The demand methods dealt with in the two preceding sections can be applied to events; however, cost-benefit analysis (see Chapter 8) is a better approach. In economic impact studies of events, expenditure is the key element. Therefore it is important, especially with major events, to define expenditure in the right way. Furthermore, it is necessary to make a distinction between the result for the event organizer and that for the host city (Baade and Matheson, 2004).

Major events always involve 'crowding-out' effects, expenditure switching and retained expenditure. Big events are very often confronted with crowding-out effects, when traditional visitors prefer not to visit the region where the event takes place for reasons of over occupation, higher prices, etc. (Scherly and Breiter, 2002). These effects can take different forms:

• Geographical diversion people avoid the place of the event and visit another region

• Temporal substitution traditional visitors come before or after the event

• Monetary substitution visitors abstain from coming to the region and spend the money on other products or services.

Cost-benefit analysis takes these crowding-out effects into account through the application of the 'with and without' and not the 'before and after' principle (Vanhove, 1976).

Mules and Faulkner (1996) cite several examples of what they call expenditure 'switching':

• Local people might participate in the event and reduce their expenses for other goods and services. This is a pure substitution effect. Ryan (1998) uses the term 'displaced expenditure'.

• Visitors may switch their expenditure in time.