A year ago, Milwaukee hosted the Republican National Convention, with proponents seeing it as an opportunity for an economic windfall. In May, Visit Milwaukee released a report claiming that the RNC generated a $321 million economic impact for Milwaukee.
However, the report does not include lost business due to the convention, instead it counts spending by visitors and spending to put the convention on.
According to state tax records, hotel sales were up 42% in Milwaukee County in July 2024 compared to July 2023, but food and drink sales were down 1% and arts, entertainment and recreation sales were down 19% in the same time frame.
Surrounding counties had similarly mixed economic results based on taxable sales. Ozaukee County saw a 19% bump in hotel sales in July 2024 compared to July 2023, with 4% drop in arts, entertainment and recreation and a 3% drop in food and drink sales. Washington County saw a 19% bump in arts and entertainment sales, compared to a 4% drop in hotel sales and 0.5% drop in food and drink sales.
Waukesha and Racine counties do not have county sales taxes, meaning the state does not keep comparable spending records.
Tourism Economics compiled the report on the economic impact of the RNC, along with a corresponding report for the DNC in Chicago. The firm has generated similar reports for past political conventions.
Greg Pepitone, associate director at Tourism Economics, says the study focuses on spending to put on the convention and by visitors coming for the convention.
“Our study looks at visitor spending in the local economy,” Pepitone says. “So those that are coming from outside the local economy, what are they spending while there.”
Victor Matheson, a professor of economics at Holy Cross, has researched the economic impact of past political conventions. He argues that reporting on economic impact should include changes in resident spending as well as visitor spending.
“The real problem is it's a lot easier to measure what is getting spent than what isn’t getting spent,” Matheson says.
How is economic impact calculated?
The Visit Milwaukee report breaks down this impact into the categories of direct, indirect and induced spending. Direct spending refers to spending by visitors during the RNC and spending by vendors to put on the event itself. For example, booking a hotel for a week or buying lunch at a local restaurant.
Pepitone says indirect and induced spending counts spending that is not directly related to the convention, but would not have otherwise occurred if not for the convention.
“For example if a visitor goes to a restaurant and orders a meal, that restaurant is going to have to purchase food from a local wholesaler,” Pepitone says. “That purchase of food is considered an indirect impact.”
Similarly, an induced impact refers to workers spending wages that they earned via the convention.
“Someone that’s working in one of those direct or indirect industries, they’re going to earn a wage and spend a portion of that wage into the local economy,” Pepitone says. “So that’s considered an induced impact.”
Pepitone adds that Tourism Economics has a model to estimate indirect and induced impact from raw direct spending data. This data came from sources such as the RNC Host Committee, the RNC, Milwaukee city government, Visit Milwaukee, select businesses, and lodging data from hotels and short-term rentals like Airbnbs.
In total, the report claims all of this spending added up to $321 million in economic impact on the local economy.
What is missing?
Pepitone says the report does not include resident economic activity during the RNC, or typical tourist activity that did not happen because of the RNC.
“Our impact study represents what you might consider the ‘gross’ economic impacts during the RNC,” Pepitone says. “So the analysis doesn’t include displacement or losses in spending by visitors that would have come to Milwaukee but for the RNC.”
However, Pepitone says in his research of tourist spending, tourists who did not come to Milwaukee during the RNC may still reschedule their visit for another time. So even if RNC visitors displaced typical July tourists, they may still come to Milwaukee eventually.
“Are they going to cancel their trip to Milwaukee altogether, or reschedule it for later that summer or earlier that summer or a different time throughout the year,” Pepitone says. “If they’re rescheduling it to a different time throughout the year that’s not really lost business, that’s just business that’s being reshuffled.”
Matheson says it is much harder to measure what was spent versus what did not occur.
“You can survey all of the visitors ... you can ask them to fill out expenditure surveys, and all of that gets measured reasonably well, but the problem is you can’t measure what the person who isn’t there would’ve done,” Matheson says.
WUWM previously reported on anecdotes of businesses in downtown Milwaukee, some of whom were surprised by a lack of business. For these businesses, the loss of their normal customer base outweighed businesses from RNC visitors.
Matheson says it is typical for political convention impact reports to miss this aspect of economic activity.
“A lot of these reports are pretty good at the adding and multiplying, they’re just very poor at the subtracting,” Matheson says.
Hotels likely did very well
Matheson says based on research from prior conventions, there is usually a consistent economic winner.
“These events are big for hoteliers ... but everything else is pretty much flat,” he says. “We usually don’t see a lot of increases in things like food spending and retail sales, or amusement parks or museums. But we always see a big spike in hotels.”
Zooming out from the precise calculation of RNC’s economic impact, there’s a third perspective concerned with how the event compares to the size of the Milwaukee-area economy.
Dr. Michael Farrell, assistant professor of finance at UW-Milwaukee, says that the economic impact of political conventions — regardless of its party affiliation — can seem bigger than they really are when compared to general economic activity.
“This is a case where it will look small compared to something very large,” Farrell says. “Compared to the whole economy over the whole year, this is going to be less than a fraction of a percentage point.”
But certain industries may see this as a bigger deal than others.
“I would say that it was a significant event for the hospitality industry, it represents about 7% of the local economic impact for their sector,” Farrell says. “Outside of this if we look at the greater Milwaukee area, it’s a relatively small number. Back of the envelope estimate is about one day’s worth of GDP, that could be a big number or a small number depending on your perspective.”
Visit Milwaukee and Milwaukee Mayor Cavalier Johnson did not respond to requests for comment.
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