Founder: Turnaround Talk
As we move closer to December, there is an increased focus on the tourism sector as South Africa enters into its high tourist season.
The tourism sector has faced significant disruption over the past two years. The hard lockdown imposed in 2020 had a damaging impact on many businesses. Boutique hotels in the Natal Midlands turned towards their insurance to cover the losses that they incurred, the Fairmont Zimbali had to close its doors altogether stating that it simply could not recover from the crisis. And as we discovered in todays first featured article, the tourism sector has lost a significant number of jobs over the past two years.
As we plan our recovery from Covid, we need to take a step back and find ways that the tourism sector can play an increased role in the fiscus. South Africa has always been a key destination for sporting events and live concerts. And the fact that the country is relaxing its stricter Covid rules is good news for the country.
Lights out at Kyalami
South Africa was once a major hub of motor sport and held an Formula 1 race every year until 1993. There are significant rumors that the global show peace will return in 2023 which will be good news for South Africans.
I recently read an article which spoke in depth about the economic benefits of hosting a Formila 1 race.
The article points out that, with a yearly cumulative TV audience of 1.8 billion people, Formula 1 has 506 million global fans and an average race attendance of 200 000 people, creating multiple layers of cultural and economic benefits for a host city.
Whilst complimenting the local and national tourism strategy, other benefits include global visibility, positive economic uplift, contributions toward tourism and job creation.
The economic impact of Formula 1
The article points out that hosting a Formula 1 race boosts the economy of a host city and country by stimulating consumer spending and creating new opportunities in the secondary and tertiary sectors of the economy.
The Formula 1 United States Grand Prix held at The Circuit of the Americas (COTA) has contributed substantially toward the local economy, with total economic impact to the Austin Metro area between 2012 and 2015 valued at $2.8bn.
Similarly, a recent study by PriceWaterhouseCoopers found that the Azerbaijan Grand Prix in Baku created $277.3m of increased economic value in 2016 and 2017.
Increased visibility created by Formula 1
The article points out that, with live broadcast to over 200 territories worldwide, Formula 1 excites fans and creates over 635 hours of broadcast footage. A host city is positively positioned in front of a global audience, showcasing them as a destination for major sporting and entertainment events.
Through destination branding, the Mexican Grand Prix has generated over $5.5bn through global media exposure and $885m of media value of the Mexico logo.
Photo by Marcel Heil on Unsplash
Tourism
The article points out that, with over 200 000 attendees per race and on average 53% coming from abroad, hosting a Formula 1 race induces tourism and opens up a city to new audiences. Mexico City experienced a 12% increase in hotel occupancy in 4 and 5 star hotels during the Grand Prix and on average the weekend spend per guest was £1 600 (excluding tickets). Since their first Grand Prix in 2008, Singapore has hosted more than 450 000 international visitors, who have contributed around $1.4 billion in incremental tourism receipts.
This will be the biggest sporting event that South Africa will host since the 2010 Fifa World Cup. Considering that Durban was supposed to be the host of this years Commonwealth Games, hosting a Formula 1 race in 2023 will be a major boost for our tourism industry.
Photo By: Kyalami
Job creation
The article points out that, returning year after year, Formula 1 increases both annual and seasonal employment, whilst creating new jobs across a number of industries.
When the Grand Prix heads to Montreal an additional 640 jobs in the Quebec region are created and COTA’s annual activities and operations combined to support 9 100 jobs in the Austin region representing $306 million in annual payroll for Austin-area workers.
Formula 1 is a sport with unique heritage and a proven track record of creating economic benefit. While it may be an expensive undertaking for South Africa to host a race, the economic injection to our tourism industry will be massive.
