A FRAMEWORK FOR ASSESSING ‘TANGIBLE’ AND
‘INTANGIBLE’ IMPACTS OF EVENTS AND CONVENTIONS1
LARRY DWYER, ROBERT MELLOR, NINA MISTILIS, TREVOR MULES2
CENTRE FOR TOURISM AND HOSPITALITY RESEARCH
UNIVERSITY OF WESTERN SYDNEY
Published in Event Management 2000 Vol 6, No. 3, pp175-191.
INTRODUCTION
Governments are often asked to provide financial support for Special
Events/Conventions. There are sometimes good economic and non economic reasons
why a government may provide such support- conventions and events have the capacity
to create income and jobs in the short term and generate increased visitation and related
investment in the longer term. Events and conventions can also result in associated
social and cultural benefits to a destination, enhance exchange of ideas, foster business
contacts, provide forums for continuing education and training, facilitate technology
transfer etc.
Determining the role and value of Special Events and Conventions has been a
perennially difficult issue for Government to resolve. As a result, government
commitment to the resourcing of this activity and individual events/conventions has
tended to wax and wane over time. Many events have, however, been supported,
sometimes on the basis of a positive financial analysis, at other times on the basis of
broader considerations.
It can be argued that the success or contribution of a particular event/convention should
not only be measured by its direct financial contribution. For example, some
events/conventions may help to position and expose a destination as a high profile
international city and consequently lead to flow-on investment, regional headquartering
by major corporations, increased tourism receipts and the like. The 2000 Olympics is
probably the best current example of an event with such likely flow-on benefits. Others
such as ethnic festivals or events for disadvantaged groups may help to address
social/cultural issues in the community.
1
This paper is based on the results of a study undertaken for Tourism New South Wales in 1998/1999.(Dwyer et
al 1999a,b).The authors wish to express their thanks to Tourism New South Wales for permission to publish the
paper. Special acknowledgement is made to Jane Anderson, Policy and Planning Officer and John Rose,
Manager, Strategic Events, for their support and encouragement throughout the course of the study.
2
Trevor Mules is Professor of Tourism, Canberra University.
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Through Tourism New South Wales, the Government of the State of New South Wales,
Australia, has provided substantial long term funding and assistance to the hosting of
Special Events and Conventions in the State. Annual funding has been provided to the
Sydney Convention and Visitors Bureau (SCVB) and a Special Events Unit has been
established within Tourism New South Wales, with responsibility for co-ordinating a
comprehensive Events Strategy.
The main problem facing this or any government, for any given event/convention is:
what degree of support, if any, is warranted? The answer to this question varies
according to the perceived benefits and costs associated with the event. Many events
incur a financial loss to organisers but produce net benefits to the community. Clearly,
there is needed some framework of analysis that can be used to help determine which
events should be supported, and to what extent, and which should not be supported with
public funds. Ideally, the framework should also allow for consideration of the impacts
of the event on the government's overall budgetary position, since some of the outlay of
public funds will be recouped through taxes and charges resulting from increased
economic activity.
In the interests of developing a simple means of estimating potential benefits before an
event and actual benefits after an event, which draws to the maximum extent possible
upon existing data, Tourism New South Wales resolved to concentrate on measuring the
expenditure generated by Special Events and Conventions held within the State. In 1998
a key priority of the organisation was the development of a model which can provide
Government with data on the actual and estimated expenditure impacts of different types
of events and conventions and which has some estimating capacity to allow for an
objective comparison of the relative expenditure benefits of events/conventions seeking
financial or other assistance from the SCVB or Tourism New South Wales.
Events/conventions receiving substantial levels of assistance will be required to
undertake a post event evaluation which will yield further expenditure and flow-on
benefit data. This data would be fed into the model as it becomes available .
The focus of this paper will be on the usefulness of the framework for assessing the
impacts of events and conventions This paper will proceed as follows. First, the aims
of the project undertaken for Tourism New South Wales will be specified, and the
method outlined. Second, the framework which was developed for assessing the
economic and other impacts of events and conventions will be presented and
discussed.
In a subsequent article, to be published also in Event Management, it will be shown
how the framework can be used to achieve the main aim which motivated Tourism
New South Wales to commission the study: to use the framework as a forecasting tool
to inform government as to the ‘deservingness’ of different events and conventions to
receive public funding.
2 A Study for Tourism New South Wales
Tourism New South Wales commissioned the development of a framework for
assessing the economic impacts of events and conventions (exhibitions, conferences)
by type and by location.
This framework was expected to fulfil the following purposes:
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1) Serve as a device for discerning trends in economic impacts of events and
conventions by type and by location.
2) Serve as a guide to Tourism New South Wales in projecting the likely economic
impacts of future events and conventions by type and by location.
Tasks specific to fulfilment of these two aims included the following:
* Literature review of economic impact assessment methods to determine key
variables which must be measured for purposes of economic impact assessment of
events and conventions.
* Development of a framework incorporating key variables for economic impact
measurement of events and conventions by type and by location.
* Development of a forecasting model based on the assessment framework. The
forecasting model enables Tourism New South Wales to assess potential impacts on
the state economy of different types of events and conventions.
* Identification of existing sources of reliable and useable event/convention based
expenditure data, and estimations of economic impacts.
* Delivery of a uniform set of events/conventions data which can be incorporated
within the framework.
* Analysis of findings to date to reveal trends in respect of the economic impacts of
special events and conventions by type and location.
* Use of expenditure data as inputs to forecasting model to estimate potential impacts
of different types of events.
* Provision of input into the development of survey instruments which yield the types
of data necessary for economic impact assessment of events and conventions.
The focus of this paper is on the first two of these specific tasks. A second article
appearing in the next issue of this journal will address the remaining tasks.
3. A framework for Assessing Economic Impacts of Special Events
