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Festival/Event Direct Spending and Economic Impact: Going Beyond the BIG Number

Event Direct Spending & Economic Impact: Going Beyond the BIG Number
Jarrett Bachman, Ph.D., Director of Research and Collin O'Berry, Director of Operations, Looking Glass Strategic Consultants

The economic impact that festival and event productions have upon local communities can be profound. In the industry, the focus is often on ‘Direct Economic Spending’ or ‘Economic Impact Assessment’ in reference to the figure that represents the amount of money produced by a festival or event. In this article, we will explore attendee spending and economic impact assessments to highlight the processes and benefits of conducting this type of research.

Oftentimes, the terms ‘Direct Economic Spending’ and ‘Economic Impact Assessment’ are used improperly. The difference between these two measurements is subtle in text but monumental in meaning. Direct Economic Spending refers to the total amount of money spent in a city or county as a result of a festival or event. The total amount spent per person for different types of attendees (most often residents and non-residents) is calculated and extrapolated for the total attendance. An Economic Impact Assessment is far more detailed. Essentially, it starts with Direct Economic Spending numbers and traces how money flows through and impacts the community as it is spent and re-spent.

Conducting a Direct Economic Spending assessment provides information about spending across a variety of segments. Spending in categories such as retail, food and beverage, lodging, transportation, and entertainment is collected. Questions related to the spending inside the festival grounds versus the community-at-large can also be part of the analysis. The end result is determining how much the average person spends across various segments within the festival and community. Additionally, information collected concerning length of attendee stay and number of days attending the event is beneficial for multi-day productions. Further analysis can be performed based upon geographic distribution of attendees and other relevant attendee demographics.

Going a few steps further, the calculation of an Economic Impact Assessment involves the summation of the Direct Economic Spending as well as the Indirect and Induced effects. Indirect effects examine the effects of the re-spending of the direct spending within a community. Induced effects are the changes in economic activity from household spending of residents in the local area. The use of a multiplier to assess the magnitude of the secondary economic effects (Indirect and Induced effects) is often a source of much controversy and often of misuse. This type of analysis is complicated and is often completed by skilled practitioners using Regional Economic Models such as IMPLAN.

While obtaining the total direct spending at your festival and event is a vital number for the community, it has other useful applications. Which areas are bringing attendees that are staying in hotels or are spending the most money in your community? In what area(s) of the production is the most money being spent and by whom? Is there a difference in spending between returning patrons and first-time attendees? What are the spending breakdowns within the festival grounds and/or throughout the community? Obtaining these figures can prove beneficial to organizers in a variety of ways.

So which approach is best for your festival or event? For the vast majority of productions, Direct Economic Spending is the best option. Determining Direct Economic Spending is a cost-effective way for budget-minded festivals and events to get an indication of how much money is being spent in a variety of categories as a result of their productions. Economic Impact Assessments are typically best suited for larger productions with larger budgets that have the need for far more detailed information. In either case, when determining the impact of your production upon the community, utilizing the services of a reputable, third-party research firm provides actionable data that can be valued for both the production and the community at large. When understood and properly employed, reliable information provides tremendous event production, tourism, and economic development potential.

Looking Glass Strategic Research provides objective market research and economic impact studies for the Festival, Event, and Tourism Industries. Studies are conducted solely based on academically-accepted social science research methodologies, allowing for unmatched data accuracy and reliability. Delivering far more than a simple report, their team analyzes data from many geographic, economic, demographic, and qualitative characteristics to maximize client return on investment. Connect with the Looking Glass team today for more information about their innovate approaches to festival and event research.   

Jarrett Bachman, Ph.D., Director of Research   |  jarrett@lookingglassresearch.net   Collin O'Berry, Director of Operations  |  collin@lookingglassresearch.net

 

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