Volume I Issue VII - Revised. The Impact of LVCVA/LVE- Sponsored Special Events on the Southern Nevada Economy

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1 Volume I Issue VII - Revised

2 Page 1 Applied Analysis was retained by the Las Vegas Convention and Visitors Authority (the LVCVA ) to review and analyze the economic impacts associated with its various operations and southern Nevada s tourism industry more generally. This is the seventh in a series of summary reports detailing the findings of our review and analysis; it is specific to the impact of special events sponsored by the LVCVA and Las Vegas Events ( LVE ) on the southern Nevada economy. For purposes of this analysis, special events are defined as gatherings of people, generally lasting from a few hours to a few days, designed to entertain, present or host an activity of interest. Included are festivals, sporting contests and entertainment events. Recurring shows in hotelcasinos are not included, nor are general meetings, convention and tradeshows. 1 This analysis specifically seeks to offer a closer look at the impact of LVCVA/LVE-sponsored special events. These are events for which the LVCVA or LVE provided financial assistance, events produced by LVE and events for which the LVCVA or LVE provided marketing support. The value of a special event is twofold; each has economic impact resulting from event attendance and media value. This analysis focuses on economic impact driven by visitation but does not seek to quantify the media value of the events. Southern Nevada is home to a number of special events that have a significant impact on the local economy, each with the potential to draw substantial attendance. However, complete information is not available about all of the special events taking place in southern Nevada. For some non-sponsored events a great deal of information is available, including attendance profiles obtained through intercept surveys. For others, information is sparse, incomplete and at times inconsistent. As a result, the impacts of only LVCVA/LVE-sponsored events are included herein; events not sponsored by the LVCVA or LVE are not included in this analysis. FINDINGS IN SUMMARY Special events are historically significant drivers of visitor volume to southern Nevada. They also have significant economic impacts on the tourism industry and the economy more broadly. The LVCVA and LVE sponsored 51 major special events held over 220 days during FY The total value of these sponsorships was just over $13.8 million. Of the 51 special events held in southern Nevada, 36 were surveyed. Detailed information on attendee numbers, characteristics, and spending behavior is available for the 36 events that were surveyed. Attendance at surveyed events totaled 1.4 million people, with 52 percent of unique attendees 1 Note that the impact of meetings, tradeshows and conventions were reviewed and analyzed in previous briefs in this series. See, The Economic Impact of Southern Nevada s Tourism Industry and Convention Section. Volume I, Issue II.

3 Page 2 coming from out-of-town; on a per event basis, out-of-town visitors averaged 66 percent of attendance. Of the 442,000 people coming from out-of-town to attend surveyed events, 292,000, or 66 percent, are estimated to be incremental, meaning the visitor traveled to southern Nevada specifically for the special event. 2 Overall, sixty-six percent (66 percent) of all room nights booked by out-oftown visitors attending surveyed special events are considered incremental, based on available survey data. The average special events visitor at a surveyed event in southern Nevada spent 4 percent more per trip on nongaming expenditures than the average visitor to Las Vegas, while on the whole, the incremental special events visitor spent 15 percent more per trip than the average for all special events visitors, and 20 percent more than the average visitor to Las Vegas. 3 In contrast, gaming budgets reported by surveyed special event visitors were low ($303 per person for surveyed special events in southern Nevada) compared to gaming budgets for the average visitor to Las Vegas ($452 per person). 4 The economic activity of all visitors at LVCVA/LVE-sponsored surveyed special events helps maintain 4,079 direct, indirect and induced jobs which pay $126.5 million in wages and salaries annually. 5 In FY 2008, the LVCVA/LVE budget for surveyed special events was $12.2 million, or less than $0.4 million per event, while the direct economic impact of each event averaged $8.3 million. 6 Total expenditures (including estimated gaming outlays) of out-of town visitors attending surveyed special events are estimated at $299.4 million in FY 2008, for a leveraged return on investment of $25:$1, taking into account only the dollars invested by the LVCVA and LVE and the economic impact of these events for southern Nevada. 7 The economic activity of only incremental visitors supports 3,030 2 Incremental room nights were determined by surveys conducted by R&R Partners/ McGuire Research Services, LLC at 36 major special events. Out-of-town visitors were asked whether they would have traveled to Las Vegas on this trip if the special event were not taking place. 3 See, 2008 Las Vegas Visitor Profile Study prepared by GLS Research for statistics on all visitors to Las Vegas. Research regarding visitors attending special events was conducted by R&R Partners/ McGuire Research Services, LLC through surveys taken at 36 major special events. 4 See, 2008 Las Vegas Visitor Profile Study prepared by GLS Research (gaming budget per person is an average for all visitors, not solely among those that gambled). Research regarding visitors attending special events was conducted by R&R Partners/McGuire Research Services, LLC through surveys taken at 36 major special events (gaming budget average is an average for all special event visitors, not solely among those that gambled). 5 Multipliers used to calculate indirect and induced impacts, employment figures and wage and salary amounts are based on methodology used in Issues I and II of this series. Please refer to those issues for more detailed overviews of how these impacts are calculated. 6 Average economic impact per event is based on survey-based visitor expenditures that have been conservatively benchmarked to reflect known expenditure levels. 7 The survey-based visitor expenditures reported in this analysis have been conservatively benchmarked to reflect known expenditure levels. Visitor expenditure adjustments were made such that the sum of the parts is not greater than the whole (see, Issue I of this series, Tax Contributions of Southern Nevada Visitors.) Simply applying what visitors report as their spending to the number of event attendees indicated a combined non-gaming expenditure by out-of-town visitors attending surveyed special events of $398.5 million in FY 2008, or $11.1 million per surveyed event.

