major pay off
Overcrowded? Who cares: SXSW 2011 injected $167 million into Austin's economy
The consensus immediately after SXSW 2011 was that the festival needed to take a good, long look in the mirror. The city and the festival would need to think about the smart way to manage the unprecedented growth of SXSW and consider how to proceed going forward – whether that meant scaling things back, trying to restrict unaffiliated activities, dismissing an overture to move to San Antonio, or shipping the whole thing off to an April Fool’s Day dome.
Now that the economic impact report has been released – and we've learned that the $167 million that the festival injected into our local economy during the throes of a recession represents a 47% increase over 2010 – the official stance seems to be more along the lines of, “How soon can we get to $200 million?”
It's hard to argue with the numbers: 286,000 people, or over a third of the number of people who live in Austin, attended a SXSW event, be it the music conference, the guitar show, the fashion expo, or the free concerts at Auditorium Shores; that resulted in almost 47,500 room nights being booked directly through the festival, a 20% increase from last year; and $167 million tends to speak for itself.
That last figure is the marquee number, and it's worth looking at a little more closely. Greyhill Advisors, who prepared the report, breaks it down as such: $111.7 million in direct impact, which is the money that is spent directly on festival events.
The example they offer is a catering company that contracts out to serve, say, the CultureMap party at Scholz Beer Garten. The money plunked down on Lone Star over on Red River during showcases counts; so do all of the people ordering shakes and burgers at Sandy's Custard on Barton Springs before they went to the free Strokes show at Auditorium Shores. $31.4 million is "indirect impact," which represents, say, the revenue of the catering company's food distributor. And $24.7 million is "induced impact," or the money in the pockets of the people who made some extra cash during the festival. The waiter who makes his entire month's rent in five days during SXSW, and spends like a king the next two weeks, lives here.
The rest of the report talks about the cultural and publicity impact of the festival -- it's pretty intuitive stuff, suggesting that if you get the entire world paying attention to Austin for two weeks because they're hoping to see what the next Twitter or Lady Gaga will be, then you're going to make Austin a more attractive city to do business in. Greyhill points out that most other cities only get that kind of focused attention by hosting the Olympics or the Super Bowl. Mayor Leffingwell, at the press conference at which the report was released, stressed, "It's not just the economic impact, but the cultural impact."
Of course, it wouldn't be SXSW 2011 analysis without a little bit of sniping at somebody, and a throwaway line in the report's executive summary suggests that the $167 million that landed here via official SXSW channels is the only kind of economic impact worth counting. "Attempts by private marketers or third parties to co-opt SXSW attendance are not recognized by this analysis."
While it’d certainly be difficult to track the numbers on events like the staggering number of unofficial day shows that occur at seemingly every bar, taco joint, art gallery, and dentist’s office in town (“Mouth By Mouthwest,” y’all!), the language about “co-opting” the attendance sounds pretty confrontational. But what this also means is that it’s possible – though there’s no way to know – that the two weeks in March during which SXSW occurs may already bring $200 million into the city’s economy. Add that to the list of things about this year’s festival that no one will ever agree on.