Visitor Spending

Visitor spending is intended to provide an accurate base for economic impact analysis, as well as being a figure used for comparing the arts with other industries. However, as pointed out by Wilton and Nickerson (2006:17), accurate assessment of the economic impact of tourism remains difficult as there is no simple measure of how much travellers spend. A popular method of obtaining spending data is to survey actual visitors to the event – although several potential sources of bias exist with regard to survey based research. For example, Lind and Gronstad (2010:9) list:

 A difference between the reported spend and the actual spend by festival attendees;

 The issue of self-selection (who chooses to answer the survey, and who does not?);

 Potential errors based on research which isolates samples rather than the whole population;

 Invalid or incomplete questionnaires.

Spending averages can be estimated which are then applied to the volume of travel activity to facilitate the calculation of total direct (or first round) spending (Stynes and White, 2006:8).

Frechtling (2006:26) points out that different challenges are faced when estimating the annual visitor expenditures for a study area like a country, or city, as opposed to estimating expenditures at a given event held at a more specific site. Whilst the calculation of the annual economic benefits to a study area normally requires that all days of the year be represented by these expenditures, when measuring the expenditures related specifically to an event, the dates of the event serve as restrictions with the only possible extension being several days before, and after, the event to account for associated visitor spending (Frechtling, 2006:27).

At its simplest level, first-round economic impact is derived from multiplying the estimated average spending per person (or group), by the estimated number of visitors (or visitor groups) to the event in question. Herrero et al. (2002:44) pointed out that special attention should be paid to two issues under the heading of visitor spending: first, the problem of double-entry when

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calculating economic impact (for instance, tickets, which are an expense for the visitor, and a source of funding for the cultural programme); and second, the process of selecting the sample of individuals from which to draw data to measure the net increase in consumption as a result of the event. This second matter refers to the inclusion only of non-local visitors, or locals whose spending at the event is not substitutive of other expenses, an issue which is highlighted by Lind and Gronstad (2010:11). Both these issues will be discussed in greater detail later in the chapter.

A standard way of determining visitor expenditure, and one that was used in the assessment of the 2008 Chester Festivals, is to ask the visitors about their spending patterns during the event, and also to analyse a number of other factors which influence their activities (AAM, 2009:19).

Once on and off-site spending has been determined for visitors within the impact area, an average visitor expenditure amount may be calculated, and even broken down into different spending categories, for more in-depth analysis if required. Kruger et al. (2010:81) mention that it is information like this which can be of great use to festival management committees, as target marketing for future festivals can become more focussed and thus, cost-effective. Therefore it is suggested that whilst accurate visitor spending figures are of vital importance with regard to estimating a realistic impact amount, perhaps visitor spending figures are even more vital to the strategic decisions made with the festival‟s long-run sustainability in mind.

Herrero et al. (2006:47) illustrate graphically one way of collating visitor spending figures.

Visitor spending, in this instance, was split into two distinct sections: spending on equipment and facilities, and cultural spending (Tables 2.1 and 2.2, respectively). This was done in order that the effect on each of the sectors may be analysed separately, and it is suggested that this is one way in which policy could be developed for managing the effect of a festival on the specific sectors which it affects. The point is similar to that made previously except that it is looking

„externally‟ at impacts on policy – these policy implications are based on the perceived positive expenditure effects on the sectors around an event, rather than only for the event itself – an issue made mention of by Navarro et al. (2010:16).

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Table 2.1: Organisers Spending on Equipment and Facilities, Salamanca 2002

€ Millions

OVERALL SPENDING ON FACILITIES AND EQUIPMENT 120.9

Source: (Herrero et al., 2006:47)

Tables 2.3 and 2.4 indicate the economic impact of the spending on equipment and facilities,

€121 million, and the economic impact of cultural spending, €368 million. The tables are a progression of Tables 2.1 and 2.2, and serve to illustrate the effects of the festival as a result of the spending on equipment and facilities, and cultural spending, separately. These were arrived at by incorporating different multipliers for the various regions which felt the effects of the festival.

What the tables do is illustrate how an economic impact study can be structured, and specifically how the spending on an event can be categorized in order for the individual effects to be viewed

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in isolation. The different sizes of the multipliers (which range from 1.5 to 2.2) for the various regions gives recognition to the idea that the ripple effect, whilst potentially felt across a large geographical area, is not felt to the same degree (Navarro et al., 2010:16). Multipliers are discussed in greater detail in part (d) of this section.

Table 2.3: Economic Impact of the Spending on Equipment and Facilities, Salamanca 2002

Source: (Herrero et al., 2006:51)

Table 2.4: Economic Impact of Cultural Spending, Salamanca 2002

Multiplier Realistic Setting (€

millions)

Direct Effect 37.3

Indirect Effect 241.5

Direct and Indirect Effects (cultural spending) 278.8

Inner Sectoral Multiplier 1.273

Without participants no festival in the world today would exist, and the importance of the tourists to these events was emphasized by McKercher et al. (2006:56):

Multiplier € Millions

Overall investment in cultural & touristic infrastructures 120.9

Inner Sectoral Multiplier 1.546