4 Page 3 total jobs which pay $94.0 million annually in wages and salaries. Total expenditures of incremental visitors attending surveyed special events are estimated at $222.3 million in FY 2008, for a leveraged return on investment of $18:$1, taking into account only the dollars invested by the LVCVA and LVE and the incremental economic impact of these events. LVCVA/LVE-SPONSORED EVENTS Background In FY 2008, the LVCVA and LVE sponsored 51 major special events, with attendance at the 36 events that were surveyed totaling 1.4 million people. To put these figures in perspective, it is interesting to note that there were 23,500 conventions held during the same time period, with attendance at these events totaling 6.2 million. In addition to generating publicity and media attention, the special events sponsored by the LVCVA and LVE are intended to be events that drive visitation, and with an average of 38,500 people attending each surveyed event, compared to an average of 263 people per convention, special events have been particularly successful in drawing attendance, particularly among out-of-town visitors. Visitors accounted for 442,000 of the 852,000 estimated unique attendees at special events, with 66 percent of these, or 292,000 considered to be incremental, meaning the visitor traveled to southern Nevada specifically for the event. It should be noted that the size of both conventions and special events vary widely depending on the nature of the occasion. Exhibit I, which follows, lists LVCVA/LVE-sponsored surveyed major special events held in FY 2008 and their respective total attendance. Surveys conducted at each of these 36 events serve as the basis for much of the analysis that follows. As mentioned previously, the LVCVA and LVE sponsored 51 events in total; surveys were not conducted at 15 smaller events. LVCVA/LVE support for these non-surveyed events totaled $1.6 million (which is included in the total sponsorship budget of $13.8 million mentioned earlier in this analysis). These events are not included in the economic analysis that follows due to the absence of survey-based data.

5 Page 4 Exhibit I - Revised LVCVA/LVE-Sponsored Surveyed Major Special Events 8 FY 2008 Surveyed Special Events LVCVA/LVE Sponsorship Amount Total Attendance Percent from outof-town Las Vegas/Fremont Street Events Wrangler National Finals Rodeo (NFR) $628, ,275 86% ACDelco Las Vegas NHRA Nationals $145, ,075 58% Aviation Nation Air Show $250, ,100 21% NHRA SummitRacing.com Nationals Incl. in NHRA budget 106,175 58% PBR World Championship $1,541,472 90,100 85% Cowboy Christmas Gift Show Incl. in NFR budget 89,525 88% FIBA Americas Championship $3,766,724 70,240 51% Craftsman Truck Series Smith s Las Vegas 350 $155,750 68,250 15% Las Vegas Bikefest $100,000 66,550 74% Mountain West Basketball Championships $500,000 62,250 58% Las Vegas Marathon $250,000 53,450 82% Vegoose $350,000 46,200 89% Las Vegas Bowl $988,235 42,350 74% AMA SuperCross Series Finals $225,000 40,975 68% Monster Jam World Finals Incl. in AMA budget 37,875 14% Tennis Channel Open $500,000 33,875 16% USA Olympic Team Trials $490,429 23,850 93% Big League Weekend $400,000 23,375 16% Las Vegas SCORE Off-Road Race $220,539 16,125 33% USA Men s Basketball Challenge $212,257 15,525 21% Holiday Festival $75,000 12,150 75% ACM Motorcycle Ride & Concert $175,000 7,250 61% Las Vegas Cruise $125,000 6,650 78% Senior Softball Winter Worlds $10,000 5,775 88% Downtown Hoedown $125,000 3,075 80% Cliff Keen Invitational $15,000 2,400 90% Laughlin Events Laughlin River Stampede $112,500 17,650 87% Laughlin Desert Challenge $243,500 15,300 87% Xtreme Bulls $75,000 9,225 64% Laughlin Winter Break $32,000 7,350 90% International Rally & Motorsports Festival $70,000 3,125 42% Weekend of Wheels $110,986 2,300 69% Mesquite/ Primm Events Primm 300 Score Off-Road Race $59,500 6,800 95% RE/MAX World Long Drive Championship $150,000 2,200 84% Mesquite Amateur Golf $25,000 1,575 99% Exceptional Driver Championship $50, % Total $12,177,083 1,388,290 52% 8 LVCVA/LVE sponsorship amount is provided by the LVCVA; attendance and percent of out-of-town attendees were calculated by R&R partners and McGuire Research based on ticket sales, participant data and survey responses taken in the field at the special events.

