Estimating Spectators for Economic Impacts is Tricky

The UCI World Championships will soon be held in Richmond, Virginia from September 19th through the 27th. In 2011, when the city was preparing the bid for hosting the cycling championship, Chmura was asked to estimate the event’s potential economic impact. One of the most formidable challenges in that process was to estimate the number of spectators.

We estimated the number of spectators would be 450,000.  As we clarified in a previous blog, 450,000 spectators is not the same as 450,000 visitors.  Despite having thought we explained this difference, we continue to field questions like “how did that number come about?”  The purpose of this blog is to de-mystify the process of estimating this figure and to provide guidance for others who are estimating the economic impact of events in their region.

Four years ago, faced with the challenge of estimating the number of spectators for a major event, the prudent approach was to look at past, similar events.  This mirrors the typical process of any economic projection— utilize data from the past to provide valuable information that helps predict the future.  The number of spectators did not come out of a magic “black box.” Rather, the process was guided by academic research in the tourism industry.

Tourism literature consistently indicates that a region’s population base is one of the key determining factors for the number of visitors/attendants to tourism attractions such as historic sites, festivals, concerts, parks, and museums. Other key factors are the population’s interests, economic conditions such as travel costs, and the existence of a tourism infrastructure such as roads and airports. 

Since we know the population base of Richmond, its surrounding counties, and other major cities within a few hours’ drive, the missing piece is how many of the nearby residents are interested enough to attend the race.  For that information, we examined the number of spectators who attended past UCI World Championship racing events relative to the population base of the host region. 

Right away, we faced challenges. The majority of past races have been held in Europe, which has a long history of public support for cycling. This being said, the public interest in these races in Europe would be higher than can be reasonably expected in the United States, therefore using European races as examples would likely over-estimate the attendance in Richmond.  Over the past decade, the only two non-European championship races were held in 2003 in Hamilton, Canada, and in 2010 in Melbourne, Australia. The 2003 Hamilton race reported 230,000 spectators while the 2010 Melbourne race reported 300,000 spectators.

Among those two races, Australia is very far from cycling centers in Europe or North America while Hamilton has more similarity to Richmond. For that reason, we used a survey from the Hamilton race to derive our estimate. 

Hamilton is a mid-sized city (over 700,000 persons in the metro area) not too far from Toronto with a gateway international airport. Richmond is also a mid-sized city (over 1,000,000 population in the metro area) and not too far from several major U.S. cities.  Both Hamilton and Richmond are on the eastern part of the North American continent and are relatively easy to reach.

Hamilton’s survey of over 1,000 race attendants identified the spectators based on the distance of their home to Hamilton. Using that information as a proxy, we calculated the percentage of the regional population base that would travel to see the race based on their distance to Richmond.  The Hamilton survey also contained information on the number of races each visitor attended. Adjusting for the fact that the Richmond race is longer (9 days as opposed to 6 days for Hamilton), we estimated that the total spectators to the Richmond race would be 450,000.

Four years ago, we used the past events to make a future projection, just like any economist would do.  Like any economic projections, there are many unforeseeable events that can affect the actual number of spectators. For example, the global economy and exchange rates can play a role in attendance. With the European economy struggling and the high value of the dollar, European visitors may find it too expensive to travel to America.  Marketing and outreach efforts will also affect the number of spectators. Locally, traffic and parking can affect the number of spectators from the region, and even weather can play a role in attendance.

With the race just about to begin in 22 days, we look forward to measuring the true number of spectators.

 

How Many Visitors for Richmond 2015?

The residents of the city of Richmond and surrounding communities are eagerly awaiting the Union Cycliste Internationale (UCI) Road World Championships to be held in Richmond in September - referred to locally as “Richmond 2015”.  Likewise, cycling enthusiasts around the country are excited about the championships returning to the United States for the first time in almost 30 years.

Businesses in the region, including hotels, restaurants, shops, and taxi drivers are hoping that the influx of athletes, race officials, and visitors to Richmond 2015 will mean a boon for businesses.  According to a study completed by Chmura Economics & Analytics, “The World Championships is a 9-day event from which Richmond can expect to draw more than 450,000 on-site spectators over the course of the nine-day event from around the United States and the world.”[1]

The number “450,000” has been quoted frequently by many media outlets. While some quoted it properly as 450,000 spectators, unfortunately, there are some mischaracterizations that warrant clarification.

