Jonathan Rochwerger looks beyond the Wallabies’ accomplishments in the 2015 Rugby World Cup to understand how the tournament and other major sporting events can affect the tourism market and the economy.
As an Australian, I took a lot of joy out of the 2015 Rugby World Cup (RWC), especially since my Australian Wallabies were ultimately responsible for knocking England out of its own tournament. My smugness, however, has since been destroyed by the all-conquering All Blacks, who duly defeated the Wallabies in last week’s epic final (and brought welcome relief to my colleagues).
The six week rugby tournament was held in 12 venues across England (and one in Cardiff) and has already been declared by the International Rugby Board as the ‘biggest and best tournament to date’. While I don’t dispute this fact (despite the Wallabies loss), working at Fourth Street has inspired me to think beyond the sporting feats on the pitch and focus instead on the wider economic and social impacts. More specifically, I want to understand how major sporting events, such as the RWC, affect tourism.
The common perception is that large-scale events such as the Olympic Games and FIFA World Cup have the ability to shape a nation’s tourism patterns, by attracting a large global audience and using the event as a platform to transform itself into a more attractive tourist destination.
Once a country has been selected to host a tournament, it plans for an influx of international visitors years in advance, resulting in large investments in infrastructure, transport and accommodation. If this is managed correctly and with an eye to the future, a tournament can leave a lasting legacy on the host nation through urban regeneration and improvements in amenities and social services for the benefit of local communities.
With additional tourists comes additional tourist spend, which is a vital contributor to the economic impact of the tournament. Direct and indirect tourist expenditure can offset the public funds invested in the tournament as well as contribute to the host nation’s GDP.
Yet the overall impact of a major sporting event on tourism is not as clear cut as it may seem. Despite the RWC being the third largest sporting event in the world after the Olympic Games and FIFA World Cup (based on a combination of participating nations, television audience and total attendance), recent evidence suggests that major sporting events don’t necessarily provide the predicted boost to tourism or the economy.
In an effort to ‘sell’ the event to the public, Governments and event organisers are generally quick to forecast and publicise the economic and social benefits of hosting a tournament. In 2014, well before the tournament began, Ernst & Young (E&Y) were commissioned by the RWC organising committee to deliver an economic impact study. The report predicted the following benefits:
- Increased tourism, with 466,000 international visitors expected across the duration of the tournament (contributing up to £869 million in direct expenditure).
- £982 million of value added to GDP.
- 41,000 jobs supported.
- £85 million invested in infrastructure.
- Wider benefits such as national pride, cultural engagement and increased participation in sport.
The report was also advertised on the VisitEngland website, which was keen to highlight the benefits for the UK tourism market and build on Britain’s ‘decade of sport’ platform, which also includes: the 2012 Olympics and Paralympic Games, the 2013 Rugby League World Cup, and the 2014 Tour De France. Clearly, the RWC was part of a broader policy by the UK Government to create a sporting legacy and raise England’s profile as an attractive tourist destination.
However, despite these predictions, recent studies suggest we should be more circumspect when analysing the true effects on tourism.
Major sporting events are generally expected to produce a double-boost to tourism. Firstly, the influx of visitors attending the event is expected to increase tourism in the short-term. Secondly, the exposure of the host nation as a desirable tourist destination, coupled with positive experiences from tourists attending the tournament, are expected to boost tourism in the long-run.
However, a recent study on The Impact of Mega-Events on Tourist Arrivals points to ‘the careful appraisal of possible tourist displacement.’ In other words, major sporting events can have a different effect on ‘sports tourists’ and ‘non-sports tourists’. While there is usually a marked increase in sports tourism during a tournament, non-sports tourism can decline. Tourists that are uninterested in the spectacle will avoid visiting the host nation, as they are deterred by the large crowds and higher prices generally associated with major sporting events.
The effect of this can be a net tourism gain that is less than expected or, indeed, a net tourism loss. Put simply, even if 466,000 international tourists (as forecasted by E&Y) arrived in England to attend the RWC, the net gain is likely to be lower after taking into account the non-sports tourists that were put off by the thought of high priced flights and hotels, crowded tubes and trains, or the loutish behaviour of boozy sports fans.
