Does Your Festival or Event Make Cent$: How To Conduct an Economic Impact Analysis
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This document discusses methods for conducting an economic impact analysis (EIA) of festivals and events. It outlines three DIY methods with increasing levels of accuracy and professionalism: 1) a basic estimate using average spending data, 2) contacting local hotels for room receipts and extrapolating total spending, and 3) designing and implementing an attendee survey with professional analysis. The benefits of an EIA include justifying funding, proving return on investment, attracting sponsors, benchmarking, demonstrating partnerships, planning for expansion, and market research. Factors that determine the appropriate method include available resources, accuracy needs, and timing.
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Does Your Festival or Event Make Cent$: How To Conduct an Economic Impact Analysis
- 1. Does Your Festival or Event Make Cent$? How To Conduct an Economic Impact Analysis (… and why you should) Photo: 401(k) 2013 on Flickr
- 2. Agenda Benefits of conducting an EIA Is an EIA right for your event? DIY Methods of conducting an EIA Method 1 Method 2 When to see professional help Method 3 – Hire a consultant Q&A
- 3. Get these slides here: http://sarahtpage.com/tda-tourism-toolkit/
- 4. What Is Economic Impact? New money injected into a host economy by people from outside the host economy.
- 5. 7 Benefits of Conducting an EIA on Your Event
- 6. #1 Justifies Financial Support Photo: Michael @ NW Lens on Flickr Anytown City Council
- 7. #2 Proves Return on Investment Photo: 401(k) 2013 on Flickr
- 8. #3 Attracts Sponsorships Photo: 401(k) 2013 on Flickr
- 9. #4 Allows for Benchmarking Photo: 401(k) 2013 on Flickr
- 10. #5 Demonstrates Benefit to Partners Photo: 401(k) 2013 on Flickr
- 11. #6 Paves the Way for Expansion Photo: AlBakker on Flickr
- 12. #7 Provides Market Research 12% 13% 19% 20% 28% 4% How often do you come downtown? daily 2-3 times/week once/week 2-3 times/month once/month never before today
- 13. Is an EIA Right for Your Event?
- 14. Don’t Conduct an EIA If … • … your event draws mainly locals • … you lack the resources • … economic impact data is not needed
- 15. EIA Example: Run Like the Wind Relay
- 16. Run Like the Wind Relay Photo: Ella Baker Center on Flickr • Run Like the Wind Relay is held in Nacogdoches • Nacogdoches is located in the Piney Woods region • There are 1,700 race participants
- 17. DIY Method 1
- 18. Use Method 1 If … … you only need a very basic and generalized estimate … you have little time to prepare and organize prior to the event ... there are few volunteers available to survey event attendees … no one is available for data entry and analysis … you have a good estimate of the number of event attendees
- 19. Method 1 Process
- 20. Method 1 Process
- 21. • Big Bend • Gulf Coast • Hill Country • Panhandle Plains • Piney Woods • Prairies and Lakes • South Texas Plains Texas Travel Regions
- 23. Calculating the Economic Impact 1,700 race participants * $87.30 pppd spending = $148,410 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ The economic impact of the Run Like the Wind Relay was $148,410.
- 24. DIY Method 2
- 25. Use Method 2 If … … you have little time to prepare and organize prior to the event … you can secure the cooperation of local hotels, motels, and B&Bs .. there are few volunteers available to survey event attendees … someone is available to contact the lodging places before and after the event and to record the data … you have a good estimate of the number of event attendees
- 26. Method 2 Process • Uses algebra and actual hotel receipts to estimate the total impact • Solves an equation to determine unknown quantities • Hotel receipts are the known quantities • Hotel receipts are a percentage of total travel expenses Photo: llamnudds on Flickr
- 27. Method 2 Process
- 29. Method 2 Process $8,722 ($ lodging) ÷ $52,657 ($ destination) = .1656 or 16.6% 16.6% of all expenditures in Texas are for lodging.
- 30. Method 2 Process Make this assumption: If 16.6% of all expenditures on trips in Texas are for lodging, then 16.6% of all expenditures on trips in Nacogdoches are also for lodging.
- 31. Method 2 Process • Before the event • Step 1: Request that hotels ask guests if they are in town for the Run Like the Wind Relay • After the event • Step 2: Call each hotel and request the “rack rate” charged during the event. Also ask for the number of rooms sold and number of nights stayed specifically for the Run Like the Wind Relay. • Step 3: Multiply the number of rooms by the rate for each property and total.
- 32. Method 2 Process The economic impact of the Run Like the Wind Relay was $25,060.
- 33. Photo: andyde on Flickr When To Seek Professional Help
- 34. Photo: modenadude on Flickr Accuracy
- 35. Avoid This
- 36. Credibility
- 37. Method 3
- 38. Use Method 3 If … … you need the most accurate data possible … there is ample time available to plan and organize prior to the event .. there are plenty of volunteers available to survey event attendees … you have a good estimate of the number of event attendees
- 39. Consultant Responsibilities • Design the survey • Estimate sample size needed • Develop a sampling plan and surveying schedule • Guide in volunteer selection and provide training • Determine/estimate event attendance • Collect and analyze the data • Produce a report detailing the results
- 40. You’ll Need a Questionnaire • Zip code • Number in the traveling party • Number of days spent in your town • Amount (or estimated amount) spent in the following categories: – Dining – Lodging – Shopping – Gas – Attractions/entertainment – Other expenses
- 41. Sampling • Survey – or sample – throughout the entire event. • This is the number of completed non-local surveys you need. • Local survey responses DO NOT contribute to the economic impact.
