March Madness predictions for local businesses

Every year, as basketball enthusiasts all over fill out their March Madness brackets, one of the first things they do is look at the performance of players and team last year. They do this to see what kinds of trends they can predict for this year and—just maybe—build a winning bracket.

Beyond performance on the hardwood, what impact does March Madness have on sales at local businesses in host cities or towns with a team in the tourney? We thought local businesses, particularly those with teams in the tournament and those in cities where the games are hosted, should have the same opportunity to evaluate last year’s numbers to help them align their expectations for this year’s Big Dance.

WE WANTED TO KNOW: Does the NCAA basketball tournament have an impact on small business revenues during the tournament? After all, we saw how a having a winning team in the Championship game boosted sales for bars and restaurants during the Super Bowl. We specifically wanted to know:

  • How did relevant industries in cities that hosted perform? It was a layup for lodging, a slam dunk for transportation, but an airball for bars and restaurants.
  • How did relevant industries in cities with a team in the tournament perform? Turns out, the tourney’s impact on the bottom line was quite average unless your team made it to the National Championship.

OUR ANALYSIS: We analyzed transactions for lodging businesses, transportation businesses, and bars and restaurants during the tournament to see if March Madness had an influence on business revenues at the local level.

 

Industries in cities that hosted

To get started, let’s take a look at cities that hosted the NCAA tournament in 2017. We looked at the relevant industries that we expected to see some change. We paid particular attention to the hospitality industry: food, transportation, and lodging.

After we established these businesses’ average performance for this time of year, we were able to see how the days of the tournament compared to the baseline. Here is what we learned.

BARS AND RESTAURANTS
SCORE: AIRBALL

When it comes to local bars and restaurants in host cities before, during, and after games, March Madness is a bit of an airball for bars and restaurants. They did see a slight (8%) uptick in revenue, but nothing that seemed to correspond with tournament activities (i.e. no direct correlation to increased revenue on host days).

Based on our ongoing research into sales patterns at local eateries, this was not a particularly surprising discovery. Restaurants are one of the most stable and consistent industries, with very little seasonality and a predictable sales curve across the days of the week. It’s also worth noting that the main events happen around the same time most bars and restaurants see their evening rush.

 

LODGING BUSINESSES
SCORE: SOLID LAYUP

Local hotels, motels, and bed-and-breakfasts score a solid layup when it comes to boosting sales the day before a game. In cities that hosted the NCAA tournament last year, lodging businesses saw an 84% spike in revenue the days before a game. They returned to average sales immediately after.

 

TRANSPORTATION BUSINESSES
SCORE: SLAM DUNK

When it comes to the transportation businesses, March Madness is a slam dunk. They were the only industry to see a significant boost in sales both before, during, and after games. During March Madness, local transportation businesses saw a 35% increase in revenues the days before a game, 14% on the day of the game, and a 57% bump the days following a game.

 

Bars and restaurants in cities that had teams compete

During the NCAA tournament, bars and restaurant revenues are quite average. They don’t see much of an increase or decrease before, during, or after games. Bars and restaurants in cities with teams in the tournament had just as many days above average as they had below.

In fact, revenues for bars and restaurants in cities with teams competing didn’t change much, no matter how we looked at the data. They didn’t see a decrease in average revenue, but they didn’t see the 8% increase that host cities experienced, either.

If you’re like us, you may be thinking, “But what about teams that advanced to the Sweet 16 or Final Four? Do local eateries benefit when their teams make a deep tournament run?”

We were curious, too. So we looked, and it doesn’t matter if your team advances during the tournament, sales revenues still hovered around the average. Only when a team makes it to the championship game do we see an increase in daily sales revenue. Bars and restaurants in cities with a team in that advanced to the National Championship saw a 30-50% increase in daily sales revenue.

 

The takeaway

All in all, it’s fair to say March Madness has a positive impact on small business revenues if you’re in a host city. The same cannot be said of cities that just had teams in the tournament, with a few exceptions. Unless your city is hosting any games this year, the biggest thing you’ll have to worry about during March Madness will be your bracket. Other than that, things should be quite normal—even if “normal” just means most of your sales all come in a compressed timeframe.

PRO TIP: Use the NCAA tournament as an opportunity to get closer to some of your best customers. Offer a special discount to repeat customers who come in for a drink or dine during the game.

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