Economic Impact Assessment - Bergen kommune Impact Assessment local business ... The impact of Tall Ships Races for the food and beverage industry ... PwC interviewed all sponsors

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The Tall ShipsRaces Bergen2014Economic ImpactAssessment

This report has beenprepared by PwC at therequest of Bergenkommune.

12 November 2014

Tall Ships Races Bergen 2014 – Economic Impact Assessment

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Contents

About this report .......................................................................................................................................................... 4

Disclaimer ..................................................................................................................................................................... 5

Summary....................................................................................................................................................................... 6

Introduction...................................................................................................................................................................7

Tall Ships Races Bergen 2014 .......................................................................................................................................7

Mandate .........................................................................................................................................................................7

Cooperation....................................................................................................................................................................7

Method .......................................................................................................................................................................... 8

Value creation ............................................................................................................................................................... 9

Regional value creation ...............................................................................................................................................10

National value creation ...............................................................................................................................................12

Economic Impact Assessment local business ............................................................................................................13

The hotel industry .......................................................................................................................................................13

Result difference ....................................................................................................................................................14

Representative figures ...........................................................................................................................................14

Accumulated result ................................................................................................................................................14

Event calculator......................................................................................................................................................14

Restaurants ..................................................................................................................................................................15

The impact of Tall Ships Races for the food and beverage industry ...................................................................16

Representative figures ...........................................................................................................................................16

Shopping centers .........................................................................................................................................................17

Traffic ...........................................................................................................................................................................17

Parking....................................................................................................................................................................17

Transactions ...........................................................................................................................................................17

Visitors' feedback........................................................................................................................................................ 20

Sponsors...................................................................................................................................................................... 25

Interviews.................................................................................................................................................................... 25

Sponsor program ........................................................................................................................................................ 25

What can be achieved by sponsoring TSR ................................................................................................................ 25

The Sponsor agreement afterwards........................................................................................................................... 25

Methodology in this report ........................................................................................................................................ 28

Survey.......................................................................................................................................................................... 28


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About QuestBack................................................................................................................................................... 28

Design of survey .................................................................................................................................................... 28

Accomplishment of the survey ............................................................................................................................. 28

Number of visitors ...................................................................................................................................................... 28

Event calculator .......................................................................................................................................................... 28

About the event calculator .................................................................................................................................... 28

Number of individual visitors............................................................................................................................... 28

Visitors consumption ............................................................................................................................................ 29

Accommodation capacity...................................................................................................................................... 30

Accounts Tall Ships Races Bergen 2014.................................................................................................................... 30

Full time equivalents............................................................................................................................................. 30

Income and expenses ............................................................................................................................................ 30

Revenue from local business...................................................................................................................................... 30

Revenues information from hotels........................................................................................................................31

Revenues information from restaurants.............................................................................................................. 32

Revenues information from shopping centers .................................................................................................... 32

Revenues information from parking.................................................................................................................... 32

Transaction data and electronic means of payment ........................................................................................... 33

Other ...................................................................................................................................................................... 33

Interviews of sponsors ............................................................................................................................................... 33


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About this report

This report is made by PwC at the request of Bergen kommune.

The report has been prepared to respond to the mandate given by Bergen kommune. In order to ensureindependence in the work and result, PwC has had an independent role in regards to the approach, collection ofdata and method. Bergen kommune has not provided guidance beyond the mandate.

PwC's report will build on the facts, the information provided to us through documentation, conversations andsurveys. This report contains PwC's opinions and assessments based on our understanding, knowledge andexperience.

PwC wishes to thank Haakon Vatle, project manager for Tall Ships Races Bergen 2014, Anita Nybø, congressmanager in Bergen reiselivslag and Birgitte Nestande, project manager for Norway Convention Bureau, whohave contributed in the work and kindly shared their knowledge and information.

The work has been led by Øistein Jensen, and Ivar Borge has been responsible for the engagement. JulieEkeland has managed the team; Thomas Garnes, Bjarte Waardal and Tormod Gjerde Opdal have had key rolesin the project. PwC has prepared the report in collaboration with students at NHH. We would therefore like tothank the following NHH students; Morten Korsveien, Anders A. Lager, Mathias Gullien, Lars Kristian Istad,Linn N. Fotland and Lisa M. Ålsberg.

All pictures in the report have been provided by TSR, who has granted PwC rights to use the photos in thisreport.

Bergen, November 12, 2014

Ivar Borge Øistein Jensen

Partner Director


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Disclaimer

This report has been prepared for Bergen kommune in accordance with contract dated 19. March 2014.

Our assessments are based on the information that we collected through conversations with visitors at TallShips Races Bergen 2014, and information provided from both the organizer and businesses in Bergen. PwC hasnot verified the information provided from the organizer nor the businesses in Bergen, and we therefore do notvouch for its completeness, correctness or accuracy. PwC has not performed any quality assurance or controls ofBergen kommune.

Bergen kommune has the right to use the information in this report in its activities, in accordance with thecommercial terms agreed in the framework agreement with PwC. PwC accepts no responsibility for any lossessuffered by Bergen kommune or any other party as a consequence of our report.

PwC retains copyright and other intellectual property rights to the report as well as the ideas, concepts, models,information and know-how that have been developed in relation to this work.

PwC is not responsible for any actions made by a third party in relations to this report.


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Summary

Tall Ships Races Bergen 2014 (TSR) was arranged Wednesday 23 July – Sunday 27 July 2014 in Bergen. It isassumed that between 500 000 and 600 000 persons visited the event. It is estimated that this includesapproximately 184 000 individual visitors. PwC's mandate has been mainly to describe the effects and spin offeffects of TSR for local businesses and sponsors.

PwC did a total of 620 interviews during the event. The focus of each interview was estimated consumption andtheir view of the event.

PwC has developed a methodology and tool to assess economic impact and creation of value both regional andnational. Value creation in this regard is value added from TSR visitors outside the region. The event calculatoris a model using standard rates and collecting data to calculate value creation. The calculator has been used tomeasure value creation during other events in the country. Parts of the survey regarding consumption wereadded to the event calculator together with the preliminary accounts per 31.10.2014 for the project TSR. Thecalculator assessed that TSR has provided a regional value creation of NOK 22.5 million and a national valuecreation of NOK 6 million.

