RECN 344 Event Management Week 9 Lecture 2

RECN 344: Event Management Week 9 Lecture 2 The economic impact of events

Week 9 Lecture 2: Overview • • Economic Impact Assessments EIAs: misleading assumptions The multiplier effect Maximising the benefits to locals

Week 9 Lecture 2: Reading • Library: Getz, D, (2013). Ch. 10: Economic impact measurement and costbenefit evaluation. In Event tourism: concepts, international case studies, and research (pp. 359 -386), New York: Cognizant Communication Corporation.

Introduction/recap • When considering impacts of events, most focus on the economic returns • ROI often used to measure event effectiveness/success • Also sponsorship, revenue • Most focus on Economic Impact Assessment (EIAs)

Economic impact assessments • Limitations with most Economic Impact Assessments (EIAs) • Generally focus on the ‘new money’ attracted and new investment • Often ignore the true costs of events, esp. debt (e. g. interest on loans) • Don’t dwell on the distribution of costs & benefits, which are rarely equitable • Easy (often essential) to exaggerate benefits before event

Economic impact assessments: misleading presumptions • To justify events, or obtain grants, it is necessary to ‘prove’ their economic benefits • EIAs completed to legitimize event in eyes of public • All festivals and special events create economic benefits • Many events have limited economic benefits on regions, especially if they largely cater to residents

Economic impact assessments: misleading presumptions • Construction of new facilities for mega-events is a benefit • Money for construction is diverted from other uses • Costs of maintenance/servicing debt is high • Events/festivals are for everyone; all visitors are alike • Some locals not interested in events • Some events attract high spending tourists, some not

Economic impact assessments: misleading presumptions • Events create lots of employment • Much labour provided by volunteers • Short term, part time work, or added to existing workloads

Economic impact assessments: misleading presumptions • All expenditure by all event-goers can be counted as economic benefits • How much would be spent by visitors anyway? • What are locals not spending money on instead? • ‘time switching’? • Multipliers are often used incorrectly • Tendency to focus on broad benefits, not costs or leakage

Economic multipliers (Getz, 2013, p. 366)

Maximising the multiplier affect • The multiplier can be maximised by reducing leakages • Reducing imports • Local ownership • Source of labour • Ratio of labour to capital investment • e. g. visitor expenditure higher in hotel and creates more jobs, but B&B is locally owned and uses local suppliers

Maximising economic benefits to locals • Attract more tourists to the area specifically for an event • Attract external grants and sponsorships • Make it easier for visitors to meet their needs through local suppliers • Make event long enough/attractive enough to encourage overnight stays • Ensure enough accommodation available to allow this to happen

Maximising economic benefits to locals • Have enough for visitors to buy (food, souvenirs etc) • Coordinate/package with other providers to get people to stay longer • Employ local people and performers • Ensure local providers given priority in opportunities (e. g. market stalls, tour operators) • Put profits back into local projects • Make purchases from local suppliers

Conclusion • Assessing the value, or impacts of an event must go beyond ROI or Economic impact • Impacts are both tangible and intangible • Most of the social/cultural impacts are intangible – but subjective, and difficult to measure • Next week consideration of the impacts and legacies of mega-events

Consideration of economic costs and benefits • Selecting one of the following events, what do you think would be the economic costs and benefits of the events, and to whom? • How might the economic benefits to locals of these events be maximised? • What might be the problems in achieving this? • Coast to Coast http: //www. coasttocoast. co. nz/ • Multicultural Bite Festival https: //multiculturalbite. org. nz/about/ • NB: see Getz (2013, pp. 367 for some suggestions)