mountain Ski Dome or Snowdome. [WWW]

<URL:http://www.skidubai.com/dubai/mountain-ski-dome/> [Accessed 17

January 2009.]

Ten Real-estate. 2007. Project Developments: Dubai: Dubailand: Snowdome.

[WWW]

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 Funding of Tourism Projects
<URL:http://realestate.theemiratesnetwork.com/developments/dubai/dubailan

d/snowdome.php> [Accessed 17 January 2009.]

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 Funding of Tourism Projects
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