Elsevier

Tourism Management

Volume 26, Issue 4, August 2005, Pages 595-603
Tourism Management

Critical reflections on the economic impact assessment of a mega-event: the case of 2002 FIFA World Cup

https://doi.org/10.1016/j.tourman.2004.03.002Get rights and content

Abstract

Sport tourism has received growing attention as a source of generating significant revenue and contributing major economic benefits to host cities, regions, and countries. However, current methods for assessing economic impact have had variable success in estimating tourist numbers and expenditure directly attributable to a sport tourism mega event. This paper reports on the assessment of one such event, the 2002 FIFA World Cup in South Korea, using an estimation method that excluded tourists whose travel was non-event related. The survey research conducted during the event established that 57.7% of total tourist arrivals during the period of the event could be classified as either directly and indirectly attracted by the World Cup. Using this data it was calculated that the World Cup generated an economic impact of US$1.35 billion of output (sales), US$307 million of income, and US$713 million of value added for South Korea. The results also showed that foreign World Cup tourists provided a much higher yield compared with foreign leisure tourists, spending an estimated 1.8 times as much. Inclusion of the expenditure by non-World Cup tourists (42.3%) in the calculations of impact would have resulted in a significant overestimation due to the further multiplication of the expanded figures by an input–output model, misleading the net economic impact of the event. The use of survey data to distinguish event from non-event tourists, and their respective expenditure, clearly illustrates some of the methodological pitfalls associated with forecasting that is simply based on generic tourist data. Furthermore, the data generated by this assessment of net direct expenditure and economic impact using the input–output analysis can be used as a comparison point for other mega sport events. In terms of further research, it is evident that existing models of impact assessment have not adequately conceptualized aversion and diversion effects and this begs the future inclusion of these concepts in economic impact forecasting for mega-events.

Introduction

In recent years large-scale, high-profile sport events have increasingly been critically positioned in the marketing, decision-making and strategy development of tourism destinations (Gibson, 1998). In particular, mega sport events such as the FIFA World Cup and the Olympic Games draw significant numbers of domestic and international tourists, attract television and corporate sponsorship and showcase the host location. The hosting of mega sport events appeals to many sectors of the community. The opportunity to advertise products to a global audience, leverage business opportunities in export and new investment, on-sell event management knowledge, enhance the tourist industry of the host country, and boost citizen morale and pride are factors which motivate both corporate involvement and public support (Barney, Wenn, & Martyn, 2002).

It is the economic value accruing to the host that is commonly used as the basis for gathering public backing for such events, and to justify the initial expenditure of public funds in the bid process and the subsequent operationalization costs (Chalip, Grenn, & Hill, 2003). The economic benefit proposition of sport tourism mega-events now appears in the marketing literature of many cities, regions and countries. However, questions have been raised about the validity of many of the economic impact studies associated with event planning (Crompton, 1995; Tyrrell & Johnston, 2001) and the comprehensiveness of the methodologies used (Black & Pape, 1995). Stories of less than reliable economic benefit calculations cast a dark shadow on the return on investment claims made by both sport event organizers and government backers.

Crompton (1999) pointed out that accurate estimates of economic impact are greatly dependent upon reasonable accurate counts of visitors to the events. Furthermore, Crompton, Lee, and Shuster (2001) insisted that local residents, time-switchers, and casuals should be excluded from measures of economic impact since their spending is not attributed to an event. It was found that in five of the sixteen studies examined, time-switchers and casuals accounted for almost one-third of all visitors (Crompton, 1999). Therefore, Crompton (1999) asserted that if research failed to differentiate these group members from out-of-town visitors, who were attracted by the events, the economic impact associated with the events would be overestimated. In the same vein, Burgan and Mules (1992) cautioned that, ‘since such economic impacts relate mainly to expenditure associated with tourists who are attracted by the event, care is needed in measuring the amount of expenditure that would not have occurred in the absence of the event’ (1992, p. 709). Gelan (2003) also argued that unless there was a carefully structured methodology regarding types of tourists, and their expenditures attributable to an event, the economic impact could be overestimated. Tyrrell and Johnston (2001) maintained that without appropriate estimates of direct tourist expenditure attributable to an event, even the theoretically appropriate input–output model would produce inaccurate results. They also insisted that those tourists directly attributable to the event should be distinguished from those who merely stop by or visit regardless of the event.

Accurate measures of tourists and their expenditure directly attributable to a mega-event would allow policy-makers to more accurately estimate the economic impact of the event and make better informed decisions. While research on this methodological ambiguity has been conducted for regional and national level of events, little research has been conducted with international level mega-events such as the FIFA World Cup. In this respect, this study attempts to accurately estimate foreign tourists and their expenditure that would not have occurred in the absence of the 2002 World Cup. Based on the total expenditure derived from the above, the economic impact of the mega-event is measured using an input–output model. The resulting data provides a basis for useful comparison with other mega events. More importantly, critical methodological issues around appropriate measurements and the conceptualization of aversion and diversion effects are addressed.

Section snippets

Review of related literature

There has been growing recognition of event sport tourism as both a popular leisure experience and important economic activity (Ritchie & Adair, 2002). Only recently, the LA Sports and Entertainment Commission (2003) claimed the ‘average’ economic impact on a city hosting a major sporting event was US$32.2 million, and the Canadian Sport Tourism Alliance (2003) asserted that over $2 billion a year was generated by the sport tourism industry in Canada. Sport events have been the focus of many

Survey design

Two questionnaires were used to collect data from foreign tourists during the 2002 World Cup (KNTO, 2002a). The survey instruments were initially written in Korean, and then translated into four other languages: English, Japanese, Chinese, and Spanish. The survey was administered by trained field researchers fluent in Japanese, Chinese, Spanish or English ensuring that the surveys were administered by researchers who could speak the respondent's language. The field researchers approached

Estimation of direct World Cup tourists

The survey results indicated that of the total tourist arrivals during the World Cup period foreign football tourists (direct World Cup tourists) represented 34.6%, World Cup related tourists (indirect World Cup tourists) comprised 23.1%, and the remaining 42.3% were ordinary tourists (see Table 1). In other words, World Cup tourists (direct plus indirect) accounted for 57.7% of the total tourist arrivals during the World Cup period. Therefore, 42.3% of tourists were excluded when estimating

Discussion

Several researchers (Burgan & Mules, 1992; Crompton et al., 2001; Gelan, 2003) have maintained that accurate estimates of economic impact are highly dependent upon reasonably accurate measures of visitors attributable to the events and their associated expenditures. Otherwise, the overestimation of direct expenditures will carry through into an I–O model, misleading the economic impact of the event (Tyrrell & Johnston, 2001). Building on this notion, this study estimated foreign tourists and

Conclusion

The lessons learnt from the 2002 World Cup forecasts and impact assessments should provide useful historical data for policy-makers and practitioners of future host countries. This research has also highlighted the need to more adequately conceptualize aversion and diversion aspects, as well as attractive factors, in relation to mega sport events. Furthermore, it is evident that current methods of economic impact assessment are not designed to give full consideration to these and other unique

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