Externalities of Mega Sport Events and Transboundary Haze – Evidence From the Hotel Industry

29 Pages Posted: 26 Dec 2018

See all articles by Tien Foo Sing

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

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

Sing, Tien Foo, Externalities of Mega Sport Events and Transboundary Haze – Evidence From the Hotel Industry (November 14, 2018). Available at SSRN: https://ssrn.com/abstract=3288056 or http://dx.doi.org/10.2139/ssrn.3288056

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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