by Type of Event and by Location.
A literature search was conducted for articles addressing the theoretical basis of
economic impact assessment of special events, conventions, conferences and
exhibitions (the latter terms can be used interchangeably for the purposes of this
paper) Useful discussion was to be found in Burns et al. 1986; Getz 1987; Crompton
and McKay 1994; Crompton 1995; Dwyer and Forsyth 1997; Delpy and Li 1998;
Mules 1999). Following the literature search, and discussion of the state of the
evaluation literature, a framework was constructed which lists key variables to be
included in economic impact analysis. The Structure of Framework 1 enables
estimation of the economic contribution to a destination of different types of events
and different locations of events.
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The key input to economic impact assessment is the amount of expenditure by
visitors, accompanying persons, organisers, delegates, sponsors and others, e.g.
media. Only that proportion of expenditure which represents an injection of ‘new
money’ into an area is relevant to the calculation of the economic impacts. This
proportion of expenditure is referred to as ‘inscope’ expenditure (Burns and Mules
1986). Since this inscope expenditure has secondary (indirect plus induced) effects
on the economy, multipliers are used to determine the contribution to value added and
to employment.
The additional income and employment generated by the injection of ‘new money’
associated with an event will affect taxation revenue by the government. While this
effect is not additional to the changes in value added and employment, it may be
useful for the government to determine an events ‘fiscal impact’ separately from its
other effects.
Among other effects, the holding of an event, convention, exhibition in a particular
area may provide free publicity for the area as a tourism destination. The value of
such publicity may be imputed as advertising expenditure saved.
The holding of an event may also generate what are called ‘intangible’ costs and
benefits. By their nature, these costs and benefits are not quantifiable as precisely or
objectively as are the economic impacts.
Framework 1 allows each of the key inputs to economic impact assessment to receive
explicit recognition both in the assessment process itself and in the process of
forecasting impacts of different events/conventions by type and by location.
INSERT TABLE 1
The usefulness of the framework to Tourism New South Wales can be appreciated by
consideration of each column in turn.
1) Gross Direct Expenditure
Gross Direct Expenditure (GDE) relates to all purchases of final goods and services
associated with the event/convention from visitors, delegates, participants, organisers,
sponsors etc. regardless of source.
GDE is very relevant to tourism operators and other businesses since it comprises
their total sales revenue associated with an event. GDE constitutes the ‘initial effect’
of the multiplier process, the events incremental impact on final demand in the
destination. It is GDE which indicates the importance of events/conventions
compared to other modes of business activity in terms of total sales revenue and gross
employment generated.
GDE can be de-composed in several ways:
* By spending group: delegates, accompanying visitors, participants, sponsors,
exhibitors organisers etc.
* By industry allocation: allocation of expenditure to major industry categories such
as accommodation, transport, shopping, food and beverage,
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entertainment, etc.
* By geographic source of expenditure: from within region, from elsewhere in the
state, from outside the state (interstate and overseas).
* By timing: expenditure can be incurred before, during and after an event.
We can elaborate on each way of measuring GDE
GDE by Spending Group
Columns (1) and (2) enable GDE to be allocated between the two major categories of
spenders:
-
delegates/participants/accompanying persons
organisers/sponsors/exhibitors
It is important to recognise that organisers and sponsor expenditure must be
considered alongside visitor expenditure in estimating GDE associated with an event.
Unfortunately organiser/sponsor expenditure is often omitted in economic impact
assessment. Neglect of this category of event/convention related expenditure will
result in an underestimation of economic impacts.
GDE by Industry Allocation
Framework 1 is structured so as to recognise the fact that the major groups of purchasers
of goods and services are likely to have different expenditure patterns and hence
different economic impacts on the destination economy. In particular, it is to be
expected that event organisers whether self sponsoring or receiving as revenue
participant registration fees and funds from other sponsoring organisations will allocate a
higher proportion of expenditure to business services (meeting planners, equipment
rental, advertising etc.) than do typical visitors or delegates.
Expenditure surveys of the two major groups of spenders enables GDE to be allocated
to industry sectors.
In contrast to those studies which allocate GDE to a large range of products and
services, Framework 1 allocates event visitor, organiser and sponsor expenditure to a
small number of major industry segments. This facilitates multiplier analysis (see
below).
Unfortunately, many economic impact studies neglect organiser/sponsor expenditure
altogether despite the fact that it’s pattern may be very different from the spending
pattern of the typical visitor.
The recommended industry sectors which expenditure may be allocated to are as
follows: Accommodation; Food and Beverage; Internal Transport; Shopping;
Organised tours; Entertainment; Other (includes business services).
These categories capture the main types of events/conventions related expenditure.
The ‘other’ category allows for allocating organiser expenditure to business services,
a sector which has a different multiplier than other industry sectors.
GDE by geographic source of expenditure
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Framework 1 allows for the fact that delegate and other visitor expenditure can
originate from within a region, from elsewhere in the state and from outside the state.
It is only expenditure originating from outside the destination which represents an
injection of funds into the destination economy.
While surveys of visitor expenditure can help in the stimulation of funds injected into
the destination in contrast to expenditure originating from within, the matter is not as
straightforward when dealing with expenditure by organisers and sponsors. This is
why it has been allocated to a separate box in Framework 1.
Expenditure by event/convention organisers depends on revenues which they
received, the main sources being participant registration fees, public and private
sponsorship and financial support in kind. The revenues received may usefully be
divided into the following types by source:
-
Participant fees
Corporate Sponsorship
Government Sponsorship (Federal, State, Local)
Association Sponsorship
Other (may include payment in kind; provision of services free of charge)
Organiser revenue may originate from within a region of the State, elsewhere within
the State or from outside the State. For purposes of Tourism New South Wales
sources of revenue for event related expenditure can usefully be divided into the
following categories:





Ticket sales
Participant registration fees
Corporate sponsorship
Government sponsorship
Sponsorship from associations
The link between organiser revenues and organisers/sponsor expenditure is
displayed as Framework 2.
INSERT FRAMEWORK 2 HERE
The right hand side of Framework 2 appears within Framework 1, but it is clear that
sources and origins of organiser revenue must be determined prior to allocating Gross
Direct Expenditure by industry and by destination.
GDE by Timing of Expenditure
The expenditure “pre/post” event vs expenditure “during” the event distinction is
made because it is important to differentiate the amount which is spent within the host
destination and the amount spent outside of it. The regional impact will depend upon
the extent of additional expenditure within the region. To assess this, the surveys of
delegate expenditure must provide information on places visited by visitors and their
parties. Prepaid expenditure can be allocated to ‘pre/post’ or ‘during’ event
expenditure. Only pre/post event expenditure within the destination region impacts
on regional product and employment.
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2) Net Injected Direct Expenditure
Net Injected Direct Expenditure is taken to be that proportion of Gross Direct
Expenditure which is sourced from outside the region after allowance for '‘switching
effects'’ and '‘transferred expenditure'’ plus ‘retained expenditure', less expenditure on
directly imported goods and services. The expenditure representing an injection of
‘new money’ into an area is referred to as ‘inscope expenditure’ (Burns and Mules
1986).
ie.
Gross Direct Expenditure
less switched expenditure by visitors from outside region
less switched expenditure by resident visitors and sponsors
plus retained expenditure
=
Inscope Expenditure
less associated direct imports of goods & services
=
Net Injected Direct Expenditure
Switched, transferred and retained expenditure
Switched Expenditure. Injections into the host economy arise from expenditure by ‘in
scope’ visitors to the event,/convention expenditure by organisers which is sourced
externally and government corporate and association sponsorship which entails a flow
of funds into the region. “In scope” visitors refers to those spectators and
accompanying persons who would not have come to the destination had the event not
been held.
An amount should be deducted from injected expenditure which reflects expenditure
on event-related tourism by persons who would have visited a destination anyway if
the event had not been held and whose visit cannot be attributed to the event.
In estimating the level of injected expenditure into a destination it is necessary to
allow for ‘time switching’. For example, if a visitor from a foreign country had
planned to visit New South Wales in any case but brought the visit forward to
coincide with an event there is no incremental expenditure resulting from the event. It
may be assumed that the same amount would have been spent in the state, albeit at a
different time.
The extent of ‘time switching’ may be expected to vary according to the tourism
attractiveness of a destination. For special events held in a popular tourism
destination such as Sydney, it may be reasonably high.
A complication arises here in that some visitors who ‘switch’ the timing of their visit
to a destination to coincide with an event may stay longer and spend more than they
otherwise would have. In such cases the incremental expenditure must be regarded as
injected expenditure associated with the event. This type of information can be
gained through the visitor expenditure survey.
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Transferred expenditure. For purposes of economic assessment it is assumed that
residents of a host city, or a state, who attend an event would, in its absence, have
spent the same amount on other goods and services. More specifically, it is assumed
that expenditure by residents attending the event represents a transfer of expenditure
either from one location to another (eg. purchases of food and beverages) or from one
expenditure category to another (eg. purchase of accommodation instead of clothing
items). In like manner, sponsorship from local sources or from within the state is
regarded as transferred expenditure unless there are reasons to believe that an
additional injection of funds has resulted because of the event sponsorship. If local
sponsorship of an event was not forthcoming, it is likely that the funds would have
been used to sponsor an alternative event or have been allocated on other expenditure
activity.
Retained expenditure. Net Injected Direct Expenditure also includes ‘retained’
expenditure imputed to those event/convention visitors and participants and
associations and firms located within a region who would have spent money outside
the region had the event been held elsewhere. Retained expenditure can be imputed
to event visitors, organisers and sponsors and equates to the ‘import replacement’
function of an event held within, rather than outside, a particular region. Money
which would otherwise be spent outside the destination area, except for the
occurrence of the event, represents an ‘opportunity revenue’ for the host destination.
Some researchers eg Getz (1987), dispute the legitimacy of including retained
expenditure for purposes of economic impact assessment of events on the grounds
that it cannot be measured accurately and , in any case, it does not represent an
injection of ‘new money’ into a destination. Given these concerns it is perhaps best to
include retained earnings only when the event/convention held in some destination
resulted from a competitive bidding situation. In such circumstances, the retained
expenditure can be estimated on the basis of estimated losses of expenditure by
residents who would otherwise have travelled to the successful host destination for the
same event/convention.
Direct imports of goods & services. The import content of final goods and services
associated with expenditure on an event represents a leakage out of the host economy.
In general, sub-regions of an economy have a higher overall propensity to import than
the state as a whole since they tend to be less self-sufficient in producing goods and
services for tourist needs. This observation reinforces the importance of selecting
carefully the geographical area of the region under analysis.
3) Multiplier Analysis
Once Net Injected Direct Expenditure is estimated, the total value added and total
employment impact of the direct spending and re-spending associated with an event
can be determined by using input-output multipliers. Four commonly used multipliers
are output, income, value added and employment multipliers. They provide
respectively a measure of the effects if an exogenous change in final demand on the
output of industries in the economy; income earned by households because of new
outputs; value added at factor cost due to the change in output (ie. wages, salaries and
supplements earned by households plus gross operating surplus of business);
employment generated as a result of increased output. The multipliers can be
decomposed into their various effects which are initial, production-induced and
consumption-induced effects.
The multipliers derived by taking account of both production-induced and
consumption-induced effects are Type II multipliers and it is these multiplier values
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which are relevant for assessing the economic impacts of event-related tourism. Type
II multipliers can be contrasted with Type I multipliers which exclude consumptioninduced effects. However, the estimation of consumption-induced effects using inputoutput tables assumes that those earning the extra income were not previously
employed. Since these workers would have at least been receiving unemployment
benefits, not all of their consumption’s represents a net addition to final demand.
Thus the Type II multiplier values represent an upper bound to the level of increased
economic activity resulting from the increased expenditure due to the event, while the
Type I multipliers (including production-induced effects only) can be considered the
lower bound. It is likely that actual economic impacts will more closely approach
Type II multiplier values.
For purposes of Tourism New South Wales it was recommended that value added and
employment multipliers be used, with caution being recommended regarding use of
the latter.
While some economic impact assessments of events and conventions, in Australia
and overseas, still tend to apply output multipliers to expenditure to generate
economic impacts (eg. Arts Victoria 1994, Ritchie 1996), these exaggerate the
impacts, often providing misleading information on the economic contribution of the
event/convention to the destination. Output multipliers measure the increase in gross
turnover in the destination by summing all the intermediate transactions resulting
directly and indirectly to satisfy a change in final demand. They therefore
substantially exaggerate economic activity at any given time. By contrast, value added
multipliers (sometimes referred to as Gross State Product multipliers), measure only
the change in net economic activity at each stage of production. Unlike use of output
multipliers, value added multipliers do not double count changes in economic activity.
They are the preferred measure for the assessment of the contribution of an
event/convention to a State economy (Mules 1999).
The sizes of the value-added and employment multipliers will vary according to the
region under study and will reflect the different input-output tables estimated for
different regions. Multiplier values for a region within the State, given greater
leakages of expenditure, will be lower than those for the State economy as a whole.
For any given level of expenditure on an event the increment to value-added and
employment in the region will vary according to which particular industries are the
recipients of the direct expenditure. Direct expenditure allocated to each industry
(hotels, restaurants, transport etc.) can be multiplied according to the relevant sector
multiplier value to yield an impact estimate both in aggregate and by industry
segment. The levels of direct employment associated with Net Injected Direct
Expenditure can be multiplied according to the relevant employment multipliers for
each industry to determine the corresponding increments to employment generated by
additional event-related expenditure.
Caution needs to be exercised in use of employment multipliers for input- output
models. While the employment impacts of an event can be estimated from
employment multipliers based on input-output tables, use of these tends to exaggerate
the amount of employment generated. The underlying reason is that employment
generation models based on input-output tables assumes a constant proportional
relationship between sales turnover and the level of employment. However, different
firms, according to the nature and scale of their business, have different marginal
propensities to employ labour in the context of increased sales. In some firms,
staffing levels may be relatively insensitive to changes in turnover, while other forms
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may seek better utilisation of those currently employed (eg. provision of overtime,
weekend work).
Special events are not likely to generate lasting employment effects because of their
‘one off’ or short term nature (Delpy and Li 1998), and thus the use of employment
multipliers based on input-output tables is problematic. A broad indication of the
(full-time equivalent) employment impact of a special event can be obtained by
dividing the economic impact by average weekly earnings, and then dividing this
figure by 52 (weeks); this method has been used in some Australian studies (South
Australian Tourist Commission 1996).
It may be noted briefly that multipliers generated from Input-Output models are
subject to the same criticisms which are levelled against that modelling process, viz,
that the underlying assumptions are unrealistic (Dwyer and Forsyth 1998). For large
events, such as the Olympic Games, changes in final demand will tend to have
‘feedback effects’ on other industries which cannot be taken into account using InputOutput modelling. In such circumstances, Computable General Equilibrium (CGE)
modelling is regarded as a superior method of economic impact estimation.
Multipliers based on CGE models tend to be smaller than those generated by InputOutput tables. CGE modelling is being increasingly used in Australia to estimate the
economic contribution of tourism to the nation as a whole and to its individual States
under different assumptions about labour markets and macroeconomic policy
settings.. A CGE model was recently employed to estimate the economic impacts of
the Sydney Olympics (New South Wales Treasury 1997). Framework 1 allows use of
multipliers based on either input-output Tables or CGE modelling.
4) Economic Impacts
Framework 1 enables assessment of the economic impacts of net injected expenditure
on