To further enlighten TSR's importance to the local businesses we have also collected information aboutrevenues from hotels, restaurants, shopping centers and Bergen Parkering. The hotel industry experienced asignificant increase in revenues during the event, approx. NOK 6 million. This supports and correlates with theestimates from the event calculator. The restaurants reported an increase in revenues of 79% in total comparedto the same period the year before. The effect for the shopping centers has been highly variable andcharacterized by a small sample. It is natural to compare the variation in revenues change with the location ofthe event. Bergen Parkering stated an increase in revenues during the event of 40% in total. Nets, a companydelivering electronic payment services, informed that the total value of transactions in the Bergen area bymeans of their solutions increased by 17% nominally compared to the same week in 2013.

PwC interviewed all sponsors to verify TSR's importance to them before, during and after the event. Eight ofnine sponsors said that they would sponsor TSR again. The only negative aspect from the sponsors was that theevent was held in the middle of the general staff holiday, which probably limited the effect of the sponsorshipand the visibility of the business during the event.

During the event visitors were asked questions about their opinion of TSR. The majority of the visitors wereone-day- visitors with accommodation in hotels or with family and friends. The main sources of informationabout the event were media and internet. Approx. 70 % of the visitors had previously been present on a TSRevent, and the main attraction was the ships and the festival. 76 % of the visitors answered that TSR appeals toall groups of age. About 77 % of the visitors had the opinion that TSR has a positive effect for Bergen, and 84 %felt that TSR made them more positive to future visits to Bergen. A total of 99.7 % of the visitors recommendedthat Bergen should apply to arrange TSR again.

PwC recommends reading the whole report to get a proper understanding of the context.


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Introduction

Tall Ships Races Bergen 2014Tall Ships Races Bergen 2014 was arranged in the period Wednesday 23 to Sunday 27 July 2014.

The Tall Ships Races is an annual sail training event administrated by Sail Training International (STI). Thefirst time it was arranged was in 1956. The summer series in European waters for young people. STIorganizes races and events for sail training Tall Ships in many parts of the world, and the Tall Ships Races isthe biggest event they organize. One of the main purposes for this registered charity is "the development andeducation of young people through the sail training experience, regardless of nationality, culture, gender orsocial background". 1

MandateIn the engagement letter with Bergen kommune dated 19. March 2014, the mandate is stated in "Description of

the engagement". PwC shall prepare a report which describes the effects and spin-off effects of Tall Ships Race

Bergen 2014 (TSR). Essentially it is the following spin-off effects that are relevant to the analysis:

TSR's importance to the local businesses TSR's importance to sponsors The impact of the event for Bergen

In addition the report may be used serve as documentation of the accomplishment, which Bergen kommune can

use towards Sail Training International.

The two elements represent different types of spin-off effects, both quantitative and qualitative.

When it comes to the impact for the businesses during the event we will use PwC's self-developed economicmodel for calculation of the economic impact of the event. We will collect own data which are based on thefeedback from the visitors. In addition we will collect information from visitors about non-economic effects.

The importance of TSR for the sponsorships, will be mapped through qualitative interviews which throw lighton the importance of TSR for the sponsors ahead of the event, during and after the event, which cannot bemeasured in dollars and cents

The impact for Bergen concerns the more long-term effects of the event. This dimension will partly beintercepted through the mentioned survey which is to be carried out during the event itself.

CooperationPwC have been assigned to conduct similar assessment for the TSR in Kristiansand 2015. Some of themethodology and approach in this report have also been discussed with Kristiansand.

1 Source: http://www.tallshipsbergen.no/english/about/what-is-sail-training-international/


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Method

The main process was scheduled to be performed in accordance with the model in figure 1. Initially a survey wasprepared for the visitors of the event. Parts of the result of the survey were put into the event calculator togetherwith the accounts of TSR. Parallel to this we have collected information about revenue from the businesses andcarried out interviews with the sponsors.

Figure 1: Main Process

Estimating value creation at this level by using an event calculator includes a wide range of considerations inregard to assumptions and limitations that need to be made. This also applies when performing a survey andgathering consumption from local businesses. All the considerations in this regard are gathered in the lastchapter in this report.


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Value creation

In this chapter PwC estimates the values that TSR has created. We differ between regional value creation thathas an effect in the region of Bergen and national value creation that has an effect nationally. The two types ofvalue creation differs in whether the consumptions derives from visitors who are Norwegians living outside theregion or foreigners. Our calculations show that TSR has added positive value to both the Bergen region andNorway.

Figure 2: Total value generated

As it appears in the figure above, values of approx. NOK 22.5 million were created regionally in the Bergen areaand NOK 6 million nationally. The national value creation includes foreign consumption and investments and isincluded in the regional value creation. Total value creation is estimated to NOK 22.5 million.

TSR attracted in total approx. 184 000 individual spectators. The local visitors and the local associated personsare excluded from the valuation, as the model assumes that the local associated persons do not create anyadded value to the Bergen region in connection with TSR. In the subsequent part of the chapter we provide adetailed overview of our estimates.

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Regional value creation

Figure 3: Regional value

In figure 3 we can see that TSR contributed to a regional value creation of approx. NOK 22.5 million. Thisnumber is derived from the total sum allocated to and from Bergen by the organiser (-2 MNOK),visitors' purchase in Bergen (22 MNOK) and finally indirect value creation (2.5 MNOK) which iscalculated based on the direct value creation.

We measure the direct value creation as the organiser's or the visitors' purchase of services and goodsduring the event. For instance this can be a hotel room at NOK 1250 per night. Indirect value creationis a result of suppliers and sub-suppliers production and services in order to meet the increaseddemand. This implies that a hotel accommodation of NOK 1250 will contribute with a total valuecreation exceeding the price of the hotel accommodation itself. This is also called the multipliertheory.

Based on our model we find that the visitors consumed goods and services for approx. 22 million NOKin the period. Including the indirect impact this makes a value creation of approx. NOK 24.5 million.We find that the value creation is spread on different categories as illustrated below, and the mostsignificant part is within food and beverages.

Figure 4: Value created from visitors' consumption

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The graph in figure 4 shows that non-local visitors to TSR generated approx. NOK 10 million of values for thefood and beverage industry. The hotel and accommodation industry experienced an added value of approx.NOK 6 million. For transport, including public transport and taxi, we estimate an added value of NOK 4million. Grocery sales and trade of other goods and services experienced a value creation of approx.NOK 2 million each as a consequence of the event.

