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South by Southwest grows, evolves

Wednesday, September 16, 2015 by Elizabeth Pagano

In a ritual as punctual as the festival itself, organizers of South by Southwest Music, Film and Interactive Festival announced that its economic impact on the city of Austin continues to grow.

This year, South by Southwest contributed more than $317.2 million to Austin’s economy through the two-week festival in March and year-round operations, according to an economic benefit study released by Greyhill Advisors on Tuesday. Last year, for comparison’s sake, the festival reported an impact of $315 million, which was a $97 million increase over the previous year.

The report breaks down the numbers a bit and attributes $116.6 million to “operational output,” which is a measurement of the economic benefit of year-round operations; $140.6 million is the economic benefit from attendees of the conference and festival; and $60 million came from guest-pass holders and those not formally affiliated with the festival.

Greyhill Advisors also calculated the value of media coverage during the festival, which they totaled at more than $90.6 million. According to the report, “SXSW’s global coverage, championing Austin’s idiosyncratic image, reaches millions of creative professionals worldwide. In 2015 alone, SXSW – and by extension, Austin, Texas – achieved over 80.1 billion broadcast, print and online impressions.”

SXSW Executive Director Mike Shea spoke with the Austin Monitor after Tuesday’s press conference about the report. He said that there might have been a perception that the festival was smaller this past year, “but in reality, it was the same size or larger.”

“I think in a lot of ways it looked smaller,” Shea said, “because I think there were fewer people out on Sixth Street, for various reasons, but also I know that a lot of the outside events – not necessarily official South by Southwest events – were more stringently coded, let’s say, by the city’s various departments. And I think that helped keep them more organized, keep the size of the individual events a little bit more in scale.”

Shea noted that Austin’s changing hotel landscape played a “big role” in the increased revenue. This past year, there were more hotel rooms and more expensive hotel rooms. Also, those coming to town stayed longer than in years past – an average length of stay was 4.9 nights, which is an all-time high. In 2015, SXSW directly booked 13,300 individual hotel reservations, totaling 60,254 room nights.

“The hotels are a super-important partner for us, because obviously people can’t travel here if they don’t have a place to stay,” said Shea. “That’s a huge thing. Yes, there were more hotel rooms available to us, with the opening of some of the big hotels. The rates – unfortunately for our travelers but fortunately for our hotels – were quite a bit higher than they have been. So that played a big role in the increased revenue.”

In 2015, the average nightly hotel rate for SXSW-booked rooms was $330. Over the past five years, that average has risen 55 percent, which the report notes is “an unsustainable pace frequently criticized by attendees.” However, the increased revenue is good news for the city, as Mayor Steve Adler explained at the press conference.

“For Austinites, it’s not just about the visitors and the brand,” said Adler. “There are real benefits – tangible benefits – to our city. The impact here is huge. … In March of this year alone, the Hotel Occupancy Tax Fund was 70 percent more than in the average month.”

Adler explained that the rooms booked for SXSW brought $1.6 million to the city in hotel tax revenue, which is money used to fund and sponsor cultural contracts and the arts in the city. Sales tax associated with the festival, he said, has been estimated at an annual $6 million. SXSW, he said, is one of the reasons City Council was able to fund many of the programs in the budget passed last week while lowering taxes.

“We’re excited again to partner with SXSW and to realize those benefits for our community,” said Adler.

This year, SXSW Interactive remained the largest component of the festival. Shea noted that the same number of people continue to come to Austin for the music portion, including artists, “but as far as straight-up registrants or buying credentials and attending, Interactive is quite a bit larger.”

Within that context, SXSW Interactive Director Hugh Forrest explained a few of the tweaks planned for 2016. This year was the first SXSW Health and Medtech Expo – next year, SXSW plans to hold it earlier in the festival, during the Saturday and Sunday of SXSW Interactive.

Forrest said SXSW would be rescheduling the gaming expo to coincide with the music festival and moving it to the Convention Center. It is also adding a new Virtual Reality/Augmented Reality track that will take place March 16-17, the Wednesday and Thursday of SXSW Music.

“That’s a little bit of our overall strategy for 2016 and beyond … to try to gently push a little more tech stuff into the second part of the week,” said Forrest. “Music is the second part of the week at present. We know that tech people have been the biggest sector of growth over the last few years. They’ve got, probably, more disposable income to spend at this point, they are looking for more hotel rooms, and we have a little more hotel availability the second part of the week.”

Forrest explained that it gives tech people an excuse to stay longer, see music or come the second weekend if they can’t make it to the first.

“But I would also say, at this point, it’s a little bit hard to say what is tech, what is music, what is film,” continued Forrest. “Is Spotify a tech company or a music company? Is Apple a tech company or music company? All these things kind of run together, and they are appealing to the very creative audience that attends South by Southwest.”

Photo by shelbysdrummond made available through a Creative Commons 2.0 license.

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