Direct Economic Impact

Direct Economic Impact

The key elements of economic impact are Visitor Spend and Organiser Spend. Visitor Spend refers to additional expenditure within a defined geographical area from event-related visitors such as spectators and attendees. For most events, Visitor Spend forms the major component of economic impact. However, the Organiser Spend in staging an event can also generate additional expenditure in the host economy. Collectively, visitor and organiser spending in the host economy that is directly attributable to the staging of an event can be termed Direct Economic Impact.

Direct Economic Impact measures what is sometimes called the ‘first round’ of spending. In basic terms, this means direct transactions between those outside the host economy and those inside the host economy – for example between a visitor and the owner of a local restaurant. 

The basic measures found below are both relatively simple to capture and give a broad indication of the potential scale of an event’s economic impact. The intermediate measures button provides some further information on determining the Direct Economic Impact of an event using Visitor Spend and Organiser Spend.

Whilst good economic impact measurement requires intermediate-level assessment (involving surveys of people’s spending patterns), the basic measurements listed above have been shown to be relatively strong indicators of economic impact. For example, research conducted in the UK has consistently shown that the key determinant of total economic impact is the number of spectators attending an event. This is highlighted in the resource guidance below.The actual process and key stages to be used in determining a robust economic impact figure is dealt with in the Intermediate Total Economic Impact section.

Organisers/Funders may choose to indicate an event’s economic impact using these basic measures for varying reasons:

The document in the resources section below provides further information on how basic measures such as those listed above can be used to give an indication of the economic impact of an event. 

Estimating Direct Economic Impact

An estimate of the Direct Economic Impact provides an ‘at least’ position, which can be supported by a transparent audit trail of the assumptions used in the calculation process. Depending on the ultimate aspirations of the research and availability of requisite evidence, adjustments can then be made to the Direct Economic Impact in order to calculate the Total Economic Impact. There is a section in the economic section with further information on measuring the Total Economic Impact.

Routes to Measurement

There is broad consensus on the standard approach to measuring the economic impact of an event. The spending patterns of event attendees are sampled, averaged and then upscaled to the overall 'event population'. This is typically combined with an assessment of the net spending in the host economy by the event organiser to determine the Direct Economic Impact. This process typically requires some primary research in the form of surveying event attendees to evaluate peoples' spending patterns at the event. Whilst not excessively complex or longitudinal in nature, this research is normally best carried out by a specialist contractor.

Within this basic approach there is the potential for diverging results based on different interpretations of the stages within the process. There can be varying approaches to: defining the host economy, surveying and sampling parameters, treatment of local residents and measuring economic flows in and out of the host economy. Arguably the biggest scope for error is in upscaling visitor spending patterns to an inaccurate event population - a factor which highlights the importance of securing accurate attendance data.

Points 1 to 5 below give an overview of the key steps in measuring the Direct Economic Impact. Detailed guidance on steps 1 to 5 can be found in the Economic Calculator section.