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Major sport events and long-term tourism impacts
Solberg HA, Preuss H
Journal of Sport Management
21: 213-234, 2007
Event long-term tourism 2
Objectives
What infrastructure do cities need to host major sport events
Potential welfare-economic benefits and costs of the changes in infrastructure
How can infrastructure be used to maximize benefits for future tourism
What should pay the costs of hosting the events
Event long-term tourism 3
Stages of long-term period Possibility to promote a city through Olympic bid is
limited Process NOT identical for every event
Event long-term tourism 4
Supply side: structural requirements
Major sport events have potential to develop urban structure Housing, labor, recreation, transportation
Must compare long-term development plan with necessary event-related structural requirements Before bidding for or creating events
Whether event-specific development exceeds long-term demand from locals and visitors Peak demand during mega events exceed
capacity in almost every host city
Event long-term tourism 5
Supply side: structural requirements
High costs may create negative long-term impacts by reducing other activities that require tax funding
Whole Athletes Villages converted to housing after events
Sport parks, rather than a single sport facility
Event long-term tourism 7
Soft-infrastructure change
Skills and knowledge upgrade in service industry English courses
Improve skills and knowledge necessary to win more bid competitions
Improve skills required to secure a safer environment Police, security network
Event long-term tourism 8
Destination marketing Production of destination marketing involve
public goods Risk for suboptimal production May be driven by free-rider motives, let others to
fund marketing Government involvement
Promote destination by hosting additional sport or cultural events, fairs, exhibitions, cultural festivals, concerts Combine with improvement in soft-infrastructure,
have potential to increase long-term tourism
Event long-term tourism 10
Increased awareness and image
Increased awareness and image of host city or nation may be mixed or no results
Duration of any increased-awareness effects limited 55% did not remember host nations 1 year after Euro
2000 football cup Only 10% remember host nations 5 years after Euro
1996 Tourism products and service, image of destination,
more strongly influenced by city’s broader environment Not only the sport event
Event long-term tourism 12
Investment
Not all event-related infrastructure serve tourism
Cities hoping to reach long-term revenues from post-event tourism General structure, not necessary for the event,
but necessary to attract and serve tourists: museums, shopping malls, special tourist attractions
Unpredictable sociopolitical factors 9-11 attacks, SARS, terrorist attacks
Event long-term tourism 13Welfare-economic impacts from inbound tourism
Australia enjoyed stronger growth than its neighboring countries 1994-2000
One of main targets: convention market Small number of tourists, high spending power
Decreased inbound tourism to Australia after Olympics
Revenue per guest night for all commercial accommodations also decreased after Olympics Preparation and increasing supply vs tourism crises and
oversupply
Event long-term tourism 15Welfare-economic impacts from inbound tourism
Increased tourism demand before Olympics Number of hotel rooms in Sydney ↑40% from 1994 to
2000 Significant decline in number of rooms after
Olympics In part because of conversion of hotel rooms for
residential purposes Demand too low to meet the enhancement in
capacity before Olympics Employment in accommodation industry declined
after Olympics Higher in 1998-99 than 2002-04
Event long-term tourism 17
Post-event tourism effect
Time switching effect of tourists to Sydney Postponement or forwarding of a once-in-a-lifetime trip
to Australia What effects would have been without the event Barcelona revenue per available room decreased by
60% in 2 years after Olympics Although number of tourists continue to grow, not
enough to balance the growth in hotel rooms Balanced by positive long-term events: use Olympics to
build up image as cultural city: museums, pedestrian zones
Event long-term tourism 18
Post-event tourism effect
Lillehammer: unrealistic optimism caused overinvestments in local hotel sector Several bankruptcies in tourism industry
Event long-term tourism 19
Market failure
Market failure occurs if those who would have benefited from welfare-economic gains are unable to coordinate their actions Resulting in lack of funding that prevents the
events from being staged Typically results from presence of public goods Tourism products are bundle of separate
products offered by different suppliers supply side needs to coordinate to maximize aggregate profit
Event long-term tourism 20
Market failure
Governments should only become involved in hosting of sport events to prevent market failure
Some hotels may adopt free-rider strategy Let others bear burden of financing the event The product of events become suboptimal
Event long-term tourism 21
Role of governments Neither profit-maximizing producers nor event
organizers will undertake activities designed to generate revenue for other producers
Rationale for governmental intervene Funding the event
Motivate those who expect to benefit from events to provide the government with prognosis that exaggerate the positive impacts Local decision makers have high interest in attracting
events Host destination can take advantage of asymmetric
information to provide the government with higher prediction
Event long-term tourism 23
Conclusions
Large events can generate revenues that cover operational costs, but not investment in infrastructure
Events can stimulate inbound tourism Too much optimism can initiate investments that exceed
long-term demand Attracting more tourists in post-event period may
require considerable investment Duration of event promotion period is short Upgrades of local infrastructure to provide sufficient
quantity and quality of tourism products and services
Event long-term tourism 25
Participating countries,Events held in off-season (non-summer)
Fourie & Santana-Gallego, 2011