Events, such as festivals, conventions, air shows, sporting events, and more, can have significant effects on local economies. Understanding the economic impact of events helps policymakers, event organizers, and many other stakeholders make informed decisions on hosting and investing in these experiences.
Measuring the Economic Impact of Events
To gauge the economic impact of an event, you have to be able to measure it. There are three essential indicators to consider:
1. Direct Spending
Direct spending is a key metric that includes money spent by event organizers, participants, and attendees within the local economy—ranging from accommodations, food, transportation, and registration fees to merchandise and entertainment. It represents the initial injection of funds into the local economy.
2. Indirect Effects
The indirect effects metric refers to the secondary economic activities generated by the event. When hotels, caterers, and local businesses receive event-related income, they often make purchases from suppliers, stimulating further economic activity.
3. Induced Effects
Induced effects account for additional economic activity resulting from increased household income among employees involved in event-related businesses. This leads to further consumer spending within the local economy.
Collecting Data for Economic Analysis
Accurate data collection is crucial to understanding an event’s economic impact. You’ll need to take action to gather the necessary data and crunch the numbers. Common data sources used for this purpose include:
- Event Attendee Surveys: Gathering spending patterns, travel behavior, and attendee demographics.
- Vendor and Supplier Data: Information on event-related sales and local business performance.
- Financial Reports: Insights from event organizers, local businesses, and government agencies involved in the event.
Analyzing the Data: Economic Impact Models
Next, you need to analyze the data in order to quantify the economic impact of your events. Various models and methods are typically employed to do this, including:
- Input-Output Analysis: This method assesses the relationships between different sectors of the economy, estimating the ripple effects of event spending.
- Multiplier Effect: Measures how each dollar spent during the event circulates through the local economy. For instance, a multiplier of 1.5 indicates that each dollar generates an additional 50 cents in local economic activity.
- Cost-Benefit Analysis: Compares the economic benefits of hosting an event to the costs incurred, offering a broader view of both tangible and intangible impacts.
Key Factors Influencing Economic Impact
Keep in mind, there are many external factors that can influence the economic impact of an event, and some are completely outside of your control. For outdoor events, the weather is a perfect example. Following are some other examples to consider.
Distance Attendees Travel
Events draw local, regional, and even international attendees. Typically, the farther attendees travel, the higher their spending—covering accommodations, dining, and tourism. A study by Destination Analysts found that overnight visitors spend 3-4 times more than local attendees, highlighting the value of attracting non-local guests.
Event Duration
Longer events generally create a more substantial economic impact. A multi-day convention or airshow, for example, can lead to higher spending on lodging, meals, and local attractions compared to a single-day event. According to Visit California, multi-day events increase average spending by 50-60%.
Demographics and Attendee Profiles
The economic impact varies by demographics. Younger audiences might prioritize affordable options, while older or more affluent demographics may spend more on premium experiences, luxury accommodations, and merchandise. The mix of audience age and income level plays a significant role in determining spending behavior.
Ancillary Industries’ Role
Hospitality, transportation, and retail sectors are critical in amplifying an event’s economic impact. Studies from local chambers of commerce, such as the Greater Boston Convention & Visitors Bureau, show that events stimulate a ripple effect—benefiting hotels, restaurants, and retail stores even beyond the immediate event venue.
Seasonal Trends and Event Timing
Events hosted during peak seasons can maximize economic benefits for host cities. According to data from Tourism Economics, events held during high tourism periods or major holidays see higher attendance and spending rates. Conversely, off-season events may benefit from lower operational costs and can attract niche audiences, yet might see reduced overall economic impact.
Event Size
The scale of the event, ranging from small local festivals to massive international conventions, directly affects its economic impact. Small-scale events may have a localized economic impact, while larger events, like airshows or conventions, generate significant spending on accommodations, transportation, and dining. According to a comparative analysis by the Event Industry Council, large-scale events often have a higher multiplier effect due to their broader reach and supply chain needs.
Types of Events
Different types of events influence spending patterns. Sporting events often lead to higher local spending on food and merchandise, while conventions may generate more income from accommodations and hospitality services. A study by the U.S. Travel Association found that festivals boost retail sales by 20-30%, while conventions drive higher room occupancy rates.
Additional Economic Impact Considerations
Events affect local economies in so many significant ways, which is why tracking economic impact is so important. Let’s take a look at some additional economic effects of events.
Long-term Economic Effects of Recurring Events
Recurring events, such as annual air shows or festivals, create long-term economic benefits by fostering destination branding, consistent visitor spending, and sustaining local business growth. For example, the Dayton Air Show, held annually in Ohio, consistently generates millions in economic activity each year, reinforcing the city’s identity as an aviation hub.
Impact on Employment and Job Creation
Events support both temporary and permanent employment. Temporary jobs may include roles in event management, food service, and retail, while permanent jobs are often supported in the hospitality and tourism sectors. Data from the U.S. Bureau of Labor Statistics indicates that large-scale events can boost local employment rates by 1-3% during the event period.
Correlation Between Event Attendance and Economic Benefit
There is a direct correlation between attendance figures and overall economic impact. Higher attendance typically results in greater local spending. According to a report by Oxford Economics, each additional 1,000 attendees at a major event can translate to $150,000-$300,000 in local economic benefits, depending on attendee demographics and spending habits.
Revenue from Ticket Sales, Merchandise, and Concessions
Ticket sales, merchandise, and concessions contribute significantly to an event’s economic impact. Organizers often rely on these revenue streams to offset costs and gauge success. A study from the International Association of Exhibitions and Events (IAEE) found that merchandise and concessions can account for up to 30% of an event’s total revenue, especially in niche or enthusiast-driven events like air shows.
Conclusion
Measuring the economic impact of events involves more than just calculating ticket sales—it’s about understanding the broader financial, social, and long-term effects of the event on the local economy. By employing a mix of data collection methods, economic models, and industry insights, stakeholders can make informed decisions that maximize benefits for their communities.
Whether it’s deciding on event timing, targeting specific demographics, or understanding the multiplier effect, a comprehensive economic analysis can optimize the planning and execution of any event.
