The ripple effect on local economies from mega events is profound. From increased hotel bookings to surging restaurant reservations, the influx of visitors during events like Taylor Swift’s Eras Tour, the Olympics, or the Euros can significantly boost economic activity. This phenomenon, often referred to as “event economics”, highlights the considerable market power these events hold, influencing everything from pricing to investment opportunities.
Market power in action: Taylor Swift’s Eras Tour
Market power is the ability to raise prices above competitive levels. Taylor Swift’s Eras Tour exemplifies this concept. When her tour stops in a city, the demand for hotel rooms, flights, and restaurant reservations skyrockets.
According to Time magazine, Taylor Swift’s fans, or “Swifties”, spend more than four times what regular music fans do on concert-related activities. For instance, during the Eras Tour in Singapore, travel bookings increased by 275%, inbound flights rose by 186%, and hotel bookings surged by 462%. Regional airlines added 13’000 extra seats and numerous additional flights to accommodate the influx of fans.
In addition, Taylor Swift fans attending the Eras tour reportedly spend more than 3 times the regular pricing, including for travel, hotel and food prices when attending the concerts. This surge in spending demonstrates the significant market power wielded by such events.
The larger economic impact across sectors
The economic impact of large events extends far beyond immediate spending. These events create jobs, stimulate investment in infrastructure, and boost the profile of host cities. The construction industry often sees a surge in activity as cities prepare to host mega events, building new venues or upgrading existing ones. Food and beverage companies benefit from increased demand, and TV broadcasters gain from higher advertising revenues and viewership numbers.
Events attract visitors who spend money on accommodation, dining, and local attractions. This influx of tourists can have a lasting impact, as some visitors may return for future vacations, boosting the local economy even after the event ends. The broader economic impact of these events underscores their importance to host cities and industries that support them.
Investment opportunities tied to mega events
Understanding the economic impact of big events can uncover lucrative opportunities for investors. By investing in companies within sectors that cater to event-goers, such as tourism, construction, food and beverage, and media, investors can capitalise on the economic benefits generated by mega events.
For example, hotel chains, airlines, and restaurant franchises often see increased revenues during major concerts or sports events. Construction companies involved in building or renovating event venues also experience growth. Media companies that secure broadcasting rights can attract higher advertising revenues due to increased viewership. Even the cities themselves can be investment targets, as improved infrastructure and heightened global profile can lead to long-term economic growth. Investors can look to these sectors for promising investment opportunities.