Demystifying the economy | Major events, positive for the economy?

Every week, you send us your questions on the economy, finances, markets, etc. Our journalists try to answer them with the help of experts.

Grand Prix, Osheaga, Montreal International Jazz Festival… What does it bring in, concretely? Let’s take the example of the Grand Prix, in 2019. Roughly speaking, the event contributed about 0.01% of the province’s economy, according to data from Tourisme Montréal.

Let’s expand a bit. A few years ago, the Regroupement des évènements majeurs internationales (RÉMI) estimated the economic contribution of 17 of its members (Osheaga, Festival Juste pour rire, Coupe Rogers, etc.) to the Quebec economy. It came to $290.8 million. By adding this amount to the amount generated by the Grand Prix, we could deduce that the events contributed to… 0.08% of the Quebec economy in 2019.

Tourism in the economy

According to economist Pierre Emmanuel Paradis of the firm AppEco, the answer to the question can be broken down into two levels.

First, the share of tourism in the growth of the economy. Let’s go back to 2019 as an example, since it is the last year whose figures were not affected by the pandemic. The economic impact of the 2019 Grand Prix on the province’s GDP was estimated at $63.2 million by Tourisme Montréal.

“It’s not zero: 63 million is 63 million. But we can’t say that if there was no Grand Prix, there would be no tourists,” contextualizes economist Pierre Emmanuel Paradis.

Can we talk about significant economic benefits in this case?

For Tourisme Montréal, major events are significant for tourism and represent a calling card for the metropolis.

“The economic impact of the Grand Prix over 4 days is equivalent to 12 days of average spending in the middle of June. So, we can say that it is [environ] “three for one,” says Aurélie de Blois, spokesperson for Tourisme Montréal.

According to Mr. Paradis, the most profitable tourist dollar comes from international destinations, since the tourist chose to visit Quebec instead of visiting another destination. The money spent by a Quebec tourist would, in theory, have been spent in another sector unless it was saved, and would have allowed the economy to progress in a different way. An opinion shared by Martin Roy, President and CEO of RÉMI.

In its study published in 2018, more than 4 million people attended one of the 17 participating festivals. Of this number, 190,603 tourists from outside Quebec visited a destination mainly because of the event.

Income

Now that the contribution of tourism to the economy has been put into context, how do the different levels of government benefit from it? First, the City.

In addition to this new land wealth, the City of Montreal considers that the only other direct revenues are those linked to parking fees and the use of public transport.

“Public revenues from tourism are largely captured by the governments of Quebec and Canada through sales taxes (QST and GST) and income tax on businesses and individuals,” said Gonzalo Nuñez, public relations officer for the City of Montreal, by email.

In 2018, the RÉMI estimated that the 17 events participating in its study generated tax revenues of $49.3 million for the Quebec government and $17.3 million for the federal government. However, the events were able to take place thanks to local, provincial and federal subsidies, representing 16.7% of their revenues.

M^me Blois recalls that tourists generate spending in five sectors: catering services, accommodation, leisure and entertainment, transport and travel services.

“For every dollar spent by a festival-goer, a quarter goes on accommodation and a third on catering,” recalls the president and CEO of RÉMI.