Business winners and losers of Singapore’s F1 race

SINGAPORE - It’s just days before the roar of the engines will be heard in Singapore. As the city transforms its streets into the famed Marina Bay Street Circuit ahead of this weekend’s Formula One Grand Prix, a familiar buzz of anticipation is building.

This is the 16th edition of the annual night race, and it has grown to become more than just a sporting event. Other side activities such as concerts and showcases of local cuisine have turned the race into a beacon for international tourism.

Who are the winners and losers of this mega annual event? The Business Times takes a closer look.

Winners

Hospitality surge

Hotels across the island have recorded a surge in demand ahead of the weekend.

As at mid-September, islandwide hotel occupancies on the books ahead of the F1 weekend hit more than 70 per cent, data from hotel industry research firm STR indicated.

Major players are seeing occupancy levels that eclipse a typical weekend, with Pan Pacific Hotels Group (PPHG) forecasting that its trackside properties will reach between 90 and 100 per cent occupancy.

And despite being the 16th edition of the race, it seems to be growing in popularity, as PPHG, Fairmont Singapore, Swissotel The Stamford, and Hilton hotels report that their bookings are tracking significantly higher than a typical non-race weekend and ahead of this time in 2024.

In line with this surge in demand, the hotels have seen a healthy increase in both their average daily rates (ADR) and revenue per available room (RevPAR).

Based on STR records of past year performances in 2023 and 2024 for the month of September, F1 generally stimulates an uptick in RevPAR by around 100 per cent. This means that on an average day of the F1 week, hotels make around double the money per room compared with an average day in the rest of the month.

Across the country’s hotels, the economic benefits of the Grand Prix are also broadening beyond luxury class.

While luxury and upper upscale hotels cemented their market leadership with a robust 13.5 per cent growth in RevPAR over 2023 and 2024, the more telling trend lies in pricing power.

The ability to charge a premium for the F1 weekend grew far more aggressively in the tier below. The F1 room rate premium for upscale and upper midscale hotels jumped 44 per cent year on year, significantly outpacing the 29 per cent premium growth seen at their luxury counterparts.

As top-tier hotels approach their price ceiling, the immense demand is spilling over, giving mid-tier properties leverage to capitalise on the event.

Some Singapore companies

While the F1 Grand Prix is a global event, its intricate assembly is a powerful opportunity and showcase for Singapore-based enterprises.

Kingsmen Exhibits, a wholly owned subsidiary of Singapore-listed firm Kingsmen Creatives was tasked to manage the physical build-out of the pit street, hospitality suites, grandstands and more. Discussions with service stakeholders for design, development, technical drawing and compliance reviews have been ongoing since March, Kingsmen Exhibits tells BT.

In 2024, Kingsmen Exhibits won a contract worth up to $53.2 million to be fulfilled for the F1 Singapore Grand Prix until 2028.

Ms Madeline Lee, the executive director of Kingsmen Exhibits, said that due to the scale of the event, they mobilised 50 per cent more staff than usual for this project, and hired around 30 per cent more contract staff to focus on F1.

“Through F1, we took the opportunity to deepen our technical skill set, our capability in our design development, our capability in innovation and, of course, sustainability.From these capabilities, we have then been able to venture into new global businesses,” Ms Lee said, making reference to their involvement in World Expo Osaka in 2025.

DZE Asia, a regional subsidiary of Dino Zoli Group based in Singapore, which was also awarded a five-year contract with F1 in 2024, has had similar opportunities for growth.

The company serves as the systems integrator and general contractor for three main packages – the race track lighting system, the race communications systems, and the overtrack signage lighting system.

Mr Marco Scaioli, the director of DZE Asia, told BT that during the year, it has five or six permanent staff members based in Singapore. But in preparation for the race, headcount reaches up to 100 people, composed of local partners and staff members coming from global branches.

Mr Scaioli said: “For the event itself, we also collaborate with local subcontractors and temporary staff to manage installation, testing, and operations... it generates valuable opportunities for local technicians and suppliers during the build-up and race week.”

Work opportunities on the ground

This year, about 850 ITE students between 18 and 23 years old will also be supporting the operations of the race in areas such as hospitality and customer service.

