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South by Southwest is back in person with its annual 'shot in the arm' to Austin's economy

People walk under a sign that says "SXSW" in the Austin Convention Center.
Patricia Lim
As South by Southwest returns in full force, it brings with it a boost to the local economy.

South by Southwest returned in full force today with its first in-person festival in three years. A perennial boost to the economy, the festival brings restaurant diners, hotel guests, rideshare passengers, tech workers with expense accounts and souvenir shoppers.

“South by Southwest is always a big shot in the arm in terms of the amount of commerce that goes on in Austin, particularly in the downtown area," SXSW Chief Programming Officer Hugh Forrest said. "We know that in 2019, the event had a $350 million economic impact on Austin, which is, you know, a sizable percentage of what a Super Bowl does.”

That’s $350 million flowing from visitors through the pockets of sound engineers, waiters and pedicab drivers and eventually to rent, electric bills and groceries.

“For a while, it was our second Christmas," said Cindy Y. Lo, CEO of Red Velvet, an experience-marketing and event-planning business. "We have two busy seasons, fall and spring. But spring is really March." 

Red Velvet creates many of the branded booths and clubs that have become a hallmark of the festival.

“It was always thanks to South by Southwest we had double the revenue, easily, of any given month, and it was just wonderful,” she said.

A mini-economy sprouted around it, with small businesses, independent contractors and gig workers marking the middle of March on the calendar as paydays. Then, for two years, the festival and the work vanished.

South by Southwest laid off roughly a third of its employees. Lo’s company Red Velvet has less than half the employees she had two years ago.

For Amanda Fairman, co-founder of Bluebonnet Custom Graphics, the cancellation meant nearly a total loss.

“That day was when everything got pretty crazy, where I was like, okay, I really don’t know how I’m going to make money for the next couple of months,” Fairman said.

She and her partner print merchandise for bands and businesses. Her biggest clients at the time depended on SXSW and the rodeo for merchandise sales. She says they have since pivoted to some other products to sustain themselves.

The announcement that this year’s South by Southwest was going to be in person was welcome news, but the lead-up had many of Fairman’s clients worried.

“Even though they were making all of these announcements of, you know, ‘OK, this is happening in person,’" she said, "I think there was a lot of hesitation. There were so many false starts.”

But now South by Southwest is here, and client orders are coming nearly nonstop.

A similar situation is happening over at Red Velvet. Lo says many would-be clients got a case of "fear of missing out" as COVID-19 indicators improved and the festival looked like a go.

“Really, the last two weeks — which is crazy — people were asking us, ‘Would you be willing to take on our last-minute event?’" Lo said. "We can't, physically, because we don't have enough people and we're already booked. I reached out to other competitors to ask them if they wanted it, and they said ‘No, we’re booked too.’”

Forrest, with SXSW, says having the festival back is good news for everyone in the city.

“Even more importantly, it reaffirms Austin as this global epicenter of creativity, of innovation, of forward-thinking, progressive ideas, a place where you can make connections,” he said.

This year’s festival may not be as large as it was in its peak in 2019, but it is still bringing some heavy hitters for performances and panels to Austin, from Lizzo to Dolly Parton, Pete Buttigieg and even former All Things Considered host Audie Cornish.

SXSW organizers are expecting a 10% to 20% drop in attendance from three years ago. But that's still a lot of people — and still music to a lot of people’s ears.

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Jimmy is the assistant program director, but still reports on business and sports every now and then. Got a tip? Email him at Follow him on Twitter @maasdinero.
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