Based on data, from our survey and from companies in and around the event area, we estimate that there wereapprox. 20,000 individual non-local visitors in Bergen during TSR, whose main cause for the visit was thisevent. They represented approx. 25 ooo overnight stays in hotels or other commercial accommodationalternatives in Bergen. Our event calculator estimates that each visitor created values on average correspondingto approx. NOK 1 150.


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Figure 6: Value created by visitors’ consumption

National value creation

Figure 5: National value creation

Figure 5 shows that TSR created national values of approx. NOK 6 million, of which NOK 4 million weredirectly and NOK 2 million were indirectly. Unlike the regional value creation, purchase of goods and servicesthat in any case would have been consumed in Norway, have been eliminated2. This implies that it is merely theconsumption by international visitors that creates value in the model for national value creation. As previously,direct value creation is calculated as the sum of the organiser's and the visitors' value creation. For Norway thisfigure is NOK 4 million. If we include the indirect value creation, total value created amounts to NOK 6 million.Indirect value creation in Norway is higher because the multiplier in the model is of greater value. This isbecause it is a higher probability for multiplier effect or that the money is spent more nationally than regionally.

Based on the calculation model we found that TSR created in total approximately NOK 8 million in additionalconsumption by visitors from outside the Norwegian borders. In the same way as for the national visitors, wealso found that for the non-domestic visitors, the food and beverage and the hotel industry benefit the mostfrom the value creation.

2 The model assumes that national visitors' consumption in Bergen would have been made in Norway if the event had not been held.


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Economic Impact Assessmentlocal business

TSR had a significant positive impact on the businesses in Bergen. Data from various participants in thebusinesses show a clear increase in revenues for the hotel and restaurant industry.

The hotel industryThe hotel industry in Bergen has experienced a significant increase in revenue during TSR. Revenueinformation from 13 hotels indicates that there has been an increase in revenues of 64 % for the hotels duringthe event3 compared to the week before. This implies an increase in revenues of NOK 2.9 million.

Consumer price adjusted4 revenue increased compared with the same period in 2013 is 28 %, giving a revenuegrowth of NOK 1.3 million.

Figure 7: Hotel revenues, week 29 and 30

3 The increase in revenues applies from Thursday till Saturday.4 The Consumer Price Index increased by 2.6 % for hotel and restaurant services from July 2013 - July 2014. The revenues for 2013therefore have to be adjusted to obtain comparable figures.

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Figure 8: Hotel revenues, 2013-2014

Result differenceIf we isolate week 30 and compare revenue in 2013 with 2014,the increase in revenue from week 29 to week 30can be explained by two factors: Friday 25 July 2013, which is the corresponding Friday during this year's TSR,the revenue were marginally lower than in 2014. Rihanna gave a concert at Koengen this day, which may lead toa considerably increase in revenue for the hotel industry in the center of Bergen.

The second factor is that the hotel with the highest growth, Scandic Hotell Ørnen, opened first in May 2014. Ifwe exclude these two factors the difference in revenue growth between 2013 and 2014 is 42 %.

Representative figuresIn the period 24 to 26 July there were a significant growth in revenue. Wednesday 23 July and Sunday 27 Julyalso represent an increase in revenue5, but considerably lower and cannot with certainty be related to TRS. PwCassumes that visitors arrived Thursday, during festival opening, and left Sunday after the ships had left theharbor.

Accumulated resultThe revenue increase for all hotels in Bergen is estimated to be NOK 7.7 million as a result of TSR. The revenueincrease due to lodgings is estimated to NOK 6 million. It is assumed that the average increase in revenue,which the 13 hotels have stated, is representative for all hotels in Bergen.

Event calculatorThe estimates based on the revenue information from the hotel industry, supports the estimates from the eventcalculator. The revenue information collected from the hotel industry give an estimated revenue increase due to

5 Increase in revenue of 8.5 % for Wednesday and 1,9 % increase in revenues for Sunday.

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lodgings of close to NOK 6 million6. This is only 3, 5 % lower than the estimate of the event calculator andtherefore the two estimates are very similar.

As this is an estimate, it is not expected that the two estimates will give the same increase in revenue. However,the fact that the two estimates, which is calculated in two totally different ways, give approximately the sameresults, indicate that the estimates are reliable.

RestaurantsAll restaurants in the sample experienced a significant growth in revenue during TSR. Revenue informationcollected from 15 restaurants show more than a doubling in revenue compared to the week before TSR. Theincrease in revenue was 102% compared to the week before and 79% compared to the year before. This isillustrated in figure 9.

Figure 9: Restaurants revenues, week 29 and 30

6 Revenues increase for the hotels , ex. food and beverages.

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Figure 10: Restaurant revenues, 2013-2014

The impact of Tall Ships Races for the food and beverage industryAs shown in figure 10, there is a significant increase in revenue for Thursday, Friday and Saturday during TSR.There is a small growth in revenue for Sunday, but this is very low. This reflects that the event ended Sunday atnoon and therefore did not attract people in the afternoon and the evening when the restaurants are open.

The impact of TSR for the restaurants is strongly correlated with the location of the restaurants. The revenue ofthe restaurants located near the event were more affected than restaurants located further away from the eventarea. The restaurants near the event area experienced some days more than a four-doubling of the revenue.Restaurants further away from the event area experienced a minor increase in revenue. The revenue figures thatare collected do not provide evidence for value creation for the region, but indicate a clear positive effect of theevent.

Representative figuresPwC does not have sufficient data for estimating the total increase in revenue for the food and beverageindustry in Bergen, based on the revenue figures collected from the 15 restaurants. This is because therestaurants mainly are located near the event area and are not a representative sample for restaurants in theBergen region. Besides, we assume that there is a difference between which restaurants that are known for thevisitors and which are known for the locals, therefore it will be difficult to find a sample that takes this intoconsideration.

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Shopping centersThe impact for the shopping centers varies and is characterized by a small sample. Kløverhuset states anincrease in revenue of 44 % and Xhibition states -4 %. When the revenue of Bergen Storsenter is compared withCPI-adjusted figures for corresponding week in 2013, an increase in revenue of 8 % is measured. For Gallerietcorresponding change in revenues for the same period is measured to -3 %.