6 Page 5 Non-Gaming Expenditures Surveys indicate that on average, visitors in southern Nevada attending special events spent 4 percent more per trip than the average visitor to Las Vegas, while incremental special events visitors spent 20 percent more. 9 In addition, incremental visitors, or those visitors who traveled to southern Nevada specifically for a special event, spent 15 percent more per trip than the average for all special events visitors. This trend suggests that visitors planning a specific trip around a special event tend to budget more for their trips than those who happen to be in town during an event and decide to attend, or those who travel partly because of an event but would have come regardless. It is important to note that special events have both direct economic impact and media value. This report does not seek to quantify the media value of these events. Economic Impact of Surveyed Special Events Visitors attending the 36 LVCVA/LVE-sponsored surveyed special events held in FY 2008 generated total economic activity of approximately $299.4 million. This equates to an average expenditure level of $678 per out-oftown visitor per trip for all special events, a figure which includes surveybased benchmarked non-gaming and gaming expenditures. As mentioned at the outset of this analysis, in previous reports in this series we have benchmarked survey-based visitor spending totals to reflect known expenditure levels. A married couple staying in a single room may each be surveyed independently and asked the question, How much did you spend on your hotel room per night? and might both respond $100. This, of course, would be an accurate response, but would tend to suggest that each party spent $100 per night, when in reality their combined expenditure was $100. Visitor expenditure adjustments were made such that the sum of the parts is not greater than the whole (see, Economic Impact Series Volume I, Issue I, Tax Contributions of Southern Nevada Visitors). It is important to note that the total economic impact of special events reported in this analysis includes the expenditures of visitors only. The economic impact of special events reported herein does not include the expenditures of local residents who also attended the special events, such 9 See, 2008 Las Vegas Visitor Profile Study prepared by GLS Research for statistics on all visitors to Las Vegas. Research regarding visitors attending special events was conducted by R&R Partners/ McGuire Research Services, LLC through surveys taken at 36 major special events. As special events in Las Vegas, Laughlin and Mesquite are included in this analysis, and the visitor profile from Las Vegas is used as a point of reference, the comparisons shown here are conservative, as the average visitor to Laughlin and Mesquite spends significantly less than the average visitor to Las Vegas.

7 Page 6 as meals out, souvenir purchases, or transportation costs to attend the special event. LVCVA/LVE-sponsored special events have significant economic impacts on the community, supporting jobs, generating wage and salary payments and stimulating economic activity. Direct visitor spending is estimated at $678 person per trip, a value that increases to $1,040 when the indirect and induced impacts of that spending are considered. Indirect and induced impacts include the affects of resulting supplier purchases and spending by employees throughout the economy. This is sometimes referred to as the ripple effect. When this ripple effect is considered, LVCVA/LVE-sponsored special events generate total economic activity valued at $459.5 million. This activity also supports 4,079 jobs throughout the community and nearly $127 million in annual wage and salary payments. 10 Exhibit II Direct, Indirect and Induced Impacts of LVCVA/LVE-Sponsored Surveyed Special Events 11 All Visitors FY 2008 Direct Indirect Induced Total Impacts Impacts Impacts Impacts Total Employees 2, ,079 Total Wage & Salary Payments $84,913,385 $19,768,377 $21,866,796 $126,548,557 Wages Per Employee $34,136 $29,024 $24,017 $31,024 Total Economic Output $299,430,485 $72,675,414 $87,425,383 $459,531,282 Output Per Employee $120,374 $106,704 $96,022 $112,656 Considering only the economic impacts of incremental visitors (who were reported to spend more on average than all special event visitors) LVCVA/LVE-sponsored surveyed special events support 3,030 total jobs that pay $94.0 million in wages and salaries annually. 12 Direct incremental visitor spending of $222.3 million is estimated to generate total activity valued at $341.1 million when the indirect and induced impacts of this spending are considered. 13 Refer to Exhibit III below for economic impacts generated by incremental visitors only. 10 Multipliers used to calculate indirect and induced impacts, employment figures and wage and salary amounts are based on methodology used in Issues I and II of this series. Please refer to those issues for more detailed overviews of how these impacts are calculated. 11 Id. 12 Id. 13 Id.

