Description
The accurate measure of the economic contribution of festivals and special events is a
challenge. Using a case study, the purpose of this paper is to demonstrate a previously un-captured
economic contribution from increased hotel rates during the period of festival or event; the ‘‘rising tide’’
effect.
International Journal of Culture, Tourism and Hospitality Research
Festivals, special events, and the “rising tide”
Stephen Litvin Bing Pan Wayne Smith
Article information:
To cite this document:
Stephen Litvin Bing Pan Wayne Smith, (2013),"Festivals, special events, and the “rising tide”", International J ournal of Culture, Tourism and
Hospitality Research, Vol. 7 Iss 2 pp. 163 - 168
Permanent link to this document:http://dx.doi.org/10.1108/IJ CTHR-04-2013-0022
Downloaded on: 24 January 2016, At: 22:21 (PT)
References: this document contains references to 9 other documents.
To copy this document: [email protected]
The fulltext of this document has been downloaded 1117 times since 2013*
Users who downloaded this article also downloaded:
Stephen W. Litvin, (2013),"Festivals and special events: making the investment", International J ournal of Culture, Tourism and Hospitality
Research, Vol. 7 Iss 2 pp. 184-187http://dx.doi.org/10.1108/IJ CTHR-04-2013-0025
Bing Pan, Tzung-Cheng Huan, (2013),"New perspectives on festival and events research", International J ournal of Culture, Tourism and
Hospitality Research, Vol. 7 Iss 2 pp. 115-117http://dx.doi.org/10.1108/IJ CTHR-04-2013-0018
J udith Mair, Michelle Whitford, (2013),"An exploration of events research: event topics, themes and emerging trends", International J ournal
of Event and Festival Management, Vol. 4 Iss 1 pp. 6-30http://dx.doi.org/10.1108/17582951311307485
Access to this document was granted through an Emerald subscription provided by emerald-srm:115632 []
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Festivals, special events, and the ‘‘rising
tide’’
Stephen Litvin, Bing Pan and Wayne Smith
Abstract
Purpose – The accurate measure of the economic contribution of festivals and special events is a
challenge. Using a case study, the purpose of this paper is to demonstrate a previously un-captured
economic contribution from increased hotel rates during the period of festival or event; the ‘‘rising tide’’
effect.
Design/methodology/approach – This paper uses a case study on Charleston’s hotel occupancy
changes, and howthe changes coincide with the occurrence of festivals and events in the community, to
demonstrate the increased tourism income due to rising accommodation prices during festivals and
events.
Findings – The study validates the increased tourism income due to rising accommodation prices
during festivals and events, which can provide a signi?cant boost to the economy of a local community.
Practical implications – Festival organizations, as well as hoteliers and other bene?ciaries of tourist
spending during festivals and events, should note how this additional contribution bene?ts them and
their communities.
Originality/value – Many economic contributions of festivals/events overstate their values. The current
study ?rst demonstrates a previously un-captured economic contribution using a case study approach.
Keywords Tourism, Hotels, Income, Local economies, Entertainment, Economic impact,
Community development, Promotion
Paper type Case study
Introduction
The measurement of the economic contribution of festival and special events is far from an
exact science. The intent of the following discussion is not to instruct on nor critique the
methods used in many economic impact studies for festivals and events. An extensive body
of literature is related to the topic. Instead, the intent of this paper is to suggest a new
variable to those who conduct such studies.
In an article poignantly entitled ‘‘Economic impact studies: instruments for political
shenanigans?’’, John Crompton (2006) discusses potential errors incumbent in economic
impact calculations that often result in an overstatement of festival economic impact.
Crompton does not instruct how one should conduct his/her study; instead, he notes that
festivals had the tendency to overstate the economic contribution of their events, regardless
of the approaches taken. Per Crompton, the overlooking of contra-factors in the calculation
is the common cause for such overstatement. His examples include: ‘‘time-switchers’’ –
those tourists who would have visited without the festival or event, but changed their
schedule to coincide their travel with it. They should not be credited to the festival; ‘‘casuals’’
– those attending tourists whose main purpose is not for the festival, and thus should be
excluded from the calculation of bene?t; the inclusion of local visitor expenditures which is a
redirection of local funds from other alternative expenditures; the failure to account for
incremental municipal costs related to the event; and the loss of revenue from displaced
DOI 10.1108/IJCTHR-04-2013-0022 VOL. 7 NO. 2 2013, pp. 163-168, Q Emerald Group Publishing Limited, ISSN 1750-6182
j
INTERNATIONAL JOURNAL OF CULTURE, TOURISM AND HOSPITALITY RESEARCH
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PAGE 163
Stephen Litvin, Bing Pan
and Wayne Smith are
based in the Department of
Hospitality and Tourism
Management, College of
Charleston, Charleston,
South Carolina, USA.