Output
Value added (ie. State Gross Product)
Employment
This assumes that multipliers from an Input-Output or other model are available. In
the absence of such multipliers it may be appropriate to simply estimate the event
generated expenditure without attempting to estimate the economic impacts on Gross
State Product (Higham 1996)
5) Media Impacts
A significant benefit for an event destination and the state can derive from media
coverage of the event before, during and after its occurrence.
Favourable publicity received by an event destination, conveyed by various forms of
media nationally and internationally, counts as a benefit of holding the event.
Because an event may enhance the tourism image of an area, there is a ‘background’
economic benefit attributed to events by future visitors attracted by this enhanced
image. This image enhancement can have long term positive effects on tourism and
tourism investment (Ritchie and Smith 1991).
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While the benefits to an event destination from potential publicity are difficult to
quantify and this may be included among the intangible benefits of hosting events
(see below), the immediate impact of media coverage can be measured in terms of the
input cost of such media coverage. Techniques exist for inputting the costs of
advertising dollars saved through media coverage of an event. By such means, media
impacts of an event can be quantified in dollar terms.
Of course, several problems challenge the measurement of advertising costs saved,
not the least of which involves the treatment of unfavourable publicity, the labour
intensiveness of the estimation process and the degree of subjectivity involved in the
estimation process.
6)
Fiscal Impacts.
The hosting of an event/ convention within the State of New South Wales will have
implications for Government Revenues and Outlays.
Fiscal impact refers to the Government revenue generated through
event/convention related expenditure less associated Government
expenditure.
I.
Possible revenue sources for the State of New South Wales include
taxes or fees imposed on:

