The Formula One (F1) Singapore Grand Prix is now the only race in Southeast Asia after the Malaysia race was discontinued in 2017 due to dwindling spectator numbers and rising costs. The race has successfully managed to attract over half a million tourists for each event.
This year marks the 15th Grand Prix Season Singapore (GPSS) since its debut in 2008. Held from Sept 13–22, the event is more than just a race for sports fans. The GPSS complements the F1 Singapore Airlines C6L Singapore Grand Prix 2024 and is Singapore’s chance to draw in visitors worldwide and boost its tourism receipts and GDP.
The Ministry of Trade and Industry (MTI) said in a statement earlier this year: “Many international business events, such as the TIME100 Leadership Forum, the Forbes Global CEO Conference, the Milken Institute Asia Summit and SuperReturn Asia, have also been organised around the F1 race in Singapore to take advantage of the occasion for high-level networking and meetings.”
Large-scale activations and festivities across Singapore are held to celebrate the event, such as live concerts, parties, fun fairs and more, making it more immersive and engaging for locals and tourists alike. This means a tonne of preparation is needed to support the main event and the supporting festivities.
One local stock directly benefitting from the race is events construction company Kingsmen Creatives 5MZ , note RHB Singapore analysts Vijay Natarajan and Alfie Yeo. In May, Kingsmen announced that it had secured contracts worth up to $53.2 million to be fulfilled for the F1 Singapore Grand Prix (SGP) from this year to 2028.
The contract marks Kingsmen’s fourth consecutive win from SGP since its debut in 2008.
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Kingsmen said on May 5 that the contract win demonstrates its “commitment to providing unparalleled experience for its client and F1 fans while also solidifying its presence in the motorsport industry”.
Kingsmen expects the contract to contribute positively to its earnings and net tangible assets (NTA) for the current FY2024 to FY2029 ending December 2029. As at Jan 31, Kingsmen has built up an order book of $171 million, with $152 million in revenue to be recognised in the current FY2024.
While the group has declined to comment on the matter, The Edge Singapore understands that Kingsmen’s responsibilities in its past contract have involved the fabrication and construction of grandstand seats at the Esplanade Waterfront, Padang and pit, interior fit-out works at the Paddock Club, as well as works at the corporate hospitality suites.
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However, the event construction space is capital- and labour-intensive — somewhat similar to property construction, albeit at a much smaller scale. Often, the high costs of building up the project will affect margins and, in turn, earnings.
In FY2023 ended Dec 31, 2023, Kingsmen, while enjoying the resumption of physical events after the pandemic and being involved in the SGP set-up, saw a drop in earnings of 38.4% y-o-y to $2.9 million from $4.6 million in the previous year, even as revenue grew 10.1% y-o-y to $361.5 million.
Hospitality players see boost
Apart from companies like Kingsmen, which are directly associated with the GPSS, several others support the overall ecosystem of the mega-scale event. Analysts from Maybank Securities and RHB Singapore expect the tourism-related industries, such as the hospitality, F&B and transport sectors, to benefit.
Typically, large-scale events, such as the GPSS and the recent Taylor Swift concerts, give local hospitality players a short-term boost, as hotels provide not just a place to stay but also the chance to be closer to the action.
Edmund Ong, general manager of Trip.com Singapore, says: “Based on the booking numbers on Trip.com Group’s platforms, we believe there will be healthy growth in F1 attendance numbers this year. We have observed an almost 60% increase in the total booking volume for all products in Singapore for this year’s F1 week (Sept 16–22) compared to last year’s F1 week (Sept 11–17).”
Cinn Tan, chief commercial and marketing officer of Pan Pacific Hotels Group (PPHG), says: “Both F1 and the Taylor Swift concerts significantly benefit our properties in Singapore in terms of bookings. Properties within close proximity to the racetracks and concert venues typically experience the most notable boosts.” PPHG is the hospitality arm of UOL Group.
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Wong Kar Ling, chief strategy officer and managing director of Southeast Asia at The Ascott Limited, says the night race significantly boosts business for hotels, local attractions and service providers as visitors extend their stay to experience all the destination offers. Ascott is the lodging arm of CapitaLand Investment (CLI).
“Following the announcement of this year’s race dates, we saw an upswing of about 20% in room nights compared to last year for our properties in Singapore,” says Wong, adding that this is particularly so for properties close to the track and city centre. “The rise in bookings alongside an uplift of average daily rates have supported a strengthened revenue per available room (RevPAR) across our portfolio of properties in Singapore.”
To further capitalise on the event, Ascott launched several marketing and promotional campaigns. For instance, guests who are top-tier Ascott Star Rewards loyalty members will enjoy the exclusive opportunity to experience the race event at the Ascott Privilege Signatures lounge at the Singapore Flyer. Ascott has also launched exclusive stay packages, including special rates, a curated entertainment programme, and exclusive merchandise.
All these efforts are part of the company’s Ascott Privilege Signatures programme, an experiential programme launched earlier this year that provides loyalty members with access to global events. “Having successfully launched our first global event at The Championships Wimbledon 2024, we are now anticipating our second global event at the Singapore Night Race 2024,” says Wong, adding that Ascott has also partnered with Chelsea Football Club to be the Official Global Hotels Partner of the English Premier League club. As part of the partnership, Ascott assumed management of the 232-unit stadium hotels at London’s Stamford Bridge, home of Chelsea.
Meanwhile, RHB Singapore’s hospitality stock picks that will benefit from the GPSS include CapitaLand Integrated Commercial Trust C38U , CDL Hospitality Trusts J85 (CDLHT) and Far East Hospitality Trust Q5T (FEHT). Thilan Wickramasinghe, Maybank Securities’ head of research, acknowledges that direct plays are limited but likes CDLHT, FEHT, Frasers Hospitality Trust ACV and LHN for its co-living offerings.
Shuttling fans around
While the hospitality players enjoy their higher RevPAR, the transportation sector, too, enjoys higher ridership. “For the transport sector, airlines should see a higher load factor, and land transport operators should see higher rail ridership and an increase in demand for taxis,” say Natarajan and Yeo.
Both RHB and Maybank like ComfortDelGro C52 (CDG) as a beneficiary of the GPSS. CDG is not just the local taxi operator, it also has a 75% stake in SBS Transit, the local rail and bus operator.
“CDG could see improved ridership and bookings during this period,” says Wickramasinghe.
With the increase in tourist numbers in Singapore, analysts are expecting higher demand for taxis during the race days. This will see a higher surge for taxi bookings and prolonged peak periods.
Furthermore, train and selected bus services will have their operational hours extended during the race days. These are also expected to see high demand after the race and concerts end at night.
Meanwhile, Trip.com’s Ong shared that the number of inbound flight bookings for the GPSS week spiked by almost 90%, supporting RHB’s preference for Singapore Airlines (SIA) as a beneficiary for the event.
Apart from SIA being the local carrier, which will see several tourists landing in Singapore on SIA flights, the group is also the title sponsor for the entire race event.
