Cost and benets of sports events tourism

The case of the Singapore Grand Prix

ports events should complement, and not disturb, other forms of tourism. Sports tourism has been dened as a social, economic and cultural phenomenon arising from unique interactions of activity, people and place. Globalization has facilitated this growing trend. As a new discipline of research, sport event tourism raises a few questions: what are its inherent challenges and critical success factors? This study explores the case of the Singapore Grand Prix and its outcome on the economy, society and the environment.

Organizing the Grand Prix

The Singapore Grand Prix can be classed as a major international sporting event with the capacity to attract a large number of visitors and make an impact on tourism. The aim of the study is to investigate the events implications on public and private sectors, and on residents. Data for the study were collected mainly from published material due to the difculty in obtaining primary data from the government. Approval for Singapore to host the Formula One Grand Prix was awarded in May 2007 after lengthy negotiations. Its agreement was complicated by the fact that it was going to be a pioneering night race. Other factors such as the high risk of tropical thunderstorms were additional hazards that weighed in the decision. Moreover, the circuit is based in the downtown district and not on a purpose built track like most Grand Prix. Because of the difcult nature of the project, the backing of the government was essential. The Ministry of Trade and Industry set its expectations high, demanding as many as 50,000 extra tourists with an average spend of US$1,400 every year and higher revenues for businesses acting as direct and indirect suppliers. To capitalize on the two-day event, the Singapore Tourist Board (STB) created a Grand Prix Season lasting two weeks, targeted at regional countries such as Australia, China and India. The programme included a concert, a river festival and a motor show. Private businesses were invited to add to the program by organizing their own events.

Costs
The cost of the Grand Prix for the rst ve years was estimated to be US$103 million, excluding the promoter fee, with a commitment from the government to pay 60 percent of the cost. The rights were reportedly sold for US$205 million to a local race promoter. The government levied 30 percent on rooms and packages in 13 hotels nearest the track and 20 percent in other hotels during the ve-day race period. Preparation work in the city

DOI 10.1108/02580541011055652

VOL. 26 NO. 8 2010, pp. 9-11, Q Emerald Group Publishing Limited, ISSN 0258-0543

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centre was extensive and costly. In total, 800 volunteer marshals, 300 hospitality suite ambassadors and 100 operational staff were recruited and trained.

Benets
In total, the sale of tickets earned US$128 million. The STB estimated that 40,000 overseas visitors stayed in average over 5 days, creating US$115 million of tourist revenues. The event met its targets, and personal experiences among locals were generally good. The Minister of Trade and Industry highlighted the very positive impacts on businesses as a whole and the STB concluded that Singapores hotel sector had beneted across the board. Revenues per room reached a record US$318 over the F1 period, 132.8 percent more than the annual gure for 2008. The Grand Prix contributed to subvert conventional stereotypes of the city and convey a more glamorous image of the nation. It helped position Singapore as the premier lifestyle destination. Over 100 million viewers saw television coverage of the race. The absence of technical glitches was also testimony to Singapores efciency.

Negative impact
However, a number of adverse effects were reported after the race. Some businesses in shopping complexes near the track complained of a fall in custom. Inated room prices deterred guests and business travel, causing a longer-term risk of damage to loyalty. Besides, many of the visitors attending the Grand Prix were corporate guests with no proven appeal for the race. There are therefore reasons to question the long-lasting interest in the race, and, consequently, the sustainability of the event as well as returns on investments in the future. There were other dissenting voices. A random survey of over 300 inhabitants showed that a majority considered their everyday life had been adversely affected by disruption to trafc in the centre. Equally, no ofcial carbon offsetting scheme was announced when it is known that F1 cars are nine times more pollutant than family cars. Concerns were mainly raised by isolated individuals. Survey respondents were not unduly concerned about risks of degradation but almost one quarter felt that the race had caused air pollution.

Learning lessons
The event, however, was a source of pride for 75 percent and safety was not jeopardized. Despite uncertainty about the value of the event, 80 percent were willing to recommend the race and 90 percent judged it a success. The Ministry of Trade and Industry tried to apply the lessons learned from the rst race to the second event in 2009, acknowledging public and private concerns. Learning points covered minimizing inconveniences, maximizing benets and enjoyment and prompting more enthusiasm from locals. The authorities also identied the need to advise local enterprises on how to benet from the event.

The greater the standing and scale of the event, the higher the tourist demand and value is likely to be and the more prominence allocated to it in promotion.

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 Factors that are critical to success include negotiations with sports governing bodies, funding, infrastructure provision, effective marketing and appropriate pricing.

The wider environment

Underlying political agendas cannot be ignored in the wider spectrum of sports event tourism. Premier events are coveted as platforms to showcase the competencies and achievements of countries and leaders. Sports events are also vulnerable to external unforeseen circumstances as was the case with the global nancial crisis, which affected the 2009 race by making sponsorship harder to nd. The recession eroded both corporate budgets and consumers condence. The factors that are critical to the success of such events include negotiations with sports governing bodies, funding, infrastructure provision, effective marketing and appropriate pricing. The consequences on economy, society and the environment must be anticipated and managed. Meeting all these requirements is a formidable task, which highlights the need for a comprehensive cost-benet analysis in such situations to allow objective quantication.

Comment
Keywords: Sporting events, General management, Singapore, Tourism This is a review of Sports events and tourism: the Singapore Formula One Grand Prix by Joan C. Henderson, Ken Foo, Hermes Lim, Serene Yip. This case study explores how to manage sports events successfully so that they have a positive impact on tourism. It looks at success factors and a cost-benet analysis of the Formula One Grand Prix in Singapore as an example.

Reference
Henderson, J.C., Foo, K., Lim, H. and Yip, S. (2010), Sports events and tourism: the Singapore Formula One Grand Prix, International Journal of Event and Festival Management, Vol. 1 No. 1, pp. 60-73, ISSN 1785-2954.

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