Visitor Expenditure: eg. the Sydney Bed Tax; State taxes on casino
turnover;State revenue from proposed Goods and Services Tax (GST)

Business Expenditure: eg.Stamp duties, licence fees, property
taxes,occupational licence fees, State payroll taxes.

Ticket sales on state owned public transport and admission fees to state
owned attractions.
Estimates of government revenues from taxation are measured by
applying the appropriate category tax rates to the additional convention
related spending for that category (eg. additional relevant hotel receipts
multiplied by bed tax).
II.
Possible government expenditure items include:

Public expenditure on construction of facilities and supporting
infrastructure eg. roadworks.

Public expenditure on provision of additional police, ambulance officers
etc. less contributions from convention organisers.

Government subsidies relating to events conventions and exhibitions.
Where the government subsidises an event or convention, the amount will
normally be included in the category of transferred expenditure. However,
Framework 1 also recognises that government expenditure associated
with a convention can represent an injection of ‘new money’ into an area
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provided that the expenditure would not have been forthcoming within the
area except for the event.
The question must be asked: was the money redirected from another
project (public capital switching), and, if so, was that project in the impact
area or outside? (Crompton 1995)
If the state government reallocated funds originally earmarked for roads in
Local Government Area X to build an event facility or convention centre in
Local Government Area Y, this switching would be a net gain to LGA Y
and a net loss to LGA X.
7) Intangible Impacts
There are always particular impacts associated with an event, convention or
exhibition which are unable to be quantified in an objective way.
Framework 1 identifies two categories of benefits and costs which can be
regarded as ‘intangible impacts’ of conventions viz. social impacts and
intangible ‘economic’ impacts.
Social Impacts
benefits
Three categories of social benefits are:

