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IMPLAN Blog

What Value do Community Events Provide?

July 26, 2019 by Joe Demski

Local events that bring communities together for holidays or regional celebrations often become annual traditions deeply intertwined with an area’s identity. In recent years, however, some localities have halted events like holiday parades, block parties, and July Fourth fireworks due to increasing regulations and rising costs. The immediate savings are beneficial. However, the significant, positive effects these events have on local economies are being lost in the process. While few studies exist regarding the impact of non-tourist, community events on economies, the framework exists to reliably analyze their effects. Before jumping into the event analysis methodology however, there are several factors to assess.

Considerations

The benefits of putting on events and festivals are easily defined. Expected economic and community benefits include:

    • Captured labor spend
    • Increased temporary labor hours
    • Increased tax receipts
    • Improved quality of life
    • Increased tourism/business awareness

Modeling the impact of a specified event is often considered in terms of a tourism impact study, however, local spending also plays a role and special considerations are necessary to capture total impact. Important factors which affect the economic impact of an event or festival include the length and scale of events, short-term costs associated with putting on events (i.e. additional government service providers required), and potential infrastructure improvement costs. These overarching factors require consideration along with the general costs of hosting an event.

Spending data is necessary in order to accurately complete this style of analysis. The most effective means of collecting the necessary data is participant and visitor surveys. Surveying event visitors allows you to easily establish spending patterns and learn demographic information about visitors. This also ensures that you are able to reliably determine the percentage of non-local spending.

Local spending also requires consideration. In almost all cases, local spending should not be considered in economic impact studies because the models upon which those studies are based do not inherently distinguish between local and visitor spending. Any expenditures from community members are merely considered recycling of existing money. In some cases, local spending related to events can be considered retained impact. Retained impact refers to spending that occurs locally that would otherwise occur outside of the defined area. This is especially pertinent when considering local holiday events. If a locality is able to retain spending, rather than its residents contributing tourism dollars elsewhere, an economic benefit is realized. While this is a consideration, Crompton (2006) clarifies, “Evidence of (retained) impact is very difficult to collect. In most cases, the evidence is likely to be tenuous, and the deflected impact is likely to be minimal, so the accepted convention by economists is to disregard it.” 

Small, but Mighty

Special events, festivals, and fairs are often crucial for local economies. They attract visitors and generate tourism interest. But they also induce local expenditures and engender positive community identity. An event does not necessarily have to draw a large number of “tourists” in order to have a significant economic contribution. When an event is geared specifically for the citizens in and near a locality (i.e. a holiday celebration or fair), the economy can be bolstered by the generated economic activity. Consider, for example, an economic impact analysis of small scale events related to the Canfield Fair in Canfield, OH. The small city of Canfield is located about 10 miles south of Youngstown and hosted their inaugural fair in 1846. The annual event champions Mahoning County’s agricultural and industrial products, offers customary fair attractions, and features live entertainment (i.e. musicians, comedians, tractor pulls, demolition derbies, etc.). 

Kim and Dombrosky were interested in what effect small-scale events have on local earnings. The Canfield Fair offered a perfect venue to measure this impact. The researchers hoped, “the results of this study would be beneficial to Mahoning and other counties that are considering offering similar types of local fairs or events to determine comparative economic impacts on the local community.” 

The economic impact of the Canfield Fair varies from a run-of-the-mill tourism study because of the participant population. Tourists are generally defined as those who travel about 50 to 150 miles one-way to destinations or events. As a community-based fair, the overwhelming majority of attendees were local or from out-of-town, but were not “tourists.” As a result, the effects on the lodging industry were less pronounced than with tourist-driven events. The four most significant areas of spending identified were: Food & Beverage, Shopping, Recreation, & Transportation. 

In order to establish these spending patterns, the research team prepared a survey for out-of-town visitors to estimate their spending. They noted that some amount of survey error is inevitable, but a good faith effort was assumed from respondents and marginal error was determined to be incalculable. Expenditures were broken down into categories: lodging, food and beverages, entrance fee (included in recreation), retail shopping (souvenirs, gifts etc.), parking (included in transportation), recreation (entertainment) and other spending. The survey results coupled with the estimated number of out-of-town attendees rendered the total visitor spending. With this established the researchers estimated the proportion of demand fulfilled within the region, known as the Regional Purchase Coefficient. This was used to calculate the locally retained spending by visitors.

Spending by Out-of-Town Visitors

SPENDING CATEGORY

IMPLAN SECTOR

PER PERSON (AVERAGE)

TOTAL SPENDING

REGIONAL PURCHASING

Lodging

499

$7..22

$1,026,568.48

$667,269.51

Food & Beverage

503

$19.54

$2,778,275.36

$1,805,878.98

Other F&B (ie. groceries)

395

$5.72

$813,292.48

$528,640.11

Transportation

412

$7.42

$1,055,005.28

$685,753.43

Shopping

406

$11.77

$1,673,505.68

$1,087,778.69

Recreation

496

$8.90

$1,265,437.60

$822,534.44

Other Spending

512

$6.80

$966,851.20

$628,453.28

Total

 

$67.37

$9,578,936.08

$6,226,308.45


Visitors spent an estimated $9,578,936 related to the Canfield Fair. These expenditures resulted in $8,166,956 in direct economic impact. These direct effects create ripples within the local economy and have indirect and induced effects as well. The indirect effects for businesses with contractual relationships to providers of supply service, products, and goods were determined to be $2,880,940. Those effects then supported $2,371,436 in induced economic effects for Mahoning County. All-in, the fair generated $13,419,332 in total economic impact. The study exemplified that localities do not need significant populations or large-scale tourist events in order to produce noteworthy economic impacts. Regional fairs and events have the potential to benefit an area’s local economy.

