Ready. Set. Go! The South by Southwest festival is coming to town, and that means big business for Austin and Round Rock Business owners! The Austin Business Journal writes that:
The annual South By Southwest festival has become a massive economic storm system raining down increased business throughout Central Texas.
While the Austin Convention Center is the center of the 10-day storm that blends music, film and technology, the economic impact swirls well beyond the city’s core. And for some companies, like Pink Avocado Catering, SXSW offers the chance to generate several months of revenue in a few days.
Last year, SXSW attracted more than 126,000 conference participants. Another 286,000 people attended the festival’s free public events, according to an economic impact analysis. The total economic impact of the 2011 SXSW festival was estimated to be $167.8 million.
This year, the festival is expected to grow by 25 percent, economist Angelos Angelou said.
“SXSW is no longer that music festival,” Angelou said, “It has become the largest digital media event in the world.”
Sleeping in the suburbs
Out-of-towners who need a place to stay during the festival patronize hotels and homeowners, not only in Austin, but throughout the region.
As expected, many of the area’s 30,000 hotel rooms are sold out well in advance, especially those within Austin’s city limits. And the economic boon extends to hotels in Austin’s suburbs, though the suburban hotels don’t tend to raise rates temporarily like the central hotels can afford to do.
At the Holiday Inn Express and Suites in Bastrop about 35 miles away from the Austin Convention Center, not only are there more bookings, but they are happening earlier each year, General Manager Jonathan Adam said. He expects his hotel to be fully occupied for most of the festival.
Doug Kurkul, president and CEO of the Round Rock Chamber of Commerce, calls it an economic win for the entire region. In addition to SXSW, “many of those staying in Round Rock will visit small businesses, the Round Rock Premium Outlet Mall and IKEA during their visit,” he said.
Such business extends to some of the farther suburbs, although that ripple sometimes takes a while.
The Embassy Suites in San Marcos usually fills up early for the weekends of SXSW, but the days in between fill up closer to the festival, Sales and Marketing Director Ruth Buck said.
“It stretches our patience,” said Buck, who can tell it’s going to be a busy SXSW by the increased number of calls and reservations.
Her hotel gets many of the small groups that can’t find rooms in Austin, Buck said, such as a production company she recently talked with.
Jerry Anderson, general manager at the Comfort Inn in Cedar Park, said he gets a lot of people who come to Austin without reservations.
“We’re fortunate Austin has these events. They’re good for business,” Anderson said.
Unfortunately, the festival’s impact appears to skip communities without hotels, such as Pflugerville.
SXSW is also good for property owners willing to rent out their space.
Jon Gray, vice president of the online vacation rental marketplace HomeAway Inc., calculates the average daily rental rate for a home with more than two bedrooms during SXSW to be $691. With about 500 rentals available within the Austin city limits, that can equate to more than a million dollars in revenue for Austin property owners.
“And that figure doesn’t even include the true economic impact of tourists who, while visiting the city, spend money at local shops, services and restaurants,” Gray said.
Feeding the masses
Many restaurants and catering companies experience huge spikes in sales during SXSW.
“We do 50 percent of our annual sales in the 10 days of SXSW, and we love every minute of it,” said Brenton Schumacher, executive chef and owner at Pink Avocado Catering.
For downtown restaurant La Condesa, owner Jesse Herman said SXSW forces him to temporarily alter his business model.
“It significantly increases our off-site events and catering, which is always a part of our business, but during SXSW it is accentuated,” Herman said.
He estimates sales during SXSW to be 200 to 300 percent higher than normal, and he has had to turn down a high-profile event because the restaurant didn’t have the capacity.
In that case, he said he passed it on to a friend because locals help each other out.
Help wanted
The festival also creates a need for extra workers or for staffs to work extra hours.
Many restaurants, caterers and venues hire additional bartenders, servers and security staff. For regular staff, it usually means all hands on deck and overtime.
Public relations company Giant Noise puts on events during SXSW for existing and new clients, such as Perez Hilton, Fast Company, Spin and the Austin mayor’s office.
Elaine Garza, partner at Giant Noise, estimates that business increases 20 percent during SXSW. She said the company builds a mini-event team for two months and gets help from its visiting New York City office.
Lasting effects
Garza said one of the festival’s bigger benefits for a public relations company is meeting the press that it interacts with.
Also, some of the new business acquired for SXSW comes back.
“We form great long-term relationships, and we feel the effects far after SXSW is over,” Garza said.
In addition to an economic boost, the festival creates brand recognition for Austin, economist Angelou said.
“It makes this place more unique, more attractive, as well as fun,” he said. “SXSW has become an international brand, and through that, Austin becomes an international city.”
With the latest positive news for Austin followed up by this event which is a smashing success year after year, only good things can happen. What a great time it is to be in business in Austin and Round Rock.
