How Do You Find the Economic Impact of An Event?

Table of contents


This report examines the events that can have positive impacts on the economy and communities of host areas. The impacts provided events that are widely recognized and needed to be measured each year.

According to Allen et al (2008) stated that events play a role in the lives of communities, they are seen to provide important activities and spending outlets for locals and visitors, they can also enhance the image of the local community. Events are considered as having an integrating effect can when introduced into a social system. Events can improve social relationships in surroundings, for attaining relationships between people for strengthening people’s abilities to understand to one another and for people’s well-being. The social function of events and festivals is closely related to the values that a community regards as essential to its philosophy.

An event is offering based on simultaneous production and consumption. For the event output to occur, the event attendee must attend the event and consume the event product. An event is a personal service and can only be consumed by the event visitor attending the event. The implication of this for the host community where the event is taking place is that not only will the community be subject to the changes created by the stimulation and change in direction of local economy, the community will also come into contact with a foreign population during the production process. Changes in economic growth and development will always be associated with changes in the socio-cultural characteristics of a particular area or region (Yeoman et al. 2004). As events bring visitors into contact with the local host community, this adds further dimensions to the socio-cultural change. The contact between the host communities can be beneficial or damaging to the host community depending on the differences in culture and the nature of the actual contact. However, social impacts of events can contain a mixture of both positive and negative strands that affect the host community and event visitor.

Different Types of Events

The events discipline is face with differentiating between special events, major events, hallmark events and mega-events.

According to Damster et al (2006) described that Special events is and infrequently occurring occasions outside the normal programme of the sponsoring or organising body. Special event is also an opportunity to relax, to engage in a social or cultural experience. The events are always planned, arouse expectations and motivate by providing reasons for celebration. Major events described as large scaled of either national or international special events which attract large crowds and media attention. They can be expensive to stage, may involve tradition or symbolism, it attracts funds to the region, lead to demand for associated services and leave behind legacies.

According to Getz (2007) stated that Hallmark events are those that possess such significance in terms of tradition, attractiveness, quality or publicity, that the event provides the host venue, community or destination with a competitive advantage. Over time the event and destination images become inextricably linked. Hallmark events are by definition of permanent institutions in their communities and societies.

Mega-events are also large scale events such as sporting events of the Olympic Games and World Cups, through community festivals to programmes of recreational events at parks.

Positive and Negative Impacts within Events

According to Raj et al (2009) suggested, events are emerging globally as major and growing sector and are seen as having an important economic, socio-cultural and political impacts. However there has been an increasing interest in devising ways to identify the various costs and benefits associated with events. Tourism events can have a positive impact on the economy and communities of host areas because the funds that typically go into supporting these events are public funds and therefore should benefit society at large portion, and not just an elite minority.

In the events industry economic impact studies are undertaken for a variety of purposes; frequently they consider elements of cost-benefit analysis concerning the cost of hosting the event in comparison to income generation and visitor expenditure. Events give greater economic sustainability to the host city and raise the city’s profile by developing employment, additional trade and business development (Davidson et al 2006). It could be argued that a catalytic effect ensues whereby an increase in investment and additional monies are made available for local infrastructure and long term promotional benefits are created. Further to this, other tangible benefits are improved tax revenues and increased property prices, with subsequent connections to the community. Significant economic benefits provided by outdoor events e.g. Olympic Games and the World Cup events, to host city which can create the potential for high status profiles and increase tourism potential, increase the numbers of tourist arrivals and awareness for the future. Moreover, festivals/carnivals (Notting Hill Carnival, Frost Fair, Edinburgh and Glastonbury festivals) and events help to develop social and economic cohesion, confidence and pride that connect local community and local authorities together. In addition Bowdin et al (2006) stated that to their spending at the event, the external visitors are likely to spend money on travel, accommodation, goods and services. This expenditure can have a considerable impact as it circulates through the local economy. However the effect on tourism promotion can result in visitors to the event extending their length of stay and visiting other regional tourism destinations and attractions. These events can also attract media coverage and exposure that enhances the profile of host areas by resulting improved a long-term tourism image and visitation.

