💥 Real Event Economic Impacts: What We Think We Know vs. What We Need to Know
simple 9-step-method for revealing the most important in major event economic impact estimates
🔍 The Traditional Way (Still Used Everywhere)
“An event’s direct economic impact is defined as the amount of additional expenditure (i.e. new money) generated within a specific area as a consequence of staging it.”
That’s an example of the standard definition.
The method sounds solid:
Ask visitors how much they spent
Multiply by the number of visitors
Add organiser spending in the host economy
Deduct geographical leakage and deadweight
Report the result as direct economic impact
It’s clean.
It’s accepted.
It’s...
It’s incomplete.
In fact, most economic impact studies sound like this:
💰 “The event generated €42 million spending in the host city.”
It looks great in a press release.
It’s the kind of number that makes headlines.
It’s the kind of number that politicians and funders love — because it justifies spending on events, infrastructure, and tourism programs almost “whatever is needed”.
But here’s the real question:
🔍 “How much of that money actually stayed in the city — and helped local businesses, workers, and communities grow stronger?”
They rarely answer that
🎯 Why Should We Care?
Because if we get it wrong:
We risk overpromising and under-delivering to cities and taxpayers.
We create nice-looking numbers without showing real value.
We miss the chance to learn and improve from one event to the next.
If we measure better:
We can build stronger cases for funding.
We can design smarter events that create real local benefits.
We can show real growth, not just temporary spending.
Measuring accurately isn’t bureaucracy.
It’s a great piece of strategy.
🧱 Where the Traditional Method Goes Wrong
Problem 1: It counts money spent — not money kept.
The traditional method assumes:
“If someone spends money in the city, the city benefits.”
But that’s not how it really works completely.
Here’s a simple example:
A visitor spends €100 in the city during his/her event trip:
€50 → hotel room (international chain, profits sent abroad)
€10 → McDonald’s (global chain, profits elsewhere)
€10 → Uber rides (money to the app, driver often from outside)
€15 → drinks at a national chain bar (profits to HQ)
✅ Only €15 → at a local bakery (money stays local)
🧠 What actually happens:
The report counts the full €100 as "local impact" or new money to local economy
In reality, maybe €30 actually stays and benefits the local economy
Spending inside the city isn’t the same as spending staying in the city. Much of the money leaks out immediately and eventually.
Problem 2: It stops at the first spend — and ignores what happens next.
The traditional method tracks only the first transaction:
“Event Visitor spent €100 inside the city.”
But it doesn’t ask:
Did the local business reinvest that money?
Did it pay local workers, who then spent their wages locally?
Did it lead to upgrades, new hires, better services?
Without these next steps, spending is just a one-time event — not real economic growth.
🧠 Simple rule to remember: “ One transaction is spending. Circulation and reinvestment is impact.”
If the money doesn't move again inside the local economy, its effect dies fast.
Problem 3: It multiplies what might already be gone.
Many economic impact reports show big numbers from "indirect" and "induced" effects —
like this:
"Every €1 spent creates €1.60 in wider economic activity!"
Sounds great.
But here’s the catch:
If most of the original €1 leaked out —
(to chain hotels, global apps, HQs outside the city)
— then there’s almost nothing left to circulate or multiply.
They’re multiplying an empty base.
🧠 Simple rule I follow myself.
“Retention must happen first. Only then does the multiplier effect make sense.”
Without strong retention, multiplier numbers are just theoretical noise — not real local benefits.
✅ What We Actually Need to Know
Cities and organisers should not just need a headline number.
They would need to understand the full flow — from global footprint to local growth:
What was the total economic footprint? 🌍 (Total event-driven spending — local, national, and international — by visitors, organisers, other stakeholders)
How much of that was spent inside the host economy?💸 (New money entering the local city or region)
How much was retained by local people and businesses? 🔒 (What stayed — not just what passed through)
That’s what matters.
That’s what our Event Direct Economic Impact (DEI) Estimation model reveals — clearly and step-by-step.
It gives keys to unlock the last question.
4. What happened after the money landed? 🔁 (Did it circulate again? Was it reinvested, used to hire, or build long-term capacity?)
That’s what drives real, lasting growth
🔁 The Retention-Led Impact Model
Here’s the simple logic, how cities and local economies captures (should capture) the value of major events:
↳ Event generate spending by visitors, organisers and other stakeholders
↳ Event brings new money into the city
↳ Local economy captures a share of it (retention)
↳ That money is re-spent, invested, used to hire
↳ Real growth: jobs, capacity, taxes, upgrades
↳ City and businesses reinvest in services, infrastructure, tourism
↳ The region becomes stronger, more competitive
↳ Long-term economic benefit and growth
So yes — retention leads to growth.
But only when the system can first capture, then reuse, and later multiply the value locally.
🧭 The Shift We Need: From Spend to Stay
Stop asking:
“How much did people spend?”
Instead.
Start asking:
“How much stayed — and what grew from it?”
That’s the difference between spending and impact.
That’s what our Event Direct Economic Impact (DEI) Estimation model aims to.
It’s a logical tool and template to solve the pattern behind local economic growth - through major events.
Clearly and step-by-step.
🔢 MY 9 Steps to Estimate Real Economic Impact
1. Who spends?
Map visitor and participant groups by origin (local, national, international).
2. What do they spend on?
Define key spending categories per group (e.g. accommodation, food, transport, etc.).
3. Estimate average spend
Input average daily spend per group and category.
4. Calculate gross visitor spend
Multiply daily spend × person-days to get gross totals.
5. Apply DEI filters
Deduct local visitors, usual tourists, leakage, displacement, and VAT.
6. Add organiser spending
Estimate organiser’s net spend with local suppliers (minus local income).
7. Add partner/supplier inflows
Include non-local B2B flows: sponsors, media, production, services.
8. Calculate net direct impact
Sum all filtered spending to get Net DEI.
9. Estimate local retention
Apply retention rates by stream to reveal how much actually stays in the local economy.
📈 What Information You Get from the Model
Total Gross Economic Footprint (€)
Total Net Direct Economic Impact (Net DEI) (€)
Local Economic Retention (Real DEI) (E)
Total Number of Event Visits
Total Unique Event Visitors
Visitor Gross Spend (€)
Organiser Gross Spend (€)
Stakeholder Gross Spend (€)
Local Gross Spending (€) (excl. tax)
Domestic Gross Spending (€) (excl. tax)
International Gross Spending (€) (excl. tax)
Tax Collected from Visitor and Organiser Income (€)
Tax Paid by Organiser and Stakeholders (€)
Net VAT Position / Tax Yield Ratio
Total Visitor Spending for Accommodation (€)
Total Visitor Spending in Event Areas (ORG) (€)
Total Visitor Spending in Local Economy (off-the-venue) (€)
Total Visitor Spending Getting to/from Host City (€)
Average Spend per Unique Visitor (€)
Average Daily Spend per Visitor (€)
And
much more details
to share with ownership, stakeholders, or media
📚 Need More Guidance to your template?
If you want detailed, step-by-step instructions and reasoning of estimating economic footprint, direct economic impact and “real economic impact”,
for each phase,
I’ve collected everything essential into a ready-to-use Notion template.
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DID THIS RESONATe?
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🧠 Built For Smart Event Pros Who...
→ Pitch events to or within host cities for decision makers
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Who I am to help You?
I am Jesse Kiuru. A straight-forward-thinking event professional with over 20 years of experience in organizing events.
I’ve gathered all my insights, processes, and experience into one comprehensive guide—so you can use the same tools I’ve refined over decades.