“USES AND ABUSES OF ECONOMIC
IMPACT STUDIES IN TOURISM”
<COPY ON SEMOONCHANG.COM>
Prepared for
The World Leisure Congress
September 11, 2014
Mobile Alabama
AUTHORS
 Semoon


Gulf Coast Center for Impact Studies®
Mobile, Alabama
 Katarina


Chang (USA)
Petrovcikova (Slovakia)
KORA TRADE ltd
Kosice, Slovakia
 Hwa-Kyung


Kim (Korea)
Jeju International University
Jeju City, Korea
WHY IMPACT STUDIES
 Possible
motives
 Public relations: self-promotion
 Industrial location incentives
 Financial support for existing businesses
 Likely sponsors
 Existing & new businesses
 Event organizers
 Government
WHAT ARE IN IMPACT
STUDIES
Employment
impact
Wage impact
Impact on tax revenues
Retail expenditures by sector
Impact on supply chain (?)
Output impact (?)
WHO PREPARE IMPACT STUDIES
Leading
commercial companies
 IMPLAN (IMpact analysis for PLANning) in WI
 REMI (Regional Economic Models Inc) in MA
University
research centers
Economists of large corporations
Independent consultants: RIMS II
Regional Industrial Multiplier System
ECONOMIC IMPACT OF MARDI GRAS
(NOW EXPLAIN!)
Year of Mardi Gras in Reported in or by
Direct Total
Report
Impact Impact
______ ___________ _____________________ ______ _________
2011 New Orleans Tulane University
$144M $301M
2009 New Orleans Mayor’s Office
n.a.
$332M
2013 New Orleans mardigrasneworleans.com n.a.
“over $1B”
2010 Mobile (AL)
Chamber of Commerce $227M $408M
2013 Mobile (AL)
City news release
$227M n.a.
____________________________________________________________
A MODEL OF IMPACT ESTIMATION
DM
x m = TM
Where
 DM = direct impact
 m = multiplier
 TM = total impact
PRE-CALCULATION CHECK LIST
 Clear
definition of the impact area
 Subtraction of leakages from impact expend.
 Subtraction of transfer expenditures (retail)
 Visitor count in open gate v. ticketed event
 Local v. out-of-town visitors
 Wage v. non-wage expenditures
 Full-time v part-time v FTEs
 Short term events v. long term operations
 Negative impacts: economic & on-economic
T YPES OF IMPACT
Direct
effect = increase in inputs
purchased
Indirect effect = additional rounds of
spending in the supply chain of those
inputs
Induced effect = household spending
by employees throughout supply chain
multipliers = (direct + indirect +
induced)/direct
PROPER USES OF MULTIPLIERS
PROPER USES OF MULTIPLIERS!!!
 Employment
includes both full-time and part-time
 No constraint to local supply chain: goods & workers
 Changes in output assumed to lead to proportional
change in jobs; may not work for short-term events
 No time lag assumed between initial spending and
full impact
 New & outside expenditures only
 No impact by local employees living outside
 No transfer benefits: Impact of new Wal-Mart?
 I-O tables unique to individual industries; no simple
average of multipliers for several industries
TURNING ATTENTION TO
EXPENDITURES PER VISITOR
Do
we really know how
much visitors spend when
they visit?
Review of two festivals
ADD REGIONAL MAP
NATIONAL SHRIMP FESTIVAL, GULF SHORES (AL)
40TH ANNUAL NATIONAL SHRIMP FESTIVAL
IN GULF SHORES (AL)
 Oct.
13 (Thursday) to Oct. 16 (Sunday), 2011
 About 150,000 visitors (open gate)
 On-site questionnaire survey
 1,393 completed the questionnaire
 102 excluded for unreasonable responses
 1,291 kept for analysis
 845 by out-of-town visitors
 446 by local visitors
 Local defined as the Baldwin Co.(AL), Mobile
Co.(AL), Escambia Co.(FL) & Escambia Co.(AL).
BILOXI (MS) CRAWFISH FESTIVAL
20TH ANNUAL MISSISSIPPI COAST COLISEUM CRAWFISH
MUSIC FESTIVAL IN BILOXI (MS)
 Two consecutive weekends: April 19 (Thu) to 22
(Sun) and April 26 (Thu) to 29 (Sun), 2012.
 Local economy defined as Jackson, Harrison, and
Hancock Co. (MS)
 Unique to Festival – “rides”
 Total admissions 48,726; excluding
complimentary admissions
 726 useful out of 901 completed questionnaire
 339 completed by out-of-town visitors
 387 completed by local visitors.
IN BOTH STUDIES
 Size
of a group stated as 5+ assumed to be 5
 7 or more days of staying assumed to be 7 days
 Average size of group: out-of-towners
 126 day-outers 3.09; 212 over-nighters 3.04
 Average size of group: locals
 256 day-outers 3.04; 190 over-nighters 3.43
 If a visitor stays one night (2 nights), it is counted
as two days (3 days), etc.
 Lodging expenses for day-outers for renting a
condo or other facilities for stay during the day.
DAILY EXP. PER VISITOR 2012=100 NOT RECOMMENDED
BEFORE ADJUSTMENTS (RIDE, CASINO, MALL)
Out-of-town day outers:
 $102.49 for the Crawfish Festival (excl. admissions)
 $95.21 for the Shrimp Festival.
 Out-of-town overnighters:
 $113.42 for the Crawfish Festival (excl. admissions)
 $104.81 for the Shrimp Festival.
 Local day outers:
 $56.23 for the Crawfish Festival (excl. admissions)
 $109.20 for the Shrimp Festival (outlet mall nearby)
 Local overnighters:
 $88.94 for Crawfish Festival (excl. admissions)
 $61.07 for the Shrimp Festival.

