Building Tourism Capacity
The review of the literature sheds light on the relationship between mega-events and their significance to the tourism sectors. The literature further reveals how making investment decisions based on ex-ante estimates may cause negative impacts after the conclusion of mega-events. Critical reasoning will prove that the demand for accommodation and other essential services created by megaprojects is short-lived, while the supply to meet this demand will remain even after the conclusion of the events. In the end, supply will overshoot, while the demand decline, creating unutilized facilities in the long run.
As the law of demand and supply dictate, when the supply exceeds the demand, the prices drop. Such a phenomenon explains why Lillehammer eventually suffered huge losses after the conclusion of the 1994 Winter Olympics. The stakeholders’ estimates were exceedingly optimistic, to a point, the demand after the event fell to 40%. This analysis sends a signal in the way the tourism sector responds to demand created by a forthcoming mega event. Unless there are contingency plans to absorb the overshoot of the supply after the mega-events, then the tourism sector will lose in the long run. Investors will not stand a chance to recoup their investments.
In conclusion, literature has proven that there exists no substantive relationship between mega-events and economic growth. The tourism sector is one perfect illustration to prove only short-lived improvements. In no doubt, ex-ante studies have overstated the impacts of mega-events on the tourism sector. With sensible reasoning following the commissioned studies, it proves wise to promote tourism through other means like advertisement other than the option that mega-events present. Policymakers need to be cautious about misinterpreting the impacts of mega-events in the tourism sector. Through this understanding, a country can sustain its tourism industry.