Report Suggests Las Vegas Inflated Benefits of Hosting the F1 Grand Prix

Article by : Erik Gibbs Apr 16, 2024

• 
• 

Las Vegas experienced a surge in both hotel room occupancy and rates during the excitement of Super Bowl week. However, in the aftermath, there was a notable decline in both occupancy rates and room prices, reflecting a temporary downturn in the city’s hospitality sector.

Conversely, leading up to the Las Vegas Grand Prix weekend, there was a decrease in hotel occupancy in the days preceding the race.

Despite this trend, there was a modest uptick in occupancy noted on Saturday, suggesting a potential shift in visitor interest coinciding with the event. Berry College Professor of Economics, Frank Stephenson, conducted a thorough analysis of these fluctuations, shedding light on the intricate dynamics at play within Las Vegas’ hospitality industry.

Meanwhile, Jeremy Aguero, representing Las Vegas-based Applied Analysis, presented findings to the Las Vegas Convention and Visitors Authority board of directors.

Aguero’s report indicated a significant economic impact from both the Grand Prix and the Super Bowl, with the former boasting a $1.5 billion contribution and the latter making a $1 billion imprint on the city’s economy, as detailed in the Las Vegas Review-Journal.

Aguero’s marketing firm is gathering data to support public subsidies for Las Vegas events and sports projects, such as Allegiant Stadium and the potential Oakland Athletics stadium, which received $380 million in state aid.

Economists criticize this practice, calling it a “cottage industry” that relies on questionable figures to justify funding. Clark County commissioned a report for the Las Vegas Grand Prix, incorporating Aguero’s data, and allocated $40 million to the event.

Stephenson, a researcher, analyzed hotel-related statistics for major sporting events. He noted a 3.5% increase in room rentals during the Super Bowl weekend in Las Vegas, followed by a 6% decrease afterward, which he called a “hangover effect.”

Room rates rose by an average of $300 per night over the weekend, resulting in an estimated $150 million increase in hotel revenue.

Stephenson’s analysis compared outcomes for two major Las Vegas events. Despite a modest rise in hotel rentals during the Super Bowl weekend, revenue surged significantly. Stephenson questioned the widely cited $1 billion impact, highlighting that much of the extra revenue benefits corporate hotel owners rather than the local economy.

Furthermore, data from the Grand Prix depicted a less favorable scenario, with declining occupancy rates leading up to the race, offsetting the revenue gains from high room rates on race day.

Stephenson underscored the lackluster performance preceding the grand prix, suggesting that any event gains were overshadowed by the weak numbers of the preceding week. Currently, he’s conducting a comprehensive analysis of various Las Vegas sporting events, including those at Allegiant Stadium.

Additionally, Stephenson noted a positive increase in occupancy rates the Saturday after the Super Bowl, despite unchanged room rates.

This weekend featured multiple events, including the Rock ‘n’ Roll Las Vegas marathon, a Bad Bunny concert and the start of the International Builders’ Show at the Las Vegas Convention Center.