One way in which the economic cost of hosting major sporting events is justified is that it will produce a significant stimulus to the tourist industry. Already the South African government has been making claims about the influx of visitors.
A couple of days after the final The South African Home Affairs Minister Nkosazana Dlamini-Zuma told the press that “1.4 million persons had entered the country” during the World Cup (http://www.afrol.com/articles/36514). Given that the consultancy firm Grant Thornton had downgraded their forecast before the tournament to only 373,000, this sounds pretty impressive, doesn’t it?
Well, that depends. First, it’s impressive that the government can produce a figure within two days of the event finishing. This is thanks to the charmingly named “Movement Control System” they have recently installed at all the nation’s main entry points which also enabled them to keep 188 undesirables out. So now they have all the numbers on computer, they can give an instant tally. South Africa is pretty good at collecting visitor numbers, and issues two documents online providing a monthly breakdown of arrivals (the Tourism and Migration Report http://www.statssa.gov.za/publications/statspastfuture.asp?PPN=P0351&SCH=4699) and their port of origin (Table A, Total Tourists http://www.southafrica.net/sat/content/en/za/research-search), going back a few years.
The Tourism and Migration report shows that in June 2009, 1,033,420 persons entered the country and July 2009 1,326,609 persons entered the country (this is the sum of foreign arrivals and arrivals of SA residents). Counting only 11/31 of the July figures, this means that total arrivals for the equivalent period of the previous year were was 1,504,152- i.e. a higher figure than announced for the World Cup. So if we take the minister at his precise words (“persons had entered the country”) it would appear that there was a fall of about 100,000 compared to the previous year.
If we ignore the exact wording and assume that the minister had excluded arrivals of South African residents then the equivalent figure for the previous year was 1,030, 831 (i.e. foreigners entering the country allowing 11/31 of the July figure). This is a respectable increase of 35%, or about 370,000 visitors –almost exactly Grant Thornton’s figure.
Whatever the case, the minister had earlier confirmed that most these foreign visitors came from SADC, the neighbouring African states (http://www.timeslive.co.za/local/article515605.ece/Few-taker) and the article suggests a figure of about 80%, in line with the usual pattern. Most of these people will have come for same reasons they came in 2009 (and 2008, 2007…) – to work and visit relatives. Even if they were going to the football, they were unlikely to be spending on the same scale as Americans, Germans, Brits. So, even allowing a generous interpretation of the minister’s statement, there were likely fewer than 100,000 high spending World Cup visitors.
We probably won’t know exactly what the minister meant until the statistics are published. The June figures should be published around the end of September and the July figures at the end of October.
This seems to be a case where it’s better to be roughly right than precisely wrong. The roughly right take is that they can jiggle the figures around all they want but SA lost money on the World Cup..the servicing of stadia debt..the ongoing high maintenance costs of these structures..the security and policing expenses..on and on.
Top those aspects off with the strong possibility that low impact, higher spending tourists that usually come stayed away and your left with the aftermath of a soccer headache. Of course, it provided a critical venue for Bill Clinton and Mick Jagger to schmooz and act important..my bad.
Stefan,
Nice post.
There are at least two issues that are not addressed in the statistics. First, it would be interesting to know how much of the influx was time shifting, changing timing of trips from summer to winter, for example.
Second, how many South Africans decided to avoid the World Cup crowds by fleeing the country for all or part of the event period?
Bottom line, there may be no net increase in visitors.
Dennis..FEW South Africans have a choice of “fleeing” the country..What does “time shifting” have to do with anything??? The “bottom line” is that these events are political scams…the countries that fall for them are clueless! No money…no payoff down the road..LOTS OF PHOTO OPS OR THOSE NOT PAYING THE FREIGHT…..
Greg,
To really know the impact of the event on tourism one has to know not just the arrivals but both the departures and the number of arrivals that would have occurred anyway.
The poverty in South Africa limits the ability of much of the population to go out of country, but there still are people with the wealth to travel out of country. If some of them did so, then the 100,000 high spending visitors has to be offset a bit by the few hundred or few thousand high spending South Africans that traveled abroad during the World Cup.
How many of the 100,000 high spending World Cup visitors planned to visit South Africa during summer but altered their travel plans to be there for the World Cup? Every one that did that means that the 100,000 figure over states the actual impact of the World Cup.
I am hopelessly naive I suppose because I think evidence and logic will eventually rule the day by informing the “clueless” of the nature of the scam so they don’t fall for it any more. Unfortunately, by your implied definition, every country is clueless, so those of us trying to educate have our hands full.
I know that the presumption is that the event does not help the local economy much and we can see that not that many additional people entered the country during the event. However, I was curious if there is any data on increased rents from assets owned by companies and individuals during the world cup in South Africa.
I would expect to find that prices for food, hotel, transportation, and probably some other categories to be higher than the year previously. Is the amount significant? Or did all of the money just go to multi-national companies that funnel the money back to the countries that people came from.
Before we could really say we understand the full impact of the event we need to know more than the change in volume.
-Jon
hi Jon
Higher prices would not in fact be an economic benefit to the economy- just a redistribution of resources (for every seller making a bigger profit there’s a buyer who is out of pocket). In the worst case scenario a small influx of foreign tourists causes SA businesses to put up prices for everyone so that there is a redistribution of wealth from the poor to the rich. It is real business activity that contributes to GDP; I have not seen any stats, but a lot of the anecdotal evidence suggested that business was not exactly booming. Certainly previous World Cups did not show up strongly in the business activity stats.