Hotel Demand before, during, and after Sports Events: Evidence from Charlotte, North Carolina

By Depken, Craig A., II; Stephenson, E. Frank | Economic Inquiry, July 2018 | Go to article overview

Hotel Demand before, during, and after Sports Events: Evidence from Charlotte, North Carolina


Depken, Craig A., II, Stephenson, E. Frank, Economic Inquiry


I. INTRODUCTION

As the academic literature on the economic impact of sports or other events is vast, it is worth calling immediate attention to this paper's contributions. This paper is the first to use daily hotel occupancy data over a long period to investigate the net impacts of political and sporting events on hotel demand, room prices, and total daily hotel room revenue in a large city in the United States. High-frequency data allow for granular estimates of visitor inflows net of any crowding out or displacement effects (Porter 1999).

While the use of high-frequency hotel occupancy data improves upon existing research in several ways, a notable limitation is that hotel occupancy data alone cannot capture any economic impact of visitor spending on food and drink, souvenirs, and other nonhotel goods and services. Such activities might be better captured using sales tax data as the measure of economic activity generated by sports (e.g., Coates and Depken II 2011).

The data facilitate a test of the long-touted but untested claim that major political and sporting events spur tourism spending before and after the event as visitors arrive days before or stay several days after the event. We test whether there are statistically significant impacts on hotel demand, hotel prices, and hotel revenue, during the days leading up to or following the events included in our analysis. This provides insight into the economic effects of sports events and any external benefits or external costs they may generate.

We distinguish between hotels that are close to the Charlotte venues, those that are at an intermediate distance from the Charlotte venues, and those that are at some distance from the Charlotte venues although still within the Charlotte metro area. This last point has economic importance because the metro area's core county has a hotel occupancy tax that is dedicated to debt service associated with a football stadium, a basketball arena, and a sports hall of fame, all in the city of Charlotte. However, many hotels in neighboring counties are within driving distance of the various venues and are not subject to the hotel occupancy tax being used to fund the facilities. Therefore, the geospatial distribution of hotel registrations and revenue for various events can influence tax collections in the various counties of the metro area and therefore the ability to service the debt incurred to build and renovate venues in the metro area.

To preview our empirical results, we find the impacts of various sporting and political events differ in terms of magnitude, geospatial distribution, and temporal distribution of hotel registrations, prices, and revenues. The claims that many events draw tourists for multiple days before and after the event are generally not supported; most events draw, at most, a statistically significant, if not overly large number of people, on the day before or after the event. Only large, multiple-day events such as a national political convention or a multiday National Association for Stock Car Auto Racing (NASCAR) event appear to generate significant net increases in hotel rentals in days before and after the event.

II. LITERATURE REVIEW

Studying variations in and factors affecting hotel occupancy is not new. Papers such as Andrew, Cranage, and Lee (1990), Jeffrey and Hubbard (1994), and Jeffrey et al. (2002) are among many examining determinants of hotel occupancy. However, little attention has been paid to analyzing the interaction between hotel room rentals and sporting events, facilities, and franchises. Lavoie and Rodriguez (2005) use monthly hotel occupancy data from eight Canadian cities in the 1990s to study the effects of the 1994-1995 National Hockey League (NHL) lockout. Also included in their analysis are several events which affected some but not all of the eight cities in their study: the 1994 baseball players strike, the 1998 National Basketball Association (NBA) lockout, and the departure or arrival of several NHL and NBA franchises. …

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