The comeback of the Singapore Grand Prix last 2008, after almost 30 years of inactivity, boosted tourism and the economy of the city-state. After being stopped in 1974 due to people’s complaints and concerns about traffic jams, community noise and subsequent accidents in the 1972 and 1973 races, the Singapore Government decided to co-finance the return of the race with Singapore GP Pte Ltd, the Singapore Tourism Board. and Bernie Ecclestone.

With its phenomenal return in September 2008, local hotels received an inflated number of occupancies and even experienced full bookings during this season. Forecasts that said it would boost Singapore’s tourism and hospitality industry proved to be true and accurate.

It is true that Singapore hotels are proud to host this popular event every year. Christopher Khoo, MD of Master Consult Services, explained that the hospitality industry would be the first to benefit from having an F1 race in Singapore. Rooms would be full and prices would stay high. Due to the sheer number of people coming and with the rooms fully booked, other tourists may even go as far as taking rooms in neighboring countries like Malaysia just to watch the race.

Associate Professor Prem Shamdasani from the National University of Singapore Business School further explained that events like the F1 race are very expensive to organize. In order for Singapore to be able to meet the costs, a cost-sharing approach was recommended. A strong partnership between the public and private sectors could help ensure that this event is well prepared and organized. Therefore, the government imposed a special tax on all hotels.

The Minister of State for Commerce and Industry, Mr. Iswaran, explained that an excise tax of no more than 30% will be imposed on hotel revenues for about seven days during this season with the aim of helping the Government settle the costs of hosting the race. This special tax was expected to raise an average of about $15 million to $20 million per year.

It was obvious that not everyone in the industry was happy with the special tax imposed by the Government for this particular season. With this special tax, the hotels admitted that an increase in price rates was their possible solution to face the new regulation. The Government, for its part, assured the hotel industry that it would give a consideration to the hotels. They understand the need for businesses and business establishments to make a profit, but it is important not to forget their fair share for the nation.

Minister Iswaran further explained that they are simply asking for 30% percent so that hotels have a chance to benefit from their sales and keep their share. Hotels closest to the race track and providing the best view of the race, such as those located in Marina Bay, would pay the full 30%, while hotels further away would pay less.

Experts say some 35,000 tourists are expected to flock to the F1 event annually. And this outpouring will always require high demand for accommodation and push for higher rates on hotels and airfare. A positive turnaround for Singapore’s economy is anticipated with the revival of the F1 race. The tax imposed, albeit a bit high, on commercial industries would help fuel the economic recovery of the city-states.