Last fall, as the city of Hartford, Conn., prepared to
welcome the Aircraft Owners and Pilots Association 2007 Expo, H.
Scott Phelps, president of the Greater Hartford Convention and
Visitors Bureau, estimated that the three-day convention would
infuse up to $10 million into the local economy.
How did Phelps come up with that
figure? Like number crunchers at most CVBs, he used the ExPact
delegate spending study, published in 2004 by the Washington,
D.C.-based Destination Marketing Association International, which
at the time was known as the International Association of
Convention and Visitor Bureaus. Phelps took the projected
attendance (10,000 people), multiplied it by the average length of
stay per delegate (3.56 days per meeting, according to ExPact) and
multiplied that number by the study’s national average for daily
expenditures per delegate ($290, which includes lodging, food,
transportation, souvenirs, etc.). That yielded $10.3 million. To be
conservative, Phelps shaved a little off the top and set the number
as an upper limit for the meeting’s potential economic benefit.
“It’s very important,” Phelps says of
estimating a convention’s value. “In some cases, you’re putting
incentives out there for groups to choose your city, and to do that
you have to look at the return on investment.”
Estimates of direct delegate spending
or a meeting’s overall economic impact are the backbone of the
meetings industry. Many convention centers are allowed to operate
at a loss because the revenue and tax money meetings generate
outside of the convention centers outweigh the cost of running the
But how cities gauge that benefit is
inexact, and the industry remains deeply divided over how these
numbers should be calculated, because different methods tend to
yield alternately incomplete or inflated estimates.
Part of the problem is that, despite
the best efforts of DMAI, the industry suffers from a lack of
reliable spending information, throwing some cities’ estimates --
and their underlying formulas -- into question. In fact, the ExPact
study proved so difficult for DMAI to produce and statistically
deficient in certain regards that executives at DMAI decided they
needed to alter the way they produced spending reports. For DMAI’s
new delegate spending study, due to be released this month, the
organization bought spending data from a third-party company,
McLean-Va.-based D.K. Shifflet and Associates, and because DMAI no
longer surveys planners or exhibitors, the new report is missing
some key data upon which some cities have come to rely.
Quantifying economic impact is central
to determining how much public funding city and state governments
earmark for tourism organizations such as CVBs, as well as for the
construction or expansion of meeting facilities. Additionally, the
estimates are an essential component of the vocabulary CVBs and
convention centers use to educate policy makers and the general
public about the importance of the industry.
In other words, these quick
calculations help move billions of dollars each year and earn the
support of politicians.
But while planners keep information
about how much their groups spend at hotels and inside meeting
facilities, few have comprehensive data about the overall spending
patterns of their attendees, and thus, it’s usually left to the
cities to make these estimates. Furthermore, the formulas cities
use are easy to manipulate, and estimates are difficult to verify.
“Therein lies the problem,” says Kenneth McGill, executive vice
president of Global Insight, a Waltham, Mass.-based economic and
financial analysis firm that works with CVBs. “It’s very easy to
hide poor work.”
In most cases, CVBs don’t have a choice
when it comes to gathering data. Only a few cities conduct their
own spending research, and the rest rely on whatever national
averages are available. That means the amount delegates spend in
College Station, Texas, or West Chester, Pa., for example -- two
contributors to ExPact -- might be used to calculate how much
attendees will spend in Portland, Ore., a city that relies on DMAI
numbers. What doctors spend at a major medical convention,
furthermore, could be used to project how much teachers or
librarians will spend at a modest annual meeting.
But even for those armed with in-market
research, delegate spending figures that cities calculate for
individual meetings are rarely, if ever, based on the actual
spending history of delegates from those meetings.
Still, short of surveying every
attendee at every meeting, there might not be a better way.
“There’s no perfect economic model for any industry, from GDP
numbers down to measuring the size of the tourism industry in a
small destination,” says David Bratton, managing partner and
founder of San Francisco-based Destination Analysts, which conducts
spending research for San Francisco and Irving, Texas.
It might be impossible to know exactly
what a meeting is worth, and it might be equally irrelevant. How,
after all, does one quantify the value of the media coverage a city
receives when a national convention comes to town, or a positive
impression a city makes on an attendee who later returns on a
family vacation -- all part of a meeting’s value, from a city’s
Steven Carvell, a professor and
associate dean at Cornell University School of Hotel Administration
in Ithaca, N.Y., says the pursuit of total accuracy is foolhardy.
“Only the Lord Almighty will be totally accurate,” he says. There
always will be some margin of error associated with these
calculations. The best plan, researchers say, is to derive a sound
methodology, based on the best data available, and stick with it in
order to have results that can be compared year over year.
But CVBs that rely on DMAI’s numbers
now face potential consistency problems as well. The new DMAI study
does not contain all of the same categories of statistics as ExPact
did. The new report is more detailed in certain areas, less in
others, and some numbers have been omitted completely. Kristen
Clemens, vice president of marketing and communications for DMAI,
says the new study is “not directly comparable” to ExPact.