Community Development
Benefits of an event/convention may include such emergent values as
increased community interest in sport. This may lead to greater participation,
creating obvious community health benefits as well as increased use of sport
equipment. A cultural event may increase cultural awareness among young
people.
Community Development may also take the form of increased investment in
facilities which can be used by the community before and after an event.
Residents of Sydney have had access for some years to several of the
facilities constructed for the Olympics, including the main stadium and the
swimming pool.
Attendance at conferences draws together leading national and international
specialists and practitioners in their fields. They bring together world leaders
in science, medicine and business, strengthening a destination’s internal
capabilities in each profession. Community development also encompasses
increased educational opportunities. Conventions also provide opportunities
for access to new technology, exchange of ideas, establishing and
maintaining valuable business and professional contacts, a source of
continuing education and other favourable socio-cultural impacts (Dwyer and
Mistilis 1997).
Estimation of community development benefits requires judgements as to the
likely effects of events/conventions in promoting a healthy lifestyle or
increasing cultural awareness or in promoting understanding between
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different groups of people. Additional investment in facilities available for
community use provides one indicator of the long term potential benefits from
this source.

Civic Pride
This is sometimes referred to as ‘psychic income’. For many communities,
playing host to a special event, instills a sense of pride in their city or region.
Residents often feel a sense of excitement about an event held locally. Home
hosting opportunities, providing social and cross cultural interaction, are often
explored. Residents of Sydney and, indeed, Australians generally, have
expressed considerable pleasure in Sydney’s nomination as host city for the
2000 Olympics.

Event Product Extensions
Types of event product extensions which have occurred in host cities or
regions include youth sports clinics, educational training programs and
philanthropic/social causes involving sports scholarships, youth, the elderly,
the underprivileged etc. (Crompton 1995)
Their valuation requires analysts judgements as to the likely catalytic effects
of the event on such facilities or activities on persons’ wellbeing, and the
extent to which additional investment in such facilities or activities may be
generated by the event/convention or exhibition.
Costs
A major category of social costs is the disruption to resident lifestyles associated with
a convention or exhibition. Examples include: traffic congestion ,crime, litter, noise,
crowds, property damage, vandalism. Conferences and conventions have traditionally
been associated with waste in the form of printed material, conference satchels, nonreusable exhibition materials and disposable food and drink containers. Recently,
more account is being taken of responsible environmental practices by international
conference and congress organisations with a move towards ‘green’ meetings
(Cheung 1999).
Typically, these costs are very difficult to measure. The standard economic method of
valuing impacts such as noise effects or crowding is to determine the willingness to
pay of the people to avoid them. This can be done through hedonic pricing or
contingent valuation methods (Tribe 1995). Time lost due to congestion can be
estimated and priced at average wage rates. The increased incidence of crime
associated with an event can be estimated from statistics for previous events as can
property damage and vandalism. Costs of cleanups of litter can also be estimated.
‘Intangible’ Economic Impacts
benefits
The following sorts of intangible economic benefits may be associated with a convention
or exhibition.
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
Long Term Tourism Promotional Benefits
The publicity accorded to a convention or exhibition may enhance awareness of the
destination and create a favourable image to potential tourists. For example,
according to ICCA, Sydney, selected as Olympic City 2000, has ranked 1st as the
most popular destination to host an international meeting since 1997. This can lead to
increased visitation and associated expenditure over the longer term. The event may
enable new markets to be tapped. Of course, a poor reputation can be developed if
facilities and services come to be regarded as inadequate .eg. Seville’s unsuccessful
hosting of EXPO’92 ( Smith and Jenner 1998).
One indicator of long term tourism promotion benefit is the expected volume of
repeat visitation to the event/convention or exhibition destination and this can be
estimated from survey responses. Another indicator is the amount of publicity
generated by the event, domestically and world-wide. Future injections of tourist
expenditure can be predicted from forecasted additional numbers multiplied by visitor
average expenditure figures. In a similar manner, forecasts of investment sourced
from ‘new money’ can be made. One (rough) method of estimating this is to assume
that investment of new money in tourist related facilities is in the same proportion to
additional tourist expenditure generated by the convention as it is to total investment
in such facilities prior to the convention.

Induced Development & Construction Expenditures
Conventions, Exhibitions, particularly those scheduled by a dedicated Convention
Centre, generate additional investment in tourism/recreation infrastructure, thereby
increasing the attractions available in an area for use by locals as well as visitors. The
Sydney Olympics has generated around A$5 Billion worth of stadia and sporting
infrastructure as well as investment in road, rail and transport interchange systems, all
of which will benefit residents of, and visitors to, Sydney into the future.
Conferences, conventions and exhibitions trigger private and public investment
particularly in tourism development such as new hotels, restaurants, shopping centres,
and urban renewal to include new roads, improved appearance through streetscape
beautification, rehabilitation or creation of green space.