According to Robinson et al (2010) assured that impacts can vary in their intensity and can be both short term and long term. The very nature of events results in most impacts being rather intense within a short term period. To assure harmony within the local community and the overall sustainability of events, impacts have to be managed and kept it to a minimum. The main benefit of most communities into hosting a major event is the promise of economic profits. The possibility to achieve these economic gains is real (Leier, 2006). However, the events must be well managed and planned to ensure that goal will be met. Many events require government assistance in order to be staged and justification for assistance is often required in economic terms.

Social benefits include goodwill, public happiness, social inclusion etc. Economic benefits events may make a profit which can be used to keep a club or society going, to donate to charity, or to use for a philanthropic purpose (Clark. 2008). It partly depends on the type of event and can use them to compare the various effects.

Economic Impact is terms which often associates with large-scale events, but also have some small-scale implications. Local events are often small-scale, they are put on for simple enjoyment, they may have and actually do not even need to have, the economic impact or economic benefit. Also bear in mind that economic benefit might simply mean raising money. On the other hand, it might be about proving employment on a small scale for example to raise money to pay a part time cleaner. In terms of negative effects these vary. Small events tend to have few or no negative effects except the need to tidy up. However, bigger events may have issues such as the need for grounds restoration, also recycling collection requirements, they may use energy, they may generate short term noise, they may generate traffic, and the need for police or stewards in large numbers.

Communities often have strong social ties which events help to sustain to attend an event, meet friends and people you know, and events offer a forum for informal discussions and creativity. However, events alone would not be enough to sustain the economic and social life of a community, because events are only one aspect of community life, there have to be other, perhaps more routine things which help sustain a community. For example, social, hobby, or leisure clubs, activities and sports and a whole range of ordinary things which sustain communities, including going to the shop or having a drink with friends it is not just about events. The balance of community involvement versus professional input may not be an issue at all some events are entirely community organised, some entirely professionally organised. Where both are operating together, it is important to be clear who is the lead group relations between volunteers and paid staff may be delicate.

According to Robinson et al (2010) stated that other negative impacts can occur if events are imposed in local community and the local input is neglected or the event is manipulated and exploited. Local communities can become alienated and resist the event. If events are too successful, the event risks can lose its authenticity and appeal to local communities. In relation to the environmental impacts which damage to local amenities and the pressure is on and disruption of local infrastructure can affect community life in a negative way. Events can have far reaching negative impacts, which result from bad press and publicity and also damage to the event, the community and other stakeholders. These can also examine the impacts within the following events:

Examples of Major Events

Notting Hill Carnival:

According to Robinson et al (2010) suggested that the Notting Hill Carnival in London started to introduce the Afro – Caribbean culture to Britain and attracts millions of visitors every year. The carnival has generated economic impact on the local area since the late 1980s. In 2004 the greater London authority carried out detailed research looking at the overall economic impact of the carnival. Notting hill Carnival has generated a huge economic impact for the host community over the last decade. The carnival organizers believe that publicity and promotion of the event generate benefits for London in the form of improved image and repeat visitations.

The economic impact has a commissioned by the London development agency on behalf of the Mayor’s Carnival Review Group found that in 2002, the Notting Hill Carnival generated approximately ?93 million and supported the equivalent of 3,000 full-time jobs that takes place every August Bank Holiday weekend on the streets of Notting Hill is a multi-million pound income generating event. And yet, the way in which the Carnival is currently perceived has been shaped more by crime figures than its positive social and economic contribution to London’s economy and cultural dynamism. If it is properly supported and resourced, the Carnival has the potential to contribute significantly more. The history of the Notting Hill Carnival and the reason for its existence are firmly rooted in the ideals of freedom, unity and community empowerment. And yet so much of the language and debate about the Carnival has been centred on how the event should be contained.Until the establishment of a new community-based Carnival organising body in 2003, the majority of the Carnival arts community were neither democratically represented within the Carnival management structure, nor legally entitled to influence it.

