Wales International Convention Centre (WICC) Economic Impact Analysis Final Report Welsh Government March 2016
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Wales International Convention Centre (WICC) Economic Impact Analysis Final Report Welsh Government March 2016 Lead Author March 2016 www.miller-research.co.uk | | Twitter: @miller_research Contents 1 Executive Summary ............................................................................................................ 4 2 Introduction ......................................................................................................................... 6 2.1 Economic Impact Assessment: Overview .................................................................... 6 3 Context ............................................................................................................................... 8 4 Economic Contribution .......................................................................................................11 4.1 WICC Total Economic Contribution .............................................................................11 4.2 Construction Phase .....................................................................................................11 4.3 Operational Phase ......................................................................................................13 4.4 Extension Activity ........................................................................................................14 5 Additional Impacts ..............................................................................................................16 6 Technical Approach ...........................................................................................................17 6.1 Economic Impact Assessment: Methodology ..............................................................17 6.2 Approaches and Assumptions ....................................................................................21 6.3 Calculating Average Salaries ......................................................................................28 19/12/2016 3 Wales ICC Economic Impact Assessment 1 Executive Summary Economic Impact – Key Facts Between £225m and £429m contribution to economic activity between 2016-2025 • Between £22m & £64m from extension activity • Between £57m & £89m from construction • Between £146m & £276m from operations Between 875 and 1,830 FTE jobs supported between 2016-2025 • Between 245 and 790 from extension activity • Between 449 and 699 from construction • Between 180 & 341 from operations This report documents the findings of an independent economic impact assessment of the proposed Wales International Convention Centre (WICC) at the Celtic Manor Resort (CMR) which is scheduled to be operational by 1st January 2019. The Welsh Government and the CMR are working as equal partners on the proposed WICC which aims to develop a 27,000 square metre convention centre at CMR, with a 4,000 square metre, 10 metres high main hall capable of accommodating 4,000 people. The proposal also includes an auditorium with fixed seating for 1,500 people, 8 rooms of varying sizes ranging from 40 to 800 people, and a car park with 1,000 spaces. The WICC would cater annually for at least 30 events, generating around 90,000 room nights per year, of which only 18,000 could be accommodated at CMR. The contribution of the WICC to the economy of Wales over the period 2016 to 2025 is estimated at being between £225 million and £429 million. This includes a total net impact of somewhere between £57 million and £89 million from the construction phase (£29-45m from each year of construction); between £146 million and £276 million from the operation of the WICC and a further £22 million to £64 million from extension activity resulting from increased spend of delegates in the wider economy. Across the whole period, between 875 and 1,830 FTE jobs will be created by the WICC within Wales. Of this, around 245 to 790 will be created as a result of the operations of the convention centre. Extension activity of delegates spending in the wider economy1, as a result of the WICC activities is expected to support around 180 to 341 FTE jobs – around 26 to 49 per year. A net present value (NPV) was calculated by using the HM Treasury’s recommended figure of 3.5% and also by accounting for the inflation effect (discounting by 2.5%). The result was that the total net economic impact of between £225 million and 1 For further discussion refer to the extension activity section. Wales ICC Economic Impact Assessment £429 million over the period 2016-2025 has a NPV of between £150 million and £286 million. The CMR already has a high profile reputation as a conference venue. However, if developed, the WICC will be Wales’ only facility of its kind or scale, attracting a level of events which do not come to Wales or SW England at present. The facility would enable SE Wales to benefit from a level of business tourism not currently available to the region, especially from the lucrative Association Conference market. Examples of other cities where facilities have been built, such as Edinburgh and Liverpool, have shown that large convention centres can bring significant regeneration benefits to their host communities. The impacts will come about through the construction phase, the day to day operations of the WICC and as a result of substantial “extension activities”; including bed nights at other suitable hotels in the region and delegates and their spouses spending on retail, food and drink and excursions to local attractions. The local focus of CMR spend is very strong (95% of all supplier spend occurs in Wales, mainly in the SE), therefore the multiplier effect is much greater than the Wales average for the hotel, bars and restaurants industry (2.19 compared with 1.54). Economic Impact of the WICC – Direct, Indirect and Induced Effects. Source: Miller Research (UK) Ltd. Wales ICC Economic Impact Assessment 2 Introduction This report documents the findings of an independent economic impact assessment of the proposed Wales International Convention Centre (WICC) at the Celtic Manor Resort. The aim of the assessment was to understand the potential impact of the increased investment and revenue that the WICC would bring, to the Welsh economy. It is expected this report will support on-going proposals for the WICC. This assessment builds on investigatory work already carried out for the proposal. This includes a feasibility study into its potential development, a ‘White Paper’ setting out detailed proposals for the WICC, and a summary information document which offers updates on the proposal since the original White Paper. In short, the proposals are to develop a 27,000 square metres complex comprising: A main hall of 4,000 square meters and 10 metres high, large enough to accommodate approximately 4,000 people, A fixed seating auditorium to accommodate 1,500 people, Eight meeting rooms of varying size to accommodate between 40 and 800 people, A car park to accommodate 1,000 cars. The feasibility study recognises the Welsh Government’s announcement of Autumn 2012 to support the development of an international convention centre for South Wales as the catalyst for the proposal from the Celtic Manor Resort. In addition, the Resort recognises that its current convention centre offer is not sufficient to meet growing demand. 2.1 Economic Impact Assessment: Overview The WICC contributes directly to Wales’ GDP (Gross Domestic Product) through the GVA (Gross Value Added) it produces as a result of attracting conventions. This creates new jobs and results in demand for goods and services in the supply chain (including delegate spend in the wider economy during their visit) and the wages paid to those people employed in businesses that supply the WICC. In turn this creates additional spend as the WICC’s suppliers and their employees consume goods and services in the wider economy. In economic terms, these impacts are defined in terms of the direct, indirect and induced effects as explained below: Direct, Indirect and Induced Effect The Direct Effect of the WICC’s activity is its contribution to Wales’ GDP and the jobs it creates. The Indirect Effect is the increased demand for goods and services in the WICC’s supply chain. The Induced Effect is the impact of the WICC’s suppliers and their employees spending in the wider economy. This assessment considers the potential impact (direct, indirect and induced effects) of three distinct phases of activity that will be delivered should the WICC proposals be realised. They are: Construction Phase – the design and build of the proposed WICC (2016 -2018) Wales ICC Economic Impact Assessment Operational Phase – the year on year running of the WICC (2019 – 2025) Extension Activity – the spend of delegates in the wider economy during their visit (2019 – 2025) The full benefit of the activity of the proposed WICC can be estimated by calculating the economic effects of each phase / activity. The approach taken to measuring the impact – including sources of information, assumptions and economic modelling used to derive the impact is discussed in Appendix 1. The subsequent sections of this report present our estimate of these impacts. In addition to the quantifiable impacts that the WICC might have, it is also expected to have an impact on wider, less quantifiable factors such as: An improvement in the profile of South Wales as a place for business, tourism, culture and leisure; Support for local facilities and initiatives such as the Newport Science Village, and the Newport 2020 Regeneration Masterplan; Increase in the