It is natural to explain the variation in revenues by the location of the event. Kløverhuset has a central locationin relation to visitors and has experienced a significant growth. Galleriet and Xhibition on the other hand arelocated a little further away from the event areas and experienced a reduction. Bergen Storsenter is well locatedin regard to the traffic flow into the center of Bergen. They may have benefited by a city center that is closed fortraffic, and therefore increased use of public transport and parking.

Traffic

ParkingBergen Parkering states a number indicating an increase in parking in their premises of 40 % compared to thesame period in 2013. Bergen Parkering operates the P-houses Bygarasjen, Klostergarasjen, Solheim P-Hus andNordnes P-Hus. This indicates that locals would drive to the city for the event.

TransactionsAccording to numbers from Nets, the total transaction amount by means of their payment solutions increasedby NOK 44.4 million in outlets with post office Bergen, compared to the week before TSR. This is an increase of16 %7. The number of electronic transactions were almost 1,1 million in week 30, an increase of 21.5 %compared to the week before. Note that the weeks in the data set from Nets apply from Tuesday to Tuesdayeach week. These statistics include 2 days before and 2 days after TSR. Nets has a market share between 30 %and 35 % in the Nordic countries. It is not known to us which market share Nets has in the center of Bergen,therefore it is difficult to conclude about additional consumption based on these numbers.

7 Increase compared to the whole week, therefore the percentage increase is probably lower than it would have been if the comparison onlyapplied for Thursday-Sunday.


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Figure 11: Value of electronic transactions

Compared to 2013 the value of electronic transactions increased by 9% in week 29, 17% in week 30, and 15% inweek 31. This increase exceeds the average increase in the value of electronic transactions in 2014 by approx.6% nationwide8. As the general inflation in the same period was approx. 2.2%9 this makes a real increase invalue of transactions of approx. 9% in week 30.

It appears from figure 11 that in general there is an increase in the value of electronic transactions from week 29to week 30 in the Bergen region, in the period 2012 to 2014. In 2012 the increase from week 29 to week 30 wasapprox. 11 %. In 2013 the difference in value of electronic transactions between the weeks was 9 %, while it was16 % in 2014. This indicates that there are other reasons, in addition to TSR, that contributed to a higherconsumption in week 30 compared to week 29. Still the increase in transaction amount is considerably higherin 2014 than in 2013 and 2012, so the value of electronic transactions indicate that TRS has created value forthe Bergen region.

If we assume that 5 percentage points of the total growth of 16 % is due to TSR, it would imply thatNOK 14 million of the total growth of NOK 44 million between week 29 and 30 is due to TSR. Further if weassume that Nets’ market share in Bergen is equivalent to their market share in the Nordic countries, between30 % and 35 %. In that case, the increase in total value of electronic transactions in Bergen as a consequence ofTSR amounts to approx. NOK 40 million.

TSR's value creation for Bergen is also supported by number of transactions for Nets-customers with post officeBergen. Compared to 2013, the number of transactions increased by 11.7 % in week 29, 21.2 % in week 30 and17.5 % in week 31. This is above the annual general increase in number of transactions of 7 % in Norway.10

8 See statistics for BankAxept at http://www.bankaxept.no/no/Hoved/Forside/. BankAxept has a market share of 90% of the electronictransactions in Norway.9 Inflation data from Statistisk SentralbyråSee statistics for BankAxept at http://www.bankaxept.no/no/Hoved/Forside/. BankAxept has a market share of 90% of the electronictransactions in Norway.

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Figure 12: Number of electronic transactions

In the same way as the value of electronic transactions, the number of electronic transactions also increasedfrom week 29 to week 30 every year. Number of transactions increased by 21.5 % from week 29 to week 30 in2014. Corresponding increase for 2013 and 2012 is 12 % and 14 % respectively. Based on this it is difficult toestimate to what extent the increased quantity of transactions can be attributed to TSR. Still, a considerablelarger increase than usual between week 29 and week 30 in 2914 indicates that TSR has contributed positivelyto value creation in the Bergen area.

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Visitors' feedback

QuestBack was used to safeguard the calculation model and to pass on information about visitors' impression ofthe event. Visitors on the event were therefore asked questions related to their visit.

Figure 13: Respondents' gender Figure 14: Respondents' age

As figure 13 indicates, there was a majority of men who answered the questionnaire. In total 350 men and 270women answered the questionnaire. Figure 14 indicates that a majority of the respondents are older than 45years old, as 68.7 % of the respondents are either in age the group 45-60, or the group 60 and above. This is notnecessarily representative for the population of visitors, and is something we must take into consideration whenwe generalize through the event calculator. It is likely that old adults are more resourceful than younger adults,therefore the consumption figures that the event calculator reveal may be over- or underestimated, as we maynot have a representative sample in the survey.

Figure 15: Respondents' residence Figure 16: Type of visit

As the graphs above indicates, as much as 66.1%, or 410 of the 620 respondents are from Bergen or themunicipalities in the environs. The visitors from the rest of Hordaland, Norway and abroad make 33.9% of therespondents, or 210 persons. This corelates with the assumption that around two thirds of the respondentswere on a day visit to Bergen, while one third stayed the night.

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Figure 17: Type of accommodation Figure 18: Duration of visit (Nights)

Around 200 respondents indicated that they spent the night with accomodation in Bergen. Of these, more thanhalf stayed at hotels or camping sites, while 32% stayed with friends or family or in secondary homes/cabins. Ofthe respondents spending the night in Bergen, a majority stayed for more than one night. The average durationof visit by the respondents who stayed overnight in Bergen was 2.64 nights. Considering that TSR lasted forfour days or three nights, it seems like a majority of those who stayed overnight were able to attend all four daysof the event.

Figure 19: Information channels Figure 20: Attendance of previous TSR events

As the graph above indicates, media coverage was a major source of information for the respondents regardingthe event. Nearly 60% of the respondents learned about TSR from media channels. Internet and personalrelations follows as utilized information sources with 30% and 27% respectively. Only a few respondentsmentioned social media as a source of information.

About 70% have previously attended a TSR event. This is as expected, as Bergen hosted TSR in 1993, 2001 and2008. Only around 30% attended a TSR event for the first time, which coincidentally, happens to be of a similarnumber as those visiting Bergen from either abroad, our outside of the Hordaland region. Of those previouslyattending, 85% had visited a TSR event in Bergen.