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visitors (Litvin, 2007). Failure to consider these negatives in reported bene?ts results in
overstate an event’s true economic contribution to the community (Crompton, 2006).
Crompton (2006, p. 67) notes, ‘‘Most economic impact studies are commissioned to
legitimize a political position rather than to search for economic truth. Often, this results in the
use of mischievous procedures that produce large numbers that study sponsors seek to
support a predetermined position.’’
Such errors are not generally the results of shenanigans, and are likely a function of the
complexity of calculating economic impacts for festivals and events. However, the resultant
inaccuracies often overstate economic bene?t. The balance of this paper discusses an
opposite issue: a previously unidenti?ed effect that captures a positive economic impact. A
festival or special event can have this impact upon its host community given the right
circumstances. The new concept is termed the ‘‘Rising Tide’’ effect, referring to the
increased tourism income due to rising accommodation prices during festival and events.
Festival managers, hoteliers and other tourism providers who bene?t from successful
festivals and special events will be interested in the concept and ?nd it valuable.
The Rising Tide effect
This research is based upon a dataset on tourism activities in Charleston, South Carolina.
Charleston is a tourist metropolitan area with a population of approximately 600,000. The
area is blessed with Civil War era plantations and forts, lovely parks and gardens, nearby
beaches, a temperate climate, the largest preserved historic district in the USA, and an
extensive festival and special events calendar. These assets have earned Charleston
accolades as one of Conde´ Nast Traveler’s ‘‘Top 10 travel destinations in North America,’’ a
National Geographic Traveler’s ‘‘Top 50 places of a lifetime America’’ designation, and
recognition by Southern Living as both a ‘‘Favorite historic destination’’ and ‘‘Favorite dream
getaway.’’
Per the College of Charleston’s Of?ce of Tourism Analysis, Charleston County has
approximately 15,000 hotel rooms and hosted just under four million overnight visitors during
2009 (Byrd, 2010). Figures 1 and 2 re?ect hotel occupancy and Average Daily hotel Rates
(ADR) on a week-by-week basis for both Downtown Charleston and Charleston County in
2009.
The numbers in the two graphs re?ect weekly ?uctuation and Charleston’s seasonality.
Certainly a perfectly smooth demand curve is not possible. What is interesting is the number
of signi?cant weekly upticks tied directly to a major festival or special event held during
those weeks. Some of these events created a positive phenomenon we refer to as the rising
tide effect (from the JFK idiom, ‘‘a rising tide lifts all boats’’). This rising tide likely enhanced
the events’ economic contributions signi?cantly in a manner not captured by their
organizers’ economic impact studies.
The festivals and special events in Figures 1 and 2 have the power to in?uence the area’s
entire hotel sector. They not only increased county-wide hotel occupancy levels as a result of
the visitors they attracted, they also likely provided a measurable boost to the county’s ADR.
The result was not just the increased number of visitors recorded in Charleston than those
expected from a ‘‘normal’’ non-festival week; collectively all visitors that week – whether
festival/special event attendees or not – paid incrementally higher hotel rates as re?ected in
the higher ADR. This across-the-board higher ADR is the rising tide effect.
Consider a couple of examples. Charleston’s ?rst major event of the year is Southeastern
Wildlife Exhibition (SEWE), a very successful wildlife art festival. Held each February, local
tourism sector strategically scheduled SEWE to jump-start the local tourism season. Per
SEWE’s 2010 Application for Accommodations Funding (a grant request submitted to
Charleston County in 2009 and a public record), SEWE 2009 attracted around 23,000
visitors, 85 percent of whom stayed in paid accommodations for an average of 2.3 nights.
Assuming an average party size of 2.2 (Charleston average), one can approximate that
SEWE visitors occupied approximately 20,000 hotel room nights during the festival period.
As a whole, the County sold approximately 70,000 hotel room nights during that time period.
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Festival goers account for the signi?cant uptick in occupancy (Figure 1); county-wide ADR
also shows a signi?cant increase during the festival week (Figure 2). As depicted in the
graph, the increase in ADR from the prior week was $8. Similarly, data from 2008 also found
an increase of $9. Thus, factors such as bad weather in 2009 could have skewed the data;
they were not in play in 2009. Arguably, the strength of SEWE bookings is that it allowed other
hoteliers to raise their rates. SEWE attendees paid more to visit Charleston speci?cally
Figure 2 Charleston SC hotel average daily rate, 2009
Figure 1 Charleston SC hotel occupancy rate 2009
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because they wished to attend the festival. The vast majority of visitors also paid a higher
rate than one would expect to pay in early February in Charleston, simply because their
visiting week coincided with the event. As a result, non-SEWE visitors occupied the other
50,000 room nights, and collectively contributed approximately $400,000 in additional funds
to the county’s hotel revenue. It is calculated as 50,000 rooms sold to non-SEWE visitors £
$8 incremental ADR ¼ $400,000 additional revenue.
