Hosting the World Cup brings benefits but not as much as politicians claim

The FIFA World Cup kicked off on November 20, with the opening game Qatar-Netherlands. It will end on December 18, with the final scheduled for the Lusail Iconic Stadium, which has a capacity of 80,000. In the weeks to follow, the world's attention will be on Qatar, the smallest country in terms of area to host the event. Having faced a lot of criticism since winning the bid, it's likely that Qatar want to impress. Expect spectacular.

But Qatar is not only present on every television or mobile phone screen in the world. Over a million tourists are expected to make the trip, providing a much-needed injection into the economy. In fact, Qatar Tourism COO Berthold Trenkel made it clear that Qatar's goal is to impress visitors with much more than football. In recent months, new beaches, theme parks and water sports hotels have opened their doors. And on November 1, the highly anticipated Lusail Winter Wonderland opened, an island full of tourist attractions which, according to its website, offers "the ultimate entertainment and celebration of lifeclass".

But are these forecasts of increased tourist numbers realistic?

Economists have pondered this question for some time. When countries apply to host sporting mega-events such as the FIFA World Cup, their politicians often make bold predictions about the likely effects on tourism. They tend to use those same numbers to convince their taxpayers to pick up the extra costs of new infrastructure. And it makes sense: an event that attracts so much attention from around the world must certainly increase its appeal, attracting new audiences and future visitors.

Benefits and costs
Yet, as several economists have pointed out, there are many reasons to doubt these predictions.

In particular, the notion of travel must be kept in mind: tourists who would normally go to a destination may decide not to go there because of a mega-event, which reduces the net number of arrivals. The magnitude of the move can be affected by many factors: the season in which the mega-event takes place, for example, or the type of mega-event. Big events, like the Summer Olympics, are likely to attract more visitors than the Basketball World Cup.

Sometimes the size of the tourist bonanza is even as bizarre as the countries that qualify for the event. In a 2017 article, we showed that Thierry Henry's handball during a qualifying match between France and the Republic of Ireland for the 2010 FIFA World Cup, which allowed France to qualifying for the finals, brought nearly 30,000 additional tourists to South Africa, creating more than 6,000 additional jobs.

Indeed, France is a much larger country than Ireland, and the number of tourists who have visited South Africa - despite France's poor performance - is far greater than the number of Irish tourists who would have visited if Ireland had qualified.

The question of how much major sporting events actually boost tourism is a question we first attempted to answer over a decade ago. Our first article published in 2011 showed that hosting an event such as the FIFA World Cup or the Olympics increased tourism by around 8%, on average. While this average was large, it masked some variation between the different events we studied: the Summer Olympics had large effects, the Rugby World Cup had less.

We recently published a follow-up article. We have updated our time series (which now covers all tourist arrivals from 1995 to 2019); we added a wider selection of sporting mega-events (from six to eleven); and we have integrated new techniques to estimate the gravity model. We also tested a wider range of hypotheses.

Findings
After our updated analysis, we are even more skeptical about the significant tourism effect of major sporting events. While we still find a large and positive effect on hosting the Summer Olympics – a sizeable 18.2% – most other events show zero or even negative change.

Hosting the Cricket World Cup, for example, reduces the number of tourist arrivals. This is partly explained by the fact that it takes place during the high tourist season and is often organized by rich countries. The displacement effect is more important than the number of new visitors.

Perhaps, some would say, the main benefit of hosting an event is that tourist numbers increase in the years following the event – ​​and not necessarily during the event itself. We tested this hypothesis and found a very small effect after the event. In fact, we found a stronger anticipation effect: host countries tended to welcome additional tourists a year or two before hosting an event.

This suggests that an important part of hosting a sporting mega-event is signaling the country's openness to tourists, but also to investors and the wider international community.

It is important to keep in mind that our analysis is not a cost-benefit analysis. To properly assess the economic benefits of hosting a sporting event – ​​of which tourism is a part – one must weigh the benefits against the costs, such as the construction of new stadiums or transport networks.

But given the importance of tourism in justifying a new nomination, we think it is worth asking whether these hopeful promises are being kept.

A final conclusion that also has implications for future applications. We have found that developing countries experience a greater increase in tourism than developed countries. The next three Summer Olympics will be held in France, the United States and Australia. After Qatar, the United States, Canada and Mexico will co-host the next FIFA World Cup.

Of the seven host countries of the five biggest sporting events, only one is a developing country. We conclude :

If this trend continues, the returns we measured above are unlikely to be repeated for future sporting mega-events. This would mean that the era of hosting mega sporting events because they increase tourism is over.

All is not lost, however. Several developing countries are candidates to host the 2030 World Cup. These include Morocco, a joint bid from Uruguay, Argentina, Chile and Paraguay, and an inter-confederation bid from Egypt, Greece and Saudi Arabia. If boosting tourism is indeed one of the top priorities for host countries, one of these bids has every chance of increasing tourist arrivals, even without a wonderland.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

By Johan Fourie, Professor, Department of Economics, Stellenbosch University And

Maria Santana Gallego, Associate Professor, University of the Illes Balears

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