(KTSG) – 12 years after winning the right to host the World Cup, Qatar – a small but rich country in the Gulf has welcomed the world’s top players and passionate football fans from many countries. . Besides helping to make Qatar famous globally, the biggest football tournament on the planet is expected to bring significant economic benefits.
Huge economic benefits
According to the 2020 annual report of the International Football Federation (FIFA), the total revenue of the FIFA World Cup Qatar 2022 is expected to reach 4.66 billion USD. FIFA also introduced five core revenue categories, in which, television broadcasting rights were the largest contributors, accounting for 56% of total revenue. Next is advertising rights, accounting for 29%, while the remaining 15% comes from hotel revenue, ticket sales, franchises and other sources of revenue. Prior to that, the two World Cups in 2014 and 2018 generated revenue of $4.82 billion and $4.64 billion, respectively.
However, the actual benefits will be even greater than that. In an interview with Bloomberg, Nasser Al Khater, CEO of the FIFA World Cup Qatar 2022, said that Qatar will attract 1.2 million visitors during this World Cup. This will bring Qatar huge financial returns, estimated at $17 billion, by creating promising opportunities for various economic sectors, including real estate, commerce, tourism, aviation, transportation.
According to Redseer Strategy Consultants, the event will also generate $4 billion in revenue through tourist spending, of which about $500 million will go to Qatar’s neighbors. Online viewership is expected to reach 5 billion during the World Cup, up 43 percent from the 2018 World Cup held in Russia.
In addition to the financial benefits, Qatar aims to utilize the tournament to transform its economy towards a more modern, sustainable, diversified economy with key sectors including tourism and hospitality being considered the focus. in growth plans.
These results are considered an inevitable consequence of the huge investments that Qatar has made to organize the event. After a decade of painstaking preparation, Qatar has added a series of new stadiums, hotel rooms, metro lines and nearly 2,000 kilometers of new roads. Statista calculates, if the total costs, including the cost of building new stadiums and renovating existing stadiums as well as the amount spent on infrastructure, this year’s World Cup in Qatar gives by far the most expensive World Cup of all time.
“After winning the rights to host the 2022 World Cup in 2010, Qatar announced a $200 billion infrastructure program. Direct costs to build and repair stadiums have been reported to be between $6.5 billion and $10 billion, in line with the spending levels of previous host nations,” said the International Monetary Fund (IMF). IMF) said in a report.
According to the IMF, although the money is relatively large, the benefits it brings are very long-term, because “most of the announced investments are for general infrastructure projects, including build an integrated rail and metro system, develop a road and utility network, expand an airport, and build a brand new city of Lusail where foreigners are allowed to buy real estate.”
Diversified and sustainable development potential
In addition to the financial benefits, Qatar aims to utilize the tournament to transform its economy towards a more modern, sustainable, diversified economy with key sectors including tourism and hospitality being considered the focus. in growth plans.
According to research by real estate consulting firm Knight Frank, the Middle Eastern country could see the hotel market grow 89% to more than 56,000 rooms by 2025. The construction of this hotel room is expected to cost Qatar 7 billion dollars.
“Around 30,000 hotel rooms have been put into use since the end of 2021, and an additional 3,800 rooms will be ready by the time the World Cup kicks off,” said Adam Stewart, Knight Frank’s Qatar branch head. know. “The numbers after the World Cup are even more ambitious. The tourism and hospitality industry is expected to contribute about 12% of Qatar’s GDP by 2030, with a total value of about $55 billion and an estimated 7 million annual tourist arrivals.
“The Qatari hotel business has grown not only in the number of rooms available but also in the number of brands entering the market. This is establishing a strong base for building an attractive, well-known destination, with a diverse choice of accommodation types and budgets. This is an important factor for Qatar to be able to ambitiously welcome 6 million visitors a year by 2030,” noted Christian Hirt, CEO of Raffles and Fairmont, Doha.
Other key areas will also make significant strides. “The Qatari banking industry, which plays a key role in financing many World Cup-related projects, including the provision of promotional offers, the issuance of special credit and debit cards. in particular, will benefit from higher credit demand and stronger spending activity over the course of the tournament. The retail sector will also benefit from surging demand for goods such as jerseys, food and beverages, and consumer electronics,” said Rituparna Majumder, chief economist at Frost & Sullivan. determined.