The value of the Notting Hill Carnival, in social, economic and cultural terms, has received little recognition in the past. Members of the wider carnival arts community have expressed their growing disappointment at the way in which the Notting Hill Carnival has been portrayed in the media and the lack of recognition afforded to them for the cultural and artistic development and educational work that they undertake within schools and their communities. This will help that:

The Notting Hill Carnival as a community of interest can link together by a shared vision and concern. The history of the Carnival clearly demonstrates how, in adverse conditions, a cultural event became a vehicle for community self-help, a movement towards self-sufficiency, empowerment, participation and involvement;
Offers a definition of the Carnival arts as emanating from the cultural traditions of Africa, Latin America and the Caribbean. It argues that from a variety of perspectives, the Carnival arts are extremely valuable in promoting new learning ideas as well as multicultural awareness within the classroom and in higher education;
Provides rich examples of the social, cultural, human and intellectual capital that has always existed within the Notting Hill Carnival and the wider Carnival arts industry; and
Examines the ‘business of the event and its significant economic contribution and potential. It argues for a fairer assessment of an event that generated ?93 million in 2002 and offers an analysis of how this economic potential can be harnessed to ensure that the Carnival is able to develop into a truly independent and sustainable festival every year.
Olympics Games and World Cups:

The world’s cities through host hallmark events such as the Olympics Games, World Cup’s etc. It is seen by many as a sure way of shooting the host city into the limelight, resulting in an economic windfall (Weed et al. 2009), and at the same time giving these host cities the impetus to improve domestic facilities and infrastructure. The impact of being the host city, range from the physical construction projects to the intangible to local international impact. The impact that an event of this kind has on the urban landscape can largely be gauged by the size of the legacy that it creates. It is important to note here that it is not only legacy creation that is important, but creating a legacy which is beneficial to the host community post games, and which justifies the costs involved.

The controversy surrounding these events however is centred on its economic sense. The data from past Olympic Games seems to suggest not. All recent Summer Games with the sole exception of the 1984 Los Angeles Games have lost funds. The citizens of Munich continue to pay a special tax to this day, to pay off debt incurred in the 1976 Games. This is very often not revealed to the public by using smart accounting techniques that do not include a lot of the costs incurred under direct games expenditure.

Interestingly, Los Angeles bid for the 1984 Games, largely due to the financial disasters that the Montreal and Moscow Olympic Games in 1976 and 1980. This fact explains the absence of significant public sector financial support in Los Angeles, and, the private financial success the 1984 Games are thought to have enjoyed. Even here and elsewhere the world, employment effects and increased economic activity seem to have been transitory. When numerous bidders are present however, theoretically the winning bid would be constant with a zero economic return on the investment if opportunity costs were included in the bidding calculus. The political nature of the event has however ensured that the games give a negative return. In other words government is willing to pay something for perceived political gains (Burns 2010). However the bid process has also become a very expensive and long drawn out affair. Some estimates place the amount spent by potential hosts for the 2012 Olympics during the bidding process at nearly 200 million pounds. In more recent years, therefore, hosting sporting events has been viewed as a prestigious achievement resulting in opportunities for economic profit, urban regeneration and global media exposure. Increasingly such sporting events are being aimed at increasing the exposure and visibility of the host city, and many academicians believe that success cannot be simply decided by profit and loss, as there are many intangible and unaccounted for benefits (Jamal et al. 2009).

Developing nations have only hosted two summer Olympics, one Winter Olympics, one Commonwealth Games and six football World Cups. This is dued to the changing world order and rising prominence, is set to change. Beijing has host the 2008 Summer Olympics, India, the 2010 Commonwealth Games, South Africa the 2010 Football World Cup and South Asia the 2011 Cricket World Cup. However research seems to point out that though the benefits of hosting these events are dubious at best, the factors seem to work expressly against developing nations. The experience that a developing nation faces is vastly different from that of a developed nation (Davidson et al 2006). This is especially pertinent in the Indian context as we prepare to host the 2010 Commonwealth Games, and make a push to host the 2014 Asian Games and the 2016 Olympic Games.

According to Damster et al (2006) stated that Cape Town’s 2004 bid was a much controversy resulted from social and economic impact of the mega event on the city. Most of the scrutiny in event accountability tends to focus on the tendency to exaggerate to event benefits and to underplay hidden costs. The impacts tend to gloss over the outcomes of real costs by discriminately using multipliers and unreliable data on visitor numbers, motives and expenditures.

