Economic Impact Assessments (EIAs) are used to examine the effect of an attraction or other leisure real estate upon the economy in a specified geographical area, normally on the immediate market place i.e. local town or region.
Leisure Development Partners LLP has seen an increasing interest in Economic Impact Assessments over the past few years. James Kennard explores the topic further.
LDP has a number of clients who have been either seeking to estimate the potential impact of a proposed new development or to understand the impact of their existing businesses on the local economy. The economic impact assessment measures the effect of the development of leisure real estate. It also explores the ongoing impacts of the development on the local economy due to the day-to-day running of the business.
The purpose of Economic Impact Assessments
In most instances, be it a new development or an already existing operation, the main reason for understanding the economic impact is to help leverage Government or Local Authority support. This might be in the form of free land and infrastructure, soft loans, and capital support for new ventures. It may also be in the form of other improvements to the local/regional infrastructure, in the case of an existing business.
EIAs can be a powerful tool for developers and operators. They can show the value of leisure businesses to the local economy. This helps local policymakers to justify investment decisions. Leisure businesses, particularly larger attractions such as theme parks, are long term investments. Businesses such as this have very long-term economic impacts.
Direct and indirect impact
When we talk about economic impacts we usually measure the ‘direct’ impacts on the local economy. For example changes in business revenue, business profits, personal wages and/or jobs. We also seek to quantify the ‘indirect’ impacts upon the local economy. This includes the impact on supply chains and other businesses in the area. For instance, food & beverage and retail outside the gates of an attraction. Furthermore, we look at ‘induced’ impacts. This is the impact of spending by employees on goods and services outside of the attraction.
One area in particular that leisure uses can impact is tourism. It’s not always the case but larger attractions can be a primary reason why people might visit an area. These tourists will have a significant impact on overnight stays in hotels, campsites and other forms of accommodation.
EIAs and the retail sector
Traditionally, EIAs have provided strong estimates around the impact of a project or park on local economies. However, we have recently been working at a more micro level. Increasingly, clients want to explore the impact of attractions on retail developments. The rise of e-commerce has sapped some of the footfall at a lot of shopping centres. Retail developers and operators are increasingly looking at leisure anchors to draw visitors back to the mall.