After application of the area’s tourism multiplier of 1.66 (OTA, 2010), this created a gross
incremental economic contribution of $650,000. Though a relatively small percentage of the
$67 million contribution reported by the organizers, it is a number worthy of inclusion in the
festival’s impact calculation. Please note that the methods utilized by festival management to
calculate the $67 million is not germane. What is important is the fact that the reported
number does not consider the macro-effect of the festival upon the general lodging sector.
A similar scenario occurs for the Charleston Food þ Wine Festival (F þ W), a non-pro?t
festival founded and championed by the city’s hotel and food and beverage industries.
F þ W week generated an ADR bump of $7 for both 2009 and 2008 compared to the
festivals’ prior week. Per the F þ Waccommodation tax grant application (a public record of
Charleston County, 2009), the 2009 festival generated approximately 9,000 hotel room
nights. During that week, 60,000 other room nights were ?lled by non-attendees. IF we apply
the same logic used above for SEWE, the most recent F þ W festival thus contributed an
additional $420,000 direct impact and $700,000 total impact after applying the local tourism
multiplier, due to raised county-wide ADR. This is a very signi?cant unaccounted
contribution when considered in conjunction with the $2.4 million economic impact reported
by F þ W festival organizers (McMillan, 2009).
Charleston area festivals with such impact occur throughout the year. These included
Charleston Fashion Week and the Citadel’s (Military College of South Carolina) Parents and
Homecoming weekends. Each of these events not only raises County-wide hotel occupancy
levels, but also creates an environment enabling Charleston hoteliers to command higher
room rates from their guests, attendees and non-attendees alike.
Comments
What is the main lesson to take from the above outcomes? First, when calculating the
economic contribution of a festival or special event, we need to consider Crompton’s
warnings. However, we should also consider the broader macro-issue: well-publicized
events will attract visitors who likely book early and are willing to pay higher prices. Those
events can dramatically and positively impact local economies in a manner not previously
captured. While the examples herein are Charleston-based, the lessons would seem to
apply universally.
Not all festivals and special events are likely to have such impact. The ones we identi?ed
attracted guests willing to pay premium rates at premium properties. This in turn created a
cascade, empowering lower priced and geographically peripheral hotels to raise their rates to
take advantage of a pricing concept economists refer to as the ‘‘umbrella effect’’, that is, ‘‘the
tendency for the prices of all goods and services to rise once a few do’’ (Weiner, 2007, p. 1).
Return to SEWE as an example. SEWE attracts an af?uent clientele, most of whom would
wish to stay in downtown hotels to be within close proximity to the event. During the 2009
festival, downtown ADR during festival week rose signi?cantly. An ADR of $145 from $132
the prior week resulted in an increase of 10 percent. As SEWE visitors ?lled city center
rooms, others not coming to Charleston for the festival undoubtedly elected to move to the
periphery for more affordable lodging options. In response to this uptick in demand,
non-downtown hotel revenue managers similarly raised their rates above what they would
charge during an otherwise relatively slow off-season time of year. As a result, they collected
8 percent more than they were able to charge their guests just one week prior.
The other characteristic that identify festivals and special events can in?uence
destination-wide hotel pricing would be their ability to create publicity and awareness.
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Note per Figures 1 and 2 those festival weeks produced higher room rates even in seasonal
periods of only moderate demand. The basic law of supply and demand re?ects an
economic environment where consumers compete for limited goods. In this case, however,
we note that hotels during festival weeks have raised their rates despite being short, at times
signi?cantly short, of full occupancy levels. Hoteliers it seems, have the con?dence to do so
as a result of the increased hype that accompanies these events. And non-attendee
consumers seem less price sensitive when aware that they are sharing a destination with
those visiting speci?cally for a special event. If the event were not well publicized, however,
such likely would not be the case. It is interesting consumer psychology.
Festival and event managers, as well as government of?cials often responsible for
supporting these events, should be careful to consider both the positive and the negative
factors when computing the economic value of their events. Overstatement, due to a failure
to consider offsetting costs and displacement issues, must be conscientiously avoided.