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Figure 21: Visitors' reasons for visiting TSR in Bergen

The main attractions of the Tall Ships Race are obviously the ships, and the festival surrounding them at theevent location. Of the respondents, 30% selected the maritime community as one of the main reasons forvisiting TSR, while 21% selected the cultural program as one of the reasons.

Figure 22: Number of days spent at TSR Figure 23: Hours spent on TSR each day

As the graph on the left above indicates, the majority plans to spend one or two days vising TSR. Only aroundone third of the respondents planned to visit the event more than two days. Nearly 40% of the visitors plannedto attend for more than 5 hours of the days they visit TSR. Using the averages of both questions, or 4 hours and2 days, we find that the average respondent spent a total of 8 hours total at the event, or 2 hours for each day.

73.4%

59.2%

29.4%

21.3%

13.4%

6.8%4.0% 1.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Ships Festival Maritimecommunity

Culturalprogramme

Coincidental Other Sales outlets orexhibits

Invited to ship

Reasons for visiting TSR 2014 in Bergen

32.9% 32.9%

18.5%

15.6%

0%

5%

10%

15%

20%

25%

30%

35%

1 2 3 4

Number of days spent at TSR

3.1%

11.9%

27.3%

19.7%

38.1%

0%

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40%

1 1-2 3-4 4-5 > 5

Hours spent on TSR each day


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Figure 24: Spending, food and beverage Figure 25: Spending, outlets at event location

Figure 26: Spending, transport Figure 27: Spending, stores in city centre

The four graphs above indicate some areas where the respondents planned to spend money during the event.Not surprisinly, we find that the majority spent most on food and beverage, between NOK 200 and 500. Usingthe median in each group of the possible answers (NOK 1000 for the final answer), we find that the averagerespondent planned to spend NOK 275 on food and beverage. The respondents planned to spend less at thestreet shops or outlets, where a majority planned to buy nothing, and just short of 99% planned to spend lessthan NOK 500. This translates to an average of NOK 74 using the same method as described above.

Nearly 40% of the respondents did not spend anything on transportation. If our respondents used and hadmonthly tickets to public transport, then they would not spend anything extra due to TSR. Respondents livingin the city center would similarly not spend anything on transportation. Using the same method as for food andbeverages and for outlets, we find that the average spent on transportation is NOK 82.

A majority of our respondents did not plan to spend anything in other stores, outside the event area in the citycenter. This may not come as a surprise, as the event was the main reason for the visit in the first place. Mostnecessities such as beverages and food were available inside the event area. Around 41% of our respondents didhowever plan to spend some money on other shops in Bergen. On average, our respondents planned to spendaround NOK 150 in other shops.

While it seems our respondents planned to spend some money at the event and in the event area, it is uncertainto which extent TSR caused our respondents to spend money in the event area in central Bergen. Some mayhave spent this money regardless of the event. Still, the statistics presented above gives an indication of how

15.8%

33.2%34.8%

9.0%

2.7%4.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0 0 - 200 200 -500

500 -700

700-1000

> 1000

Values in NOK

Spending: Food and beverage

56.0%

33.5%

9.2%

1.1% 0.2% 0.0%0%

10%

20%

30%

40%

50%

60%

0 0 - 200 200 -500

500 -700

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>1000

Values in NOK

Spending: Outlets at eventlocation

39.4%

55.2%

3.9%0.6% 0.2% 0.8%

0%

10%

20%

30%

40%

50%

60%

0 0 - 200 200 -500

500 -700

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>1000

Values in NOK

Spending: Transport

58.9%

16.1% 14.5%

4.8% 2.4% 3.2%

0%

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30%

40%

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70%

0 0 - 200 200 -500

500 -700

700 -1000

>1000

Values in NOK

Spending: Stores in CityCentre


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much money our respondents spent in some areas during TSR. Input data for the event calculator is based onthe graphs on the previous page, and similar questions regarding other areas of expense.

Figure 28: Visitors' opinion of whom TSR appeals to Figure 29: Hosting TSR is positive for Bergen

Our respondents seem to find that TSR is an event that suits everyone. Nearly three quarters of our respondantschose this option when we asked them which group TSR as an event appeals to. A minority chose either adultsor elderly, but the consensus is relatively clear. All of the 620 respondants also agree that hosting TSR ispositive for the city of Bergen. Not a single respondent chose the “Not descriptive” or “False” option. Nearly 77%of the respondants found the statement completely true.

Figure 30: Visitors' opinion of Bergen Figure 31: Visitors' opinion of Bergen as host

342 of our respondents answered a question asking if TSR had made them more positive to a possible futurevisit to Bergen. Of the 342, 288 or 84% replied that this is true. This suggests that visitors to the event have apositive opinion of Bergen both as a host of TSR, and the city itself. The most revealing graph is however figure31. Of the 620 asked, 618 replied that in their opinion, Bergen should apply to host TSR again in the future. Thisshows visitors positive opinion of Bergen as a host city for major events.

76.3%

16.1%

4.4% 1.8% 1.1% 0.3%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Everyone Adults Elderly Families Young(15-25)

Children(<15)

Who does TSR appeal to?

76.9%

22.3%

0.8%0%

10%

20%

30%

40%

50%

60%

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90%

Completely true Largely true Somewhat true

Hosting TSR is positive forBergen

84.2%

15.8%

0%

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30%

40%

50%

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Yes No

TSR has made me morepositive to future visits toBergen 99.7%

0.3%0%

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80%

90%

100%

Yes No

Bergen should apply to hostTSR again in the future


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SponsorsThe sponsors provided the local TSR organization with cash or cash equivalents, such as goods and services inexchange for participation in the sponsor program.

InterviewsTelephone interviews were carried out with nine of the sponsors. One sponsor did not wish to participate. Threeof nine sponsors have previously sponsored TSR and similar events. Through the interviews it has emergedwhat the sponsors emphasize when choosing sponsorship. This is knowledge of the event, the utility value ofsponsoring and the relation to the environment. It is also important that the event is visible locally and that thecommunity has a positive perception of the event.

Sponsors reasoned that sponsoring TSR contributed positively to their customers’ opinion of their company. Inaddition, several sponsors found that TSR was a good opportunity to increase awareness of their activities inBergen. Some sponsors also deliberately target the marine segment who naturally attends an event such as TSR.

