The Taylor Swift Economy: A record-setting tour's hospitality impact

At Lighthouse, we’ve recently explored the impact of major sporting and cultural events on hospitality markets, but one event that has really stood out this year is Taylor Swift's Eras Tour.

The tour, an impressive lineup of over 130 concerts, has already claimed the title of 2023’s top-earning musical tour. Astonishingly, this feat was accomplished before the tour even hit its halfway mark or ventured beyond U.S. boundaries. If the present ticket sales momentum continues, the Eras Tour is on track to shatter records, potentially becoming the first tour to amass over a billion dollars in revenue.

But Swift's tour doesn't just resonate on the music charts. Its ripples extend to the hospitality and hotel industry as well.

The tour’s focus on multi-date, arena-filling stops that hit major destinations over weekends is moving accommodation markets in even globally significant cities with deep pools of inventory.

Our analysis has unearthed an unmatched phenomenon: the Taylor Swift effect. Let's peel back the layers to fully comprehend how this ripple effect plays out on the ground.

The Eras tour and its impact on hotel demand to date

As of July 2023, the Era's tour had crisscrossed the US but had yet to leave the country. Its impact, however, is already evident in the numbers.

At first glance, its effect on the hospitality industry might seem slight, with only incremental price growth year-over-year (YoY) in the months when Swift's tour graces the cities, and rates often marginally higher than the preceding month.

But a closer look reveals a substantial impact, underlining the enormous influence of this singular artist.

Despite a lull in the U.S. travel market following a boom in 2022, the Eras Tour is playing a supportive role in local markets, staving off potential price erosion in most locations.

Upon aggregating data from 13 tour stops to date, we find an interesting pattern in average price changes in the months preceding, during, and after the concerts. Prices see an uptick of 7.7% YoY in the month prior, and a slight reduction to +7.2% during the tour. However, in the post-tour month, prices dip 4% below 2022 levels.

It's important to remember that these are substantial U.S. markets, and generally, Swift's appearances only span two or three consecutive nights at a single location within an entire month.

The fact that a single music tour can significantly influence average pricing in major U.S. cities for an entire month underscores the magnitude of this tour and its far-reaching implications for the hotel industry.

Minneapolis serves as a prime example of this overarching impact. Hotel prices in the city remained largely stable throughout 2022, before experiencing a sharp surge of 80% from May to their zenith during the tour dates in June 2023. Meanwhile, short-term rentals saw a 37% hike during the same period. Post-tour, prices promptly reverted to their long-term average trends for the year, marking a sharp descent from their prior high.

The Taylor Swift effect: Los Angeles and Mexico City

Looking ahead, the tour’s momentum is only growing. Let’s now take two of the remaining tour dates in 2023 in a pair of mega-cities: LA and Mexico City.

These urban behemoths, with thousands of accommodation options, are witnessing a clear boost which can be linked to the arrival of Swift.

We can track the changing demand patterns back to key announcements about the Eras Tour. For example, when we look at searches for Mexico City hotels, there is a clear spike in the weeks surrounding the ticket presales. 

Ticket presales opened on June 13th. In the week before and week of this key date, hotel OTA and metasearch volume shot up 2.5 times the number of searches made at the start of 2023.

The intense interest has manifested itself into demand that continues to build as her concert dates approach.

In both cities, rates see a notable surge coinciding with the tour dates, and this upward trajectory continues unabated.

Taking Los Angeles as an example, rooms at the height of demand—on Saturday, August 5th—are priced on average $70 higher than the same day the previous week. Hoteliers have responded to the growing demand by raising their rates 17% higher than where they stood a mere 30 days prior, as of the extraction date.

Figures for Mexico City show properties being even more aggressive with their pricing as demand strengthens, with prices 57% higher than a month ago.

It doesn’t take much to guess where the weekend of the shows falls when we look at occupancy either. There is a clear spike where the reservations exceed the overall booking curve, with peak On-The-Books (OTB) occupancy in LA on the Saturday of the concerts 12% higher than the preceding weekend and 19% above the following weekend for hotels in our database.

