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SXSW economic impact grows north of $350M

Tuesday, July 10, 2018 by Chad Swiatecki

The economic impact of the South by Southwest festival inched across the $350 million mark in the latest analysis by Greyhill Advisors of the spring festival’s effect on the community. The $350.6 million total for the 2018 festival represented growth of just over 0.5 percentage point from the 2017 impact of $348.6 million.

With a worldwide media impact calculated in excess of $430 million, city and festival leaders repeated a common refrain of SXSW being roughly equivalent to having a Super Bowl game, which is estimated to generate $400 million for host cities, played locally every year. Ben Loftsgaarden, managing partner for Greyhill Advisors, explained the impact includes operational impact of $148 million, attendance impact of $175.5 million and consumer event impact of $27.1 million.

Further, Greyhill found SXSW created a direct impact of $240.2 million, indirect impact of $61 million and induced impact of $49.4 million.

Austin Mayor Steve Adler touted the effect SXSW has on city tax rolls in addition to local businesses. “Many businesses get a significant part of their yearly profit in the two weeks of South By that lets them operate the rest of the year in the city,” he said.

“Every sales tax dollar generated by South By is a dollar we do not have to raise in property taxes. The additional money from Hotel Occupancy Tax is a dollar we don’t have to raise on property taxes. We want to put clinics and we want to put pocket parks throughout our city, and one of the ways we can afford to do that in this city is by generating revenues that do not rely on our residents paying property taxes.”

Adler added that the festival’s recently created programming track for mayors and other civic leaders has made SXSW a greater resource for the smart cities movement and generating solutions to issues such as affordable housing and mobility.

“The conversations we’ve had with (SXSW) on Austin issues have been around innovation for social challenges, and we’ve spent lots of time with them at the U.S. Conference of Mayors,” he said. “From that we created pitch sessions for entrepreneurs trying to create new companies dealing with municipal challenges like housing affordability, mobility and also our operations around governance and permitting.”

Hugh Forrest, the festival’s chief programming officer, said SXSW has reached a mostly stable level of business instead of the aggressive growth of the mid-2000s, with plans to add new programming around blockchain and cryptocurrency and cannabis-related businesses in the later portion of the festival to add more growth in 2019.

“We’ve leveled off the last two years versus where we were five years ago where growth was increasing by leaps and bounds, and we don’t have a whole lot more room to grow with attendance,” he said. “We’d like to be able to push more growth into the second half of the week and see more industry activity taking part, whereas currently the activity in the second half is more of the consumer variety.”

Forrest said Adler and other U.S. mayors have helped add to SXSW’s growing international reputation, pointing to the recent World Cities Culture Forum gathering in Chengdu, China, where Austin was praised as a leading global city for creatives in large part because of the festival’s worldwide pull.

“The creative culture and vibe is what powers the innovation that makes South by Southwest possible,” he said. “It was something we talked about at the forum, and how there’s lots of research that talked about how Austin has become a powerhouse because of the effects of South by Southwest.”

Photo by Brian Solis made available through a Creative Commons license.

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