Special Events: Economic Drivers

Tourism-based attractions also drive significant economic benefit as a component of special events and festivals. These were determined to have a sizable effect on the overall economic impact of the Erie Canal National Heritage Corridor (ECNHC). The ECNHC spans the 524 miles of the Erie Canal across Upstate New York, encompassing 234 municipalities (23 counties) and 6 New York State Tourism Regions, and was officially designated as a heritage site in 2000. The area garners significant tourist interest and hosts numerous events and festivals within the surrounding communities during the year. 

 

While examining the overarching economic impact of the corridor, the study drew specified focus to the effects of single-day events on overall tourism output. The study team conducted surveys related to visitors’ motivations and spending patterns. They also gathered information from festival and event organizers and business operators in order to put together a more complete picture of event impacts. ECNHC calculated an overall economic impact from tourism of $1,313,359,593 with $169,350,840 attributed to single-day event attendees.

2017 Events Revenue

REVENUE SOURCE

NUMBER OF VISITORS

AVERAGE DAILY SPEND PER PERSON

AVERAGE DAYS ON CORRIDOR

TOTAL ESTIMATED REVENUE

Multi-day Event/Vacationers

1,276,653

$618

1.45 

$1,114,008,753

Day trip Festival/Event Attendees

1,498,680

$113

$169,350,840

Total

2,775,333

 

 

$1,326,305,322

 

While there are numerous activities and attractions along the ECNHC, special events demonstrated the potential to infuse increased spending in minimal time periods. Via survey responses, the team established that 30% of canal visitors attended an event or festival. Of the event-based visitors, 54% came for just the day. The study determined that the average festival day tripper would spend $113. While overnight visitors spend more on lodging, food, and transportation, the estimated 1,498,680 event-based day trippers contributed $169,350,840 in direct spending to the economies surrounding the ECHNC.

Notable and National

Holidays represent a substantial opportunity for places to entice spending from visitors and retain local spending that may otherwise leave the area. Hosting holiday events often comes at a cost, but thorough impact studies often demonstrate that the benefits outweigh the costs. There is no shortage of impressive fireworks displays on the Fourth of July, but San Diego’s Big Bay Boom truly brings the bang. 

Starting in 2001, the Big Bay Boom began as a large fireworks display in the “natural amphitheater” of the San Diego Marina. It has grown into one of the largest displays in the country and draws 500,000 visitors annually. The event entertains tourists from around the country as well as sizable media exposure. The privately-funded display results in a significant benefit to San Diego’s economy.

Tourism is one of the three biggest industries contributing to San Diego’s overall economy. In order to determine the economic impact of the 2018 Big Bay Boom, researchers disseminated surveys to hotels, restaurants, retailers, transportation companies, attractions, and other business tenants in the Port of San Diego. To learn visitor’s motivations for visiting San Diego, hometowns, and lengths of stay, questionnaires were also distributed to hotel guests during the Fourth of July. The surveys to businesses were tailored to their industry and included questions like:

      • How many days are affected by the fireworks show?
      • What is the average daily revenue on a typical non-holiday day during the summer season?
      • What is the average daily revenue during the July 4th event?
      • What is the average employee count on a typical non-holiday day during the summer season?
      • What is the average employee count during the July 4th event?
      • What is the average hourly wage on a typical non-holiday day during the summer season?
      • What is the average hourly wage during the July 4th event?
      • Estimate what percentage of patrons come from: City of San Diego, County of San Diego, Other

With these results in hand, the team identified significant increases in economic effects related to the Big Bay Boom (as distinct to normal visitor or local spending).

Big Bay Boom Spending Results

BUSINESS SECTOR

EVENT SALES "BOOST"

TOTAL SALES INCREASE

Hotels (including hotel dining, shops, and services)

23%

$8,386,000

Restaurants

25%

$713,000

Retailers

21%

$596,000

Parking

NR*

$363,000

Total

 

$10,058,000

*Not Reported but report states, “The advance was substantially higher for many boat operators and parking venues.”

Hotels in the area experienced a particular bump from the show. Not surprisingly, 73% of all hotel guests came from outside of the San Diego county area. Beyond just experiencing 23% increase in revenue surrounding the event, guests stayed an average of 2.75 days and hotels reported an average 99% occupancy rate (up from 91% for a normal summer day). 

The near $10.1 million in direct sales related to the Big Bay Boom generates $7.7 million in indirect and induced effects in the local economy. Businesses that provide services for Big Bay Boom vendors and the businesses that are supported by labor income from the event experience a significant benefit. All in, the Big Bay Boom has an overall economic contribution of $17.8 million to San Diego’s economy. 

The impact of the event was not as clearly defined, as an estimated number of tourists was not calculated. There is also potential for deflected impacts, as locals choose to stay close to home for the festivities, instead of traveling.  

Wrapping It Up

Tourism dollars support many economies. However, tourist-focused events and festivals are not the only means for a locality to positively affect their economy. By determining spending pattern information, attendee demographics, and business trends, the economic effects of local events can be readily calculated. By taking the time to analyze the economic impact, you may find that that holiday parade generates more than just cheer, the block party creates more than just buzz, and fireworks do more than inspire awe. Your local economy gets a boost, too! 

Download the white paper 'The Tourism Impacts Primer for Economic Developers'

Topics: Data, Events, Economics, Methodology, Tourism, Impact

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