Economic impact on NI economy through hosting the Open at Portrush in July 2019
Release: Immediate Wed 17 July 2019
The economic numbers re. the Open’s Impact
Dr Esmond Birnie, Senior Economist
“For sure the Open at Portrush will have a sizeable and positive impact on the Northern Ireland economy. This will come in three ways: a boost to output, promotion (global advertising) of the region and benefits in the longer term. It is, however, important to put the size of all these gains into perspective.
Benefit- to Northern Ireland’s economic output
215,000 visitors are indicated. Assume half of these (113,000) will be from outside of the region [Note to Editors 1]. Assume on average those external visitors stay an average of 4 nights [Note to Editors 2]. Assume on average those external visitors spend £60 per night during their stay (Note to Editors 3]. The spending and employment in the golf and hotels sectors will have spin-offs and sub-supply benefits in the rest of the regional economy, assume a “multiplier” effect to capture those benefits of 1.5 (i.e. for each £1 of additional output directly in the golf and hotels sectors add 50p for uplift in the rest of the economy) [Note to Editors 4].
Hence the output benefit from the Open=
113,000 X 4 X 60 X 1.5 = £40.7m.
In 2019 Northern Ireland output (gross value added, GVA) will be about £40m higher than it would otherwise have been.
Benefit- global promotion of the Northern Ireland location
It has been estimated that the “value” to Scotland from hosting the 2018 Open in terms of international TV marketing £51m- in other words, that sum would have had to be spent to get an equivalent amount of coverage. It can be assumed Northern Ireland will get an equivalent value of international TV coverage etc. [Note to Editors 5].
Benefit- long run
This is important even though it cannot be readily quantified. There may be some lasting gains to tourism: repeat visitors or even people who watched the event on TV. Possibly also in terms of helping to promote Northern as a location for inward investment.
There are a number of these:
A sizeable, positive immediate (or short run) gain to output is indicated: perhaps up to about £40m.
The value of that gain does depend on the assumptions made.
Undoubtedly, Northern Ireland is “buying” a lot of international promotion through hosting this event.
There will be important gains in the long run.
It is important to put all of these into some perspective. One context is, “how much will it all cost, especially in terms of public spending in Northern Ireland?” [Note to Editors 6] Unfortunately, not much data has been supplied about such costs. It has been reported that £17m have been spent on improving the amenity in Portrush including some infrastructure spend (e.g. railway improvements). Also, extra cost of policing. [Note to Editors 7]. It does look as though the benefits will exceed the costs.
Another piece of context is as follows. IF the gain to output in 2019 is £40m that is equivalent to 0.1%, a tenth of one percent of Northern Ireland’s total annual output (gross value added or GDP). That does not sound like very much. However, available forecasts, such as those by the Ulster University Economic Policy Centre, suggest economic growth this year of about 1%. So the Open could contribute about one-tenth of that annual economic growth.
There is also an important question about sustainability and the long term. This event was planned whilst we had a functioning regional government and, indeed, was part of a strategy for international promotion through the Executive. What happens next if we do not have any Ministers taking key decisions?“
Note to Editors
Importantly, for this economic impact exercise only non-Northern Ireland visitors, and their spend, “count”. The assumption here is that most (all) of the spend by Northern Ireland origin spectators would have been spent anyway on something else within Northern Ireland. Hence, the latter would not add to Northern Ireland’s output.
An assumption of a 4 night stay may, perhaps, be on the high side- they would have to stay that long to see most of the actual competition.
That figure of £60 might “feel” on the low side (especially given stories about very high prices being paid for accommodation). It is an average figure, derived from NISRA’s estimate of per night spend by overnight external visitors in 2018 which was £57.
Estimation of multipliers is not straightforward. NISRA do now provide estimates for the various sectors of the Northern Ireland economy in 2015. For accommodation and food services 1.244 (the GVA multiplier) and for Arts, entertainment, and recreation 2.091. Hence 1.5 was judged a reasonable compromise figure.
We cannot say what value of economic output that £51m of advertising will eventually translate into. This raises the question of the size of the third benefit of the Open- the long run.
An important question because it is not really “benefits” which are the key things but the scale of “benefits minus costs” (a cost benefit calculation).
The R&A are reported to have spent £6m but any such private sector spend is not relevant in assessing the benefits minus costs of the Open as a public policy intervention.
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Dr Esmond Birnie, Senior Economist, 07703 184459,
My comments during this interview reflected this press release:
|Period||18 Jul 2019|