Sponsor programIn total four sponsor breakfasts were arranged in 2013 and 2014. During these meetings the sponsors had theopportunity to introduce their business, were given information about TSR and got the opportunity to buildnetworks. The sponsors were also offered "kick-off" gathering at Statsraad Lehmkuhl, two shanty gatheringsand the possibility to participate on the regatta TSR from Bergen to Aarhus.

During TSR the sponsors had free admission to the vessel "Loyal", invitation to "Captains dinner", reception atStatsraad Lehmkuhl and the possibility to participate on sailing from Bergen on the last day of the event.

Many sponsors also rented their own vessels, during the event, which they used for marketing themselves assponsors. Three out of nine sponsors said that it was the sponsor program itself, that influenced the decision tobe sponsor. Eight out of nine businesses participated on one or more of the events, either ahead of or duringTSR. All sponsors had a positive perception of the sponsor program.

What can be achieved by sponsoring TSRThe reason why the sponsors expected increased visibility by sponsoring TSR, is that this is an important localevent. Many expected an impact of long-term brand building and found the sponsoring of TSR as a goodopportunity. Many found, however, that it was negative that the event was held in the middle of the publicholiday. They had the opinion that it would probably limit the impact of the sponsoring and the visibility oftheir business. Many of the businesses invited customers and employees to the event, but only a few had thepossibility to participate because of the dates.

On the question to which extent the sponsors meant that TSR would increase the knowledge of their business,three of the sponsors answered to a large and very large extent. Four sponsors responded to some extent.

The Sponsor agreement afterwardsAll sponsors PwC interviewed reported that the sponsor agreements had fulfilled their expectations. Several ofthe sponsors pointed out that they had low expectations to the sponsorship and were positively surprised of theprogram. Some businesses felt that they could have utilized the sponsor better themselves.

Ahead of the event, most sponsors profiled themselves by having TSR signature in their e-mails, logo oninformation and several produced their own «roll-ups11» which they placed at the work place and in Bergen

11 In order to create proudness in the businesses, some made ”Tall Ships Race” banners (roll-ups) which they initially had on the work placeand then used to profile themselves during the event.


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during the event. The businesses also had the opportunity to introduce themselves during the sponsorbreakfasts.

Several sponsors state that the sponsorship of TSR was well received by both existing customers and employees.

The main reason why the companies wanted to be associated with TRS is that the event is a very positive eventfor Bergen. Some also wished to be associated with the event in connection with the centenary of StatsraadLehmkuhl and to mark the Constitution Day. Eight out of nine sponsors wished to sponsor the event again.

The reason why not all wanted to sponsor the event again, was that they had expected more publicity in themedia. The sponsors found that the sponsor program was satisfactory ahead of the event, but poor afterwards.

At the time the interviews were conducted, no further activities were planned. This may have influenced thenegative responses. Addional activities have been planned for the sponsors, and will take place later this year.

Most of the sponsors agreed that the event was very good, and the only negative issue was the dates of the event– in the middle of the public holiday.


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Photographs in left-right, top-down order:

1, 2, 3, 4, 6, 7, 8 by Eivind Senneseth, 5 by Tom Kjøde


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Methodology in this report

Survey

About QuestBackQuestBack (QB) is a data tool used to collect and collocate information. The visitors answers were put into QBby PwC. PwC then controlled the entire data collection process. QB generates a report which collocates thevisitors' answers and data can easily be analysed.

Design of surveyInitially PwC made a questionnaire draft for visitors of the event. The draft was prepared in accordance with theevent calculator. Both TSR Bergen and Tall Ships Races 2015 Kristiansand did a quality check of the questionsand provided input. The survey was divided in two parts and contained question related to both economic andnon-economic consequences for Bergen.

QB was designed in both English and Norwegian, and a pilot was conducted.

Accomplishment of the surveyThe survey was conducted during the event in the period Thursday 24 – Saturday 26 July between 11am -19pm.

PwC had six people collecting data by QB during the mentioned time. The interviewers contacted visitors,introduced themselves and explained that the survey was an activity directed by TSR. They were situated at allthree visitor information centers, respectively Strandkaien, Bryggen and Festningskaien. Information about thesurvey was presented in the festival paper, on the three screens in the event area, and in addition theinformation centers encouraged visitors to respond to the survey. PwC actively got in touch with visitors to getas many responses as possible. As an added incentive, prizes were distributed to randomly selectedrespondents.

A total of 620 visitors participated in the survey. PwC points out that the respondents answers are notnecessarily representative for the general population of visitors.

Number of visitorsFinding the number of visitors attending the event was assigned to the TSR organization. In cooperation withthe police in Bergen, it is estimated that 500 000– 600 000 people visited the event. In events like this, wherethere are no tickets, there is no easy way to estimate the number of visitors.

Event calculator

About the event calculatorIn this section PwC describes the assumptions that form the basis and the limitations that apply in regards tothe event calculator that is used to estimate the regional and the national value creation. The section below isrelated to the structure of the calculator. The event calculator takes V.A.T. into account.

Number of individual visitorsThe number of individual visitors influences to a large extent the outcome of the value creation. The numberwhich form the basis in the calculator is 184 332 individual visitors. The event has estimated between 500 000-600 000 visitors totally in the course of five days. Our estimate is based on the lower estimate, 500 000.Through the survey it emerged that each person in average participated on the event 2.17 out of 4 days. Weconsider the number of individual visitors as a conservative estimate based on the above numbers.


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66%

20%

14%

Distribution of visitors

Local Non-local Norwegian Foreign

Figure 32: Distribution of visitors

The calculator differs between visitors, associated persons 12 and participants. PwC does not differ betweenthese three groups. Therefore everyone who was at TSR is treated as visitors. It is assumed that the valuecreation only to a little extent is affected by this simplification.

Visitors consumptionA key factor affecting estimated value creation is the origin ofthe visitors. The calculator operates with three categories; local,non-local Norwegian and foreign. Through the questionnairethe respondents were asked about origin based on whether theylived in Bergen, in the environs13 , Hordaland, other parts ofNorway or abroad. Respondents living in Bergen and environsare placed in the group local. Hordaland and other parts ofNorway are placed in the group non-local Norwegian andrespondents from abroad are placed in the group foreign.This results in the distribution;

Local 66 %

Non-local Norwegian 20 %

Foreign 14 %

The group with the most significant influence on regional andnational value creation is the Non-local Norwegian and Foreign group, whose main reason for the journey isassumed to be the event. We assume that this group would not have been in Bergen in this period if TSR hadnot been arranged.

