This is the wrong way round. The levy does not cause higher hotel room rates during the F1 race. The race itself is the cause. Hotels price their rooms according to market demand and what their guests are willing to pay.

For the Formula 1 SingTel Singapore Grand Prix, we expect over 80,000 spectators, many of whom will be from overseas. This event will generate high demand for rooms, especially in hotels that are close to the race circuit, and that is why guests are willing to pay high room rates during the race period.

Indeed, this high demand was the focus of the article, which pointed out that some trackside hotels were already fully booked, despite the significantly higher prices.

The levy is to recover some of the windfall gains that hotels will enjoy from the F1 race. Hotel room rates would have been high during the race period even in the absence of a levy.

Lim Bee Khim (Ms)
Director
Corporate Communications
for Permanent Secretary
Ministry of Trade and Industry