by David Craft
Destinations are turning to sporting events as a way to revitalize themselves. With technology keeping us connected to these events, it’s no surprise international sports events have grown in appeal. Decades of research find that these events can impact economic growth, urban renewal and social and cultural improvements, but not all host cities’ or countries’ experiences are the same.
Investing in More Than A Game
Infrastructure investment for a major sporting event is about more than new stadiums and arenas. Events like the Olympics have traditionally been used to make other improvements, many of which have long-term appeal for tourism.
Before Athens was chosen as the site for the 2004 Olympics, the city had worked for nearly 40 years to prevent flooding and improve its Faleron Bay area. Because of improvements made for the Olympic Games, residents and visitors can now enjoy entertainment facilities, a water plaza, an esplanade and an open-air amphitheater that originally was the site of beach volleyball competition.
Australia’s Gold Coast hosts the Commonwealth Games in April. In a recent article for Skift, Allan Leibowitz quoted Martin Winter, CEO of Gold Coast Tourism. “This is like a coming-of-age of the city at speeds that would not have been sustained had it not secured the Commonwealth Games.” Leibowitz noted that the area has completed “$1.6 billion (Australia $2 billion) worth of light rail, road works, bus lanes and venue upgrades.”
Leading up to the 2007 America’s Cup, Valencia invested €122 million to expand the airport at Manises, which included adding a metro station at the airport and increasing the number of parking spaces. The event was also a catalyst for long-term growth with many local companies later moving into high-tech sailing and marine services.
With an $11 billion price tag, the stakes were high for the Brazil 2014 World Cup and needed to be viewed in the long-term. Just two years after the 3.7 million World Cup tourists went home, the same stadium was used for the 2016 Olympic Games.
Expanding the Season & Awareness
In an analysis of the Caceres International Open 2013 World Paddle Tour, the authors explain that sport events offer a way to complement a city or country’s seasonality.
Holding the Commonwealth Games during Australia’s autumn provides a big off-season bump for its tourism industry. “Traditionally, summer is the highest-yielding period and we are hearing reports that many accommodation providers are at 90 percent occupancy,” said Winter.
Another way events impact seasonality is “tourism crowding-out.” The number of tourists who change their visits to avoid a mega-event appears to depend on when the event is held. In a paper titled The impact of mega-events on tourist arrivals, the authors explain that when events take place during peak season predicted tourism tends to decline, but that events “held during the off-season attract significantly higher numbers than what is predicted.”
Raising awareness for a destination, long-term, is often cited as a benefit of hosting a sports mega-event. For example, the South Africa World Cup showcased the country’s ability to host a large sporting event, which likely contributed, five years later, to their winning bid for the 2022 Commonwealth Games.
The benefits of mega-events can extend to more than just the host country. In 2012, Jamaica hosted Jamaica House at the London Olympics. After several years of negative growth in visitor arrivals from the UK, Jamaica saw an increase beginning in 2013. That increase rose to 17.5% in 2014 and 27% in 2015. While Jamaica House wasn’t the only reason for the growth, it’s considered a major factor in the increase.
Doing a cost-benefit analysis of mega-events can be a challenge and the results are often challenged, especially since there are tangible and intangible, short-term and long-term benefits. Even so, when the planning and execution are spot-on, the numbers are impressive.
London’s Olympic return was £9.9bn (on the £8.9bn investment to host the games)—though some disputed the figure. The six-week 2011 IRB Rugby World Cup, hosted by New Zealand, “expanded the country’s Gross Domestic Product (GDP) by NZD $573 million.” In Valencia, the America’s Cup generated an added value of about €2.7 billion and increased employment by 73,800 jobs.
In the 2010 Deloitte report “A Lasting Legacy,” Greg Pellegrino and Heather Hancock acknowledge large sporting events have the “potential to create a lasting legacy,” but “if not handled correctly, a major event also has the potential to leave a disappointing legacy of abandoned stadiums, missed development opportunities, and lost investments.”