A good example of tourism displacement can be seen from the 2011 Rugby World Cup held in New Zealand from September to October 2011. During the tournament, 127,000 additional international tourists arrived for the RWC, generating net additional direct expenditure of $387 million. However, subsequent reports suggested that approximately 46,000 international tourists that would otherwise have visited New Zealand actively avoided the country because of the tournament (i.e. they were displaced). Subsequently, the net international tourism gain was reduced by 36% to 81,600 international tourists.
The additional tourist expenditure generated from the RWC was also revised down from $387 million to a net gain $280 million – a reduction of $107 million (28%) from initial reports. To its credit, the New Zealand Government publicly acknowledged the revised figures in their evaluation reports (which also accounted for external factors affecting tourism such as the Christchurch earthquake in February 2011).
Tourism displacement can be more or less of a factor depending on when and where the event is held. It is more significant when the event happens during the peak season and when it is held in a single city rather than multiple cities. While the RWC – which is a markedly smaller event – no doubt attracted fewer tourists than the London 2012 Olympics, its displacement effect would also have been much less significant. It took some Central London tourist attractions up to 18-24 months to recover from the London Olympics because people stayed away during July and August which would have otherwise been their busiest months. Sure, the Olympic venues were full, but tumbleweeds rather than tourists could be seen at the Tower of London and Tate Modern. By contrast, the RWC took place across the UK during the tourist ‘shoulder season’ in the autumn. It surely attracted fewer ‘sports tourists’ but it also dissuaded far fewer ‘non-sports tourists’.
Beyond this short term effect, there is also no evidence to suggest that hosting a major sporting event contributes to any long-term increase in tourism. The study on The Impact of Mega-Events on Tourist Arrivals showed that in the three years immediately following a major sporting event, there were little to no gains in tourism. For example, following the 2000 Sydney Olympic Games, only in the year immediately following the event did tourism in Sydney grow faster than the rest of Australia. After this, the tourist market quickly reverted back to the pre-Olympic trend, with no evidence of any long-term effects.
An obvious – and frequently stated – long term benefit accrues to cities and countries that are put ‘on the map’ by a major sporting event, but this is typically overstated for places that were major tourist destinations already. How much marketing and branding benefit did cities like Sydney, Athens and London really get from their recent Olympics? Do we really need Olympics in cities like Rio de Janeiro or Tokyo to know where those cities are or what they are all about? By contrast, who had ever heard of Lillehammer, Nagano or Sochi before they hosted the Winter Olympics?
We may all have a mental image of Singapore, Shanghai and Monte Carlo – but would we know anything about Hockenheim, Spa or Monza if it weren’t for Formula One?
There is an inverse relationship between the scale of long term tourism benefit and the size of the host city – smaller cities gain a much bigger promotional boost from a mega event than larger cities. That Beijing recently beat Almaty to the 2022 Winter Olympics – and the circumstances in which it did so, with 3 other cities bowing out before the IOC decision – says a lot about the potential benefit of future events. If the demands of the event are so great that only mega cities can bid for mega events, then much of the potential economic benefit of hosting an Olympics or a World Cup or a Formula One is neutralised.
In short, one has to be cautious in how these economic impact studies are interpreted. Many are sloppy and most are exaggerated. They are equal parts measurement and marketing – as much about politics and spin as they are about rigour and understanding. Even the most independent and unbiased studies are partly compromised by the fact that they tend to focus on what is easiest to measure – e.g. tourist arrivals, direct spend, hotel occupancy, box office – and not what necessarily matters most – e.g. tourist satisfaction, positive referrals, perceptions of place, indirect and induced expenditure.
Time will tell whether the real tourism and economic impact of the 2015 Rugby World Cup comes anywhere close to the impact predicted by its pre-tournament forecast. Sadly, I don’t think the off-field tourism gains will be of any consolation to fans of English Rugby.