THE ‘VENUE’ AS A CATALYST FOR GROWTH – THE MASTERPIECE AND THE MOUSE

Bilbao, Spain’s fifth largest metropolitan area and the capital of Vizcaya, was faced with considerable urban decay following the collapse of its traditional industrial base.  The city turned to the service sector for salvation, but recognized the need for an identifiable image or flagship (like the Eiffel Tower to Paris and the Empire State Building to New York) and opened the unique and architecturally significant Guggenheim Museum.  Since its opening in October 1997, the city has undergone a remarkable cultural re-birth.  Vizcaya’s visitation in the four years after the opening was three times faster than that achieved in the four years prior to opening.  In tandem, Vizcaya’s GDP growth accelerated at a 38 percent faster pace over the same period. 

In a similar way Walt Disney World (opened in 1971) transformed Orlando from a tertiary (at best) agricultural-based town into a thriving world-class city.  It now features seven large-scale theme parks, houses more than 110,000 hotel rooms and attracts annually more than 40 million visitors and $3.5 billion in convention dollars.  The city now has 750 manufacturing plants and 18 million square feet of office space. 

CREATING A DESTINATION – THE POWER OF SINGLE BUILDINGS

Dubai has also demonstrated the power of coupling leisure with real estate.  The Burj Al Arab hotel has been immensely powerful in making a bold statement and branding the city.  Numerous other hotels have subsequently opened as the government embarks on a careful plan to expand and diversify the economy. On a smaller, but just as powerful scale, Four Seasons created a destination by opening a hotel in Nevis, West Indies.  Previously unknown, it achieved incredible visibility for the island, which is now among the hottest destinations in the Caribbean. 

VISIBILITY THROUGH MEDIA ATTENTION – “TALL AND TANNED AND YOUNG AND LOVELY….”

While much of Latin America is considered ‘developing’, Rio de Janeiro is one of the oldest examples of leisure acting as a stimulator for city growth.  Rio’s beachfront hotels in world famous Ipanema have attracted both tourists and media attention in the form of movies (the city was a popular backdrop in many James Bond adventures) and music (immortalized in the Frank Sinatra hit of the 1960s, “The Girl from Ipanema”).  Despite losing the crown as the country’s capital in 1960, Rio maintained strong regional growth, with tourism continuing to propel the city into the international spotlight.  Infrastructure has grown in support, with a leading airport handling over one million international visitors a year and the city home to Latin America’s largest convention center. 

Success has spilled over to other sectors, with office absorption and rental growth measuring 10 percent and 15 percent over the last five years.   High barriers to entry, which included a 15-year moratorium on hotel building (lifted in 1999), have ensured economic viability.  As a result, the industry is weathering the current downturn with hotel occupancy higher than many other Latin American destinations.

DEVELOPING CITIES TYPIFY THE ‘LEADER’ EFFECT

Most of Mexico’s thriving cities are leisure based, while tourism has been the ‘horse’ on which many Eastern European (Prague, Budapest and Istanbul) and Asian cities (Bangkok, Macau and Bali) have rode on to broader economic growth.  Yet the drivers of ‘success’ in places like Las Vegas prove that leisure can lead in mature economies, although this is usually the exception rather than the rule. 

ESTABLISHED CITIES DEMONSTRATE THE ‘SERVANT’ EFFECT

Lagging indicator circumstances are usually typical in established cities, where hotel development is a response to already established demand, rather than a precursor to it.  Hotels act as base infrastructure in the development of a city, just like airports, retail and office buildings.  As a result, while hotels might not lead a city’s growth, they often act in tandem.