8 Page 7 Exhibit III Direct, Indirect and Induced Impacts of LVCVA/LVE-Sponsored Surveyed Special Events 14 Incremental Visitors Only FY 2008 Direct Indirect Induced Total Impacts Impacts Impacts Impacts Total Employees 1, ,030 Total Wage & Salary Payments $63,050,876 $14,678,645 $16,236,788 $93,966,310 Wages Per Employee $34,100 $29,010 $24,010 $31,016 Total Economic Output $222,279,891 $53,950,028 $64,899,553 $341,129,472 Output Per Employee $111,096 $98,480 $88,621 $103,973 Return on Investment In FY 2008, the LVCVA/LVE budget for surveyed special events was $12.2 million, or less than $0.4 million per event, while the total direct economic impact was $299.4 million, or approximately $8.3 million on average per event. 15 The total direct economic impact of only incremental visitors was $222.3 million, or approximately $6.2 million on average per event. Exhibit IV below depicts the FY 2008 LVCVA/LVE special event budget in comparison to the total economic impact of these events. 14 Id. 15 As previously stated in this analysis, expenditures have been benchmarked to reflect known expenditure levels so as not to overstate economic impact.

9 Page 8 Exhibit IV LVCVA/LVE-Sponsored Surveyed Special Events Direct Return on Investment 16 FY 2008 (Millions) $350 $300 $250 $200 $150 FY 2008 LVCVA/LVE special event budget Total direct economic impact $100 $50 $0 All Visitors Incremental Visitors Only It is important to note that the LVCVA and LVE were not the sole sponsors of many of the events for which they provided financial and other assistance; thus, the special event budget shown in Exhibit IV above reflects only the expenses incurred by the LVCVA or LVE. Nevertheless, consistent with the LVCVA and LVE s goal to effectively generate visitation and business activity in the local economy, the total economic output of sponsored events is significantly greater than the amount it invested. Taking into account only the dollars invested by the LVCVA/LVE and the total direct economic impact generated by all visitors attending these events for southern Nevada, the estimated leveraged return on investment equals $25:$1. Taking into account only the total direct incremental impact, or the impact generated only by incremental visitors, the estimated leveraged return on investment equals $18:$1. METHODOLOGY General information on special event attendance, attendee expenditures and profiles, and event sponsorship contributions were obtained from the Las Vegas Convention and Visitors Authority, which surveys events via R&R Partners and a third-party polling and research firm, McGuire Research Services, LLC, which works in the field at special events. Data regarding general visitor profiles was obtained from the 2008 Las Vegas Visitor Profile Study prepared by GLS Research. Data reported by the Nevada Department of Taxation, the Nevada Gaming Control Board, and GLS Research was used 16 Id.

10 Page 9 to calculate adjusted or discounted economic impact. See also Issues I and II of this Economic Impact Series for details on the methodology used to calculate direct, indirect and induced economic impacts as well as adjusted economic impact. ANALYSIS LIMITATIONS This analysis used the best available data to calculate the impact of LVCVA/LVE-sponsored special events on the southern Nevada economy. It relies heavily on data reported by third-party data providers; and, although we have no reason to doubt the accuracy of these data, they have not been subjected to any auditing or review procedures by AA. In some cases data were either incomplete or inconsistent. Efforts were taken to minimize the impacts of these challenges, and we believe the analysis provides a fair and reasonable response to the fundamental question presented. Finally, it is important to note that this is a preliminary undertaking that will be supplemented by on-going and future analyses. This report is not intended to be comprehensive and may not be appropriate for all purposes.