ECONOMIC IMPACT OF THE 2008 AMERICAN FOLK FESTIVAL IN BANGOR, MAINE

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1 ECONOMIC IMPACT OF THE 2008 AMERICAN FOLK FESTIVAL IN BANGOR, MAINE Bernardita Silva Graduate Assistant M.S. in Resource Economics and Policy 5782 Winslow Hall Orono, ME Marilynne Mann Research Associate Harold Daniel, PhD Director Associate Professor, Marketing Abstract Festivals and events are important drivers of tourism activity in a growing number of communities in Maine. Based on a survey of festival visitors, this study used an IMPLAN input-output model to estimate the economic impact of the 2008 American Folk Festival in Bangor, Maine. CenTRO estimated 95,626 local and non-local visitors to the Festival based on a Festival gate count of 168,000 visitors and reporting of the number of Festival days attended by surveyed participants. The estimated direct spending was $6.5 million. The calculated total output multiplier was 1.51 for every dollar spent; therefore, the total economic output generated in the Bangor area because of the Festival was $9.8 million. Survey results demonstrated the importance of festivals to local growth and tourism promotion. Policy implications for the Bangor area to increase the economic impact of the Festival are identified. 1.0 Introduction Festivals and events are important drivers of tourism activity in a growing number of communities in Maine. The Portland Sidewalk Art Festival, American Folk Festival in Bangor, Yarmouth Clam Festival, and Rockland Lobster Festival are among some of the better-known events that take place every year in Maine. The American Folk Festival, on the Bangor waterfront, has been a celebration of multi-cultural traditional arts and music for seven years. Attendees are exposed to music, dance, and other performing arts representing cultural traditions from Maine, the nation, and the world. Festival-goers are offered the opportunity to purchase authentic, traditionallymade crafts from Maine artisans and the festival experience is enhanced by offering a variety of regional, ethnic and fair food. The impact of the American Folk Festival on the area has been threefold: 1) spurring economic activity in the region, 2) expanding the cultural and artistic opportunities available to Bangor residents, and 3) increasing the visibility of Bangor as a tourist destination. Working with Festival organizers, the Center for Tourism Research and Outreach (CenTRO) of the System, conducted a study of the 2008 American Folk Festival to gauge the experience of attendees and estimate both the direct and indirect economic contribution of the Festival to the regional economy. 2.0 Literature Review Many studies mention the importance of festivals and events as key factors in attracting new money to a local economy and increasing tourist visits in an area (Long & Perdue, 1990; MacDonnell, Allen & O Toole, 1999; Jackson, Houghton, Russell & Triandos, 2005). At times, festival organizers dismiss the importance of these events to the local economy and focus on the social benefits of festivals as an instrument to preserve traditions contributing to community cohesiveness (Gursoy, Kim & Uysal, 2004).

2 The number of festivals promoted as tourist attractions has increased along with the numbers of studies designed to analyze impacts in local economies (Howell & Bemisderfer, 1981; Della Bitta & London, 1982; Wilson & Udall, 1982; Getz & Frisby, 1988). Input-output models have been highly recommended for analyzing the economic impact of tourism events for a specific region (Fletcher, 1989; Johnson, 1999). Saayman and Saayman (2006) used a model to estimate the economic impact of three festivals in South Africa. They also demonstrated that location and size of the festival have a great influence on impact. Using data from festival visitors expenditures, the model provided an estimate of the economic impact of the festival, including the effect of spending on income and jobs. 3.0 Methods The project used a two-stage approach for contacting and surveying Festival attendees. The first stage was an intercept contact with visitors during the Festival asking them to complete a short questionnaire. This questionnaire examined demographic characteristics of the responders as well as the factors that influenced their attendance. Also, to be able to identify exclusive festival visitors, visitors were asked whether they would come to Bangor if the Festival were not held. contact information collected from the first stage was used to field a second, online questionnaire. The follow-up questionnaire examined satisfaction, perceptions, and money spent at the Festival and in the Bangor area. In order to calculate the average expenditures per person, we asked respondents to estimate the amount of spending by their group and the total number of people in the group. The first-stage systematic, random on-site surveying at the 2008 American Folk Festival took place on August 22, 23 and 24: Friday afternoon, Saturday afternoon and evening and Sunday afternoon. All time frames that the Festival was in operation were surveyed and 953 questionnaires were completed. Twenty-five percent of respondents were surveyed on Friday, 40 percent on Saturday and 35 percent on Sunday. An on line survey can produce some bias excluding people without Internet access or those who declined to disclose information for privacy reasons. Nonetheless, the first-stage, onsite questionnaire produced 602 addresses 63 percent of the total of Phase 1 contacts. Each of the household units were contacted in mid-september and asked to complete the online survey. A total of two follow-up invitations were sent and occurred at a one to two week interval after the previous contact. This resulted in 314 completed questionnaires for a response rate of 52 percent. That is considered a high response rate for online surveys. Through the online survey, information was obtained on expenditures by the entire party for lodging, food, gasoline, entertainment and various kinds of retail shopping in the area outside of the Festival. Visitors also reported the total amount of money spent at the Festival for food, arts and crafts, donations and other spending. An IMPLAN input-output model was used to calculate the economic impact of the Festival in the Bangor area. This included estimates of aggregate output, income and employment change attributable to the Festival. In order to estimate the economic impact in the Bangor area, Maine multipliers were used which can be slightly higher than county multipliers which were not available for Penobscot County. The impact for the Bangor area assumes all vendors were local and all spending remained in the area. If there was leakage, the impact calculated may represent a larger geographic area than just the immediate Bangor area. This is not a cost benefits analysis because the costs associated with the staging of the Folk Festival are unknown. 4.0 Results The total outcome created by the Festival in the region was analyzed through two different scenarios. The first scenario included total expenditures for all Festival visitors. The second scenario calculated the impact from the visitors who came to Bangor because of the Festival (exclusive Festival visitors). This was done to exclude expenditures that would have taken place regardless of the Festival. Numbers were estimated and total expenditures were calculated for spending both at the Festival and in the Bangor area (Table 1). Total visits to the Festival were based on a gate count provided by Festival organizers of 168,000 visits, which is the total number of visitors entering the Festival over three days but does not distinguish visitors who have attended multiple days. Using data from the onsite survey, it was estimated that 47 percent of total visits were by people who attended the Festival for one day, 30 percent for two days, and 23 percent attended all three days. Based on the gate count and these percentages, it was estimated that 95,626 individuals attended the Festival in From the onsite survey it was determined that 22 percent of these visitors came to Bangor specifically to attend the Festival. As a percentage of total visitors (95,626), an estimated 21,108 people would not have been in Bangor if the Festival had not been held. These are exclusive festival visitors.

