Is Coachella Good for the Economy?

2014 Bonnaroo Music Arts Festival / Jason Merritt / Getty Images

Some people definitely think so. “[T]here are signs that the exponential curve of festival growth is a path to an unsustainable scenario, where too many festivals overshoot talent costs and overrun the ability of fans to buy tickets at all,” argued Grayson Haver Currin (who helped found the Hopscotch Festival) in a 2014 article for Wondering Sound.

That’s bad news for cities that hope to play host to the next Coachella or SXSW (the latter generated $218 million for the Austin, Texas, economy in 2013, according to Governing magazine). With tickets for many festivals running into the hundreds of dollars, plus the costs of travel, food, and lodging, even the most die-hard fans usually can’t afford to attend more than a couple of events.

Average nightly hotel rates for the first week of Coachella were $454, and enterprising local residents can make big bucks by renting their homes to out-of-town visitors. But more people trying to cash in by offering attendees a place to crash has actually started to drive down rental rates, which are 16% cheaper this year than last. Still, average nightly rental rates are higher for Coachella weekends than they are at other times.

While the high cost of attending may deter some people, “music festivals can …. be serious components of local economic development and regeneration strategies,” John Connell and Chris Gibson wrote in their book, Music Festivals and Regional Development in Australia. But those benefits aren’t automatic. For some festivals held in rural areas without a strong existing infrastructure to support a major event, most of the economic benefit may flow mostly to concert organizers and outside vendors rather than to the local community. When combined with the costs of hosting a major event, the expected payoff may not materialize.