Posted on: April 13, 2024, 12:29h.
Last updated on: April 13, 2024, 12:57h.
The marketing firm paid by the Las Vegas Convention and Visitors Authority (LVCVA) exaggerated the benefit to Las Vegas of hosting the first Formula 1 Las Vegas Grand Prix, according to a new report.
On Tuesday, according to the Las Vegas Review-Journal, Applied Analysis reported to the LVCVA’s board of directors that the Las Vegas Grand Prix produced a net economic impact of $1.5 billion on local tourism.
However, according to an independent analysis conducted by Berry College Professor of Economics Frank Stephenson, an expert in hotel profits linked to sporting events, hotel revenue increased only $60-$70 million on race day, and was down the rest of the week.
Stephenson’s numbers were published in The Center Square — a reliable journalism arm of the Chicago-based Franklin News Foundation 501(c)(3).
According to Stephenson, Monday, Tuesday, and Wednesday nights before the race saw occupancy down 20%, while Thursday and Friday were down around 10% year-over-year, and Saturday was up — but only 3% year-over-year, to 80% occupancy.
“The whole week leading up to it, the numbers were really anemic,” Stephenson told The Center Square. “I guess some people showed up for the race itself but whatever modest gains there were, were almost certainly offset by the whole week leading up to it.”
In addition, Stephenson noted, whatever the actual revenue boost to Las Vegas was, “additional hotel revenue heads to the hotel’s corporate owners and does not remain in Las Vegas to be re-spent, as economic impact reports often claim.”
Applied Analysis is a Las Vegas-based marketing firm retained by the LVCVA to review and analyze economic impacts. According to The Center Square, its real job is “to produce numbers for groups looking to push subsidies for Las Vegas events and professional sports” such as Allegiant Stadium, the Grand Prix and a new stadium for the Oakland Athletics on the site of the soon-to-be former Tropicana Las Vegas.
“Economists have pushed back strongly on marketing economic impact reports that are part of a cottage industry used to secure public funding for professional sports stadiums as an attempt to push public funding with false numbers,” The Center Square reported.
Clark County, which pumped $40 million into the race, also produced its own report on the costs and benefits of hosting the F1 event, and it also cited the $1.5 billion figure provided by Applied Analytics.
