Giga-Scale Tourism Projects Are Being Scaled Back Worldwide. The Math Is Why.

Over the past four to five years, developers and governments around the world have announced a wave of mega-scale destination projects – ambitious, visually striking, and backed by significant capital. Now many of them are stalling, shrinking, or disappearing outright because the underlying economics never held up. Ambitious renderings attract attention, but the absence of a credible financial structure eventually catches up.

Michael Henderson, co-founder of Moon World Resorts, a Toronto-based design studio and intellectual property licensor developing a moon-themed destination resort concept, frames the failure in direct terms. His company screens every component of its project against two requirements: logic and math. If a component does not make conceptual sense, it is out. If it makes sense but the numbers do not work, it is also out. “If it didn’t fit into the logic box, a particular component, a particular design, it didn’t get off the starting line,” Henderson says.

That framework sounds elementary. But Henderson argues it is precisely what most failed giga-scale projects skipped. He points to Saudi Arabia’s The Line as a case in point: a project that generated enormous global attention before Saudi Arabia scaled it back, pushed further work past 2030, and began redesigning it. “No logic, no mathematics,” he says. “It could never work irrespective of how much money you put into it.”

The same standard applies to Henderson’s own project. Moon World Resorts remains in pre-development: it has not secured a site or a licensee, and its cost analysis and financial forecasts are still in progress. What Henderson offers, then, is not proof that the formula works but a practitioner’s account of what investors demand before they commit.

The Checklist Investors Actually Use

For projects at this scale, spectacle alone does not attract institutional capital. Henderson says the first question investors ask is whether the project can physically be built – and by whom.

“They’re going to ask, can this be built? And you’re going to say yes. And they’re going to say how? And you’ll explain to them. And then they’re going to say, but who’s going to do it?” That sequence, he says, is why a credible delivery team matters as much as the design. For its own project, Moon World Resorts has assembled more than 50 international companies, many of them multinationals with experience on very large-scale projects, and Moon World Resorts co-founder Sandra Matthews says the company plans to include that team in the license it offers regional partners in up to 10 locations. Henderson adds that three more engineering groups are joining, all experienced in complex builds such as major hospitals, transit systems, and airports.

Beyond the team, Henderson says investors need two things in sequence: a compelling, differentiated concept and then the financial backup. “You have to be able to deliver the sizzle to get them excited,” he says. “And then you have to have the backup material, the build out, the cost analysis, the EBITDA forecast.”

How Residential Revenue Changes the Math

One structural feature Henderson describes is how real estate sales alter the financial model for large-scale destination projects. His company’s master plan pairs the resort with 12,000 residential units and commercial space. In his model, profits from selling those units substantially change what the destination component effectively costs to build.

“You put the profitability of the residential units, the profitability of the commercial units – all of that significantly impacts the overall cost of the destination resort,” Henderson says. “And so you end up with a very logical mathematical portfolio which actually works irrespective of the large scale.”

Henderson notes that branded, upper-market residential developments are still moving even in difficult conditions. “The high-end branded, very unique projects … are still selling. The middle market is challenged because there’s an oversupply.” Matthews adds that repeating building designs within the master plan keeps costs down and speeds delivery. Rather than creating unique plans for every residential and commercial tower, the company develops one design and rolls it out across the development. “You develop one and then the ease of duplication is what we’re after,” she says.

Where the Capital Is – and What It Expects

Henderson draws a clear line between smaller investors and institutional capital. Smaller players, he says, are cautious and focused on near-term returns. Sovereign wealth funds and large asset managers operate on a fundamentally different timeline.

“If the math is right and the logic is right, these major players will not say, we’re going to build this thing and hope to get a return in 12 months. They’re saying in 12 years or 20 years.” Sovereign wealth funds, he notes, are sitting on trillions, and they accept that an asset held for decades will pass through both up markets and down markets.

That long-term orientation also shapes how Moon World Resorts approaches market timing across its 10 planned global locations. “You’re not going to get all 10 markets in a troubled time,” Henderson says. The company plans to move forward selectively, choosing which market fits at which moment rather than committing to a single geography.

Why Countries Are Competing for These Projects

Henderson says the appetite for unique, large-scale tourism projects extends well beyond the Gulf states. Countries across Asia and Europe are actively pursuing differentiated destinations because they are all competing for the same tourism spending. “Tourism is a great business,” he says. “People fly in, they drop a lot of cash and then they fly out again.” The result is mass employment without the long-term costs of permanent residents.

The distinction Henderson draws is between projects that offer something new and projects that replicate what already exists. Building another theme park in a market that already has dozens of them is difficult to justify economically. A project in a category of one – with no direct competitor – has a different risk profile. “If I’m saying to you we’re building something completely unique in Florida, then you got a shot,” he says.

About the Experts: Michael Henderson and Sandra Matthews are the co-founders of Moon World Resorts, a Toronto-based design studio and intellectual property licensor developing large-scale, moon-themed destination resort projects for global markets. Matthews is the company’s president.