Wednesday, October 31, 2012

The Rugby World Cup did not make us richer

Shock, horror! This will come as a big surprise to accommodation providers throughout the country - Apparently the orgy of feel-good public expenditure on hosting the Rugby World Cup did not make us richer! 
NZIER said major international events tended to "suck in" visitors from before and after the time they are held, creating a displacement effect. It said most event analysis doesn't stack up because it missed the displacement effects.

It means the benefits are often far smaller than people think....

The displacement effect meant the net number of visitors an event generates is much lower than the visitors to the event, and NZIER said the Rugby World Cup 2011 was a good example of this.

"We estimate there was little overall boost to visitor arrivals because there were fewer visitors before and after the 133,000 international visitors that came to New Zealand for the tournament," it said.

"Crucially, domestic tourism is displaced expenditure that would occur elsewhere in the economy. This significantly reduces the overall benefit from the events. "Simply put, major domestic events do not make New Zealanders any wealthier," it said.

Increased spending at the major event is mostly offset by reduced spending elsewhere. This might take the form of reductions in other holidays, spending on takeaways and eating out, or spending on household items such as TVs.

NZIER said most event analyses used multipliers to capture second rounds of spending from the profits and wages captured by local events.

But the multipliers used to capture second round spending also needed to be applied to the reduction in spending that cannot now occur elsewhere in the economy.

"Regional events are more likely to only reallocate spending across regions. They are likely to benefit the region, but at a national level let's be clear - little additional income is generated by these events," it said."

Click the "Get Widget" link below to place this widget on your website or blog!