Crompton has provided a good primer of potential errors and his work should be required
reading for any festival manager producing an economic impact study. But, while further
research in other communities and across a range of festivals and special events would be
useful to con?rmgeneralizability, a broader macro-viewis appropriate for those festivals and
special events of suf?cient signi?cance to in?uence lodging pricing across their destination
market as a whole.
Litvin et al. (2006), in a multi-year study of the expenditure of accommodation tax funds in
smaller communities across the state of South Carolina, suggested that the best use of these
funds was an investment in festivals and special events. No explanation was provided to
support the ?nding beyond the fact that those communities that promoted festivals reported
higher tourism growth rates than had those that had not. Perhaps, it can be argued that the
‘‘rising tide effect’’ may have played a part in explaining their ?ndings, with the bene?ts of
these events broader than is sometimes credited.
Several concluding comments
The study has the following caveat. The study attributes the rise of ADR and hotel occupancy
rates to speci?c festivals and special events. Other unidenti?ed factors may have also
in?uenced these numbers. We have spoken with local tourism of?cials, and asked if they
could point to other factors possibly in play during the current festival period. None were
apparent to them. However, what is important is not our speci?c impact calculations related
to the festivals discussed. These festivals were solely illustrative. When preparing their own
studies, Festival organizers should consider their locale’s macro-environment and account
for all positive and negative factors. If they see the rising tide as an incremental bene?t, they
have the responsibility to justify this to those relying upon their studies. Our goal is simply to
suggest the new variable, and enable a truer and more complete assessment of the
contributions of a festival or special event to the economic well-being of its host community.
Further, spiked performances occur during certain weeks in Figures 1 and 2 do not tie to any
special event. Beyond the comments of the CVB director in Figure 1, the study provides no
further explanation. Destination-wide lodging performance evaluation is a complex issue
and that such ?uctuations are to be expected.
In addition, tourism of?cials often warn the danger of ‘‘festivalitis’’ – an over-reliance upon
festivals while disregarding the development of a permanent tourism attractions base. While
those are good advice, a calendar with major events appealing to different demographics
and interest groups can provide bene?ts both under-appreciated and under-counted by
festival and event organizers and host communities.
Finally, public monies support many festivals and special events. Hoteliers should become
involved with the process that governs the distribution of these funds, and lobby
governmental entities to support major events in the community. These events not only drive
visitor numbers, but can also be the impetus for increased hotel rates across the destination.
Those events bene?t the economy in a way neither captured nor appreciated.
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References
Byrd, A. (2010), ‘‘Visitor ?gures re?ect recession’’, Post and Courier, April 19, p. 7E.
Charleston County, South Carolina (2009), ‘‘2010 application for accommodations funding’’, Forms
completed by applicants, on ?le with the County.
College of Charleston Of?ce of Tourism Analysis (OTA) (2010), ‘‘Economic multiplier for Charleston
County tourism analysis, based upon IMPLAN, Multiplier number provided by the OTA’’.
Crompton, J.L. (2006), ‘‘Economic impact studies: instruments for political shenanigans’’, Journal of
Travel Research, Vol. 45 No. 1, pp. 67-82.
Lawson, P. (2010), private conversation with the Deputy Director of the Charleston Area Convention and
Visitors Bureau.
Litvin, S.W. (2007), ‘‘The economic attractiveness of runners: are they ‘healthy’ tourists?’’, Tourism
Economics, Vol. 13 No. 3, pp. 481-486.
Litvin, S.W., Crotts, J.C., Blackwell, C. and Styles, A. (2006), ‘‘Expenditures of accommodations tax
revenue: a South Carolina study’’, Journal of Travel Research, Vol. 45 No. 6, pp. 150-157.
McMillan, E. (2009), ‘‘Fourth Annual BB&T Charleston Food þ Wine Festival successful during tough
economic times: College of Charleston Of?ce of Tourism Analysis announces results of Annual
Economic Impact Study’’, press release dated April 20, available at:http://charlestonwineandfood.com
(accessed April 23, 2010).
Weiner, E. (2007), ‘‘Is a weak dollar really so terrible?’’, National Public Radio, available at: www.npr.org/
templates/story/story.php?storyId ¼ 14901181 (accessed May 18, 2010).
About the authors
Dr Stephen W. Litvin is a Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA. Dr Stephen W. Litvin is the
corresponding author and can be contacted at: [email protected]
Bing Pan is an Associate Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA.
Wayne Smith is an Assistant Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA.
PAGE 168
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This article has been cited by:
1. Guido Ellert, Guido Schafmeister, David Wawrzinek, Heike Gassner. 2015. “Expect the unexpected”. International Journal of
Event and Festival Management 6:1, 54-72. [Abstract] [Full Text] [PDF]
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doc_819070139.pdf
The accurate measure of the economic contribution of festivals and special events is a
challenge. Using a case study, the purpose of this paper is to demonstrate a previously un-captured
economic contribution from increased hotel rates during the period of festival or event; the ‘‘rising tide’’
effect.
