Introduction into the event Australian Open

The topic under study is the Australian Open Tennis Championship where the world’s best tennis players participate. The event exists since 1905 and forms the Grand Slam tournament with the French Open, Wimbledon Championship and the US Open, which takes place year-round, starting off with the Australian Open for two weeks in January in Melbourne. It is deemed to be one of the most economically successful sport events in the world due to its huge return on investment of around 27.8% annually (Deakin, 2017). Visitors can follow more than 500 top ranked players. Besides this a festival on site is offered, gastronomic options as well as a mini theme park for children’s entertainment. The event attends a new record of 728,763 fans in 2017. 446,000 visitor nights got created (61% from Victoria, 26% interstate and 13% international) with an average stay of 5 nights in Melbourne’s hotel rooms and an average spent of $181 per day (Australian Open, 2016). The huge economic impact is generated mainly through increasing domestic tourism and the multiplier effect (Edward E. Leamer, 2008; Van der Wagen et al., 2010). The Australian Open earn Victoria over $200 million annually and generated $278.1 million GDP and 1,109 full-time jobs in 2016 (BBC, 2017; WTTC, 2017).

​

There are ongoing discussions about holding the Australian Open in March and not in January. Top ranked players requested it due to the intense weather conditions. A study identified a twofold reason for its failure (McCarthy et al., 2008). Firstly, players, fans and sponsors want the Grand Slam tournaments to stay spread out throughout the year. Secondly, the event should be detained within the Australian summer holiday to keep the attendance figures high (McCarthy et al., 2008). Besides other smaller events, the Formula One Australian Gran Prix would collaborate with a time shift. It takes place in Melbourne every year during the end of March (Gran Prix, 2017).

​

Region of interest

Since 1988 the event takes place in the Melbourne Park (Johnson, 1985). It is analysed on the province-level with the focus on Victoria, one of the seven states in Australia. Apart from the main attractions in the states’ capital Melbourne (Arts Centre, 2017; FED, 2017), Victoria’s pull factors are the Great Ocean Road, the region of Mornington Peninsula as well as Phillip Island (Visit Victoria, 2017; Australia, 2017). As a result, Victoria attracts 14,242 million tourists and $5,474 million visitor expenditure in 2015. The number of tourists can be split up in intrastate overnight (81%), interstate overnight (16%) and international overnight (3%) (Victoria State Government, 2016). The major economic sectors are the mining and energy industry, financing and health care. Tourism contributed with only 3% of Australia’s GDP in 2015, which means an employment of 580 thousand people (ABS, 2017).

​

A variety of stakeholders are directly and indirectly involved in the event (see appendix). Internal stakeholders, which are directly involved in the organization of the event are the Australian Tennis Association (ATA), who is part of the Australian Tennis Organisation (ATO), in cooperation with the International Tennis Federation (ITF) (Tennis Australia (b), 2017). The organisers have the ambition to increase the number of visitors as well as overnight tourism expenditure to $24.7 billion by 2020 (Tourism Australia (c), 2017). Sponsors are using the event as a promotion instrument. Sport events are usually subsidized by investments from public sector funds, which is the reason why the government and the DMO “Visit Victoria” are directly involved. External stakeholders that profit directly from the event are several private companies: the HORECA sector, public and private transportation providers and tour operators, local government and communities. Since tourists may spend money in other activities while visiting, sectors like retail and food production, attractions and tour guides are indirectly affected by the event.

​

Economic impact analysis and target audience

The economic impact analysis is going to be carried out, because it serves as a tool measuring the impact on a region related to tourist expenditure during an event. Due to the huge number of visitors to the Australian Open, the analysis indicates economic benefits for the country by measuring the amount of money spent by tourists (Zuruba et al., 2015). The analysis can document if the investments in the event amortized as well as if the success increased over the past decades. Thereby the impact of changing the time of the event from January to March can be quantified. If the region would be much more beneficial by shifting the occurrence timewise (or generally spoken: through the presence of the event as if it would not take place), the public sector might be even more supportive. The use of the economic impact analysis is also necessary to support public subsidy of an event.