The respondents were asked if TSR was the main cause of their visit to Bergen. For most people the cause of avisit to Bergen will be complex. The number of visitors that stated that the main cause for the visit it attendanceto TSR is higher than empirical data from similar events. Based on this, the numbers have been adjusted inaccordance with empirical data. Of a total of 20 % non-local Norwegians, it is estimated that 41 % has the eventas main cause for the visit, which totals 15 115 individuals. Of 14 % foreign visitors it is estimated that 18 % hasthe event as the main cause of the visit, in total 4 594 individuals. The cruise tourists have been excluded in thelast mentioned figures, as it is natural to assume that visitors from cruise ships would have been in Bergen inany case. It can be argued that TSR will lead to increased consumption also for the cruise tourists. Thispotential national value creation has not been included in the estimation.

The largest group during the event is the locals. This group is excluded as a whole when regional value creationis estimated. The main reason is that consumption from locals during the event represents value which isassumed would be consumed in the region regardless of the event.. A weakness in the model is that it does notaccount for the consumption from locals who choose to stay in Bergen because of TSR. Potentially this couldhave a positive impact on the regional value creation. This is not included in estimated regional value creation.

Through the survey it has emerged how the groups non-local Norwegian and foreign are distributed based onhow they accommodated. In the survey the alternatives "acquaintance/family" and "other" are used for thecategory "private" in the calculator. All who have answered "day visit" have been excluded. Cruise touristsreplied the alternative "other" and are therefore included in the category "private". Other categories are "hotel","rented cabin or accommodation" and "camping/recreational vehicle". Further on the respondents were askedabout the length of their stay measured in number of 24-hour periods.

In order to estimate day consumption per visitor, various methods have been used to reach the most accurateday rate per consumption category based on available figures. The methods used are collection of figures fromSSB14, questions to the respondents in the survey and the use of standard rates in the calculator. Each standardrate is tested against each other to identify any non-conformity. In the survey the respondent was asked about

12 Associated persons are among others VIP and the employees.

13 Environs include the municipalities Radøy, Lindås, Øygarden, Fjell, Sund, Askøy, Austevoll, Os, Fusa, Samnanger, Osterøy and Vaksdal.14 Statistics Norway has the overall responsibility for official statistic, http://www.ssb.no/en/omssb/om-oss


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own assumed consumption divided into different items. The item "remaining purchase" was included in"purchase of groceries" in the survey.

There are several potential sources of error in the distribution between the items. An important factor is therespondent's interpretation of what is included in the different items. For instance, the items "purchase ofgroceries" and "activities and purchase of services" may be challenging to separate for the respondents. Yetthese are non-conformities that only to a little extent affect the total day consumption per participant, as itmerely leads to different distribution between the items that are summarized.

In the survey, spending intervals have been used to classify consumption per category. In the calculation ofconsumption, the average value for the intervals has been used as basis. The totals have then been verifiedagainst standard rates in the calculator and in some cases empirical figures from SSB. Minor adjustments inthese input figures have potentially large effect on the outcome of value created. The figures used are bestestimates considering available information and experience from similar events.

Accommodation capacityAccommodation capacity and normal number of visitors are based on numbers stated by VisitBergen. Apotential source of error is what is defined as normal number of visitors. Historical numbers have been used inorder to reach a rate of number of visitors that to the largest possible extent reflects the normal level in Bergenthroughout the year. This number is relatively stable and any season adjustment will only have minor influence.We have not succeeded in collecting normal numbers of visitors for cabins and flats, thus it is assumed that thisrate is the same as for hotels. In addition the hotel capacity contains numbers from boarding houses. Due tomissing number of beds for cabins it is assumed that each cabin can accommodate four people on average.

Accounts Tall Ships Races Bergen 2014The organizer's accounts including income and expenses have been used as basis for the estimation of regionaland national value creation. Where and how the organizer uses the money has potentially large influence on thevalue creation. This comes into force especially if the organizer contributes to moving means out of the regionor out of the country. The source of the finance has an influence on the value creation. Consumption financedoutside the region or country consumed locally has a positive impact on value. Local financing of localconsumption will have little or no impact on the value created in the region.

Full time equivalentsTSR has stated that the event has 5.28 paid full time equivalents. The use of volunteers during the event andtheir generation of number of volunteer equivalents years have not been included in the calculations as it doesnot affect the estimation of the value creation in the calculator.

Income and expensesIncome and expenses for the event have been collected from the accounts of TSR in Bergen. Each income andexpense item have been assessed and distributed based on whether they come from the region, outside theregion or from abroad15.

Revenue from local businessPwC has collected revenues information from businesses in order to ascertain whether the event contributed tovalue creation. This was carried out to control that the value creation that appears from the event calculator alsois reflected in real figures from the business sector. Agreement here will support the figures from the eventcalculator. The figures in the event calculator are obtained by asking visitors about own consumption during theevent. The figures we have collected from the business section are gathered from the suppliers who renderpossible the same consumption.

15 The TSR organisation has provided income and expenses from the event, dated 31.October 2014. Both income and expenses have beendivided by the TSR organisation on whether they have local, national and foreign impact.


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PwC has focused on the largest consumption items and collected revenues information from accommodations,food and beverage establishments, commerce and transport. More specific, we have attached focus to hotels,restaurants, large shopping centers, taxi, parking and public transport, including Bybanen, bus and boat trafficin the center.

PwC has been assisted by VisitBergen in the work with collecting revenues information from their members. Inaddition PwC has collected revenues information from businesses for the rest. The extent to which we havereceived response from the businesses varies, which is also the case for the quality of the information. PwCconsiders that we have received sufficient information within the sectors that we consider as most relevant, –hotels, food and beverage. Several items remain where we cannot express an opinion, as we have not succeededin collecting figures.

The revenues information that has been collected represents a three week period in connection with the event,and the same weeks in the years 2012 and 2013. In the analysis we have compared Thursday, Friday, Saturdayand Sunday to the same weeks the previous years. In this way we have revealed local variations around theevent this year, but also compared to same period previous years. For several of the industries and the supplierswe have collected information from there will partly be significant season variations. It is natural to comparesimilar periods to estimate the additional revenues around TSR. To ensure that the revenues figures from lastyear are comparable the figures have been adjusted according to the consumer Price Index16.