3 Table 1 shows the breakdown of expenditures by all visitors (n=95,626) and by exclusive festival visitors (n=21,108). Spending outside the Festival by all visitors was highest for restaurants and/or lounges (21.2%) followed by gasoline (16.6%), hotels (14.9%), and gifts and outdoor equipment (10%). For exclusive festival visitors, the highest expenditures were for hotels (22.9%) and other accommodations (16.1%), followed by grocery and convenience store purchases, as well as restaurants and/or lounges and gasoline. This makes sense considering this group came from outside the area to attend the Festival requiring hospitality expenditures. In both scenarios, the expenditures at the Festival are more than 50 percent of the total expenditures in the Bangor area. <insert table 1 here> The input-output model used to evaluate the impact of expenditures in a region describes commodity flows from producers to intermediate and final consumers. IMPLAN software and database was used to develop the regional inputoutput model. For retail categories, IMPLAN calculated the retail margin, which represented the portion of retail purchases captured in the local economy by the retailers who make goods available to consumers. This retail margin, plus purchases of locally produced goods and services, represents the direct impact or direct effect of the expenditures. Using Maine industry multipliers, IMPAN calculated indirect, induced and total effects in the regional economy. Finally, direct effect, plus indirect and induced effect, represented the total effect of the expenditures in the region because of the Festival. Table 2 presents IMPLAN results for both total visitors and exclusive Festival visitors. For all visitors expenditures, the direct effect was $6.5 million. The calculated total output multiplier for expenditures was 1.51 for every dollar spent; therefore, the total output generated in the Bangor area because of the Festival was estimated to be $9.8 million. Analysis of exclusive Festival visitors reflected a direct effect of $2,217,977 and an estimated total effect of almost $3.5 million, which produces a multiplier of 1.51 for every dollar spent. For the analysis of all visitors, the employment impact in Table 2 shows that the 2008 American Folk Festival supported the equivalent of 121 jobs and $2.8 million of income. IMPLAN estimated the number of jobs using a national average wage. Employment multipliers are generally based on the total number of jobs (full, part or seasonal jobs). Using data from exclusive Festival visitors, an estimated impact of 41 jobs because of the Festival, produces a total income effect of $928,553. <insert table 2 here> 4.0 Conclusions and Implications The 2008 American Folk Festival which took place in Bangor, Maine, at the end of August, attracted around 95,000 visitors of which 13 percent came to Bangor exclusively to attend the Festival. Their expenditures in the area and also at the Festival had a large monetary impact on the local economy. In order to show the impact of expenditures that would not occur in the absence of the Festival, all visitors expenditures were separated from exclusive festival visitors expenditures. Using the IMPLAN input-output model, total output was estimated at nearly $10 million which included all visitors. Total output was estimated at $3.3 million for exclusively Festival visitors. Survey data substantiated that local visitors also increased their normal expenditures because of the Festival, especially money spent at the event. This amount represents almost 40 percent of total expenditures. For this reason, the final impact is estimated to be closer to $10 million than $3.3 million. By attracting large audiences festivals can bring attention to and help to preserve local arts, culture, and traditions. Impacts include socio-economic benefits connected with festival at the local, regional, and state level. Festivals can increase demand for tourist attractions and present opportunities for promoting other state and regional attractions to residents and visitors. Efforts to use the Festival as a means of promoting other attractions in the Bangor area, both man-made and nature-based, have the potential to extend visitors length of stay in the area and increase the economic impact of the Festival. This can be accomplished through links on the Festival website and embedding a Visitor Information Center booth into the Festival. At the same time, results showed that lodging and restaurants benefitted from the highest average expenditures while visitors did not spend significant amounts for recreation or shopping. This suggested opportunities for encouraging spending in these areas to increase the economic contributions to the region that flow from the Festival. Local business owners could provide more information to Festival goers in order to promote the local services, stores, restaurant, etc. The Festival may serve as an instrument in this promotion. Visitors could be invited to other area attractions beside the Festival.

