How to Estimate Economic Impact and Effort in Event Bidding: 15 Key Points for Success

When cities think about bidding for a major event, they need to carefully look at the possible economic effects and the work involved. Hosting an event is not just about attracting visitors—it’s about understanding how it will affect the city's economy, environment, and community. Estimating these impacts early in the process helps cities decide if it's worth moving forward and ensures they can get the most benefits. 

In this article, I will briefly explain 15 important things to estimate in the Event Due Diligence process before making the final go/no-go decision.

1. Direct Economic Impact (DEI)

This is the most immediate and visible impact, reflecting the direct spending by visitors and organizers within the host city. It includes spending on hotels, restaurants, transport, and logistics, offering a clear view of the financial boost from the event.

• Key Metric: Total Visitor Spending + Total Organizer Spending.

2. Total Economic Impact (TEI)

Going beyond direct spending, TEI captures the ripple effects of the event through indirect spending by suppliers and the wages spent locally. This broader view highlights how the event stimulates additional economic activity.

• Key Metric: Direct Impact + Indirect/Induced Effects.

3. Economic Retention (ER)

Not all money spent within the local economy stays there after the event. ER measures how much is retained right after the event . Retention ensures that local communities benefit as much as possible.

• Key Metric: Spending retained from visitors and organizers in the local economy. 

4. Pre-event Infrastructure Impact (PEI)

Hosting major events often requires significant infrastructure investment. The PEI measures the short-term economic benefits from these investments, such as job creation during construction and boosts to local industries.

• Key Metric: Total infrastructure investment’s impact on jobs and industries.

5. Post-event Infrastructure Impact (PI)

This focuses on the long-term use of infrastructure built or improved for the event. Ensuring that these investments continue to benefit the host city after the event is crucial for sustainable economic growth.

• Key Metric: Revenues and benefits from continued infrastructure usage.

6. Tax Revenue Generation

Increased economic activity from events results in higher tax revenues for governments, helping offset the costs of hosting. This includes taxes from sales, income, and business profits.

• Key Metric: Total tax revenue from visitor spending, wages, and business profits.

7. Return on Investment (ROI)

ROI measures the profitability of the event by comparing economic returns to the costs. A positive ROI is vital for justifying public and private sector investments in the event.

• Key Metric: (Total Economic Impact - Total Costs) / Total Costs.

8. Cost-Benefit Analysis (CBA)

A comprehensive assessment weighing the overall benefits against the total costs. This analysis ensures the city receives greater value than it invests, guiding long-term strategic planning.

• Key Metric: Net benefit after all costs and benefits are calculated.

9. Leverage Ratio

The leverage ratio highlights the level of private sector engagement by comparing private investments to public funding. A higher ratio means less financial burden on public resources.

• Key Metric: Ratio of private investment to public investment.

10. Opportunity Cost

Every decision comes with trade-offs. The opportunity cost estimates what the city sacrifices by choosing to host the event instead of pursuing alternative projects or investments.

• Key Metric: Value of foregone alternatives vs. expected event benefits.

11. Social Return on Investment (SROI)

Beyond financial gains, events often bring broader societal benefits, such as job creation, cultural uplift, and community development. SROI measures these social and cultural returns.

• Key Metric: Social and cultural value, including job creation and cultural enrichment.

12. Environmental Impact Cost

Every event has environmental consequences, such as carbon emissions and waste. Estimating these costs helps host cities mitigate harm and incorporate sustainable planning.

• Key Metric: Total environmental cost based on carbon footprint and resource usage.

13. Human Capital Impact

Major events can leave lasting benefits in the form of workforce development. This metric captures the economic gains from upskilling local workers, which may boost the local economy long after the event.

• Key Metric: Increased earning potential of trained workers.

14. Job Creation (Work-years)

Events generate employment both in the short term (event preparation and execution) and long term (ongoing facility use). This metric measures the total number of work-years created.

• Key Metric: Number of work-years from short-term and long-term employment.

15. Tourism Boost (Post-event)

Events often enhance the city’s visibility, driving tourism even after the event concludes. Estimating this increase in long-term tourism helps gauge the event's enduring economic impact on local hospitality and related sectors.

• Key Metric: Incremental tourism revenue from post-event visitors.

Conclusion

Estimating the economic, social, and environmental impacts of big events is very important for cities when deciding whether to bid. These estimates help cities make smart choices about whether to go ahead and allow them to plan for both short-term benefits and long-term results. By looking at these 15 key factors, cities can make the most of the benefits, plan for costs, and make sure the event brings good value.

Also, by keeping track of the event’s impact during and after it happens, cities can measure their success, change plans if needed, and get the most lasting benefits from the event.