International Journal of Culture, Tourism and Hospitality Research
Festivals, special events, and the “rising tide”
Stephen Litvin Bing Pan Wayne Smith
Article information:
To cite this document:
Stephen Litvin Bing Pan Wayne Smith, (2013),"Festivals, special events, and the “rising tide”", International J ournal of Culture, Tourism and
Hospitality Research, Vol. 7 Iss 2 pp. 163 - 168
Permanent link to this document:http://dx.doi.org/10.1108/IJ CTHR-04-2013-0022
Downloaded on: 24 January 2016, At: 22:21 (PT)
References: this document contains references to 9 other documents.
To copy this document: [email protected]
The fulltext of this document has been downloaded 1117 times since 2013*
Users who downloaded this article also downloaded:
Stephen W. Litvin, (2013),"Festivals and special events: making the investment", International J ournal of Culture, Tourism and Hospitality
Research, Vol. 7 Iss 2 pp. 184-187http://dx.doi.org/10.1108/IJ CTHR-04-2013-0025
Bing Pan, Tzung-Cheng Huan, (2013),"New perspectives on festival and events research", International J ournal of Culture, Tourism and
Hospitality Research, Vol. 7 Iss 2 pp. 115-117http://dx.doi.org/10.1108/IJ CTHR-04-2013-0018
J udith Mair, Michelle Whitford, (2013),"An exploration of events research: event topics, themes and emerging trends", International J ournal
of Event and Festival Management, Vol. 4 Iss 1 pp. 6-30http://dx.doi.org/10.1108/17582951311307485
Access to this document was granted through an Emerald subscription provided by emerald-srm:115632 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about
how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/
authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than
290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional
customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and
also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.
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Festivals, special events, and the ‘‘rising
tide’’
Stephen Litvin, Bing Pan and Wayne Smith
Abstract
Purpose – The accurate measure of the economic contribution of festivals and special events is a
challenge. Using a case study, the purpose of this paper is to demonstrate a previously un-captured
economic contribution from increased hotel rates during the period of festival or event; the ‘‘rising tide’’
effect.
Design/methodology/approach – This paper uses a case study on Charleston’s hotel occupancy
changes, and howthe changes coincide with the occurrence of festivals and events in the community, to
demonstrate the increased tourism income due to rising accommodation prices during festivals and
events.
Findings – The study validates the increased tourism income due to rising accommodation prices
during festivals and events, which can provide a signi?cant boost to the economy of a local community.
Practical implications – Festival organizations, as well as hoteliers and other bene?ciaries of tourist
spending during festivals and events, should note how this additional contribution bene?ts them and
their communities.
Originality/value – Many economic contributions of festivals/events overstate their values. The current
study ?rst demonstrates a previously un-captured economic contribution using a case study approach.
Keywords Tourism, Hotels, Income, Local economies, Entertainment, Economic impact,
Community development, Promotion
Paper type Case study
Introduction
The measurement of the economic contribution of festival and special events is far from an
exact science. The intent of the following discussion is not to instruct on nor critique the
methods used in many economic impact studies for festivals and events. An extensive body
of literature is related to the topic. Instead, the intent of this paper is to suggest a new
variable to those who conduct such studies.
In an article poignantly entitled ‘‘Economic impact studies: instruments for political
shenanigans?’’, John Crompton (2006) discusses potential errors incumbent in economic
impact calculations that often result in an overstatement of festival economic impact.
Crompton does not instruct how one should conduct his/her study; instead, he notes that
festivals had the tendency to overstate the economic contribution of their events, regardless
of the approaches taken. Per Crompton, the overlooking of contra-factors in the calculation
is the common cause for such overstatement. His examples include: ‘‘time-switchers’’ –
those tourists who would have visited without the festival or event, but changed their
schedule to coincide their travel with it. They should not be credited to the festival; ‘‘casuals’’
– those attending tourists whose main purpose is not for the festival, and thus should be
excluded from the calculation of bene?t; the inclusion of local visitor expenditures which is a
redirection of local funds from other alternative expenditures; the failure to account for
incremental municipal costs related to the event; and the loss of revenue from displaced
DOI 10.1108/IJCTHR-04-2013-0022 VOL. 7 NO. 2 2013, pp. 163-168, Q Emerald Group Publishing Limited, ISSN 1750-6182
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PAGE 163
Stephen Litvin, Bing Pan
and Wayne Smith are
based in the Department of
Hospitality and Tourism
Management, College of
Charleston, Charleston,
South Carolina, USA.
