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Two local economic researchers dispute that the mega-event boosts San Diego’s economy as much as proponents say.
Tourism boosters want you to know that the hordes of people who descended on downtown San Diego recently for Comic-Con came with their wallets.
San Diego Convention Center officials estimated Comic-Con provided a $178 million economic boon to the city this year. The figure has been repeated in numerous news reports about the event and Comic-Con’s impact on the local economy is cited as a key reason the city needs to expand the Convention Center. (The expansion hit a major snag Friday with an appeals court decision to throw out the project’s financing.)
But the $178 million figure has a lot of problems. It’s based on outdated information. It includes assumptions of visitor spending from events that aren’t anything like Comic-Con. And it counts certain effects on San Diego’s economy twice. Two local economic researchers believe Comic-Con’s true effect on the economy could be significantly less than the study claims.
“It overstates the impact,” said Erik Bruvold, the president of National University’s Institute for Policy Research.
Skip Hull, an economist with Kearny Mesa-based CIC Research who came up with the Comic-Con figure, conceded that some of those problems are real. He said he was working with the best information he could get his hands on. Many of his assumptions, he said, are conservative and the event could have an even greater impact than he’s able to calculate.
Let’s break down the holes in the $178 million number and Hull’s defense.
One of the studies crucial to determining Comic-Con’s economic impact was conducted six years ago. It focused on Comic-Con-related hotel bookings.
The study was meant to establish whether hotels should set aside more rooms for Comic-Con visitors. At the time, CIC Research found about half of Comic-Con attendees were staying in a hotel. The study found Comic-Con guests resulted in $25.1 million in room sales, and it’s the basis for the number used now.
Problem is, Comic-Con has changed since 2008.
Bruvold, a longtime fan of the convention, has seen it transition from a gathering mostly focused on comic books and table-top games to one that boasts broader popular culture forums and lots of celebrity appearances.
This may have also shifted the percentage of out-of-town visitors, the number of Comic-Con attendees who stay in a single room and the amount they’re paying for their hotel stays, Bruvold said.
“I don’t know if (today’s attendees) have a different spending pattern but there’s a plausible chance that they do,” he said.
The other study the $178 million figure relies on isn’t only based on Comic-Con. It likely skewed the figures upward, economic researchers said.
In 2011, CIC Research interviewed attendees from Comic-Con and 41 other conventions in the city to see how much they spent while they were here.
But most of the conventions in the study had attendees who likely had little in common with the average Comic-Con traveler. The list of conferences whose attendees were surveyed includes the International Association for Dental Research, Airports Council International and the federal Government Services Administration. And the average median household income for those interviewed was about $106,000.
Comic-Con attendees probably aren’t that rich. The New York Times recently reported that the estimated 130,000 Comic-Con-goers were projected to spend $603 each at the convention, far less than attendees of other major events held at the Convention Center. The Convention Center hasn’t used this metric in its own promotional materials because its direct spending estimates are based only on attendees staying in hotels.
In its study, CIC Research found that about 33 percent of spending by visitors staying in hotels was funneled toward lodging. So it took the $25 million figure from the 2008 study and assumed that made up a third of what Comic-Con attendees spent. The rest of the numbers followed from there after a few adjustments for inflation and changes to hotel and other rates.
The method resulted in CIC Research’s estimate of $78.3 million in direct spending by Comic-Con hotel visitors.
Marney Cox, the lead economist for the San Diego Association of Governments, is skeptical of that approach.
“Comic-Con is different enough in terms of attendees that you wouldn’t want to apply average attendee characteristics and behaviors to it,” Cox said. “That wouldn’t work.”
Bruvold and Cox are more concerned with another method CIC Research used to calculate Comic-Con’s spillover effects on the economy.
Hull’s team assumed the region would see another $99 million in trickle-down effects thanks to the convention featuring thousands of costumed comic book characters and dozens of celebrity appearances.
Traditionally, economic impact studies simply estimate so-called indirect and induced effects to capture this dynamic. The effects could include a beer supplier who gets larger orders from restaurants it services due to Comic-Con and then gives its employees overtime for the extra deliveries. Or a local print shop that gets some business from Comic-Con exhibitors looking to promote their wares.
Hull added another category: labor income, which he says covers the wages and income workers receive, as well as income for business owners.
Hull assumed all these factors would multiply Comic-Con’s impact 2.27 times, leading to the $177.8 million estimate.
But the main source of economic data and modeling that allowed Hull’s team to make its analysis already includes labor income in its group of spillover effects. That means Hull is double counting the effects of wages in his figure.
Bruvold and Cox said the method results in a higher estimate than it should.
“You can’t add things together that are already in the multiplier,” Cox said.
Assuming other factors in Hull’s study were correct, Bruvold estimated that Comic-Con’s economic impact would be closer to $135 million.
Hull said he wished that he had more recent numbers and that he studied only Comic-Con attendees.
But he said Comic-Con organizers wouldn’t let him get any better information. Hull and a Convention Center spokesman said Comic-Con organizers haven’t allowed a large-scale questioning of their attendees that would facilitate more detailed research, and the Convention Center hasn’t had the cash to bankroll a Comic-Con-only study.
So he’s going with the best numbers he has. He has answers for Bruvold and Cox’s objections, too.
It’s clear Comic-Con is bigger now than it was in 2008, Hull said. That means visitors could be spending much more on lodging than they did back then.
Hull also defended his use of the labor income multiplier and said it’s long been factored into studies his company has performed for the Convention Center. He said his approach is not out of the ordinary, and leaving the multiplier out could put San Diego at a disadvantage. Hull, however, couldn’t immediately name another agency or group that has factored this multiplier into an economic impact analysis other than his own.
Hull believed Comic-Con actually has a much larger economic impact than he’s estimated. The current study, for instance, only focuses on Comic-Con visitors who stay in hotels, leaving out economic benefits that come from Comic-Con passholders who live here and visitors who don’t stay in hotels.
“We would prefer to do a lot more in-depth analysis,” Hull said. “There’s so much that has been left out of the picture that would add to the economic benefit of the event.”