4 This study modeled the strong economic impact of the 2008 American Folk Festival in the local economy. In order to increase the impact, organizers need to increase the number of visits to the Festival by encouraging return visits with first-time visitors and promoting the Festival in the out-of-state drive-market to increase new visits. Collaborations with organizers of other music-focused festivals in neighboring states and Canada for free promotional exchanges could provide access to like-minded festival goers without spending scarce advertising dollars. A partnership with another festival in the same geographic area, scheduled either directly before or after the Folk Festival, has the potential to draw week-long vacationers shared by both areas. 5.0 Citations Della Bitta, A., & London, D. (1982). Assessing the economic impact of short duration tourist events. New England Journal of Business and Economics, 1, Fletcher, J. E. (1989). Input-output analysis and tourism impact studies. Annals of Tourism Research, 16, Getz, D., & Frisby, W. (1988). Evaluating management effectiveness in community-run festivals. Journal of Travel Research, 27, Gursoy, D., Kim, K. & Uysal, M. (2004). Perceived impacts of festivals and special events by organizers: An extension and validation. Tourism Management, 25, Howell, R., & Bemisderfer, T. (1981). South Carolina tourist development handbook: A primer for local communities. Clemson, SC: Clemson University, Department of Recreation and Park Administration. Jackson, J., Houghton, M., Russell, R., & Triandos, P. (2005). Innovations in measuring economic impacts of regional festivals: A do-it-yourself kit. Journal of Travel Research, 43, Johnson, R. (1999). Estimating the economic impact of a tourism accommodation development on my local government area, region, state or territory. In K Corcoran (Ed.), Valuing tourism: Methods and techniques. Occasional Paper No.28.Canberra: Bureau of Tourism Research. Long, P. T., & Perdue, R. R. (1990). The economic impact of rural festivals and special events: Assessing the spatial distribution of expenditures. Journal of Travel Research, 28(2), MacDonnell, I., Allen, J., & O Toole, W. (1999). Festival and Special Event Management. Melbourne, Australia: John & Sons Australia, Ltd. Saayman, M., & Saayman, A. (2006). Does the location of arts festivals matter for the Regional Science, 85, economic impact? Papers in Wilson, J. T., & Udall, L. (1982). Folk festivals: a handbook for organization and management. Knoxville: The University of Tennessee Press.

5 Table 1: Expenditures by 2008 American Folk Festival visitors ALL VISITORS 1 EXCLUSIVE FESTIVAL VISITORS 2 Expenditures ($) Percent Expenditures ($) Percent Restaurant and/or Lounge $857, $181, Gasoline 673, , Hotel 605, , Gifts and outdoor equipment 406, , Grocery and convenience 340, , Recreation/Entertainment 338, , Other Accommodation 309, , Other shopping 287, , Artwork and antiques 135, , Other trip expenses 99, , Total External Expenditures $4,051, $1,485, At Festival Expenditures $2,459,781 $732,387 TOTALS $6,511,570 $2,217, ,626 estimated people attending the Festival. 2 21,108 estimated people that came to Bangor only because of the Festival. Table 2: Economic Impact of American Folk Festival visitors expenditures in Bangor Region 1 ALL VISITORS (N=95,626) Direct Indirect Induced Total Multiplier Output $6,511,570 $1,408,227 $1,934,104 $9,853, Employment Income $1,745,361 $ 433,943 $627,257 $2,806, EXCLUSIVE FESTIVAL VISITORS (N=21,108) Direct Indirect Induced Total Multiplier Output $2,217,977 $482,017 $639,899 $3,339, Employment Income $573,464 $147,560 $207,529 $928, Using IIMPLAN