SINGAPORE July 3 — From Coldplay to Taylor Swift, Singapore will be seeing a slew of headline acts visiting its shores next year.
Amid the frenzy to secure tickets, economists and business experts have told TODAY that while the concerts will bring benefits to the tourism and related sectors, its impact on inflation will be limited.
The National Stadium is set to host British band Coldplay for six shows next January, followed by Taylor Swift for also six shows next March — her only South-east Asian stop. Hong Kong star Jacky Cheung has also sold out tickets to 11 shows at the Indoor Stadium later this month and in August.
At the same time, reports have also emerged worldwide of mega concerts driving prices up, possibly contributing to inflation.
Last month, the chief economist in Sweden for Denmark’s Danske Bank, Mr Michael Grahn, attributed the lower-than-expected drop in Sweden’s inflation figures to fans driving up hotel prices and other costs to watch American pop star Beyonce’s concert in Stockholm in May.
Last November, a Bloomberg report also described the phenomenon of “Swiftonomics”, where demand for American artist Swift’s concerts shows how consumers are willing to spend on what they missed out on during the pandemic, even as a recession looms.
In Singapore, a back-of-the-envelope calculation shows that around S$91 million will be spent on tickets alone for Swift’s concerts over six nights.
This is based on the median price of S$228 (ticket prices range from S$108 to S$348) and on the assumption that some 400,000 people will attend the concerts.
When the Singapore Sports Hub first announced two weeks ago that Swift would be performing here for three nights, it had said that more than 200,000 fans are expected to attend the shows. Three more shows were later added due to “overwhelming response”.
TODAY looks at the economic gains and potential drawbacks that upcoming concerts by headline acts here could bring to Singapore, including their impact on inflation.
A tourism boost
Experts said that the wave of upcoming concerts in Singapore will be a boost to tourism and its related sectors, such as the hospitality, nightlife, and food and beverage (F&B) industries.
Associate Professor Lau Kong Cheen, from the Singapore University of Social Science’s (SUSS) School of Business, said that major concerts in Singapore will draw regional fans here and directly increase revenue for sectors such as hospitality, F&B and retail.
He added that the boost will be good for Singapore’s economy, given that it needs to make up for the economic lull during the Covid-19 pandemic.
He also believes that the presence of big acts will enhance Singapore’s brand image as a city that is exciting and vibrant.
Those working in industries related to tourism will benefit from the pick-up in activity due to the concerts, added Ms Selena Ling, the chief economist and head of Treasury Research and Strategy at OCBC Bank.
Potential economic revenue
However, Assoc Prof Lau will not compare the economic gains brought about by the concerts to Singapore’s premier tourist event, the F1 Grand Prix, as he said that the target segments are not the same.
Since its debut in 2008, the night race in Singapore has generated more than S$1.5 billion in incremental tourism receipts.
Assoc Prof Lau said that the F1 Grand Prix, which takes place in September, brings more economic gain.
This is because its target segment includes corporates and businesses that are willing to spend more than concertgoers. The F1 Grand Prix also draws many other ancillary events such as smaller scale concerts, he said.
Nevertheless, Assoc Prof Lau said that the revenue from the concerts would be “rather significant for Singapore for just a short period of time”.
He estimated that conservatively, the Coldplay concert alone would contribute a revenue of S$96 million to Singapore.
This is based on his assumption that 30 per cent of 200,000 tickets sold for the concert will be to foreign tourists who will stay an average of three days in Singapore and spend S$1,600 over this period, inclusive of lodging.
Data from the Singapore Tourism Board shows that the average spend per visitor to Singapore in 2019 was S$1,448. Assoc Prof Lau said he expects concertgoers to spend more.
Inflation limited to certain areas
The experts said that while inflation is a possible drawback from hosting concerts, its impact is likely to be limited given that concert-related spending is unlikely to drive up demand for goods and services that Singaporeans regularly consume.
On whether inflation could rise due to the concerts, economist Walter Theseira from SUSS said that this would depend on whether expenditures linked to these events lead to an increase in prices for goods and services under the Consumer Price Index (CPI).
The CPI measures the average price changes over time of a fixed basket of consumption goods and services commonly purchased by the resident households here.
“There will be little to no effect on measured inflation if these kinds of expenditures factor very little in Singapore resident spending, such as hotel rooms, to begin with,” he said.
Assoc Prof Lau said that the “unavoidable drawback” of these concerts will be the rise of inflation to products and services that target concertgoers, such as hospitality and F&B, as these are areas where tourists are most willing to splurge on, driving up demand.
“Items pertaining to our daily expenses such as groceries, hawker food and other daily necessities would be less impacted. So, the negative effect of major concerts on Singapore’s inflation should not be a major concern,” he said.
CIMB Private Bank economist Song Seng Wun said that inflationary pressure can occur from the “multiplier effect” of organising concerts.
The effect occurs when a whole pool of people, such as those in the hospitality sector, consume goods and services along the way in relation to the concert. This adds to demand for things like taxi or food, he said.
However, inflationary pressure can only happen if people are willing to spend, he said.
“If it’s just one show, obviously the multiplier effect is smaller. Organising a Jacky Cheung concert in a smaller (capacity) Indoor Stadium has a smaller multiplier effect than (hosting it in the) National Stadium, where you can keep more people,” he said.
Other drawbacks
On the potential drawbacks of the concerts, Ms Ling said that sectors related to hospitality services or event management could face a manpower squeeze if the increase in demand for their services is sudden or unanticipated.
Dr Theseira said that it is hard to determine if the concerts will generate an economic cost if there is no public subsidy involved in hosting them.
“Although people express concerns about pushing up prices, these are not economic costs, because there are no resources that are spent or wasted in the process, although it is a social concern.
“The most likely economic cost just comes from congestion and related disamenities, but this really is very transitory and very localised typically to the concert venue,” he added.
Overall, it is hard to say if big acts coming to Singapore next year will benefit the man on the street, or only be short lived without a comprehensive study on their impact, said Dr Theseira.
He added that their benefit would depend on the extent of local service procurement for such events as well as ancillary spending by attendees related to the events. — TODAY
