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Calculating the economic impact of festivals and events

Two dancers in traditional Mexican dance clothing dancing at a cultural event.

Economic impact includes direct, indirect, and induced effects. Direct effects are the initial change in the economy.

For festivals and events, this is spending by attendees. It includes spending both at the festival/event and at other businesses around the community. Indirect and induced effects are the economic activity generated by businesses throughout the region, even if they do not have visitors from the festival or event. For example, festivalgoers may not visit a local accountant, but that accountant might have a client who serves festival attendees for their job.

Direct effects: Visitor spending

For festival and event economic impact studies, the analyst calculates the direct effect by multiplying the number of visitors times per person spending, which is more challenging than it appears.

Number of visitors

For some situations, determining the number of visitors is simple. Ticketed events, for example, make it easy to track the number of people in attendance. Events with open gates (for example, county fairs) make attendance harder to measure. There are four main approaches to quantifying the number of visitors, as listed below. Each has its own benefits and challenges.

  1. Ticketing and/or registration counts
  2. Gate counts
  3. Crowd counts
  4. Sky counts

All approaches, other than ticketing, require a plan to count the number of attendees. This is often accomplished by doing scheduled counts. For example, volunteers count the number of people coming through the entries for the first 15 minutes of an hour. This requires a sampling plan, so you are collecting information about attendance at different times during the festival or event. For example, attendance might be high on Saturday morning and low on Sunday afternoon.

It is important to note, however, that there is always a tradeoff between the amount of effort in counting and accuracy. Having more counting sessions will increase accuracy, but it also requires more resources.

Spending per person

Economic impact studies typically use a visitor survey to determine spending per person. Survey approaches can vary. The appropriate approach will depend on the type of festival or event, which include the following.

  1. In-person intercept (paper and pencil/electronic)
  2. Online
  3. Hybrid

In-person intercept

The classic approach is to recruit surveyors to intercept people at the festival/event. The strength of this approach is that the number of surveys can be controlled. For example, you hire a surveyor to collect 15 surveys and they keep working until they collect that number of surveys. The downside is that you need to recruit enough people (either paid or volunteer) and you must coordinate schedules.

As with visitor counts, a key component of the intercept survey process is to have a sampling plan. Visitor spending can vary significantly based on the time of day and day of the week. If your festival or event has multiple days, collecting data from different days will be critical. Likewise, if your festival or event is multiple activities, you will want to collect surveys from those different activities. A town celebration might have a street dance on Saturday night and a parade on Sunday afternoon. The demographics of the visitors and their spending patterns are likely quite different.

Online survey

Another approach is to use an online survey. An online survey works well if you have access to email addresses or social media accounts that target the visitor population. You do have to guard against sampling bias (e.g., certain ages might be more present on Facebook versus TikTok). The strength of this approach is that it is easy to deploy. The drawback is that you cannot control the number of surveys collected. You could launch the survey and not receive enough responses to feel confident with your results.

As with visitor counts, there is a tradeoff between the number of surveys collected and accuracy. Extension recommends setting a target of 400 surveys, depending on the size of the event.

Indirect and induced effects: Modeling

Indirect and induced effects are calculated using an input-output model. Extension uses the IMPLAN model for analysis. There are other options, but IMPLAN is well-suited for a variety of reasons. If you want to go beyond measuring the direct effect of your festival and event, you will need a model. For some communities, however, just having the direct effect is enough information.

Extension’s economic impact analysis approach and resources

Extension has conducted dozens of economic impact studies for festivals and events across Minnesota. We have covered local community events (such as the Henderson Classic Car Roll-In) and events with a worldwide draw (Grandma’s Marathon). With experience, we have developed the following approach. Extension does charge a fee to recover our staff and resource costs.

Step 1: Survey design and sampling plans

The first step is creating a survey and developing the sampling plan. We have staff with expertise in both.

Step 2: Hire a local coordinator

Extension strongly recommends the community identify a local coordinator. This can be a person hired for the specific project or a staff member with the ability to spend time on the project. This person is critical in coordinating the project on the local level. This person should have strong connections and networks, be responsible and organized, and enjoy tracking details.

Step 3: Recruit local surveyors

If the most appropriate approach is an intercept survey, you will need to recruit people to collect surveys. Some communities choose to hire surveyors whereas others use volunteers. The best approach depends on the festival/event and the available resources. Some events will find they are short on volunteers to even run the event and will hire surveyors. Extension can provide insight into how many surveyors will be needed based on the sampling plan.

Step 4: Train local coordinator

The local coordinator is a critical person in the process. It is important they understand the role and responsibilities. Extension can help train the local coordinator.

Step 5: Train local surveyors

While collecting surveys is a seemingly straightforward activity, there are criteria and best practices. A female surveyor, for instance, might feel more comfortable approaching female attendees, but to avoid bias, males and females should be surveyed equally. Extension has a training module for local surveyors.

Step 6: Deploy survey

The local community will spend time collecting surveys. It is imperative that the community track survey collection and adjust the process if needed.

Step 7: Enter data

If paper and pencil are used to collect surveys, the surveys will need to be entered into a spreadsheet. Extension has students who can complete this task.

Step 8: Analyze survey data

Once the data is collected, it will need to be cleaned and analyzed. From an accuracy standpoint, there are methodological approaches that should be observed. Extension can analyze the data and we highly recommend using our services, as we have in-depth experience. As mentioned, if you want to determine economic impact, you will need an input-output model.

Step 9: Disseminate the information

When everything is complete, you will want to share your results. Extension typically writes a report summarizing the results. We can also make infographics.

Interested in learning more?

If you would like to learn more about Extension’s approach, staffing and resources, please contact the report authors:

  • Xinyi Qian, tourism specialist and Extension state specialist, 612-625-5668, qianx@umn.edu
  • Brigid Tuck, senior economic impact analyst, 507-389-6979, tuckb@umn.edu 
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