Friday, January 26, 2007

Super Bowl in Miami May Draw Record $195 Million in Spending

South Florida businesses can expect to see a record amount of spending by the National Football League (NFL), businesses, visitors, and the media on area lodging, transportation, food and beverage, entertainment, business services, and other hospitality activities according to PricewaterhouseCoopers (PwC). PwC estimates that Super Bowl XLI will generate approximately $195 million in direct spending for Miami-Dade, Broward, and Palm Beach counties. This excludes the so-called “multiplier effect,” which past studies have suggested can up to double the direct dollars by accounting for "indirect" impacts, such as a concession company's purchase of goods from local producers and manufacturers, and "induced" impacts which occur when the income levels of residents rise as a result of increased economic activity and a portion of the increased income is re-spent within the local economy.

The Super Bowl continues to act as a significant generator of economic activity for its host communities. Over the past 10 years, the game itself and a variety of additional special events and related activities (including approximately six months of pre-game planning) have generated $1.5 billion in local spending.

The following graphic illustrates the direct spending associated with the event, dating back to the 1998 Super Bowl XXXII in San Diego. Unlike Houston, Jacksonville and Detroit, which experienced declining direct spending due primarily to lower hotel room rates and/or limited room supply as well as a shorter overall length-of-stay per visitor, South Florida's appeal as a destination and established hotel market is expected to contribute to a rebound in direct spending.This year's event is estimated to generate a level of spending more consistent with prior Super Bowls in San Diego, Tampa, New Orleans, and the region's last game in 1999.

"The success of Miami and the entire South Florida region in realizing a greater level of economic impact from the Super Bowl reflects several factors including the attraction of South Florida as a destination, the diversity of venues available for hospitality and special events, and the higher cost of hotel rooms and other goods and services,” said Robert Canton, a director in PricewaterhouseCoopers’ Advisory practice focused on sports, conventions, and tourism. "Although any destination will experience a significant increase in local economic activity associated with hosting a Super Bowl, tourist destinations like Miami, San Diego, Phoenix, and New Orleans provide a unique atmosphere that is conducive to a comparatively higher level of spending and extended lengths of stay."

While some analysts have suggested that a "let-down" following the event can have a negative impact on a region's hotel performance in the week following the game, research conducted by PwC in markets that have hosted the past six Super Bowls indicates this is not typical. According to Mr. Canton: "We evaluated hotel occupancy and rates in the five weeks surrounding the game and found that the two-week period following the Super Bowl performed equally well or better than the two-week period prior to the week of the game."

According to PwC, while tourist destinations such as Miami generate higher impacts than non-tourist destinations, others including Detroit last year also realize significant impacts from the Super Bowl and invest heavily to attract the game.

“While few events measure up to magnitude of the Super Bowl, Indianapolis has a great history of hosting major sporting events, including Final Fours and the annual Indianapolis 500, and with its new Lucas Oil Stadium, expanded Convention Center, and visitor-friendly downtown, it should have a real opportunity to compete for the Super Bowl event in 2011” explains Mr. Canton. “To successfully attract the Super Bowl, a destination must not only be capable of providing the venues, hotel rooms, transportation, and entertainment environment, but must also be willing to invest millions of dollars on items including public health and safety, hosting special events, recruiting and training volunteers, clean-up, and other items. Indianapolis has a history of strong commitment by its leaders to create and sustain a tourism environment based largely on major sporting events and conventions.”

If Indianapolis is successful in securing the event in 2011, an analysis of the potential economic impact of the Super Bowl indicates that the region would attract approximately 98,000 visitors and experience direct spending of approximately $131 million. Assuming the "multiplier effect" from past studies, this would result in a total economic impact to the region of up to approximately $262 million.

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