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visitors (Litvin, 2007). Failure to consider these negatives in reported bene?ts results in
overstate an event’s true economic contribution to the community (Crompton, 2006).
Crompton (2006, p. 67) notes, ‘‘Most economic impact studies are commissioned to
legitimize a political position rather than to search for economic truth. Often, this results in the
use of mischievous procedures that produce large numbers that study sponsors seek to
support a predetermined position.’’
Such errors are not generally the results of shenanigans, and are likely a function of the
complexity of calculating economic impacts for festivals and events. However, the resultant
inaccuracies often overstate economic bene?t. The balance of this paper discusses an
opposite issue: a previously unidenti?ed effect that captures a positive economic impact. A
festival or special event can have this impact upon its host community given the right
circumstances. The new concept is termed the ‘‘Rising Tide’’ effect, referring to the
increased tourism income due to rising accommodation prices during festival and events.
Festival managers, hoteliers and other tourism providers who bene?t from successful
festivals and special events will be interested in the concept and ?nd it valuable.
The Rising Tide effect
This research is based upon a dataset on tourism activities in Charleston, South Carolina.
Charleston is a tourist metropolitan area with a population of approximately 600,000. The
area is blessed with Civil War era plantations and forts, lovely parks and gardens, nearby
beaches, a temperate climate, the largest preserved historic district in the USA, and an
extensive festival and special events calendar. These assets have earned Charleston
accolades as one of Conde´ Nast Traveler’s ‘‘Top 10 travel destinations in North America,’’ a
National Geographic Traveler’s ‘‘Top 50 places of a lifetime America’’ designation, and
recognition by Southern Living as both a ‘‘Favorite historic destination’’ and ‘‘Favorite dream
getaway.’’
Per the College of Charleston’s Of?ce of Tourism Analysis, Charleston County has
approximately 15,000 hotel rooms and hosted just under four million overnight visitors during
2009 (Byrd, 2010). Figures 1 and 2 re?ect hotel occupancy and Average Daily hotel Rates
(ADR) on a week-by-week basis for both Downtown Charleston and Charleston County in
2009.
The numbers in the two graphs re?ect weekly ?uctuation and Charleston’s seasonality.
Certainly a perfectly smooth demand curve is not possible. What is interesting is the number
of signi?cant weekly upticks tied directly to a major festival or special event held during
those weeks. Some of these events created a positive phenomenon we refer to as the rising
tide effect (from the JFK idiom, ‘‘a rising tide lifts all boats’’). This rising tide likely enhanced
the events’ economic contributions signi?cantly in a manner not captured by their
organizers’ economic impact studies.
The festivals and special events in Figures 1 and 2 have the power to in?uence the area’s
entire hotel sector. They not only increased county-wide hotel occupancy levels as a result of
the visitors they attracted, they also likely provided a measurable boost to the county’s ADR.
The result was not just the increased number of visitors recorded in Charleston than those
expected from a ‘‘normal’’ non-festival week; collectively all visitors that week – whether
festival/special event attendees or not – paid incrementally higher hotel rates as re?ected in
the higher ADR. This across-the-board higher ADR is the rising tide effect.
Consider a couple of examples. Charleston’s ?rst major event of the year is Southeastern
Wildlife Exhibition (SEWE), a very successful wildlife art festival. Held each February, local
tourism sector strategically scheduled SEWE to jump-start the local tourism season. Per
SEWE’s 2010 Application for Accommodations Funding (a grant request submitted to
Charleston County in 2009 and a public record), SEWE 2009 attracted around 23,000
visitors, 85 percent of whom stayed in paid accommodations for an average of 2.3 nights.
Assuming an average party size of 2.2 (Charleston average), one can approximate that
SEWE visitors occupied approximately 20,000 hotel room nights during the festival period.
As a whole, the County sold approximately 70,000 hotel room nights during that time period.
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Festival goers account for the signi?cant uptick in occupancy (Figure 1); county-wide ADR
also shows a signi?cant increase during the festival week (Figure 2). As depicted in the
graph, the increase in ADR from the prior week was $8. Similarly, data from 2008 also found
an increase of $9. Thus, factors such as bad weather in 2009 could have skewed the data;
they were not in play in 2009. Arguably, the strength of SEWE bookings is that it allowed other
hoteliers to raise their rates. SEWE attendees paid more to visit Charleston speci?cally
Figure 2 Charleston SC hotel average daily rate, 2009
Figure 1 Charleston SC hotel occupancy rate 2009
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because they wished to attend the festival. The vast majority of visitors also paid a higher
rate than one would expect to pay in early February in Charleston, simply because their
visiting week coincided with the event. As a result, non-SEWE visitors occupied the other
50,000 room nights, and collectively contributed approximately $400,000 in additional funds
to the county’s hotel revenue. It is calculated as 50,000 rooms sold to non-SEWE visitors £
$8 incremental ADR ¼ $400,000 additional revenue.
