For lovers of big music festivals, 2023 has been a renaissance year. After major events were put on hold for most of three years due to the pandemic, several mega stars have embarked on a world tour.
Beyoncé, Bruce Springsteen, Madonna and Taylor Swift are among artists to perform in stadiums and arenas around the world for the first time in years.
However, as well as bringing joy to its fans, the tour has also led to steep increases in the prices of accommodation, transportation and various types of hospitality in and around the cities around the time of the concerts. This is not to mention the rising prices of actual tickets.
Some instances have been extremely serious. When it was announced that Swift would perform in the Irish capital Dublin in June 2024, a hotel inexplicably canceled fan bookings shortly after the announcement, before rooms were sold again hours later at dramatically increased prices. Available from
Similar price hikes have been reported in other cities as well. When Beyoncé performed in Sweden earlier this year, hotel prices soared and Danske Bank’s Michael Grahn said the American superstar’s chances of an appearance were dampened by a rise in the country’s consumer price index that month.
Taylor Swift’s concerts have led to steep increases in the prices of accommodation, transportation and various types of hospitality. Image: Suzanne Cordeiro/AFP/Getty Images
Small Economy, Big Impact
This was a wonderful suggestion. But can such events seriously impact the overall inflation data in any meaningful sense?
Yes and no, says Tony Yates, a macroeconomist who formerly worked at the Bank of England. “They can certainly significantly increase demand for local hospitality and raise the prices of those services, but only in a very small number of countries will this be enough to register an overall inflation rate,” he told DW.
Official measurements of inflation usually involve comparing the prices of a range of goods and services over a period of time. Yates says that hotel prices will generally be included if they make up a large enough part of the average spending pattern.
However, he says it is also important to consider that spending on events such as concerts means that people are diverting spending from other areas of the local economy, unless they are paying specifically for the event. He doesn’t come from abroad. So there may not be much increase in overall spending locally, as the increase in prices in some areas will be offset by a fall in demand.
They say that the larger the economy, the smaller the effect of spending cuts on inflation. “In an economy of billions, it’s not a big deal for 100,000 people to temporarily shift spending from one thing to another.”
‘Nice story’ but not necessarily true
Andrew Goodwin, chief UK economist at Oxford Economics, is skeptical about the extent to which these events could affect overall inflation figures.
“It’s a good story, but it’s hard to make sense of it when you look at the numbers,” he told DW.
Many music lovers have been extra keen to go to music festivals since the pandemic ended Image: David Rowland/AP Photo/Picture Alliance
He noted that in the UK, a major live music destination, concert tickets are included as part of cultural services. This is around 2% of the overall inflation basket, but is rising at a slower rate than overall UK inflation.
“So basically it’s a very small category with a below-average inflation rate,” he says.
However, he acknowledged that related price increases in hospitality are difficult to measure and could have an impact if a concert occurs on the day the inflation data is collected. “But then you would expect that to change rapidly next month,” he added.
play it again taylor
The high prices certainly aren’t discouraging concert-goers. Many of the big music festivals announced this year and next have sold out in record numbers in many countries.
Average ticket prices for music festivals have risen sharply. Data from UK financial services firm Barclays showed consumer spending on the entertainment sector rose 15.8% in July from a year earlier.
Yates says some of this can be explained by the fact that hospitality spending has increased for the first time since the end of the lockdown, as people are more willing to spend money on activities they may not have been able to do during the pandemic. Could have
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Tickets for artists like Beyonce or Swift can cost several hundred dollars, but that doesn’t dampen the enthusiasm of fans. According to some experts, Swift’s Eraze Tour, which began in March this year and will end in November 2024, could generate nearly $1 billion (€922 million) in revenue, making it her most successful tour ever .
sang all the way to the bank
Some experts say prices and related costs are not expected to come down anytime soon, even if inflation eases.
“I think there’s going to be a lot of flexibility in the prices of concerts and other cultural events,” Claus Baader, Societe Generale’s global chief economist, told CNBC earlier this year.
He and other experts believe all of this is related to an increase in interest in participating in such programs after years of lockdown following the pandemic. Concerts performed by people such as Swift and Beyoncé have become enduring cultural phenomena.
It’s not all financially damaging news from a consumer perspective, either. Evidence suggests that large music festivals can have significant benefits to the local economy. A study by the US-based Common Sense Institute found that Swift’s two shows in the city of Denver contributed about $140 million to Colorado’s GDP.
That will be music to many people, fans or otherwise.
Editing: Ashutosh Pandey
Source: www.dw.com
