Hosting the FIFA World Cup brings benefits. But not as many as politicians claim

The World Cup kicks off on 20 November, when Qatar will host Ecuador in the opening match. It will conclude on 18 December when the final will be played in the 80 000-seater Lusail Iconic Stadium. In the intervening weeks the world’s attention will be on Qatar, the smallest country by land area ever to host the event. Having faced much criticism ever since winning the bid, it is likely that Qatar would want to impress. Expect the spectacular.

But Qatar will not just be on every TV or mobile screen globally. More than 1 million tourists are expected to make the journey, providing a much-needed economic injection. In fact, the Chief Operating Officer of Qatar Tourism, Berthold Trenkel, has made it clear that Qatar aims to wow visitors with far more than just football. Over the last few months, new beaches, theme parks, and water sports hotels have opened. And 1 November will see the opening of the much-anticipated Lusail Winter Wonderland, an island full of tourist attractions that, according to its website, offer the ‘ultimate entertainment and lifestyle celebration’.

But are these expectations of higher tourist numbers realistic?

Economists have thought about this question for some time. When countries bid for mega-sport events like the FIFA World Cup, their politicians often make bold predictions about the likely tourism effects. They tend to use these same numbers to convince their taxpayers to fork out the additional costs of new infrastructure. And it makes sense: an event that attracts so much global attention must surely increase its appeal, attracting new audiences and future visitors.

Swings and roundabouts

Yet, as several economists have pointed out, there are many reasons to doubt these predictions.

One thing to keep in mind is displacement: tourists that would normally visit a destination might decide to stay away because of a mega-event, reducing the net number of arrivals. The displacement size might be affected by many things: the season in which the mega-event is held, for example, or the type of mega-event. Bigger events, like the Summer Olympics, are likely to draw more visitors than the Basketball World Cup.

Sometimes the size of the tourism bonanza is even as bizarre as which countries qualify for the event. In a 2017 paper, we showed that Thierry Henry’s handball in a qualification game between France and the Republic of Ireland for the 2010 FIFA World Cup, which allowed France to qualify for the finals, brought almost 30,000 additional tourists to South Africa, creating more than 6000 additional jobs.

This is because France is a much larger country than Ireland, with far more tourists visiting South Africa – despite France’s dismal performance – than the number of Irish tourists that would have come had Ireland qualified.

Just how much mega-sport events actually boost tourism is a question we first attempted to answer more than a decade ago. Our first paper published in 2011 showed that hosting an event such as the FIFA World Cup or the Olympic Games increased tourism by about 8%, on average. Although the average was sizeable, it masked some variation across the different events we studied: the Summer Olympics had big effects, the Rugby World Cup, not so much.

We recently published a follow-up paper. We updated our time series (now covering all tourist arrivals from 1995 to 2019); we added a wider selection of mega-sport events (from six to eleven); and we incorporated new techniques to estimate the gravity model. We also tested a wider range of hypotheses.

The findings

After our updated analysis, we are even more skeptical of the large tourism effect of mega-sport events. While we still find a large and positive effect on hosting the Summer Olympic Games – a sizeable 18.2% – most other events reveal zero or even negative change.

Hosting the Cricket World Cup, for example, reduces the number of tourist arrivals. This is partly explained by the fact that it happens in the peak tourist season and is often hosted by rich countries. The displacement effect is larger than the number of new visitors.

Perhaps, some might say, the main benefit of hosting an event is that tourism numbers increase in the years after an event – not necessarily during the event itself. We tested this and found a very small legacy effect. In fact, we find a larger anticipatory effect: host countries tended to welcome additional tourists a year or two before hosting an event.

This suggests that an important part of hosting a mega-sport event is signalling the country’s openness to tourists, but also to investors and the broader international community.

It is important to keep in mind that our analysis is not a cost-benefit analysis. To properly evaluate the economic benefits of hosting a sport event – of which tourism is one – the benefits must be weighed against the costs, such as building new stadiums or transportation networks.

But given how important tourism is in justifying a new bid, we believe it is valuable to ask whether these hopeful promises are ever fulfilled.

A final finding also has implications for future bids. We found that developing countries see larger increases in tourism than developed countries. The next three Summer Olympic Games will be held in France, the US, and Australia. Qatar and a joint effort by the US, Canada, and Mexico will host the next two FIFA World Cups.

Of the seven host countries for the five largest sporting events, only one is a developing country. We conclude:

If this trend continues, the returns we have measured above are unlikely to be repeated for future mega-sport events. That would imply that the era of hosting mega-sport events because they increase tourism is over.

All is not lost, though. Several developing countries are bidding to host the 2030 FIFA World Cup. These include Morocco, a joint bid from Uruguay, Argentina, Chile, and Paraguay, and an inter-confederation bid from Egypt, Greece, and Saudi Arabia. If boosting tourism is indeed one of the main priorities of host countries, then one of these bids is most likely to increase tourist arrivals, even without a Winter Wonderland.

by : Johan Fourie, Professor, Department of Economics, Stellenbosch University

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