Additional Trade & Business Development
The hosting of events, conventions and exhibitions can lead to growth of existing
businesses and establishment of new ones. Conferences can play a major role in
small business development in particular. Convention business is often generated in
destinations hosting events.
Stimulation of business activity within and between nations, helps forge stronger
business links between firms, providing opportunities to promote both the national
interest and international cooperation.
The hosting of successful conventions and exhibitions often appears to be associated
with increased business confidence (the business counterpart to increased civic pride).
This increased business confidence in turn induces greater business activity including
increased business investment. Under this heading we may also include increased
economic activity by residents who are not convention attendees (ie. bar, restaurant
and home consumption expenditures).
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Conventions and exhibitions provide valuable international exposure for a host
destination among the international business, scientific and educational communities
and their families. Attendance at conferences draws together leading national and
international specialists and practitioners in their fields. They bring together world
leaders in science, medicine and business, strengthening a nation’s internal
capabilities in each profession. Community development also encompasses increased
educational opportunities. Meetings and conventions are a source of continuing
education and are a forum for developing and maintaining professional contacts.
Conventions also provide opportunities for access to new technology, exchange of
ideas, establishment of valuable business and professional contacts and other sociocultural impacts.
Successful meetings, conventions and exhibitions can be effective marketing tools for
attracting new business and visitors to an area. They offer companies an effective
means of promoting their products and services to a targeted audience.
Additional trade and business development can be estimated by surveying direct and
indirect suppliers of goods and services associated with event/convention expenditure.
Increased convention business often follows major events and estimates can be based
on experiences of other destinations domestic and world-wide. Conventions and
exhibitions have generated business development opportunities for local firms in
supplying products and services and have generated export opportunities for some
manufactured products. Trade and business development also results from additional
spending by residents associated with an event.

Increased property values due to facility construction/improvement
Property values may rise for land and buildings in certain areas of the
event/convention and exhibition destination. This would include the value of
improvements to local-owned properties provided by the host organising committee.
Increased property values, which increase the wealth of resident owners, can be
estimated with a good degree of accuracy.
Costs
The following types of intangible economic costs may be associated with an event/
convention:

Resident Exodus
The holding of a convention, exhibition may cause some residents of a destination to
travel out of the area for all or part of its duration. The event destination thus suffers
a loss of sales revenue which would otherwise have accrued to local businesses.
Indeed tour operators often provide incentives for resident exodus. For example,
international airlines, faced with the prospect of returning from Australia with empty
seats during the Olympics, are offering large discounts on outbound travel from
Australia.
Resident exodus results in expenditure of money transferred to outside of the
destination. Estimates of resident exodus numbers and duration of absence can be
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multiplied by average household expenditure data to determine lost revenues to the
destination.

Interruption of normal business
Residents may spend less on purchases of goods and services during a convention,
even if they remain within the destination. For example, they may be less inclined to
dine out because of perceived ‘crowding’ of restaurants or traffic congestion.
Business operators in Sydney have complained of loss of business due to Olympics
associated roadworks for up to three years prior to the Games.
‘Crowding out’ can occur. Event visitors may occupy accommodation rooms or
airplane seats which otherwise may have been filled with other visitors. This reminds
us that the net expenditure related to an event/convention may be very different from
the gross inscope injected expenditure.
Interruption of normal business can be determined from estimates of reduced sales
revenues to local businesses which tend to be associated with some types of
conventions and exhibitions. Hotels that are not involved in a convention tend to lose
some normal trade when conventions are held nearby and restaurants, nightclubs etc.
sometimes receive less patronage from residents who perceive that congestion from
convention visitors will diminish the pleasure of their outing (another type of
‘crowding out’ effect). Estimates of lost revenues of local businesses due to events
can be estimated from business surveys.
Of course, events/conventions and exhibitions can help to stabilise tourism inflows to
a destination. They can provide local tourism operators with useful knowledge of
visitor numbers. Relatively long lead times which result in hotel and tour bookings
being made years in advance greatly assist in the financial planning of tourism
facilities.

