by Barbara Peterson | July 01, 2017

THE 'SOUTHWEST EFFECT'
"There are many cities that would like to ask, 'What is our South By...?'" says Henry Harteveldt, founder and travel analyst at Atmosphere Research in San Francisco. "What's an event that could truly raise the city's profile?"
To be sure, the destination organizations that back these events can reap substantial rewards -- but at first it might require a leap of faith. SXSW got its start 30 years ago with a grant from the Austin Convention and Visitors Bureau, and in the decades since, the connection between the two groups has grown even tighter. In 2016, the conference drew over 90,000 registrants and untold other visitors who contributed $325 million to the local economy, including $1.8 million in hotel occupancy taxes, most of which went directly to the convention center.

Austin's civic leaders are unabashedly bullish on the impact of this business-cum-festival formula. "It has helped define Austin as a center of creativity and commerce," says Michael Rollins, president of the Austin Chamber of Commerce. The benefits extend well beyond the now three-week event, creating skilled jobs and pouring investment into hotel construction, airport expansion and other infrastructure improvements. However, such a mega event also can have unintended effects (see "No Room at the Inn").

SXSW initially flew under the radar, gaining little traction beyond a cult following of music and barbecue devotees. The turning point came after the late 1990s, as the decade's tech boom began to transform the Texas capital, prompting the festival leaders to add an interactive conference and trade show.

"That really put them on a different trajectory, because it added a larger corporate element to the conference," says Ben Loftsgaarden of Greyhill Advisors in Austin, a site selection and economic development consultant. "Before, it was more of a fringe experience, then it became more of a business-related conference," he adds, noting that SXSW spans dozens of venues around the city, and is sprouting dozens of break-out events on topics ranging from gaming to health and medicine.