Tourism front-liners tell real story on Super Bowl’s impact

I’m not here to proclaim that hosting a Super Bowl or even having a National Football League team is going to cure all of a city’s economic woes. Obviously, it won’t.

But for those who doubt the big-time economic benefit of hosting a Super Bowl, I recommend spending a few days on the phone with operators of local hotels, restaurants and meeting space.

I spent the last two weeks calling and visiting people on the tourism industry’s front line, those who feel the economic benefit of such events first. Most of you who read this blog regularly know I can be somewhat cynical and skeptical of the various spin doctors that inevitably come my way.

And after covering the convention and tourism beat for more than seven years for IBJ, I have discovered that hoteliers and restaurateurs are the last people to pull punches. They generally tell it like it is.

If the economic impact figures thrown around for the Super Bowl—$250 million to $450 million—are a sham, I knew these people who often work long hours and are used to relatively thin margins would tell me so.

I was amazed at what I heard. Without exception, of the 17 people I called for the story that appeared in this week’s IBJ print edition, everyone said they expect the week of the Super Bowl, which is to be played Feb. 5, will be the largest on record for Indianapolis from a financial standpoint. And they expect it to be so by a wide margin.

It’s important to differentiate economic impact from direct visitor spending. Direct visitor spending is the amount of money the event directly generates. Economic impact uses a multiplier effect where, for instance, a waitress makes 50 percent more in wages and tips during the Super Bowl and goes down to the corner store and buys some clothes or other goods. The owner of that store in turn spends the money somewhere else in town.

After reporting my story, I have no problem saying the economic impact for the Super Bowl in Indianapolis will easily surpass $250 million. And I’d say that direct visitor spending might actually approach that number.

If there’s anywhere near $250 million in direct visitor spending, there’s little doubt the total economic impact is at least $450 million. After all, all that money earned isn’t getting buried in backyards.

It’s true that some of that money goes to conglomerate hotel owners and out-of-state restaurant chains, and some of that profit is funneled out of Indiana.

Still, there are plenty of local restaurant owners like Jeff Dunaway who operates a spot on the east edge of downtown who expect to bring in a mid six-figure sum for the week. Locally owned Jillian’s restaurant, on Meridian Street in the heart of downtown, expects to bring in $1 million.

Kahn’s Catering expects to keep 208 employees as busy as they’ve ever been during the Super Bowl week.

I was told by various sources—and my four-function calculator—that the average catering bill for the 130 or so parties surrounding the Super Bowl will be $35,000. Some catering tabs will be six-figures. Some parties will run up $300,000-plus tabs for food and beverage, party space, music and other niceties.

Dunaway said the groups looking for party space for the Super Bowl aren’t even asking about price. He expects to get a 20-percent plus premium for his space, which seats 190 indoors, for the week of Feb. 5.

A conservative revenue number for hotels during the Super Bowl week is $50 million. Very conservative.

Another $15 million to $20 million will be spent on the NFL-sanctioned and unsanctioned parties and events in the week leading up to the Super Bowl.

According to my sources and calculations, another $15 million will be spent at area restaurants. Actually, more than that, but there’s some overlap with parties, so I scaled it down. If you don’t believe my numbers, ask St. Elmo Steakhouse owner Craig Huse. He said he got his first call for a reservation for the 2012 Super Bowl in 2008. He expects walk-up waits of three hours for a table at his restaurant during Super Bowl week.

Not surprisingly, Dunaway and Huse are planning extended hours that week.

That’s a thumb nail sketch of the impact. And the vast majority of this money comes from people outside of Indiana, new dollars this region never would have seen otherwise.

I haven’t talked about revenue from airlines, limousines, taxis, car and tour bus rental, retail shopping or myriad other factors. Still, very quickly, the direct visitor spending from the three things I picked is $85 million. Using a conservative multiplier ratio, the economic impact of those few things I picked would be $212.5 million. Again, a conservative estimate.

And that’s before the game even starts.
 

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