Tourism gold? Olympics set to lose Britain billions
The organising committee for the London 2012 Games, Locog, says it had over-estimated by a quarter the number of rooms needed by officials, media and sponsors. It has now handed back 120,000 of the total 600,000 nights it had booked. The large-scale reservation of rooms in early preparation for the Games has caused increased prices across the capital and has put many regular tourists off visiting this summer. Hotel prices have broadly tripled in London during the Olympics. There are estimates that up to a million rooms may not be occupied over the Olympics, and ordinary tourists will stay away. The likelihood is that London’s hotels will be less than 80% full. One trade association estimated income could slump by up to £3.5bn during July and August. The slump will spread beyond the capital. Meanwhile Heathrow hopes to have huge numbers of passengers, visiting the games, though numbers may be over-estimated.
Organisers accused of scaring off visitors by creating damaging spike in hotel rates
Unwanted hotel rooms needlessly reserved for dignitaries by Olympic organisers will be a key factor in a tourism slump set to cost Britain billions this summer, top travel industry figures have warned.
The organising committee for the London 2012 Games, Locog, revealed yesterday that it had over-estimated by a quarter the number of rooms needed by officials, media and sponsors. It has now handed back 120,000 of the total 600,000 nights booked for the sporting event.
The large-scale reservation of rooms in early preparation for the Games has caused increased prices across the capital and has put many regular tourists off visiting this summer.
Tour operators warned last night that a sudden flood of vacant rooms would be too late to boost visitor numbers. Analysis for The Independent suggests up to one million beds will now go unsold over the Olympic period, hitting hoteliers and others working in the tourism industry. One trade association estimated income could slump by up to £3.5bn during July and August.
Premium Tours, a leading sightseeing operator based in London, expects business to decline by one-third this year. Neil Wootton, the managing director, said: “Prices have been so high that tourists are moving elsewhere. Overseas wholesalers who traditionally push London have switched to other cities this year. If the Parisian and Italian hoteliers do their job then the tours may never return to London.”
By the end of January his company has normally sold one-fifth of summer capacity; it is currently 60% below that target.
Hotel rates have broadly tripled in London during the Olympics. Six months ago The Independent made a booking for the DoubleTree by Hilton in Holborn, central London, for 1 August 2012. The rate, £450, is four times the price of taking a room last night, and 150 per cent higher than for 1 August last year. Yet evidence from previous Olympiads, together with analysis by The Independent of the likely propensity of ticket-holders to book hotels in London, suggest hoteliers’ expectations are wildly optimistic, exacerbated by Locog’s similar over-optimism.
The likelihood is that London’s hotels will be less than 80% full – representing one million empty beds over the duration of the Games, or 55,000 beds every night. In July and August of a normal year, occupancy is 90% or more.
The European Tour Operators Association believes that the summer tourism slump could cost up to £3.5bn. The executive director, Tom Jenkins, said: “During the Olympic period itself, there is currently almost no demand from regular tourists.”
VisitBritain, the British tourist authority, however, emphatically rejects predictions of decline. The organisation expects inbound tourism to be the same as last year, with 30.7 million overseas visitors. The chief executive, Sandie Dawe, welcomed the release of rooms by Locog and said: “We have a fantastic range of deals in place.”
Official estimates of numbers continue to be optimistic. On 26 July, the day before the Opening Ceremony, Heathrow is anticipating 10% more passengers than the busiest day in its history. But the airport’s assumptions – that every seat on every inbound flight will be occupied, and that departures will be at near-record numbers – have been questioned. (see below)
Foreign visitors turn their backs on the Olympics
Overpriced hotels and threats of disruption deter tourists from what was supposed to be a money-spinning showpiece
Until last year, politicians were jostling to talk up the tourism dividend expected from the 2012 London Games.
Five years ago, the then Olympics minister, Tessa Jowell, said: “The estimate for London is that tourism will receive a £2bn boost.” In 2009, the London Mayor, Boris Johnson, said: “When hundreds of thousands of people come, as they will, to London in 2012, it will inevitably be good for this city and for the tourist economy”.
But now the official tune has changed to vague talk about the perceived long-term benefits. Just as Olympics organisers traditionally underestimate the final cost, hoteliers in Games cities are prone to overestimate the money they will make. And the fact that, for London 2012, Locog overbid by one-quarter has fuelled room-rate inflation.
JacTravel, a leading wholesaler of hotel rooms, reports that enquiries for rooms in London are below normal both for the Games and the “shoulder periods” on either side. The chief operating officer, Terry Williamson, said “Tourists are turning their back on London. We have for some time been fielding questions from overseas trade buyers about pricing and availability during both the Olympic and Paralympic games period. They are not happy about the hike in rates for everything.”
If tourist numbers fall, attraction numbers dwindle. Merlin, the biggest attraction operator in London, is “not particularly positive about the Olympic period”. Glenn Earlam, the managing director whose portfolio includes the London Eye and Madame Tussauds, said “We are expecting less visitors than normal to our attractions.” In a bid to lure spectators after evening events, the Eye will remain open to midnight.
Because most foreign visitors include London in their visits, the slump will spread beyond the capital. Tauck Travel, the oldest tour operator in the US, has cancelled all its British tours for two weeks before and after the Games, blaming the expected disruption in London and inflated room rates.
The company’s president, Jennifer Tombaugh, told The Independent: “There’s always this expectation that, if you build it they will come. This bubble of held inventory grows and grows and grows, with the price going up and up. That bubble will be deflated, if not burst. Hoteliers can be short-term in their thinking – penny-wise, pound- foolish in the longer term.”
Official estimates of numbers continue to be optimistic. On 26 July, the day before the Opening Ceremony, Heathrow is anticipating 10% more passengers than the busiest day in its history. But the airport’s assumptions – that every seat on every inbound flight will be occupied, and that departures will be at near-record numbers – have been questioned.
If the £3.5bn shortfall proves correct, it will cause the Chancellor a problem. Most tourism expenditure is taxed at 20 per cent, which means that expected VAT receipts could fall by £600m.
Neil Wootton of Premium Tours says: “Next year can’t come soon enough. We are all just hoping that a very successful Olympics will help offset the damage that poorly managed hotel pricing has done to inbound tourism in 2012.”
The predictions: what the politicians said
“When hundreds of thousands of people come, it will inevitably be good for this city” – BORIS JOHNSON, 2009
“I want the message to go out loud and clear, from tourism to business, we are determined to maximise the benefits of 2012 for the whole country” DAVID CAMERON, 2012
“The estimate is that tourism will receive a £2bn boost” TESSA JOWELL, EX-OLYMPICS MINISTER, 2007
“A golden opportunity for the tourism industry” HUGH ROBERTSON, OLYMPICS MINISTER, 2011
“A once in an era opportunity for British tourism – the biggest visitor event in UK history” TONY BLAIR, 2005
“The Olympics provide the biggest opportunity for British tourism in a generation” SHAUN WOODWARD, EX-TOURISM MINISTER, 2008
One of the many comments is:
It’s not just London tourism which is being adversely affected by the Olympics, I have friends who own a B&B in Weymouth, where the sailing is taking place, and their bookings are down from where they would normally be over the Olympics period. Their regular customers don’t want to be there when the games are on, and any extra bookings will only be short-term ones ie one or two nights. When they bought the B&B they thougth they’d do well out of the Olympics, but it looks like it will make a difficult time even more difficult.