The power of celebrities and the importance of entrepreneurs who put on events such as the Taylor Swift concerts, have been put on show with the impact on the demand for hotel rooms rising to levels not seen since the Sydney Olympics in the year 2000.
The SMH’s property expert Carolyn Cummins reports that the impact of Ms Swift has “…tripled the number of visitors to Melbourne during the traditional Melbourne Cup carnival and AFL grand final seasons.”
Add the Sydney Mardi Gras and the upcoming SailGP and hoteliers expect occupancy records to be well and truly broken. And then there’s The Pink and Blink-182 concerts, which are icing on the cake for the hospitality sector.
Accommodation Australia chief executive Michael Johnson put Swift’s economic impact into real numbers with this: “Based on past calculations, her shows can inject between $150 and $200 million to a state’s economy, just as we saw in Melbourne.”
Johnson said the decision by the hotel chains to increase capacity after two years of closure from the global pandemic had proved the right one.
And while the economic growth effect is positive, Taylor Swift could mean inflation might not fall as fast as home loan rate sufferers would have liked.
“With fans travelling internationally and interstate to see the pop princess, rooms across Sydney for the weekend have skyrocketed as much as 300 per cent compared to the average Sydney room rate achieved last February of $287 per night,” Ray White’s head of research, Vanessa Rader, revealed.
Rader told Cummins that “…CBD hotel rates in Melbourne jumped from an average $220 a night average recorded last February to as high as $900 a night and above in the past few weeks,” which is inflation with a capital I!
But it mightn’t be all bad news, with anecdotal signs that the mortgage cliff is really kicking in for the normal economic world outside of Swiftmania.
In two days, I’ve learnt the following from businesspeople in the real world.
First, my sandwich seller in the Wintergarden in Spring Street here in Sydney said that he advertised for staff before Christmas and received only three applications, but his ad two weeks ago brought 80!
Second, he said some staff who’ve worked for years with him, who he gives pay increases to every two or three years, have asked for a pay review for the first time ever!
Third, one of the best and most sought after flower businesses in Sydney has seen the demand for weddings drop from 50 a year to 10!
Fourth, that flower seller did say that people are buying flowers as gifts to take to people’s homes, who are putting on dinners because they’re finding they can’t afford restaurants.
Thirteen rate rises and the big ‘cliff’ created when borrowers switched from low fixed rate home loans to high variable rate loans is now having a bigger-than-expected effect.
Those with loans are squeezed and are saving money, which will slow down the economy and add to unemployment. Taylor Swift and other star-driven events will soften the blow of a contracting economy thanks to rate rises, and the only good thing about all this is that it could speed up the Reserve Bank’s inevitable decision to cut interest rates.
Given what I’m seeing in the real world economy, I hope the RBA cuts swiftly!