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When Formula 1 driver Max Verstappen crossed the finish line in front of an estimated 140,000 cheering fans on Sunday to win the US Grand Prix at the Circuit of the Americas, operators of hotels, restaurants and nightclubs across the Austin area had many reasons to join the celebration.
That’s because the thrill of a Formula 1 race marked the triumphant return of one of Austin’s top visitor attractions, which was canceled last year amid the coronavirus pandemic – and pumped and fueled hundreds of millions of dollars into the local economy over the festival weekend Optimism that tourists are finally ready to travel at full speed again.
“Formula One is a glittering deal,” said Jon Hockenyos, president of Austin-based economic analysis firm TXP Inc Region.
In many ways the race was a great success this year.
Circuit of the Americas chairman and founder Bobby Epstein said the estimated 140,000 people who attended Sunday were a record for success – surpassing the estimated 105,000 visitors to the F1 race in 2019 by 33%.
Additionally, the majority of participants live outside of Texas, a trend that economists say means their spending has an added effect on the Texas and Austin economies that exceeds that of the state’s residents. More than 65% of F1 contestants are expected to be from overseas, according to a pre-event study of the economic impact of the local Circuit Events Organizing Committee affiliated with the circuit.
“We were concerned because people from Europe and many of our foreign visitors could not come due to travel concerns related to the coronavirus,” Epstein told the American statesman on Monday. “But we more than made up for it” with participants from all over the country.
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These visitors filled many hotels, a welcome development for a hospitality industry in the Austin area that was pounded by the pandemic and was only recently on the rise.
“We have exceeded our expectations in the past three or four days,” said Vijay Patel, whose company Humble Origins Hospitality Management owns and operates several hotels in the area.
“F1 week starts on Monday with track staff and crew members,” said Patel. “It just keeps growing, even until Sunday night before people try to get to their flights the next day.”
Participants’ direct spending during the three-day race-related celebrations was estimated at over $ 434 million, according to the Economic Impact Study, based on surveys of people’s expectations of spending at the 2019 race. Taking into account multipliers such as “induced spending,” the study estimates the total economic impact on Texas this year at $ 987 million.
The economic impact of the South by Southwest Festival in 2019 – the last time the acclaimed 10-day Austin event took place in person – was estimated at $ 356 million, a number that includes factors as well as direct expenses.
The Austin City Limits Music Festival, held earlier this month for the first time since 2019 and being another prestigious event in Austin, won’t be as big as the F1 or SXSW for the region, economists said, in part because of a higher percentage the participant is either a resident or a Texas resident.
At Austin-Bergstrom International Airport, the great attraction of Formula 1 for racing fans outside the city was evident.
The confirmed number of passengers through the airport on Sunday was 29,251, making it the airport’s 10th busiest day of all time, said Bryce Dubee, an ABIA spokesman. The forecast for Monday was 36,146 – which would be the airport’s busiest day ever, although Dubee warned the number is not final.
“Our current record for the busiest of all time is November 4th, 2019 – the Monday after F1 2019 with 31,934 passengers,” he said. “So I am confident that the prognoses for this Monday will at least stand as a new one-day record.”
TXP Inc.’s Hockenyos said this year’s race likely benefited from the fact that many people were unable to travel for leisure or attend such large spectator events for more than a year.
“We’ve all been trapped in our jammies in front of our computer screens for 18 months,” said Hockenyos. “The term in business is ‘backlog’.”
Matthew Nuss, President of Hotel Operations at Z Resorts, which operates the ZaZas Hotel in Austin, Dallas and Houston, agreed with this assessment, saying he did more business during the race weekend this year than he did during 2019.
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Hotel ZaZa, which opened in the heart of Austin’s Warehouse District in September 2019 – about six months before the pandemic hit the state and the economy together – sold out six of the seven days leading up to Sunday, Nuss said.
“There was definitely a new optimism in the air, both among our house guests and those visiting our catering facilities, especially the nighttime audience,” he said.
Chef Kevin Fink, who owns several restaurants in Austin, called the three days of the race-related celebrations “the busiest weekend we’ve ever had – period”.
The blessing “was incredibly welcomed after the year,” he said. “Formula 1 brings so many people with it who traditionally wouldn’t come to Austin. Everyone is excited to learn about the city, and it is really fun for them to see our city. “
Fink’s company, Emmer & Rye Hospitality, operates Emmer & Rye, Hestia, Kalimotxo, Henbit, TLV and Canje restaurants in Austin.
Not all businesses in the Austin area benefited equally, however.
Brandon Hodge, a retailer on South Congress Avenue who is also president of the South Congress Merchants Association, said it was a misconception that large weekend events like the ACL Fest and F1 drive significant amounts of retail traffic into the city center.
Many locals choose to stay home to avoid likely to be large crowds, Hodge said, while out-of-town visitors are busy with the events they wanted to attend.
Even so, he said Monday sales were strong, buoyed by F1 contestants who spent an extra day in Austin exploring the city.
“They tend to get out and spend more money because the event is over and they can explore places like South Congress,” said Hodge, who owns the Big Top Candy Shop and Monkey Lake toy store! Monkey Do !, both of which are represented in the South Congress.
With the success of the F1 race this weekend, hope is blossoming that more out-of-town visitors are browsing the shelves of businesses in the Austin area, eating at the town’s restaurants and booking their hotels – just as they did before the pandemic.
“I think (this is a successful F1 weekend) continues a trend we saw in college football games and major music festivals,” said Epstein of Circuit of the Americas.
“The cumulative effect is that people are more confident and more comfortable,” he said. “These events are back and people are enjoying them.”
Patel, who runs several hotels in Austin, is keeping his fingers crossed after a bleak 2020.
The boost to business associated with Formula 1 “only brought an enormous sigh of relief – the light at the end of the tunnel that we see is not really a train,” said Patel.
“We hope things go back to normal as they were in 2019,” he said. “People are getting back to their normal lives and work and we can put this COVID pandemic in the rearview mirror.”
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