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.
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Olympics 2012: The Economic Impact 2012 – Market Assessment
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