After application of the area’s tourism multiplier of 1.66 (OTA, 2010), this created a gross
incremental economic contribution of $650,000. Though a relatively small percentage of the
$67 million contribution reported by the organizers, it is a number worthy of inclusion in the
festival’s impact calculation. Please note that the methods utilized by festival management to
calculate the $67 million is not germane. What is important is the fact that the reported
number does not consider the macro-effect of the festival upon the general lodging sector.
A similar scenario occurs for the Charleston Food þ Wine Festival (F þ W), a non-pro?t
festival founded and championed by the city’s hotel and food and beverage industries.
F þ W week generated an ADR bump of $7 for both 2009 and 2008 compared to the
festivals’ prior week. Per the F þ Waccommodation tax grant application (a public record of
Charleston County, 2009), the 2009 festival generated approximately 9,000 hotel room
nights. During that week, 60,000 other room nights were ?lled by non-attendees. IF we apply
the same logic used above for SEWE, the most recent F þ W festival thus contributed an
additional $420,000 direct impact and $700,000 total impact after applying the local tourism
multiplier, due to raised county-wide ADR. This is a very signi?cant unaccounted
contribution when considered in conjunction with the $2.4 million economic impact reported
by F þ W festival organizers (McMillan, 2009).
Charleston area festivals with such impact occur throughout the year. These included
Charleston Fashion Week and the Citadel’s (Military College of South Carolina) Parents and
Homecoming weekends. Each of these events not only raises County-wide hotel occupancy
levels, but also creates an environment enabling Charleston hoteliers to command higher
room rates from their guests, attendees and non-attendees alike.
Comments
What is the main lesson to take from the above outcomes? First, when calculating the
economic contribution of a festival or special event, we need to consider Crompton’s
warnings. However, we should also consider the broader macro-issue: well-publicized
events will attract visitors who likely book early and are willing to pay higher prices. Those
events can dramatically and positively impact local economies in a manner not previously
captured. While the examples herein are Charleston-based, the lessons would seem to
apply universally.
Not all festivals and special events are likely to have such impact. The ones we identi?ed
attracted guests willing to pay premium rates at premium properties. This in turn created a
cascade, empowering lower priced and geographically peripheral hotels to raise their rates to
take advantage of a pricing concept economists refer to as the ‘‘umbrella effect’’, that is, ‘‘the
tendency for the prices of all goods and services to rise once a few do’’ (Weiner, 2007, p. 1).
Return to SEWE as an example. SEWE attracts an af?uent clientele, most of whom would
wish to stay in downtown hotels to be within close proximity to the event. During the 2009
festival, downtown ADR during festival week rose signi?cantly. An ADR of $145 from $132
the prior week resulted in an increase of 10 percent. As SEWE visitors ?lled city center
rooms, others not coming to Charleston for the festival undoubtedly elected to move to the
periphery for more affordable lodging options. In response to this uptick in demand,
non-downtown hotel revenue managers similarly raised their rates above what they would
charge during an otherwise relatively slow off-season time of year. As a result, they collected
8 percent more than they were able to charge their guests just one week prior.
The other characteristic that identify festivals and special events can in?uence
destination-wide hotel pricing would be their ability to create publicity and awareness.
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Note per Figures 1 and 2 those festival weeks produced higher room rates even in seasonal
periods of only moderate demand. The basic law of supply and demand re?ects an
economic environment where consumers compete for limited goods. In this case, however,
we note that hotels during festival weeks have raised their rates despite being short, at times
signi?cantly short, of full occupancy levels. Hoteliers it seems, have the con?dence to do so
as a result of the increased hype that accompanies these events. And non-attendee
consumers seem less price sensitive when aware that they are sharing a destination with
those visiting speci?cally for a special event. If the event were not well publicized, however,
such likely would not be the case. It is interesting consumer psychology.
Festival and event managers, as well as government of?cials often responsible for
supporting these events, should be careful to consider both the positive and the negative
factors when computing the economic value of their events. Overstatement, due to a failure
to consider offsetting costs and displacement issues, must be conscientiously avoided.
Crompton has provided a good primer of potential errors and his work should be required
reading for any festival manager producing an economic impact study. But, while further
research in other communities and across a range of festivals and special events would be
useful to con?rmgeneralizability, a broader macro-viewis appropriate for those festivals and
special events of suf?cient signi?cance to in?uence lodging pricing across their destination
market as a whole.
