London Olympics: On par to destroy travel and tourism?

Tour operators in the United Kingdom are waiting with bated breath, as the date gets closer and closer to July 27, 2012, the day when to the 2012 London Olympic Games will hold its opening ceremony.

London Olympics: On par to destroy travel and tourism?

Tour operators in the United Kingdom are waiting with bated breath, as the date gets closer and closer to July 27, 2012, the day when to the 2012 London Olympic Games will hold its opening ceremony. The reason? The forecast for London’s travel and tourism industry for 2012 is gloomy. Simply put, it has been claimed that London will lose up to £3.5 billion as a result of the Games being held in the British capital.

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In 2009, sports tourism was touted at the World Travel Market’s Sports Tourism Conference as a new niche market that commands the attention of the global travel and tourism industry if not for one very simple argument: its potential economic benefits cannot be ignored. At that said conference, I raised the European Tour Operators Association’s opposition to London hosting the 2012 Summer Olympics on the grounds that it will damage London’s travel and tourism industry. ETOA upon researching visitors arrival for the past Olympics in Beijing in 2008, Athens in 2004, Sydney in 2000, Atlanta in 1996, Barcelona in 1992 and Seoul in 1988 found that the Olympic Games “disrupted normal tourism” and that the Olympic Games “did not reveal any conspicuous tourism growth.”

Mark Howell from VisitLondon was asked to comment on ETOA’s opposition at the abovementioned conference in 2009. His remark, however, drew more criticism than praise for failing to address the real tourism problem, which, according to David Tarsh, ETOA’s publicist whose firm represents several organizations in the tourism industry, was about market distortion of hotel room accommodation or simply put, the practice of room blocking. Mr. Howell managed to deliver a strong message, however. That “London is going to be different.”

VisitBritain’s chairman, Christopher Rodrigues, in an eTN interview last year, explained what this message means in terms of a specific plan. According to him, a budget of 100 million pounds was allocated for a marketing plan designed strategically to market Britain effectively within the critical four years of hosting the 2012 London Olympic Games—from 2011 to 2014. “Start before the Olympics” is an important aspect of the plan. He acknowledged that the Prince William and Kate wedding in 2011 did “a lot of good work in showcasing Britain and getting people to want to come.”

In that same interview, Mr. Rodrigues also said: “We are working very hard with the trade to make sure that there is a coordinated effort to get people to recognize firstly that Britain is a small country, but there’s a lot of Britain outside of London, so why not come and see the Games in the same time zone, in the same country – the coverage will be nonstop – but while you’re at it, go see other things, go to the Cotswolds, go to Edinburgh, go to Cardiff, see the Welsh coast, go to the south of England – all of the things that you can do in Britain – and still enjoy the Olympics for part of the trip.”

The VisitBritain chairman, however, agreed with ETOA on the room blocking issue, but offered what he referred to as positive observation. Mr. Rodrigues said: “The Olympics secures a lot of London rooms – a lot of rooms in whatever event city. The trick, and often they then release them late, from an independent traveler’s perspective that’s great, because they get discounted rooms; from a tour operator’s perspective, that’s not great, and we need to see if we can find a middle ground to get some kind of progressive release so that tour operators can handle that during the event. The observation I would make, and one always focuses on the positive, is that I hope this is the year that tour operators go beyond their traditional buyers, which is to focus on London and focus on the rest of the country where the hotels rooms are not pre-booked by the Olympic organizers, and there is plenty of capacity.”

Between 2009 to now, there have been numerous dialogues between UK’s travel and tourism industry and key governmental agencies such as Visit Britain and the London Olympics Organizing Committee (LOCOG). For ETOA, its position the Olympics has remained, if not even more aggressive in voicing out its opposition to the Games. ETOA, however, has remained firm in its projection that London will lose an estimated US$2.4 billion next year because of the Olympics; hence, ETOA’s argument that the Olympics will damage London’s travel and tourism.

In 2009, Tom Jenkins, ETOA’s Chief Executive said: “Every city is unique, and each city handles the Olympics in its own way. But we have yet to have a Games where tourism has not been disrupted.”

ETOA has backed its opposition of the Olympics by research and surveys. At the end of October 2011, ETOA canvassed 38 tour operators who move more than two million people annually to London. They revealed that they were expecting a significant downturn throughout 2012. This looks like being extremely severe in July and August, where operators are currently seeing a 60 percent shortfall in bookings, becoming acute during the period of the Olympic Games where bookings are running at 95 percent below where they would normally be.

Market distortion of hotel room accommodation is a major reason why ETOA has opposed the London 2012 Summer Olympics. “One of the main reasons for the drop is that the hotels believe that they are going to be full. London has priced itself out of the market in July and August,” said John Boulding, president of Insight Vacations, a leading luxury tour operator. ”Insight has won a Queens Award for Export, but we have had no choice but to remove London from our best-selling European ‘Panorama’ tours in July and August. Each one will start and finish on the Continent. They are selling well, but they are selling without the UK.”

To better understand why UK tour operators are against the Olympics is to understand it from their perspective. According to ETOA, the problem for the tourism industry is that even if London does fill with Olympic enthusiasts, they do not behave as normal tourists. “Their presence is determined by their interest in an atypical event. They do not come to shop, to sightsee or to attend the theatre.”

“We anticipate a significant decline in business in July and August 2012 for London Theatres and attractions” said John Wales, managing director of Encore Tickets, one of London’s leading theatre ticket agencies, who sell over 2 million tickets annually “At present I anticipate sales from tourists to be at least 40 percent down on last year, so we are looking urgently at alternative customers to the traditional inbound visitor that has been displaced.”

Mario Bodini, JacTravel CEO, said: “We’ve always known that hosting the Olympics is negative for the regular tourism industry. That’s why we set a strategy years in advance to try to win Olympics-oriented incentive business. Thankfully, this has paid off for us but I know the inbound industry in general is not forecasting a good year for tourism to London.”

Mr. Bodini added: “Displacement is apparent already – we are seeing 2012 hotel bookings in major Continental European cities doing much better than London.” According to him, the biggest problem is the over-ambitious rates hotel are asking and their aggressive terms and conditions, which makes London not viable as a destination for tour operators.”

There are some signs that at last ETOA’s warnings are starting to be heeded, according to ETOA’s publicist, Mr. Tarsh. He cautioned that “a concerted effort by airlines, Eurostar and accommodation providers is urgently needed to rescue London from an Olympic tourism slump.”

As of January 30, 2012, the London Organizing Committee for the Olympic Games and Paralympic Games (LOCOG) has released 20 percent of the hotel reservations it made for the Games. In terms of hotel room nights, this means approximately 120,000 rooms will be vacant during the Games.

ETOA has yet to officially comment on LOCOG’s latest move, but Mr. Tarsh is not impressed. According to him, LOCOG’s move was expected and that “120,000 rooms over 18 nights is 6,700 rooms per night which is not such a big deal in a city with 125,000 rooms to fill.”

He added: “Perhaps news of LOCOG returning rooms will finally wake hoteliers up to realizing that selling out London this summer will not be easy and the bonanza they anticipated will not materialize.”