Sustainable Economic Development:

As the Notting Hill Carnival grows, sustained success will be directly related to careful management of the Carnival, particularly in the areas of public safety, community leadership, economic development and environmental impact (Leask et al 2006). These can help to:

Identifies possible ways forward for prioritising and strengthening public safety planning for the Carnival;
Utilises the Review Group’s recommendations as the basis for a London Carnival Development Programme’ that will focus on the following priority areas:

a) Strategic management and leadership

b) Community outreach and development

c) Event operation and management

d) Fundraising and finance

e) Sustainable Economic development

f) Marketing, branding and promotion

It has argued that the Notting Hill Carnival’s economic and social potential can only be realised through strong community-based management and leadership that is supported by all the relevant stakeholders. The real challenge will be to conceive of the carnival in new ways, retaining the best of the past and building on its strengths so that the carnival thrives in conditions that are radically different from its creation (Ritchie et al 2003).

In its 40th year, the Notting Hill Carnival has economic and social potential that has yet to be fully realised. A majority of the problems experienced by the Carnival stem from years of under-investment and lack of appreciation for the value of the Carnival as a world-class event.The empirical evidence provided by the LDA’s study of the Carnival’s economic contribution to London’s economy has succeeded in challenging the negative assumptions held about the Carnival and provided a compelling case for greater investment in order to safeguard the future of one of London’s oldest festivals (Leier 2006). These can also:

Establish a permanent home within a Centre for Carnival Arts and Enterprise
To develop a Carnival Economic Development Strategy to harness the Carnival’s Economic potential for the benefit of the wider community;
To develop a London Carnival Development Programme to oversee the implementation of the Review Group’s recommendations

Olympic Games and World Cups:

There are very good reasons for why developing nations are more adversely impacted by such events. They can be listed as:

1. High infrastructure development costs

2. Under-utilization of facilities post event

3. High opportunity cost of capital

4. Unable to attract large numbers of spectators

In addition, Law (2002) stated that there are indeed ambitious plans afloat ranging from improving street furniture to setting up more power stations before deadline. The work ahead of the games can be broadly grouped into with new stadiums and renovation of existing stadiums, Games Village, transport sector, urban infrastructure like water and electricity (Environment), Efforts to make a world-class. These categories will also help to develop in the following years for host areas.

The sociological basis of event development can be subdivided into the phenomenon of events and the socio-economic basis underlying the development of events. The growth in event impacts development is described a socio-phenomenon, comprising:

The desire to experience new attractions and to escape;
The growth in communication and information technology, creating awareness and stimulating interest in various events;
Changes in mobility and accessibility, making travel to events accessible;
Increased leisure time and longer periods of vacation, together with rising real incomes, creating desire to attend events;
Increase in world trade for business tourism, leading to various events such as conferences and conventions.
Promoting government and political parties’ image and ideology

According to Toohey et al (2007) suggested that financial and economic considerations lie as close to the heart of the Olympic phenomenon as do sporting values. Since the in the early 1980s the cities and the nations have vied with one another to host the Games largely because of hoped for economic effects. It is the money generated from television rights and sponsorship which transformed the Games over the half of the twentieth century, from an event dominated by the government, voluntary funding to the professional and commercial orientated phenomenon.

According to Zhou et al (2007) also stated, that special events can enhance community pride and residents’ feelings of well-being and attract external investment. Most of these positive impacts are what government organisations desire and seek, as they provide justification for hosting events. Special events particularly hallmark or mega events with the promised of large-scale benefits, are well suited to be utilised as a means of creating a positive image for government organisations and gain political support.


To conclude this is that, the world of events is a serious re-think taking place among city officials as well as academics about the way to go about these in the industry. However it has yet to be conclusively shown that these events are beneficial as well and it is crucial to examine each event independently, studying its unique characteristics, as well as examines previous events and tries and learns from their mistakes.

The citizens have a right to know about the benefits that such events can have to the city, but need to be informed of the downsides as well. The present plan for the Olympic Games may be a recipe for an ecological and financial disaster, or they might finally put the city, and the country, on the world map. They may bring in a new era where electricity and water problems, perennial problems in the city, are no longer an issue or they might increase the burden on an already overloaded system.

Popular perception tells us that the Sporting Event Games was an unmitigated success. Closer analysis tells us that it was not so simple. These events, with some smart marketing, may just follow in those footsteps and to see if they can achieve well.


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