“Since Qatar won the right to host the World Cup in 2010, it has gradually moved towards diversifying its domestic economy. The proof is that the contribution of the oil and gas industry to GDP has decreased from 53% in 2010 to 39% in 2020, “said Majumder expert. “Moreover, over the years, Qatar has also made remarkable progress in other areas such as construction, wholesale and retail trade, finance, human health and social work. The share of the construction sector has increased from 6% in 2010 to 14.4% in 2020, thanks to infrastructure developments related to the World Cup.
Regional economies benefit
Not only Qatar, many economies in the Gulf will also benefit greatly. A large number of tourists are expected to land in Gulf countries, in the context of Qatar’s limited reception capacity. United Arab Emirates (UAE), Kuwait, Bahrain, Saudi Arabia and Oman are all ready to offer attractive accommodation services with daily shuttle flights to Doha, Qatar during the period. World Cup.
Dubai (in the UAE) is one of the more active, offering multiple entry visas for a symbolic fee of $27. Low-cost airline FlyDubai will fly at least 30 round-trip flights a day to Doha during the tournament to serve guests watching the World Cup. The city has also prepared football viewing zones in parks, beaches and downtown, in the hope of attracting tourists who want to enjoy football, but also want to drink alcohol freely. than the strict regulations in Qatar.
The influx of tourists will also strongly boost the retail and e-commerce sectors in the region. “Retail spending from tourists is expected to reach more than $400 million,” predicts Sandeep Ganediwalla, managing partner at RedSeer Strategy Consultants in the Middle East. “This year, two-thirds of the local consumers who will be participating in the World Cup also expressed an intention to spend more in the retail sectors over the duration of the tournament. This is expected to lift retail sales to $2.8 billion.”
Analysis by RedSeer Strategy Consultants predicts that direct and indirect spending will lift total retail sales in the October-November period to $70 billion, up significantly from $61 billion in same period last year. Combined with organic growth, due to the growing popularity of major discount events like Black Friday and the growing e-commerce boom, the Middle East’s retail sector in recent months will face the greatest opportunity ever.
Trends of investment in major sporting events
Qatar’s spending on sports is not limited to the World Cup. Since being awarded the right to organize the event by FIFA, the country has spent a lot of money buying a majority stake in Paris Saint-Germain (PSG), one of France’s top football clubs and 22 % stake in SC Braga, a Portuguese club. Qatar also hosts an F1 race in 2021, then won the right to host the speed sport for the next 10 years.
This is also a common trend of many wealthy neighbors in the Gulf in recent years. The region will host four F1 races in 2023, while Saudi Arabia and the UAE each own a team in the English Premier League. There are also growing investments in golf, e-sports, boxing tournaments and mixed martial arts. Last October, two teams from the American Professional Basketball League (NBA) played the opening game of the new season in the Middle East.
“Given their modest population size, the wealth of the Gulf states offers them many favorable opportunities to invest in publicity. Famous sporting events contribute to prestige and promote the image of these countries more popular,” commented Dania Koleilat Khatib, a scholar at the Hoover Institute at Stanford University.
This is seen as an important step for Gulf countries to improve the country’s image beyond oil or fossil fuel production. Giorgio Cafiero, CEO at Washington-based risk consulting firm Gulf State Analytics, said that hosting events like the World Cup “will help strengthen Qatar’s image”, making this country. building the image of “forward-thinking, progressive and extroverted”. In other words, Qatar will become a place where business travelers can comfortably entertain customers, commercial organizations can organize conferences or a place where families can come to rest for a few days. Las Vegas, but less evil.
In addition, energy exporting countries in the Gulf also see this as a solution to secure the future of their economies in the context of a declining global demand for fossil fuels. While Qatar is aiming to attract six million visitors a year, the UAE is also expected to increase the share of tourism in GDP to 15%.
The most typical case can be mentioned Saudi Arabia. From still restricting the issuance of tourist visas until 2019, the country is now expected to spend $1 trillion to attract visitors. Besides, there are plans to build Neom, a high-tech city in the desert with an artificial ski resort.
Therefore, according to Bloomberg, while Americans and Europeans tend to see the organization of major sporting events as wasteful, Gulf countries are still willing to spend big money. Last October, Saudi Arabia won the right to host the 2029 Asian Winter Games, and is currently campaigning with Greece and Egypt to win the right to host the 2030 World Cup. Saudi Arabia and Qatar are also important. interested in becoming the host country of the Olympics with the expectation that these will be good opportunities for economic and social development.
Source: Gulf Business, Bloomberg, Washington Post, New York Times, Consultant Me