PwC assumes that the difference in revenues between the periods is owing to TSR. The weakness is that otherexternal factors affecting the revenues of hotels have not been included. For instance there could be differencein the weather conditions, or other events. Still it should be mentioned that according to historical weatherdata17 the weather was about the same for the periods that are compared.

Figure 33: Weather comparison

A clear limitation in the available material is missing specification of revenues figures. Available figures do notmake it possible to establish whether increased revenues is due to increased sales/volume or increased prices ora combination of both.

Revenues information from hotelsVisitBergen sent a mail to hotels in Bergen requesting information about revenues figures in the period. Atemplate was used where revenues information for certain periods should be filled in. We received figures from

16 The consumer Price Index from July 2013 till July 2014 shows a price development of 2.6 % for hotel and restaurant services17 Weather data from yr.no


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13 hotels out of 36 asked. A potential weakness of the sample is inequality between the hotels that have replied.It is natural to think that larger hotels have better capacity to respond to such requests and that a predominanceof the respondents thus is larger hotels. Still an analysis of capacity indicates an even distribution over thewhole specter, though with an underweight of very small hotels, and no boarding houses in the sample. Theconsequence may be that the estimate becomes too high when generalizing the effect of the 13 hotels of thewhole group. There is also a possibility that hotels without change in revenues have not seen the utility value ofresponding to the inquiry. At the same time it should be mentioned that the estimate applies for hotels inBergen. Hotels outside Bergen may also have experienced an increase in revenues as a consequence of TSR.PwC has been in dialogue with hotels outside Bergen. Several of them report positive effects of TSR, but wehave not received figures supporting this. The hotels that have been contacted are located in Os, Voss andOsterøy.

It may be questioned if change in the hotels' revenues can be entirely related to TSR. PwC does not exclude thatother factors may have contributed to increased revenues, such as an increase in available rooms. Additionally,historical revenue data may be influenced by other events, such as concerts with well-known artists. Thisincreases the difficulty of determining the increase in hotels' revenue caused by TSR.

Based on these aspects and other available information, the week before TSR is to be considered as the bestweek for use as basis for comparison for calculation of increase in revenues during the event.

Revenues information from restaurantsPwC has received revenues information from a total of 15 restaurants out of 25 asked. The information wascollected through e-mail with template for filling in of revenues information sent to restaurants in the center ofBergen.

It is random which restaurants we have succeeded receiving figures from. A potential weakness of the sample isinequality between the restaurants that have replied. It is natural to think that larger restaurants have bettercapacity to respond to such requests and that a predominance of the respondents thus is larger restaurants.There is also a possibility that restaurants without change in revenues have not seen the utility value ofresponding to the inquiry. A review of the material still indicates that there is a satisfactory distribution bothwith regards to size and location.

Based on the available data, it is not relevant to estimate a total increase for the entire industry in the same way

as for hotels. This market is fragmented, and several unobserved factors may influence restaurants revenue.

Available revenues information for restaurants does not differ between serving of food and beverages.

Revenues information from shopping centersPwC has collected revenues information from the four major shopping centers in the center of Bergen,respectively Galleriet, Bergen Storsenter, Kløverhuset and Xhibition.

Data from Galleriet and Bergen Storsenter are compared with a stated increase in revenues from Kløverhusetand Xhibition, and a direct comparison can therefore not be made as it is uncertain whether the increase inrevenues has been measured similarly.

Revenues information from parkingPwC has collected traffic information from Bergen Parkering AS18. The information that has been madeavailable is number of cars for the period during the event and the same week in 2013. It is stated that 200parking spaces were hired to a veteran car gathering the same weekend as TSR. The revenues information laterin the report has been corrected for the hired parking spaces to the veteran car gathering. The manager ofBergen Parkering AS states that the increase was lower than expected and thinks this is due to the fact that largeparts of the city were closed for car traffic during the event. Bergen Parkering AS does not have revenue

18 Bygarasjen, Klostergarasjen, Nordnes P-hus and Solheim P-hus


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information available per day for the period. This causes that the information only can be used to illustrate anincrease in traffic which PwC finds probably is related to TSR.

Transaction data and electronic means of paymentNets19 has assisted PwC in supplying transaction statistics for its clients with postal code Bergen. The statisticsis aggregated and anonymous and shows total number of transactions and transaction value in the week before,during and after TSR in 2014. As a comparison corresponding figures for 2013 and 2012 have also beendelivered. The figures in the statistics are nominal and therefore have to be supplied with information fromsecondary sources with inflation and general card statistics. We do not know how large Nets' market share isamong sales outlets in the center of Bergen, which makes it difficult to use the statistics for aggregation to atotal level. Nor can we differ between sales outlets in the event area and elsewhere in Bergen. Still PwC hasconsidered the statistics from Nets in connection with our results based on other data sources.

OtherPwC has tried to collect revenues from parties in the market such as Skyss, Bergen Taxi, several hotels andrestaurants without success. Revenues information from more parties within several dimensions would havecontributed positively to our analyses of the economic impact TSR had for Bergen.

Interviews of sponsorsThe sponsors of the event are mentioned in TSR's home page. PwC has interviewed a portfolio of 10 sponsors.

PwC has established an interview guide focusing on non- financial effects for sponsors, before, during and afterthe event. The interview template was subject to quality assurance by project manager TSR. Ahead of theinterviews all sponsors received an e-mail from project manager TSR with invitation to participate. Theinterviews were conducted based on a structured interview template, to ensure comparable answers from thesponsors.

19 Nets is a nordic provider of payments, card and information services, http://www.nets.eu/About/who-we-are/Pages/default.aspx


© 2014 PwC. Med enerett. I denne sammenheng refererer "PwC" seg til PricewaterhouseCoopers AS,Advokatfirmaet PricewaterhouseCoopers AS, PricewaterhouseCoopers Accounting AS, PricewaterhouseCoopersSkatterådgivere AS og PricewaterhouseCoopers Services AS som alle er separate juridiske enheter og uavhengigemedlemsfirmaer i PricewaterhouseCoopers International Limited.

Economic Impact Assessment - Bergen kommune Impact Assessment local business ... The impact of Tall Ships Races for the food and beverage industry ... PwC interviewed all sponsors

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