Friday, September 19, 2008

City's Image Will Be The Big F1 Winner

Source : The Straits Times, Sep 19, 2008

But don't expect night race to immediately boost the economy, caution experts

OVER the next week or so, the hype over the world's first Formula One night race will build to a crescendo, but what, exactly does the event do for Singapore?

Plenty, say the experts.

But, they caution, those who are expecting the tills to ring or for the slowing economy to get a jab in the arm are setting themselves up for disappointment.

View of the F1 race circuit from the 65th level of Swissotel The Stamford. The iconic race will put the Republic in the global spotlight and boost its efforts to be Asia's events hub. -- PHOTO: TERENCE TAN

The Singapore F1 race costs about $150 million to put together, and is expected to attract 40,000 tourists, generate $100 million and attract a global TV audience of 500 million.

But, as CIMB-GK economist Song Seng Wun put it, 'a weekend of some fancy pharmaceutical output from Tuas may have a bigger impact on economic growth than an F1 weekend'.

'I doubt a weekend of 'happening' beautiful people in Zouk, St James or 100 per cent hotel occupancy will do anything more than contribute, at best, two decimal places to Singapore GDP (gross domestic product) growth this year.'

He is not alone.

Several economists and analysts are not too optimistic over F1's immediate value to the Singapore economy.

Standard Chartered Bank economist Alvin Liew feels the initial estimates are likely to be pared lower now, due to the 'depressing' global economic outlook.

HSBC economist Robert Prior-Wandesforde added: 'The macroeconomic impact is generally much smaller than most people expect.'

They are to quick to add, however, that though the dollars and cents impact of F1 is limited, its intangible benefits are priceless. Just as last month's Beijing Olympics was hailed as China's coming-out party, media consultants and industry experts say F1 will boost Singapore's image as Asia's world-class events capital.

'This race should be the catalyst in changing Singapore's efficient but dull image, in a grander and more appealing way than lifting the ban on bar-top dancing did,' said Ms Goh Shu Fen, principal of advertising industry consulting firm R3.

Added Singapore Tourism Board (STB) communications director Muhamad Rostam Umar: 'This iconic event will help to put us firmly in the global spotlight...the buzz will boost Singapore's efforts to be the entertainment and events capital of Asia.'

Media experts estimate the public relations value of the F1 race to Singapore, including the two to three hours of live TV air-time, could be worth as much as US$300 million (S$430 million).

Having the country squarely in the media spotlight will add a whole lot more.

The race coverage will 'place the city in the consciousness of millions of international TV viewers', explained media consultant Pieter Aquilia.

She added: 'Footage will be featured on news and sports programmes and Singapore will be seen by, heard of, and read about by an even larger audience.'

This will help to draw in more tourists, conferences, and sporting and business activities in the long haul, analysts note.

It could also make Singapore the Monaco of Asia - a second home for the rich and famous. Economists say some among the super-wealthy set who will be here for the race might wind up liking what they see of Singapore and set up a second home here.

The huge publicity blitz the event generates may also get the attention of foreign talent and spark a move here.

Though these intangibles are the key benefits of F1, it does not mean businesses do not stand to gain anything over the next few days. The Melbourne Grand Prix, for example, has brought in over A$1 billion (S$1.1 billion) in economic benefits for Victoria since 1996.

And while the US city of Indianapolis staged an F1 race for just a few short years from 2000 to last year, the event's economic impact has been measured at close to US$1 billion by the Indianapolis Convention & Visitors Association.

Operators of food and beverage (F&B) outlets and tourist attractions, especially those located within or near the circuit, are licking their lips in anticipation of bigger takings.

Singapore Flyer general manager Steven Yeo said: 'We expect 30 per cent more tourists than usual during F1 weekend. F&B spending should go up significantly for our tenants, as we foresee a higher spending crowd coming in.'

Over at Central, next to the Singapore River, the hope is that STB's projection of 60,000 visitors - 20 per cent more than usual - to the area during the period will come to pass.

Some bars and restaurants are expecting up a boost of up to 50 per cent more business on Grand Prix weekend.

Mr Michael Ma, owner of the IndoChine Group of nightlife establishments, said: 'There'll certainly be a jump in business, of at least 30 per cent, in the period leading up to F1 race and on race days.'

St James Power Station's chief executive Dennis Foo estimated that F1 fever will generate an 'eight-figure sum' worth of business for the local nightlife industry for the week.

He added: 'The amount of activities in store is unprecedented for any one period outside of the Christmas and New year season.'

Other businesses will also gain.

Said StanChart's Mr Liew: 'The trickle-down impact on supporting industries (such as horticulture, logistics and transport, for example) would provide welcome relief in the present time of slowing activity.'

It is not all rosy, however. Some fear that the disruptions caused by road closures and such could exact a high price.

With the memory of the business bust during the International Monetary Fund/World Bank meetings seared into their consciousness - road closures and tight security limited access to the Marina Square area, and Singaporeans and visitors stayed away in droves - some retailers are more than a little worried.

Said one, who declined to be named: 'Some of us are secretly preparing for the worst.'

Many others, however, are more optimistic, and they are rolling out all means to attract shoppers.

Discounts, shuttle buses, even go-kart races are part of their battle plan.

Whether these will work remains to be seen.

One thing is clear, however, say analysts. Singapore's image will be the hands-down winner once the dust has settled. Said CIMB-GK's Mr Song: 'The $150 million's a small price to pay to put Singapore in the global spotlight for a weekend.'

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