Under-Utilised Infrastructure
A common legacy of many past events including conventions and exhibitions,
worldwide, has been a huge debt and much under-utilised infrastructure. Operating
losses subsequently incurred by facilities constructed for a specific event must be
regarded as economic costs over the longer run (Smith and Jenner 1998).
The problem of under-utilised infrastructure arises when facilities built primarily for
an event are under utilised following the event. Operating losses combined with
interest repayments on debt may comprise a continuing burden for local tax and
ratepayers.
Given the growth in Convention Centres in many countries and many cities within
countries with consequent increased competition for international conventions, underutilisation of infrastructure is a constant threat.
By their nature, these types of impacts are very difficult to quantify in an objective
way and, in some cases, quantification may be impossible to achieve. While we have
included some discussion of evaluation methods in our exegesis of the ‘intangible’
impacts which can be included in Framework 1, this discussion is in no way intended
to be a detailed analysis of evaluation methods. On the contrary, the discussion thus
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far is only intended to be indicative of the directions in which attempted evaluations
are to proceed. The discussion here does, however, highlight a very important
research agenda : the study of the advantages and limitations of techniques of
economic evaluation of ‘intangibles’. While some discussion has taken place (Bull
1995, Tribe 1995, Sinclair and Stabler 1997) this topic has not as yet been addressed
in detail by tourism researchers.
Given the ‘intangible’ nature of many of these types of costs and benefits, it was is
recommended that staff at Tourism New South Wales, with appropriate consultation,
allocate weightings to each cost/benefit category ranging from +, ++ or +++ for
benefits to -, --, or --- for costs.
The recommended method has the advantage of requiring the analyst to determine the
relative weighting to be attached to social impacts and intangible economic impacts.
It enables judgements to be made regarding intangible impacts. Too often these types
of impacts are neglected altogether in economic impact studies of conventions and
exhibitions. In studies where they are acknowledged, very often they are treated in a
very unsystematic way. The recommended method requires intangibles to be
recognised and given a qualitative weighting. It ensures systematic treatment of
intangibles in the overall impact assessment of any convention or exhibition.
CONCLUSIONS
This paper has sought to develop a framework for assessing the “tangible’ and
‘intangible’ impacts of events and conventions. Doubtless, further refinements can
be made to the framework over time.
The framework, as developed, is useful in several ways. Its most obvious use is in
facilitating the process of evaluation of an event or convention to determine its
economic contribution to the host destination. In this role the framework is
employed after the event/convention to guide the assessment process.
Another potential role for the framework is to guide the preparation of
questionnaires and other survey instruments used to gather the expenditure data
which form the crucial input into the evaluation process. This data must include
organiser expenditure as well as visitor expenditure. In this role the framework
can help to foster the development of questionnaires and surveys which yield the
type of information necessary for credible impact assessment of different events,
in different locations and held at different times. The more consistent is the
assessment process worldwide, the greater the scope for researchers into events
and conventions tourism to derive general propositions regarding the impacts of
these forms of special interest tourism.
A third use of the framework is that it can function as a model for forecasting the
tangible and intangible impacts of events/conventions. Indeed, its potential
usefulness in this role motivated the study commissioned by Tourism New South
Wales. In this role it can provide valuable information for an organisation such as
Tourism New South Wales, in its decisions as to which events to support or not
support with public funds. In a follow up article, to appear in the next issue of
Event Management, the usefulness of this framework as a forecasting model will
be explored.
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References
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Impact of a Special Event, The Centre for South Australian Economic Studies,
Adelaide
Burns J.P.A and Mules T.J (1986) “ An Economic Evaluation of the Adelaide
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Planning and Evaluation of Hallmark Events (pp 172-185), Aldershot, England:
Avebury
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Dwyer L., R. Mellor, N. Mistilis, T. Mules (1999a) “A Framework for Forecasting
the Economic Impacts of Events by Type and by Location”, prepared for Tourism
New South Wales, May.
Dwyer L., R. Mellor, N. Mistilis, T. Mules (1999b) “A Framework for
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Getz D. (1987) “ Events Tourism: Evaluating the Impacts” in J.R.B. Ritchie and
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FRAMEWORK 1
Industry Segment
GDE by Source
Visitors/ Organisers
Delegatesrs /Sponsors
GDE by Visitor/delegate by timing of
expenditure
During
Event
Pre/Post Event
Within
Elsewhere
Destination in NSW
GDE by Visitor/Delegate by source of
expenditure
From
From
within
elsewhere
destination in NSW
Outside
NSW
I’State O’Seas
Accommodation
Food & Beverage
Internal Transport
Shopping
Organised Tours
Entertainment
Other
Subtotal
TOTAL
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From outside
NSW
page 1
GDE by Organisers by source of
expenditure
From
From
From outside
within elsewhere
NSW
destination in NSW
I’State O’Seas
Gross Direct
Transferred Expenditure
Expenditure
Visitors/
Delegates
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Organisers
/Sponsors
Switched Expenditure
Retained Expenditure
Visitors/
Delegates
Visitors/
delegates
Organisers
/Sponsors
Inscope
Imported Net Injected
Expenditure Goods & Expenditure
Services
Organisers
/Sponsors
Multipliers
Output
page 2
Value
Added
Employment
Economic Impacts of Net Injected
Expenditure
Output $
Value
Added $
Employment
Numbers
Additional Impacts
Media
Impacts $
Intangible Impacts
Fiscal Impacts
Benefits
Social Benefits



Community Development
Civic Pride
Event Product Extension
Economic Benefits




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Long Term Promotional Benefits
Induced development and
construction expenditures
Additional trade and business
development
Increased property values
Costs
Social Costs







Disruption to resident lifestyles
Traffic congestion
Noise
Vandalism
Crowding
Crime
Property damage
Economic Costs



Resident exodus
Interruption of normal business
Under-utilised infrastructure
page 3
Incomings
Outgoings
Framework 2
Type Of
Revenue
Organiser Revenue
Origin of Revenue
Within
Region
Ticket
Sales
Registration
Fees
Corporate
Sponsorship
Government
Sponsorship
Association
Sponsorship
Within
State
Outside
State
Allocated to
Industry
Segment
Organiser/Sponsor Expenditure
Gross Expenditure Allocated
By Industry & By Destination
Within
Within
Outside
Destination
State
State
Accommodation
Food &
Beverage
Internal
Transport
Shopping
Organised
Tours
Entertainment
Other
TOTAL
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TOTAL
page 4