Taylor Swift and hotel demand growth in 2024

It may be in 2024 that we witness some of the most pronounced positive aberrations attributable to the tour. Following her North and South American tour dates, Swift will take her performance to the Asia-Pacific region and subsequently Europe.

This will mean the fanbases of highly populated countries or even groups of countries may only have one or two shots to catch the set, potentially creating an even more fevered demand picture.

Using our proprietary hotel demand predictor, we observe that in every one of the opening six locations in Asia-Pacific and Europe, there is elevated demand when the tour is in town. These opening locations are as follows:

• Tokyo: Feb 7-10

• Melbourne: Feb 16-18

• Sydney: Feb 23-26

• Singapore: Mar 2-8

• Paris: May 9-12

• Stockholm: May 17-19

These forward-looking demand signals range from absolutely exceptional in the case of Melbourne and Stockholm to slight, but still apparent, in the case of Paris. In every case there is some uplift, however and indicates that there will be a continuation of the 'Taylor Swift Effect' in 2024 destinations.

The stark peaks in demand in Melbourne and Stockholm compared to the less significant ones in Tokyo and Paris are likely associated with these cities' relative sizes and inventory in contrast to the generated demand.

With Stockholm and Melbourne boasting fewer than 400 hotels, Paris has at least quadruple that number, and an even higher multiple of available rooms.

It's also worth noting that these dates are well beyond the typical travel-looking-to-booking funnel. Hence, even minor demand signals carry significance.

Hoteliers should take note of this and adopt assertive pricing strategies, even if actual bookings have yet to materialize.

For instance, current price listings for hotel rooms in Singapore during the tour dates show a slight elevation on most days. However, this likely overlooks potential revenue, as flight searches for the same period have already skyrocketed and concert tickets sold out rapidly with a million users queuing online.

While definite reservations may not have yet emerged, hotels should be looking at a wider suite of intelligence than just the booking curve to identify opportunities at times like this.

Hotel demand surges for the Australian leg of the Era's tour

It is worth contrasting Singapore to Swift's Australian tour dates and destinations, where every demand signal is flashing red hot, and inventory is already at a premium.

In both Melbourne and Sydney, the majority of inventory is already booked in these cities, with OTB reservations sitting at 71% and 63% of hotel inventory at their respective peaks.

This is driving advertised prices to double in Melbourne from prior Saturdays and adding more than USD$100 onto the average room rate in Sydney.

Perhaps the lesson for hoteliers is to follow in the footsteps of Stockholm’s establishments, where forward pricing is extremely aggressive even though this is the destination with the furthest out tour dates that we are looking at in this piece.

While advertised room rates typically sit around USD$250 for a Saturday night stay in the city, that changes in the week preceding, during and after to USD$420, USD$583 and USD$458, respectively.

The European leg of the Eras tour already displaying strong demand

Even though the European segment of the tour is nearly a year away, demand indicators suggest that some destinations are already experiencing high demand and prices are increasing accordingly.

Take, for example, Amsterdam, set to host three concerts in early July. It's experiencing an uptick in hotel searches, with rates for the concert weekend already marked up by €160 compared to the preceding week.

In a similar vein, Dublin, where three performances are slated for the weekend prior to the Amsterdam shows, is observing a significant leap in hotel prices. Concert-goers can expect to shell out an additional €100 for their hotel stay relative to the previous weekend.

Moreover, for Taylor Swift's Tuesday night performance in Cardiff, advertised hotel prices are £150 higher than any other night during that week, and nearly £180 more than the same day the week before.

Conclusion

This data paints an unequivocal picture of the Taylor Swift economy and effect - it is in fact a juggernaut. By all data points and indicators, Swift's tour is a huge demand-generating event that has very strong potential to yield the highest room rate of the year for the destination’s it passes through.

Should you be one of those lucky cities, this is not the time to be cautious. We are already seeing searches and bookings at highly inflated rates even when looking out towards the middle of 2024.

The demand spikes reach their zenith in smaller cities with lesser inventory, peaking particularly on the Saturdays when Swift is performing. The 'Taylor Swift effect' has struck once again.

Equipped with real-time, actionable insights, based off of industry leading demand and rate data, you can implement an effective pricing and promotional strategy for key event dates, to capture demand before your competition and maximise your room revenue.