Lifestyle

Are Taylor Swift and Beyonce saving local economies? – DW – 09/01/2023


For lovers of big music concerts, 2023 has been a renaissance year. After the pandemic put the squeeze on large events for the better part of three years, a host of megastars have embarked on world tours.

Beyonce, Bruce Springsteen, Madonna and Taylor Swift are among a range of performers selling out stadiums and arenas around the world for the first time in years.

As well as bringing joy to their fans, however, the tours have led to massive spikes in prices for accommodation, transportation and various kinds of hospitality in cities at and around the time of the concerts. That’s not to mention the soaring costs of the actual tickets.

Some examples have been egregious. When it was announced that Swift would perform in the Irish capital, Dublin, in June 2024, one hotel inexplicably canceled bookings made by fans in the immediate aftermath of the announcement, before rooms became available again hours later at dramatically increased prices.

US singer-songwriter Taylor Swift performs onstage on the first night of her "Eras Tour" at AT&T Stadium in Arlington, Texas, on March 31, 2023
Taylor Swift’s concerts have led to massive spikes in prices for accommodation, transportation and various kinds of hospitalityImage: SUZANNE CORDEIRO/AFP/Getty Images

Similar price hikes have been reported in other cities. When Beyonce performed in Sweden earlier this year, hotel prices surged and Michael Grahn of Danske Bank said a hike in the country’s consumer price index that month was likely down to the American superstar.

Smaller economy, bigger impact

It was a striking suggestion. But can such events seriously impact overall inflation figures in any meaningful sense?

Yes and no, said Tony Yates, a macroeconomist who previously worked at the Bank of England. “They can certainly cause a significant increase in demand for local hospitality, and push up prices of those services, but only in very small countries will this be enough to register in the aggregate inflation rate,” he told DW.

Official measurements of inflation typically involve comparing prices of a range of goods and services over a period of time. Yates said hotel prices would typically be included if they form a large enough part of the average spending pattern.

However, he said it’s also important to consider that spending on events such as concerts means people are diverting spending from other areas in the local economy, unless they come from abroad specifically for the event. So overall spending locally may not increase by much, as price rises in some areas will be offset by falls where demand has dropped.

Yates said that the bigger the economy, the less impact the spending diversion would have on inflation. “In an economy of tens of millions, 100k people switching spending from one thing to another for a while is not a big deal.”

‘Nice narrative,’ but not necessarily true

Andrew Goodwin, chief UK economist with Oxford Economics, is skeptical about the extent to which these events can influence overall inflation figures.

“It’s a nice narrative, but one that is hard to stand up when looking at the data,” he told DW.

Fans react as New Zealand band Six60 perform at Eden Park in Auckland, New Zealand in April, 2021 in what was billed as the biggest live act in the world since the coronavirus pandemic
Many music fans have been extra keen to go to concerts since the pandemic endedImage: David Rowland/AP Photo/picture alliance

Goodwin said that in the UK, a major live music destination, concert tickets are included as part of cultural services. That accounts for around 2% of the overall inflation basket but it has been growing at a slower pace than overall UK inflation.

“So essentially it’s a very small category with a below-average inflation rate,” he said.

However, he conceded that associated price hikes in hospitality are harder to measure and that they could have an impact if a concert happened to coincide with the day that inflation data was collected. “But you would then expect it to quickly reverse the following month,” he added.

Play it again, Taylor

High prices are certainly not putting off concertgoers. Tickets for the slew of big-time concerts announced this year and next have sold in record numbers in several countries.

Average ticket prices for concerts have increased sharply. Data from UK financial services firm Barclays found that consumer spending on the entertainment sector rose by 15.8% in July, compared with one year earlier.

Yates said some of this can be explained by the fact that there has been a surge on hospitality spending since lockdowns first ended, as people have been keen to spend money on activities they could not engage in during the pandemic.

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Ticket prices for artists such as Beyonce or Swift can cost several hundred dollars, but they don’t seem to dampen fan enthusiasm. Swift’s Eras Tour, which began in March and ends in November 2024, could pull in around $1 billion (€922 million) in revenue, according to some experts, making it the most successful tour of all time.

Singing all the way to the bank

Prices and associated costs are not expected to ease any time soon, even if inflation comes down, some experts have said.

“I think that there’s going to be a lot of resilience in the prices of musical and other cultural events,” Klaus Baader, global chief economist at Societe Generale, told CNBC earlier this year.

He and other experts believe this is all related to the post-pandemic surge in interest in attending such events after years of lockdowns. Concerts on the scale of those offered by the likes of Swift and Beyonce have become enduring cultural phenomena.

It’s not all financially-sapping news from a consumer point of view either. Evidence suggests that big concerts can have significant benefits for a local economy. One study by the US-based Common Sense Institute found that two shows by Swift in the city of Denver contributed around $140 million to Colorado’s GDP.

That should be music to many ears, fans or otherwise.

Edited by: Ashutosh Pandey

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