by Tom Isler | January 01, 2008


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 facilities.

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.

Estimates move billions

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 perspective?

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.