This paper explores the importance of government policy and the environment in determining locals’ perceived value of and loyalty to festivals. Although past studies have analyzed attendee loyalty, little research has examined the perspectives of local businesses and residents. Locals with unsatisfactory experiences can hinder festivals from being held. This study applied a structural equation model (SEM) approach to investigate the responses of locals to spring music festivals in southern Taiwan. The results indicated that both government policy and the environment affected perceived value, which consequently influenced loyalty. Implications are drawn for government policy support, festival management, and tourism.