​

All abovementioned stakeholders are interested in getting to know whether the event is beneficial to ensure a safe and sustainable growth in the future. However, the analysis in this study is done for the public sector, because the government, local communities and DMO are interested in the cash flow, the impact of income and employment and the added value of a region (Klijs et al., 2012).

​

The Input-Output model

The economic impact analyses will be carried out based on the Input-Output model. This model measures the impact of tourism expenses during the event on the economy. According to Klijs et al. (2012), this model shows the output (visitors expenditure on product and services during the event), the added value (remaining sum after subtracting the purchases), the income (added value paid to employees) and the employment (number of jobs created).

There are several reasons for choosing this model. By using moderate data in Excel, the model is simple to use. For this study, data in note can be obtained from the annual report of Tennis Australia. It is well known and extensively discussed in several studies, which makes the results comparable. In addition, the model is created flexible since it is possible to apply both: a significance and impact analysis as well as ex ante (expected effects of a future change) and ex post (effects of a change already happened) calculations (Klijs, 2012). Nevertheless, also disadvantages exist for this model. Formulating Input-Output tables are cost and time consuming and are not available for all regions. Limits are caused by its strong assumptions. In the case of this study, it would suppose that if the same amount or even more labour is needed for realizing the time switch from January to March, it is available. Moreover, it does not generate insights into social and environmental effects and does not consider spatial and temporal aspects. For instance, only some parts of a region or a specific time might be affected by a change (Klijs et al., 2012; Klijs, 2015). However, this doesn’t make the model less applicable in this case, it rather seems to suit best to generate an analysis of the economic impact of the Australian Open.

​

The Type of Analysis

This study considers the effects in Victoria caused by a change, which means that the impact analysis is going to be applied. While the significance analysis simply calculates the effects in a region caused by all visitor expenditures during an event, the impact analysis focuses on an increase or decrease in expenditure in a region caused by an incident (Klijs, 2012). Due to previously mentioned debates about moving the event to another time of the year, the impact analysis measures the effect in expenditure in Victoria caused by this change in time from January to March. Therefore, several types of visitors must be excluded to measure the effects that would not happen without the Australian Open. On the one hand, locals and casuals (visitors that are in the region for other reasons, but decided to join the Australian Open additionally) need to be excluded. On the other hand, time and place switchers will not be considered. These are visitors that would have visited Victoria anyway, but at a different time or location (Klijs, 2015; Compton, 1995).

​

With this analysis the added value of the economic orientation of Victoria as well as the consequences for employment can be demonstrated. The event has already taken place more than 100 times which makes an ex post analysis reasonable. Additionally, the assumed time change, which hasn’t happened yet, will enable applying an ex ante analysis as well. Hence, both types of analysis can be compared.

​

Other (non-economic) costs and benefits

Besides the economic impacts of the Australian Open, environmental and social costs and benefits will be considered. During long-lasting events inhabitants usually get upset by noises and dirt produced by huge amounts of visitors entering the city. In the case of the Australian Open, no serious complaints from locals could be found. A study confirms that inhabitants find it important to host the event (Australian Open, 2016). Other costs involved are from environmental nature. Additional busses and trains operate in the city during the event period, which causes more traffic (BBC News, 2015). Changing the time of holding the event may cause organizational difficulties in this regard, but also by affecting stakeholders’ alignments. For instance, local investment in new cruise infrastructure causes lots of cruise traffic around the time of the Australian Open in January (Cruise International, 2014). Furthermore, tour operators adjust their offers to summer holidays in which the event takes place. In addition to the Input-Output model which mostly considers the economic impact, a cost-benefit analysis should be conducted to measure these social and economic impacts.

​

Nevertheless, the event supports many important aspects such as the strengthening of the infrastructure and marketing. By operating the event in Melbourne, it can also be seen as promoting the city and the state. By the support of the Australian Open, Victoria’s claim of the title being “the sporting capital of the world” (Deakin, 2017) can be underlined.