Estimating Spectators for Economic Impacts is Tricky

Posted on August 27, 2015 by Xiaobing Shuai

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.

 

This blog reflects Chmura staff assessments and opinions with the information available at the time the blog was written.