Formula One impact on the hospitality industry: Hotel prices race upwards at Grand Prix locations

Not long after Formula 1 changed hands in 2017, the sport was given a turbocharged strategy that has propelled the sport to new heights. 

With millions of attendees to races each year and over a billion annual viewers, each Grand Prix is a sought-after event, generating major potential for surrounding hospitality businesses. 

Six million fans attend a growing global sport

While Formula 1 was never a niche sport, its audience was narrower than some of the other major global sports. However, a change of ownership and approach has dramatically increased its global visibility and attractiveness to a new generation of fans. 

Current owners, Liberty Media, aggressively promoted the sport, changing race locations to new circuits, often located closer to major cities and transportation hubs.

Races in Miami, Austin and Las Vegas marked a push for more American viewers, and a slew of stops in the Middle East and Asia, such as Jeddah, Abu Dhabi, Shanghai and Singapore, indicated a drive for bigger, more diverse audiences. 

Similarly influential has been the Netflix docu-series Drive to Survive, which has helped bring in new fans and demographics. 

Nielsen analysis found 10% growth in US fans in 2019 to 2022 and said that these younger, affluent viewers often subsequently tuned into races, with 34% saying they became a fan after watching Drive to Survive. 

Together, these strategies have pushed the sport to massive global attendance numbers and a large viewership that is younger and more diverse, in geography and gender, than ever  before. 

In its 2023 end-of-year report, Liberty Media Group reported 1.5 billion cumulative TV viewers and attendance across all races of 6 million, more than 40% growth since

Lighthouse Formula 1 data

As some circuits are in locations not attached to large population centers, we have not gathered information for every single race. 

Instead, we have pulled information for events where we do have robust data. These are as follows.  

Cities where Grand Prix have already occurred at the time of writing:

• Manama

• Jeddah

• Melbourne

• Nagoya

• Shanghai

• Miami

• Milan

• Monaco/Nice

• Montreal

Upcoming cities for Grand Prix:

• Barcelona

• Budapest

• Amsterdam

• Baku

• Singapore

• Austin

• Mexico City

• São Paulo

• Las Vegas

• Doha

• Abu Dhabi

We have then taken occupancy data from upcoming events where this data is available, which covers Amsterdam, Austin, Barcelona, Budapest and Singapore. All of our figures are in US dollars for comparison purposes. 

Formula 1 revs up hotel revenue

With average attendance just shy of 300,000 fans per race, there is a huge amount of inbound traffic to a city or region when a Grand Prix occurs. 

This is a major opportunity for accommodation providers, generating significantly higher than average rates, although this differs depending on local conditions and room supply. 

Overall, the uplift is substantial. Across the cities we looked at, the median price increase for a standard hotel room was 60%. This ranges from just a 3% rise in Shanghai, to 137% in Montreal. The mean across all 20 cities was a slightly lower, but still substantive, 49%.

As is the case with major events, markets with a larger supply of rooms, such as Las Vegas, Shanghai and Miami, experience less of an effect, while markets with tightly limited supply surrounding the circuit get more of a boost. 

Montreal, Melbourne and Monaco are in this latter group. They experience prices well above the annual average for those cities and compared to the wider sample. 

When supply is very limited in small markets, demand tends to spill over into nearby cities. For example, during the Monaco Grand Prix, Nice sees a surge in demand, and the limited availability of accommodations near Suzuka Circuit leads to increased bookings and higher rates in Nagoya, despite the 70 km distance. 

The importance of these races to the host destinations is so great that in nine of the 20 cities, the week of the Grand Prix is the most expensive time to rent a room in 2024.

Hoteliers race towards full occupancy

If we look at cities where we have available forward-looking occupancy data, it is clear why hotels are confident in aggressive pricing strategies. 

Occupancy levels dramatically exceed the norm in most of these locations, except for Amsterdam, which sees only a limited boost. This difference is largely because Circuit Zandvoort is an hour away from the center of Amsterdam by public transport and many fans will want to stay far closer to the track.

However, it does still push up occupancy and price, with a third of hotel rooms and nearly half of short-term rentals sold at the time of writing and prices 6% above the annual average for hotels.  

Otherwise, the bookings already recorded by both hotels are impressive and underline these races as demand-generation events. 

In the cases of Austin, Budapest and Singapore, bookings are double comparable surrounding dates for both hotels and short-term rentals, indicating the immense demand generated by a Grand Prix. 

Looking closely at short-term rental bookings, these are even more elevated compared to other dates, with reservations in those markets reaching as high or higher levels than any other time in the data, including the weekend directly following this piece's writing.

However, in these locations, short-term rental rates are not reflecting this demand. 

While hotels are putting rates up as a result of these bookings and positive demand signals, short-term rental owners have not raised their fees in Singapore. 

In Austin and Budapest, although there is a spike, advertised rates are lower than for last year’s races, even though demand appears at least as strong, if not stronger.

Compared to the 2023 Grand Prix, hotels in Budapest during race week are a third more expensive, whereas short-term rentals have decreased year-on-year.

Hitting the apex of the booking curve

The large influx of travelers, many of whom are affluent and willing to spend more for these glamorous events, means that hospitality businesses must ensure their revenue management strategies are effective. 

We can see that short-term rentals are not hitting the right pricing strategies. Even though the increase in short-term rental demand and forward bookings are in the same order of magnitude as hotels, and these properties may actually be preferable for many travelers in several of the locations on the circuit, prices do not currently reflect this.

This is why predictive data and real-time market information is absolutely critical to making the most of major events and capturing revenue. 

In the case of F1 races, there is clearly extremely strong interest and booking impetus very far out from the event, but this demand is very time-limited with little-to-no boost in interest in the dates surrounding the event.  

Average hotel prices remain stable prior to the races, with increases concentrated during race week, particularly on the three days of practice, qualifying and the race itself. Prices peak on the night before the race and revert to normal patterns within 48 hours. 

Therefore, while there may be some value in attempting length-of-stay discounts, these races are all about hitting the right marks in those three days.

To do so, you need to analyze your booking curve, competitor behavior and property characteristics as it relates to the distance and transportation connections between it and the circuit, particularly as there is wide variance in uplift between the different host cities. 

Capitalizing on event demand at your hotel with the right technology

Large-scale events like these will typically generate enough demand to sell out most locations and accommodation providers should be aggressive in their pricing strategy in most cases. 

This is especially so in the early booking window, as it is clear that ardent fans and corporate groups make bookings extremely far in advance, with plenty of interest from the latter not long after inventory is released to the market in search data. 

Hoteliers should remember that in these cases it is all about serving event attendees, who are focused predominantly on the event. Marketers and property managers should try to emphasize connectivity to event locations and may find value in advertising transport services and creating special packages or experiences that target event days.

Combining these tactics with dynamic pricing practices should leave accommodation providers in good stead to make the most out of these opportunities, but that can only be done with a strong foundation of local market intelligence. 

This is where Lighthouse can step in and give you all the data you need to thrive during major events and all year round. 

Our commercial platform brings together demand data, competitor intelligence, pricing recommendations, booking data, distribution channel performance and much more all in one place.