Europe’s economy is changing because of Taylor Swift: The incredible impact of the Eras Tour

Hotel room prices have increased by 100%, attracting more luxury tourists than the Olympics and causing inflation to skyrocket, the impact of Taylor Swift’s European tour.

It’s not just Taylor Swift fans who are closely following her Eras Tour in Europe, but Philip Lane, Chief Economist at the European Central Bank (ECB), has also taken note of the superstar’s impact on the region’s economy.

Asked at the event earlier this week about the risk of rising service sector inflation as the region heads into a busy summer with Euro 2024 in Germany and the Paris Olympics, Philip Lane added: “You said all that and forgot to mention Taylor Swift.”

Swift will tour Europe this summer, performing a total of 51 shows in 18 cities, attracting millions of “Swifties” (Taylor Swift fans) to spend on airfare, hotels, restaurants and souvenirs.

The New York-based luxury travel company Embark Beyond said last month’s Paris stop attracted five times the number of luxury American tourists expected for the Paris Olympics, even though most had seen her perform many times at home.

Taylor Swift performs in Sydney, Australia, on February 23. Photo: AFP

In London, research by Barclays bank said nearly 1.2 million fans will spend around £848 (about $1,070) each on tickets, travel, accommodation and merchandise to see the show, 12 times more than the average person would spend on an average night out in the UK.

“When it comes to cultural icons like Taylor Swift – just like we saw with Elvis and Beatlemania in the 50s and 60s – fans have such a strong connection to the artist that the desire to spend is stronger,” said Peter Brooks, a behavioural expert at Barclays.

The influx of visitors to selected cities has had a clear impact on the European hotel industry. During the Eras Tour, hotel rates in concert cities are expected to increase by an average of 44%, according to a report by Lighthouse.

Cities like Liverpool, Warsaw and Stockholm will see hotel prices increase by more than 100% during this time. “Taylor Swift is more than just a musical icon, she’s an economic force,” said Lighthouse CEO Sean Fitzpatrick.

Analysts are debating the economic footprint she will leave behind. The Eras Tour, which began in March 2023 and runs through December 2024, grossed a record $1 billion last year alone. Every city Swift visits is a boon for businesses, from retail to food and beverage to hospitality.

The superstar’s influence is so great that some experts have coined the term “Swiftonomics” to describe the financial impact her tour has on the economy. Estimates put the amount of spending on tickets, merchandise, and tourism that the tour could generate in North America alone at $4.6 billion.

US economists hailed Eras Tour as a “great economic achievement”. Meanwhile, central banks are right to consider its potential impact on inflation. On June 20, the Bank of England (BoE) kept interest rates unchanged at 5.25% despite inflation falling to its 2% target last month.

Before the BoE announced its decision, analysts had predicted that the central bank would delay the rate cut as Swift’s tour could alter inflation . “The increase in hotel prices could add 30 basis points to service sector inflation and 15 basis points to overall inflation,” said Lucas Krishan, a strategist at TD Securities.

In Europe, central banks have cut or are starting to cut interest rates as inflation has slowed significantly over the past year. However, the demand that Eras Tour creates for hotel rooms and flights across the continent could push up prices, affecting each country’s inflation rate.

Central banks are very sensitive to small changes in . If something raises concerns that inflation is not slowing as expected, they may delay cutting interest rates.

Last month, inflation in Portugal accelerated, partly due to a spike in hotel prices in Lisbon “due to a major cultural event,” according to the country’s statistics office. That was Swift’s concert in Lisbon on May 24 and 25.

Krishan of TD Securities said Swift’s return to the UK in August could add to services inflation, especially since one of her tour dates could coincide with the date the country’s statistics agency uses to record price .

If hotel prices rise by the same amount as they did when she performed in Liverpool this month, services inflation could rise by 0.3 percentage points. Higher-than-expected inflation in August could prompt the BoE to delay a rate cut in September.

However, some economists do not think Taylor Swift will be able to leave an economic footprint in Europe. “Taylor Swift is not likely to influence central bank policy. She is not likely to influence government policy,” said George Moran, an economist at Nomura.

He said the tour could only have a significant impact on individual cities and certain industries. When tickets went on sale last summer, Airbnb searches in host cities increased by more than 300% above average. The eight London shows are estimated to generate £300m for the city.

“The impact will be more local than macro. Taylor Swift is obviously a huge phenomenon. The areas she’s in are seeing a huge wave in the hospitality industry,” Moran said.

Even Victor Matheson, an economics professor at the College of the Holy Cross, said the notion that the Eras Tour boosted the local economy was “more a perception than a reality.” He said the bulk of the spending during the period came from ticket and merchandise sales, much of which would go to tour operators, event staff, and Taylor Swift. “When you spend money on concert tickets and merchandise, it doesn’t stay in the local economy, it goes with the artist,” he argued.

Additionally, hotel rates increase temporarily but may be viewed as a one-time expense rather than a long-term economic benefit. Locals attend the shows, many of whom have saved for months for the music party, meaning they have to cut back on spending before and after the event.

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