- 42. Analysis • Spending from the surveyed attendees is applied to the entire population (all non-local attendees) • Data is analyzed with economic modeling software • The software produces the impacts: • Total impact • Direct impact • Indirect and induced impacts • Number of FTEs created • FTE income • Tax impacts (sometimes)
- 43. Can I Help? Call Me! Photo: .Spartography on Flickr
- 44. Follow Me Linkedin.com/in/sarahpage Facebook.com/SarahTPageConsulting @pagetxSarah Page, Principal Sarah T. Page Consulting, LLC http://sarahtpage.com sarah@sarahtpage.com 512-914-8873
Editor's Notes
- Once you know the value of the event, it’s easy to prove that the investment was worth the expense.
- Sponsors will be more inclined to return next year and new sponsors can be attracted with the kind of data you get from an economic impact analysis. Sponsors will know not only how much money is being spent at your event, they will also learn:some demographic information like where the attendees live; product and venue information like what specific activities the attendees liked or wanted to improve upon; what media outlet they heard about the event from; and what new activities they would like to see at next year’s event.
- Now that you have some data, you know what areas need to be improved upon in future events. Without benchmarking, you’ve got no way to know if you’re meeting your goals.
- In many towns, it’s not just one organization that puts on the event – it’s typically a partnership between 2 or more sponsoring entities. Many of these organizations will continue to participate because of community pride or just because it’s the right thing to do. But wouldn’t it be nice if you could show them the value of their participation?
- With the data, you now know what the people want … what they’ll spend their money on … what will bring them back next year. When additional funding is available, you’ll know exactly where to spend it. Attendees may have told you that you need more children’s activities. The data will prove it and you can request the funding to add that kids’ area with confidence.
- The same type of information that is valuable to sponsors should also be valuable to you. Use an economic impact analysis as an opportunity to get to know your attendees a little better. This is some actual data from a study I did recently in Round Rock. During a downtown event, we asked local attendees how often they came to downtown and these were the results. With this and a few other questions, the City now has a better understanding of how and why locals patronize downtown and downtown businesses.
- The economic impact comes ONLY from spending generated by out of town attendees at your event. Otherwise that money comes from locals and would have been spent elsewhere in your community. There are other studies you can do to get data from local event attendees. Local spending data CAN help you determine your ROI.Doing an EIA will take man-power. You’ll need volunteers to help with data collection. It will also take time and planning. If none of these are available to you, an EIA is not right for you.If you’re only interested in getting data from local attendees, you do not need an EIA.
- We’re going to use a fictitious event to illustrate the three methods of conducting an EIA. Each method has varying degrees of complexity and accuracy. Each method also has its strengths and flaws, and only local leaders and event organizers can decide which method will work best for them.
- Method 1 is the easiest and fastest way to produce an EIA. No surveying is required. However, it is also the least accurate.
- The average per person per day spending accounts for spending on categories like lodging, retail shopping, dining, visiting attractions, and all the typical activities people would participate on during a trip – whether for business or leisure purposes. But it is an *average* of all the spending that takes place across the Piney Woods region, and it is not specific to Nacogdoches.
- This is just an estimate of the actual impact. This method assumes that every single participant spent $87.30, when in reality, some may have spent nothing. This method also doesn’t account for spectator spending, which could effect the result.
- Method 2 is still relatively easy to do, but does require a little more work. Surveying is still not required, but there is some primary data collection. The accuracy is improved over Method 1. You also have to be comfortable making some assumptions. Credit for the development of this method goes to Roger Hanagriff, Professor of Agricultural Business at Sam Houston State University.
- Found in the “Texas Travel Impacts” section of the report. Currently page 8.
- Again, this is just an estimate. However, this time it’s based on some actual spending that took place in Nacogdoches. But making the assumption that the spending on lodging in Nacogdoches was the same percentage of lodging in Texas may have under-estimated your impact. Your hotels may have been full and lodging may have represented a higher percentage than 16.6% for this event.
- Or maybe you want some professional help. Wait, not THAT kind of professional help …
- Accuracy. EIAs done by a professional will be much more accurate. They are based on actual spending data and not generalized estimates. That being said, they are still an inexact science. They will be based on actual attending spending data and should use a model to determine the impact that represents your local economy.
- You can avoid the perception of the fox watching the hen house by using an unbiased 3rd party to conduct the study and present the results. Not to mix metaphors, but this eliminates the ability for critics to say that you’re cooking the books.
- Credibility. It’s as if you put the Good Housekeeping seal of approval on the project. You’re hiring a professional to do your study. This is what they do. They are experienced in conducting EIAs, and their results will be credible.
- Method 3 is hiring a professional. Every professional’s process will vary slightly, but there are a few commonalties that you should look for. These are based on primary data – or surveys – and will provide results based on your local economy.
- But they can’t do any of this in a vacuum. They will need your input during every phase of the project.
- Other spending categories can be added:Specific retail categories (boutiques, sporting goods, craft vendors, etc.) Food vendors BarsOther questions can be added to find out more about your attendees and what they liked or didn’t like about your event.favorite/least favorite activity how did you hear? first time attendee or repeat customer? where did you stay? what would you add?
- Require survey volunteers to approach every Nth person to ensure that any festival attendee has an equal chance to be surveyed. This also eliminates surveying bias on the part of the volunteers. Once you know how many people to sample, how many volunteers are available, and how many hours the volunteers will work, you can determine the sampling interval (e.g., every 4th, 7th, 10th person, etc.).Sample size estimator developed by John Crompton, PhD from Texas A&M University.