Why events matter

The eyes of the world will be trained on the UK this sum­mer, but will the ben­e­fits real­ly out­weigh the costs of the 2012 Olympics?

“The esti­mat­ed eco­nom­ic impact of the Games is sig­nif­i­cant,” says Rob Allen, chair­man of UK events indus­try asso­ci­a­tion Even­tia. “On top of a £5.1‑billion total stim­u­lus to the Lon­don econ­o­my, there’s a pre­dict­ed £750-mil­lion increase in con­sumer spend­ing dur­ing the Games and a £1.37-billion increase in eco­nom­ic out­put each year for the three years that fol­low.”

The prob­lem is the esti­mat­ed cost of the Games has spi­raled from £2.37 bil­lion in 2005, when the bid was won, to £9.3 bil­lion, accord­ing to the lat­est offi­cial Pub­lic Sec­tor Fund­ing Pack­age, with a recent Sky Sports inves­ti­ga­tion sug­gest­ing it could rock­et to £24 bil­lion.

Yet some claim you can’t put a fig­ure on the eco­nom­ic ben­e­fits. Accord­ing to Sir Mar­tin Sor­rell, head of adver­tis­ing giant WPP, in an inter­view giv­en when the open­ing and clos­ing cer­e­mo­ny plans were announced: “With regards to the per­cep­tion of Lon­don and the UK and a tourism lega­cy, you could say the Games will be price­less.”

The UK events indus­try already con­tributes £36 bil­lion annu­al­ly to the nation­al econ­o­my, accord­ing to a 2011 report from Britain for Events, a trade body for the indus­try. It pre­dicts that the indus­try will cre­ate an addi­tion­al £1.8 bil­lion of eco­nom­ic val­ue as a result of the Games, while the sec­tor will grow to £48 bil­lion by 2020.

It doesn’t take a genius to work out the eco­nom­ic ben­e­fits of the Gov­ern­ment work­ing close­ly with the events indus­try

But with the gov­ern­ment hav­ing pumped so much mon­ey into the Olympics, why should West­min­ster do more? The answer lies in the rev­enue break­down. Some £30.3 bil­lion (84 per cent) of the £36 bil­lion gen­er­at­ed by the events sec­tor comes from busi­ness – con­fer­ences (£18.8 bil­lion), trade shows (£9.3 bil­lion), and cor­po­rate hos­pi­tal­i­ty and moti­va­tion­al events (£2.2 bil­lion). The del­e­gates that these activ­i­ties attract, or “busi­ness tourists”, account for 25 per cent of over­seas vis­its to the UK and 28 per cent of inbound tourism earn­ings. Fur­ther­more, busi­ness tourists spend on aver­age £131 a day – 72 per cent more than leisure vis­i­tors. Wield­ing this kind of spend­ing pow­er, it doesn’t take a genius to work out the eco­nom­ic ben­e­fits for the gov­ern­ment, rep­re­sent­ing UK plc, work­ing close­ly with the events indus­try to boost these num­bers.

Unlike many sec­tors, the 530,000 peo­ple employed by more than 25,000 com­pa­nies in the events indus­try are not restrict­ed to cer­tain geo­graph­i­cal areas, but spread across the UK. In fact, it could be argued that it is in the more dis­ad­van­taged areas where events have the great­est impact.

“Busi­ness tourism gen­er­ates an esti­mat­ed £277 mil­lion of direct gross spend into the New­cas­tle-Gateshead econ­o­my, sup­ports 6,332 full-time equiv­a­lent jobs, ben­e­fits 11,339 employ­ees in total across the des­ti­na­tion and con­tributes to an over­all vis­i­tor econ­o­my esti­mat­ed at £4 bil­lion,” says Adri­an Evans, senior busi­ness tourism man­ag­er at New­castle­Gateshead Con­ven­tion Bureau.

The events also cre­ate oppor­tu­ni­ties for local busi­ness­es. “Every­one ben­e­fits when a major con­fer­ence is being held in the area, from shops, restau­rants and coach com­pa­nies to the actu­al con­fer­ence facil­i­ties and hotels,” says Janet Reuben, chief exec­u­tive of Vis­it Hull and East York­shire. “It also helps raise the pro­file of the des­ti­na­tion and change per­cep­tions.”

Mean­while, Faye Sharp, mar­ket­ing direc­tor at UK events agency Zibrant, points out that events can focus atten­tion on par­tic­u­lar dis­ci­plines or sec­tors pro­vid­ing plat­forms for local organ­i­sa­tions to tap into. “This could be through cre­at­ing an appro­pri­ate­ly themed offer­ing or, if rel­e­vant, seek­ing spon­sor­ship oppor­tu­ni­ties,” she says. Many con­fer­ences these days also incor­po­rate a relat­ed bou­tique trade exhi­bi­tion, in which local busi­ness­es could par­tic­i­pate.

Sure­ly there can’t be many sec­tors that offer such a broad range of eco­nom­ic ben­e­fits and busi­ness oppor­tu­ni­ties at both the nation­al and local scale.

The eyes of the world will be trained on the UK this summer, but will the benefits really outweigh the costs of the 2012 Olympics?