DAILY EXP. PER VISITOR 2012=100 RECOMMENDED
AFTER DELETING EXP ON RIDE, CASINO, & MALL
Out-of-town day outers (average: $85.02)
 $74.82 for the Crawfish Festival
 $95.21 for the Shrimp Festival
 Out-of-town overnighters (average: $92.14)
 $79.67 for the Crawfish Festival
 $104.81 for the Shrimp Festival
 Local day outers (average: $48.90)
 $27.91 for the Crawfish Festival
 $69.88 for the Shrimp Festival
 Local overnighters (average: $41.74)
 $32.17 for Crawfish Festival
 $51.30 for the Shrimp Festival

GOING BACK TO IMPACT STUDIES…
 During
the ground-breaking ceremony
of a new retail shopping center in
Mobile on July 25, 2014, officials of the
chamber and the developing firm
expressed an opinion that the new
shopping center “won’t have a negative
impact on existing stores in the city”;
“Retailers in Mobile would not be hurt
by this.”
 Lagniappe July 31-Aug. 6, 2014, p. 9.
 After
reviewing impacts of 12 professional
stadiums and 12 major sporting events all with
public subsidies, Baade concludes that “The sum
total of the evidence does not suggest that sport
subsidies standing alone produce social value in
excess of their social costs,” and suggests that
“since the preponderance of evidence does not
support the notion that subsidies for sport alone
can serve as catalysts for economic development,
subsidy debates should focus on the public
benefits as they relate to the enhanced quality of
life imparted by teams, facilities, and sports megaevents.”

Powerpoint presentation by President Emeritus of the International
Association of Sports Economists for the Public Affairs Forum
Sponsored by the FRB of Atlanta, Birmingham, Alabama on July 17,
2014.
CONCLUSIONS
Impact
studies of short-term events are
likely to over-estimate their actual economic
impact;
Policy makers need to be aware of the
pitfalls inherent to these studies;
Subsidy debates should focus more on
public benefits v. costs, and less on
measured economic impacts, as they
relate to the enhanced quality of life that
may be generated by these events.