Litvin et al. (2006), in a multi-year study of the expenditure of accommodation tax funds in
smaller communities across the state of South Carolina, suggested that the best use of these
funds was an investment in festivals and special events. No explanation was provided to
support the ?nding beyond the fact that those communities that promoted festivals reported
higher tourism growth rates than had those that had not. Perhaps, it can be argued that the
‘‘rising tide effect’’ may have played a part in explaining their ?ndings, with the bene?ts of
these events broader than is sometimes credited.
Several concluding comments
The study has the following caveat. The study attributes the rise of ADR and hotel occupancy
rates to speci?c festivals and special events. Other unidenti?ed factors may have also
in?uenced these numbers. We have spoken with local tourism of?cials, and asked if they
could point to other factors possibly in play during the current festival period. None were
apparent to them. However, what is important is not our speci?c impact calculations related
to the festivals discussed. These festivals were solely illustrative. When preparing their own
studies, Festival organizers should consider their locale’s macro-environment and account
for all positive and negative factors. If they see the rising tide as an incremental bene?t, they
have the responsibility to justify this to those relying upon their studies. Our goal is simply to
suggest the new variable, and enable a truer and more complete assessment of the
contributions of a festival or special event to the economic well-being of its host community.
Further, spiked performances occur during certain weeks in Figures 1 and 2 do not tie to any
special event. Beyond the comments of the CVB director in Figure 1, the study provides no
further explanation. Destination-wide lodging performance evaluation is a complex issue
and that such ?uctuations are to be expected.
In addition, tourism of?cials often warn the danger of ‘‘festivalitis’’ – an over-reliance upon
festivals while disregarding the development of a permanent tourism attractions base. While
those are good advice, a calendar with major events appealing to different demographics
and interest groups can provide bene?ts both under-appreciated and under-counted by
festival and event organizers and host communities.
Finally, public monies support many festivals and special events. Hoteliers should become
involved with the process that governs the distribution of these funds, and lobby
governmental entities to support major events in the community. These events not only drive
visitor numbers, but can also be the impetus for increased hotel rates across the destination.
Those events bene?t the economy in a way neither captured nor appreciated.
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References
Byrd, A. (2010), ‘‘Visitor ?gures re?ect recession’’, Post and Courier, April 19, p. 7E.
Charleston County, South Carolina (2009), ‘‘2010 application for accommodations funding’’, Forms
completed by applicants, on ?le with the County.
College of Charleston Of?ce of Tourism Analysis (OTA) (2010), ‘‘Economic multiplier for Charleston
County tourism analysis, based upon IMPLAN, Multiplier number provided by the OTA’’.
Crompton, J.L. (2006), ‘‘Economic impact studies: instruments for political shenanigans’’, Journal of
Travel Research, Vol. 45 No. 1, pp. 67-82.
Lawson, P. (2010), private conversation with the Deputy Director of the Charleston Area Convention and
Visitors Bureau.
Litvin, S.W. (2007), ‘‘The economic attractiveness of runners: are they ‘healthy’ tourists?’’, Tourism
Economics, Vol. 13 No. 3, pp. 481-486.
Litvin, S.W., Crotts, J.C., Blackwell, C. and Styles, A. (2006), ‘‘Expenditures of accommodations tax
revenue: a South Carolina study’’, Journal of Travel Research, Vol. 45 No. 6, pp. 150-157.
McMillan, E. (2009), ‘‘Fourth Annual BB&T Charleston Food þ Wine Festival successful during tough
economic times: College of Charleston Of?ce of Tourism Analysis announces results of Annual
Economic Impact Study’’, press release dated April 20, available at:http://charlestonwineandfood.com
(accessed April 23, 2010).
Weiner, E. (2007), ‘‘Is a weak dollar really so terrible?’’, National Public Radio, available at: www.npr.org/
templates/story/story.php?storyId ¼ 14901181 (accessed May 18, 2010).
About the authors
Dr Stephen W. Litvin is a Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA. Dr Stephen W. Litvin is the
corresponding author and can be contacted at: [email protected]
Bing Pan is an Associate Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA.
Wayne Smith is an Assistant Professor in the Department of Hospitality and Tourism
Management, School of Business, College of Charleston, USA.
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This article has been cited by:
1. Guido Ellert, Guido Schafmeister, David Wawrzinek, Heike Gassner. 2015. “Expect the unexpected”. International Journal of
Event and Festival Management 6:1, 54-72. [Abstract] [Full Text] [PDF]
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