The work attachment opportunity is the result of a tie-up between ITE and event organiser Singapore GP, which began in 2009 and was renewed for seven more years in 2022.

They will contribute in roles such as gate access officials, circuit park guides, VIP concert deck access officials, info booth ambassadors and service support crew.

“Many students have leveraged this experience to secure internships with leading event management companies, strengthening their prospects of landing good jobs and careers,” said a representative from ITE.

One such student is Tay Jia Min, 23, a Higher Nitec event management graduate, who is currently undertaking a work-study diploma in event management.

She first worked at the 2022 edition of the F1 Singapore GP as an event hire, and later returned as a graduate intern with Singapore GP. Ms Tay received the Outstanding Service Award by Singapore GP for her contributions to the 2023 race.

This year, she is taking on the role of assistant supervisor for the race weekend.

Losers

Local merchants in the shadows

Despite the significant tourism and economic benefits brought about by the Singapore Grand Prix, many local businesses within the circuit area reported losses because of the multi-day road closures.

Road closures will take place over seven days – Oct 1 to 7 this year.

At the Esplanade, Mr Koh Choon Chye, the owner of restaurant Old School Delights, told BT that general footfall around the area drops by around 60 to 70 per cent.

Having run the restaurant at Esplanade since 2017, he said that there is a drop in revenue of up to 70 per cent during the F1 period.

With the road closure, it will not be able to provide its usual food delivery or bento catering services.

Mr Koh said: “It also means our suppliers do not want to provide any delivery service. Even if they are approved by (Singapore Grand Prix), they can make deliveries only after midnight. For our volume, it is not worth it for them to accept our orders.

“Our regular customers cannot come, and there are no shows and performances at Esplanade, thus there are no concert crowds for us. Most of the F1 visitors are outside Esplanade. Our establishment is located on the second floor and it is difficult for us in terms of visibility. We are prohibited from even placing standees at level 1,” he added.

Since 2024, Old School Delights has chosen to close during this period.

At Marina Square, Mr Fong Jun Jie, the business manager of Singapura Nanyang Coffee, predicted a similar drop in foot traffic.

As it is the establishment’s first year at Marina Square, it is Mr Fong’s first time facing the F1 disruption.

While he plans to keep the store running, he told BT that having heard from other stores about their experiences, he is also considering workarounds for the week, such as pausing food delivery services.

His food suppliers also have to work around the closures.

Mr Fong said: “We advised them on the blocked roads, but since the suppliers are experienced and supply a couple of shops, they know the drill.”

Shops along Millenia Walk face a similar fate. Mr Kelvin Yap, the bar manager of Horse’s Mouth, said that there was nearly no traffic at all during the F1 period in 2024.

Mr Yap said: “We had expected that business would be good because we are right near the circuit area, but we realised that that was not the case.

“For weekends, we will get about 30 to 40 covers a day for the usual Friday, Saturday (crowd). During F1, we can drop to 15 (covers) or worse.”

He said that the company’s suppliers do not deliver during the race weekend so the bar must place its orders a few days in advance.

“If business is slow, then we tend to have a high amount of wastage as well,” Mr Yap added.

Dr Simon Chadwick, professor of AfroEurasian sport at the Emlyon Business School in Paris, said that while there are a slew of studies focusing on positive economic effects of such race events, many fail to establish what the net economic impact is, failing to account for the externalities associated with staging it. Such negative externalities include the losses incurred by local merchants, productivity delays, a crowding-out effect for the locals, noise and visual pollution, and a possible increase in carbon footprint and wastage.

“I think we live in a world where we tend to take a somewhat rosy view of the impacts of these types of events,” he said.

Dr Samer Elhajjar, senior lecturer from the department of marketing at NUS Business School, said: “Not everyone will be happy, of course. Some shopping stores will be affected, but that’s actually the case for any event you are going to run.”

He added: “Of course, there are risks. But the risks are, I think, already calculated and the government is already taking these measures in terms of (warning) messages (to prepare the businesses).”

Despite the effect on local businesses, the race has a huge impact on the country’s brand image and perception, he said.

“Stakeholders perceive Singapore as a vibrant city. If you look at the overall image that Singapore will showcase to the world, I think it’s worth it.”

THE BUSINESS TIMES