Keywords : olympic game, olympics, summer olympic
Executive Summary To win the right to host an Olympic Games, a city must jump through numerous hoops held by the International Olympic Committee (IOC). It is not an easy process, with several stages and several rounds of voting. The bid for London 2012 began in 2003, the date of the deadline for the application of host cities, and did not end until 2 years later in 2005, when the IOC awarded London the Games, some 7 years before the...
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Executive Summary
To win the right to host an Olympic Games, a city must jump through numerous hoops held by the International Olympic Committee (IOC). It is not an easy process, with several stages and several rounds of voting. The bid for London 2012 began in 2003, the date of the deadline for the application of host cities, and did not end until 2 years later in 2005, when the IOC awarded London the Games, some 7 years before the event even began.
It is perceived as a great honour to be chosen to host the Games, as it is a statement from the IOC that it approves of a city’s political and social support, general infrastructure, sports venues, potential Olympic Village, environment, accommodation, transport system, security, past experience, finance and legacy.
With an event of the magnitude of the Olympic Games, is undeniable that there is the potential for significant economic impact on the host city or even, if the country is small, the entire host country. The event may last only for a few weeks, but the preparations for the Games begin almost as soon as the host city is announced.
The economic impact of the Olympic Games on London is the focus of this Key Note Market Assessment; this will be analysed using figures for tourism and hotels from the three previous Olympics, as well as taking into account other significant issues such as transport and security. This report mainly focuses on the economic impact on London during the Games period, with some mentions of prospects for the economy after the Games is over. However, it must be noted that the pre-Games activity, which has been in motion since 2005, has also had an economic effect, such as through investment expenditure, preparatory costs and the potential loss of benefits from projects that may have occurred in London, but were displaced in favour of the Games.
Whether the economic impact of the Games will be positive or negative remains to be seen at the time of writing (February 2012), but the impact of past Games can be noted and used to draw some conclusions. In the years of the Games in Sydney (2000) and Athens (2004), for example, the direct contribution of travel and tourism to gross domestic product (GDP) in Australia and Greece rose by 18.3% and 12%, respectively. 2008 saw the contribution of travel and tourism in the People’s Republic of China (PRC) after the Beijing Games increase by only 6.4%, however. The financial markets were already experiencing difficulties in 2008, the results of which were the full-blown global recession and the UK’s current economic position.
It would seem foolhardy to assume that generally depressed economic activity across the world, with a debt and currency crisis on the UK’s doorstep in the Eurozone, is not going to affect spending on non-essentials such as travel and tourism. Therefore, despite the myriad of events occurring in London in 2012, including celebrations of the bicentenary of Charles Dickens’ birth, the Queen’s Diamond Jubilee and the nationwide Cultural Olympiad, figures suggest modest growth of 7% in the direct contribution of travel and tourism expenditure in the UK. Although it is slightly larger than Beijing’s increase, it remains smaller than that recorded in Greece and much smaller than that seen in Australia.
Hotels are one of the key areas expected to benefit from hosting the Games. However, hotels in the Sydney tourism region experienced a 6.3% fall in the number of guest arrivals in 2000, while hotels in Athens experienced a 5.3% decline in arrivals in 2004. Meanwhile, Beijing suffered a 39% fall in occupancy figures in August 2008, the Games month, compared with August 2007.
The Olympics is set to display London and the UK on the world stage in the summer of 2012, but whether any immediate or future benefits occur as a result of the Games does not appear certain yet. There have been past success stories for previous Games, with the Barcelona 1992 Summer Olympics being touted as a prime example of economic success as a direct result of it hosting the Games. However, the 1976 Summer Games in Montreal did not prove as economically viable, with Olympic debts the city ran up going unpaid for almost 3 decades. A great deal depends on the reception the Games receive in the UK by the population; although traditionally increases in outbound travel are seen in host countries during Olympic years, the people of Britain may decide to welcome the Games and celebrate its arrival in the UK, thus spending money which would boost the economy.
Much also depends on the perception overseas visitors and foreign television viewers receive of London and the UK from the Games; a good impression could lead to the travel and tourism market for the UK booming, while any lingering negative impression could potentially remove any legacy benefits in terms of travel and tourism from hosting the Games.
It is widely accepted that London — thus far the only city to be chosen to host the Olympic Games three times — is unlikely to see the Olympics come to the city again in the lifetimes of the majority of the population. The number of developing nations capable of hosting an Olympics grows yearly and more of these countries are putting in bids for the Games, expanding the IOC’s pool of potential hosts. While Key Note has done its best to predict the likely economic impact the Games will have, whether the Summer Olympics of 2012 leave the UK on good terms or bad still remains to be seen.
Sport Industry in the United Kingdom
