SINGAPORE (Reuters) - Singapore will be counting on its marquee Formula One race to help make up for a 30 percent drop in Chinese tourists this year.
The three-day event, including the night street race, clocks more than S$100 million ($80 million) in tourism receipts and opens a window on the country for a global television audience.
A steady stream of Chinese high-rollers into Singapore’s two casinos helped the tourism industry grow at a compound annual rate of 10 percent over the last three years.
Tourist arrivals dropped nearly 3 percent in the first half of this year - the first such decline since the casinos opened in 2010. Singapore is on pace to record the biggest drop in Chinese tourist arrivals since it landed a spot on the F1 circuit seven years ago.
China’s corruption crackdown has hurt gaming in Singapore and Macau, both popular destinations for wealthy Chinese.
“This year, Singapore is certainly banking a bit more on the F1 event to come back into the limelight after weak tourism numbers in the first half,” UOB economist Francis Tan said.
While the haul from the race itself represents a tiny portion of the expected 2014 tourism receipts of as much as S$24.6 billion, it marks an opportunity for Singapore to sell itself as a country that works hard and parties as hard.
Festivities this year include performances from entertainers such as Jennifer Lopez and Robbie Williams.
“Every year, the race season in September brings about an influx of international tourists and media exposure for the country,” said Cassandra Tan, an analyst with Euromonitor. “One of the impacts is the ‘multiplier effect’ for Singapore’s economy, in tourism cents, retail value and publicity.”
The hospitality sector is looking to make the most of the event, with several conferences lined up for the weekend that will host Deutsche Bank co-CEO Anshu Jain and UBS AG Chairman Axel Weber among the scores of top names.
The Four Seasons Hotel, for example, expects business volumes this weekend to rise 25 percent over a non-race weekend.
Singapore Airlines Ltd, which is being challenged by heavy-spending Middle East carriers to attract business travelers, is betting on the event to drum up interest in its premium brand as it sponsors the race for the first time.
The drop in Chinese tourists has hit Singapore’s casinos, analysts say.
Combined VIP volume for Genting Singapore’s Resorts World Sentosa and Las Vegas Sands’ Marina Bay Sands fell 10 percent in the first half of this year, Macquarie Research estimated. China typically accounts for at least half of the VIP gamblers in Singapore.
Genting declined to comment beyond its results statement, while Sands did not immediately respond to emailed questions.
Tourists from China were also wary of traveling to the region because of political unrest in Thailand, the disappearance of a Malaysia Airlines flight and a new Chinese law that clamps down on ultra-cheap tour packages.
Singapore relies on tourism for about 4 percent of its economic output. It expects international visitor arrivals to rebound and grow 5 percent to 8 percent in 2014.
With more than 15 million tourists last year, Singapore has cause for optimism, industry analysts said.
“Any country would be happy to have three times its population visiting per year in tourist numbers,” said Jonathan Galaviz, a partner at consultancy Global Market Advisors.
Editing by Emily Kaiser