First, the number 450,000 refers to the total number of spectators, not visitors. Some social media and general public comments have included phrases such as “450,000 visitors are expected in Richmond,”[2] giving the impression that there will be 450,000 individuals visiting the Richmond region during the event.

However, “spectators” are defined as people watching races on-site (and it includes some double counting). According to the Richmond 2015 website, there are a dozen races over 9 days. If an individual attends multiple races, he or she would be counted multiple times.  In fact, the Chmura report assumed the average individual will watch over 4 races during the 9-day event. Obviously, visitors travelling to Richmond for the race may attend more races, while casual fans from the region may only watch a couple of them.

Another misconception by the general public is to assume that all spectators are visitors from outside the region. For example, a report from Airbnb.com in Richmond quoted one local real estate agent as saying, “450,000 visitors are expected in Richmond. There’s not enough hotels to house those people.”[3]  If hotel operators expect that there will be 450,000 people needing lodging, they will be disappointed. That is because the 450,000 spectators include local residents in the Richmond region, as well as a large number of people living outside Richmond that will make a day trip to the region. The overnight visitors are estimated to total over 50,000. Adding athletes and their support staff, journalists, and officials, the overnight visitors are estimated to be more than 60,000.

With about 18,000 hotel rooms in the Richmond region,[4] even the estimated fifty to sixty thousand overnight visitors seem to be exceeding the region’s capacity. Is it really? The answer is no. That is because many visitors will share rooms, reducing the demand for hotel rooms. Furthermore, many visitors will not stay for all nine days. Some will come for the entire event and some will come for a few days while many may only come for a weekend.  Additionally, some overnight visitors may choose to stay with families and friends in the region or rent rooms or houses directly from area residents. In the end, the regional hotels rooms may be sufficient after all.  

 

[1] Source: http://richmond2015.com/about/economic-impact/

[2] For an example, please see http://www.nbc12.com/story/20979198/richmond-2015-helping-businesses-prepare-for-450000-race-fans

[3] For an example, please see http://wtvr.com/2015/05/18/airbnb-not-legal-in-city-of-richmond/

[4] Source: http://www.visitrichmondva.com/where-to-stay/

Agritourism a growth market

Roger Gonzalez of The News Virginian writes (original article):

More than $22 million was spent on agritourism in the Shenandoah Valley last year, according to a recent study, and that number could rise in the next decade.

“There is potential to grow the number of agritourism businesses, room to grow jobs and capture some more revenue,” Bonnie Riedesel, executive director of Central Shenandoah Planning District Commission, said Thursday. “We knew that there was potential for it. We just didn’t have the numbers to back it up. Now we do.”

The planning district commission announced the news at the Fields of Gold Harvest Jubilee at Barren Ridge Vineyards. The event was named for the award-winning Fields of Gold program, which involves six Valley counties and five cities. It promotes the region as an agritourism destination, whether for visits to a working farm, a winery, a corn maze or a horse farm. It also seeks to create jobs on the farm and tourism jobs off.

In 2011, 226 businesses employed 704 people in agritourism locally, noted the study, done by Richmond-based consulting firm Chmura Economics & Analytics. And including multipliers, the $22.4 million spending figure rises to $34.8 million, and the employment number to 811 jobs.

Chmura estimates that about 6.7 million visitors traveled more than 50 miles to come to the region in 2010, and that that total tourism number could grow 6.2 percent in the next 10 years.

And, given that 15 percent of potential visitors surveyed said they would be very interested in agri- or ecotourism, the study said, such sales here could expand at a rate of 9.3 percent per year.

That delighted many in the crowd at Barren Ridge.

“Agriculture is Virginia’s No.1 industry,” said Matt Lohr, commissioner of the state Department of Agriculture and Consumer Services, keynote speaker at the event. “I think what we are seeing is that agritourism and opportunities to have more direct marketing between the producers and consumers, it really is big business. As agriculture changes, and we have more of a society that wants to be connected, it certainly gives more and more opportunities for farmers to take advantage of. It’s exciting.”

Moving forward, the plan is to take advantage of the Fields of Gold statistics and implement a plan to try to realize the potential growth. Complete results of the study will be available at the planning district commission’s website, cspdc.org, early next week.

“We have some other grants out there that are pending,” Riedesel said. “Hopefully we can begin to market and carry this program forward.”