Melbourne is hosting the first Grand Slam of 2024 and the Victorian economy is expected to see a flurry of economic activity. As tennis fans crowd the courts, small and large businesses in the hospitality industry in Melbourne’s central business district and beyond could see a significant boost.
The Mastercard Economics Institute (MEI) looked at spending behaviour during the Grand Slam in 2023 as a guide to what may be expected this year. Here’s what we observed:
The hospitality industry and retailers get a boost
MEI analysis shows that the biggest spending boost was in accommodation, with the spend in hotels in the CBD and neighbouring areas increasing by an extra 13.0 per cent due to the tournament [1] in 2023. This could be a good benchmark for this year.
Chart 1: Capturing the boost from the Grand Slam
Underscoring the impact of the tournament on retailers, Mastercard’s SpendingPulse – an indicator for retail spending that measures in-store and online retail sales across all forms of payment – estimates that Melbourne retailers, especially those in experience and fashion-related sectors, are likely to see an increase in sales during the tournament in 2024.
Compared to the two weeks preceding the competition, we expect total retail sales (excluding auto) to grow 12.6 per cent during the event, driven by in-store sales of apparel, restaurants and accommodation.
Chart 2: Retail sales forecasts for the tournament in 2024
What drives spend during the Grand Slam
All eyes on the Central Business District
A sporting event the size of the Grand Slam has a multiplier impact on the local economy, especially in the neighbourhood where the event is taking place. The CBD, where the stadium is located, is the centre of attention during the tournament, witnessing the highest level of activity across the city of Melbourne. These were some of the trends based on MEI’s analysis of change in share of spend across postcodes in Melbourne during the tournament vs. the remainder of the quarter, from last year’s matches:
- Accommodations: The tournament led to a rise in the share of in-person accommodation spending in the central business district by 2.5 per cent vs. the share of spend over the remainder of Q1 2023.
- Restaurants & bars: Tennis fans chose to eat close to Melbourne Park during the event, with the share of in-person spend in restaurants & bars (excluding quick service restaurants) in the CBD neighbourhood increasing by 1.2 per cent vs. the share of spend over the remainder of Q1 2023.
- E-commerce penetration: Digital and online modes of payments, such as mobile wallets and app-based food delivery services, also added an incremental boost to small businesses, with quick service restaurants (QSRs)[2] surging in online spend during the tournament. Share of online spending at QSRs in the CBD was 2.2 per cent higher vs. the remainder of Q1 2023.
Chart 3: Share of change in spend across postcodes during the tournament vs. remainder of Q1
MEI analysis also found some interesting trends in how long people stay in town for the tournament and where and when they decide to eat out.
- Mondays saw the most check-outs during the event in 2023 as fans stayed over the weekend to make the most of the tournament. During the remainder of the quarter, Wednesdays and Thursdays were the more popular days for check-outs, driven possibly by business travellers.
- Breakfast and lunch spend in QSRs outperformed during the event compared to the rest of Q1 2023, with breakfast on weekdays gaining popularity during the event as people grabbed a quick bite before heading to the stadium.
- Restaurants & bars, excluding QSRs, were more popular during lunch and evenings after the matches, with the beginning of the week seeing a higher share of spend in the CBD areas for lunch during the match days in 2023.
Chart 4: The economic clock during the event
A look beyond the CBD
Shopping malls and eateries in residential neighbourhoods saw an increase in spend
The impact of the tournament was felt beyond the central business districts as tennis fever led to increased spend in prominent shopping malls and eateries in the suburbs. Some observations based on MEIs analysis of change in share of spend across postcodes in Melbourne during the tournament vs. the remainder of the quarter, from the Grand Slam in 2023 include:
- Shoppers flocked to Waverly Gardens and Springvale for retail therapy. Spending on sporting goods, apparel and footwear outperformed the most in Waverly Gardens, improving by 3.7 per cent (highest across the city) vs. the rest of Q1 2023.
- Eateries that emerged in residential neighbourhoods thanks to hybrid work trends saw a higher share of spend during the tournament than the rest of the quarter, as fans chose these popular bistros to connect over a meal.
- Restaurants & bars, excluding QSRs, in Garden City, an affluent residential area southwest of the Melbourne CBD, saw an additional increase only second to what was seen in the CBD during the event in 2023 vs. the rest of Q1 2023. Mid-week spending in bars and restaurants, excluding QSRs, increased as a total share during the tournament in 2023, while weekends were popular during the rest of the quarter.
- Small businesses serving breakfast and lunch in Box Hill saw the benefits of consumers hitting the local high street, with in-person spend at QSRs – a reliable proxy for small business performance – higher during the tournament in 2023 than in previous years.
The Grand Slam promises a sentiment boost to consumers, bringing together fans to share a drink or a meal and venture out for some retail therapy. The ripple effects of the event are likely to be felt across the CBD neighbourhood and beyond, benefitting small and large businesses in both the experiences and goods industries. The cushioned acrylic hard courts of Melbourne Park will be a crowd puller over this two-week extravaganza, with the second most anticipated outcome being the multifaceted boost to the economy.
