An event’s direct economic impact is defined as the amount of additional expenditure (i.e. new money) generated within a specific area (e.g. a city, region or country) as an immediate consequence of staging it. This additional expenditure is comprised of all event-related spending in the economy from external sources, which are primarily visitors, participants and organisers.
Estimates of direct economic impact supported by a clear audit trail of calculations and the data and assumptions on which these are based provide a credible ‘at least’ position for an event, and enable meaningful comparison between properties and editions.
What to measure
Some basic drivers of direct economic impact are relatively simple to capture and can give a broad indication of an event’s potential:
- Number of spectators (for sporting and cultural events)
- Number of other attendees (e.g. sporting event participants or business event delegates)
- Percentage of spectators or attendees coming from outside the host economy
- Duration of event
Other indicators include those recommended by the OECD and ASOIF:
- Additional visitor numbers during the event
- Total number of visitor nights related to the event (ASOIF reference EC-S2.3 and EC-P2.2)
- Average visitor spend
- Total net additional visitor expenditure (ASOIF reference EC-OUTCOME1a and EC-OUTCOME1b)
- Net organiser expenditure (ASOIF reference EC-OUTCOME1c)
The OECD considers these impacts to contribute towards the UN SDG Decent Work and Economic Growth (Target 8.1).
Direct economic impact: How to measure it
The toolkit’s economic impact calculator sets out the steps to take in calculating direct economic impact.
The first of these involves sampling the spending patterns of event visitors, averaging these and then upscaling them to reflect the overall visitor population. The process requires some primary data collection through visitor surveys carried out either during or immediately after the event.
The second element is an assessment of the event budget to quantify organisers’ net spending in the host economy. This is the total spent with local suppliers and contractors minus event revenue generated within the host economy.
Accurate direct economic impact assessment requires:
- A clear definition of the geographic area within scope (noting that separate assessments could be made for the same event, using wider geographic areas, such as cities, regions and countries)
- An accurate count of visitor numbers
- Survey samples of sufficient size to provide robust data
Your subsequent calculations must account for factors such as ‘deadweight’ – economic activity that would have occurred without the event taking place – and ‘leakages’, defined as money from event-related economic activity that accrues to suppliers, contractors etc outside the host economy. This analysis is usually best carried out by a specialist service provider.
Direct economic impact assessment in action
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