When negotiating hall rent, an organizer who knows how to present the economic impact of an exhibition usually has a much stronger negotiating position than one who just says "our event is really big."
What economic impact is
Economic impact is the term for the consequences of an event on the economy of a given area, which can be a neighborhood, a city, a region or even a whole country. The effect is usually measured through changes in business revenue, profit, personal income, tax revenue and/or the number of jobs.
A successful exhibition organizer always knows the economic impact of the event they run, and uses this information to negotiate available event dates and the rent at the venue.
Why exhibition centers care about this figure
Exhibition centers often weigh the economic impact a proposed event could bring to the economic development of their own area. Depending on the perceived value of the event, a venue may be willing to negotiate and/or make concessions to win the contract.
Another important factor is whether the event's schedule fits the venue's own calendar. If an event fills a period that would otherwise be empty, the venue is likely to give it priority over a case where the proposed date falls in the venue's own peak demand period.
The basic formula for economic impact
The economic impact of a single event is best calculated by multiplying the number of hotel room nights (booked by the event) by the amount visitors and exhibitors spend in the community each day they attend, called daily spend.
Formula: Hotel room nights x Daily spend = Economic impact
Destinations International (DI) offers an economic impact model for exhibitions, available on its website and used by most venues and destination marketing organizations. The model includes the main factors that contribute to assessing economic impact.
Additional items when assessing economic impact
Besides hotel room nights and daily spend, several other items also contribute to the economic impact assessment:
- Exhibitors' spending on contractor services
- Hospitality events held as part of the exhibition
- Local jobs and the sales tax generated
In addition, the level of positive publicity an event generates can also be counted as part of the exhibition's value. For example, an event that receives a lot of positive press attention may not use many hotel rooms but can still be favored for the media benefit and public appeal it brings.
Use economic impact to negotiate, not just to report
Many organizers only use the economic impact figure in the year-end wrap-up report, while its greater value lies in negotiating before signing a contract. Laying out the expected hotel room nights and the estimated daily spend from the very first round of negotiation gives the organizer a solid basis to ask for a better rent or a more favorable event date.
Why the economic impact of an exhibition differs between industries
Not every exhibition creates the same economic impact even with the same number of visitors. A B2B exhibition that attracts many international visitors usually produces a much higher economic impact than a B2C event that attracts mainly local visitors, simply because international visitors stay more nights and spend more each day on hotels, food and transport. That is why, when presenting economic impact to a venue, the organizer should separate the figures for domestic and international visitors instead of giving one lumped total.
Keep economic impact figures from each edition as evidence
Like housing data or booth sales data, the economic impact figures from past editions are the most persuasive evidence when negotiating with a new venue or renewing a contract with the existing one. An organizer can show a rising economic impact trend over the last three to five editions to prove the event is growing, which strengthens your hand when negotiating favorable terms for later editions.