Externalities of Mega Sport Events and Transboundary Haze – Evidence From the Hotel Industry
29 Pages Posted: 26 Dec 2018
Date Written: November 14, 2018
Abstract
This paper aims to empirically test externalities generated from the two mega sport events in Singapore that are the Formula One Grand Prix (F1) races and the 28th Southeast Asian (SEA) Games. Using the daily hotel room rate data between 2014 and 2016, we find that the F1 race events increase the overall daily hotel room rates by 22.2% during the race periods; and the hotels near the F1 trackside in the Marina Bay area observe larger increases in the daily hotel room rates of 13.3% during the F1 race periods. The externalities from hosting the F1 event amount to about 8.15% of the total F1 fee of S$150 million (US$109.18) per race. The SEA Games event, a regional-based sporting event, however, accrues positive externalities, but only to the River Valley sub-market, where the official hotels are located. For the transboundary haze outbreaks in September 2015, the study finds that the environmental hazard inflicts economic losses amounting to S$15.42 million (US$11.26 million) to the hotel industry. We find empirical evidence of externalities associated with sport events and transboundary haze that cause unintended demand shocks to the hotel industry that is closely intertwined with tourist arrivals.
Keywords: Externalities, Hotel Room Rates, Mega Sporting Events, Transboundary Haze, and Demand Shocks
JEL Classification: D22, D62, Q51, R22
Suggested Citation: Suggested Citation