Olympics Business Boost Failed

The extent of the Olympics business boost has been highly contested throughout 2012. Now, with the Games over, the forecasting is over. Figures reveal that the economic boost of the Olympics on business fell short of expectations for hoteliers.

Initial indications from PKF Hotel Consultancy Services suggest that hoteliers actually experienced a fall in occupancy during July.

The key reason hoteliers failed to fully capitalise on the Olympic business opportunity is that the impact of the Olympic Games actually discouraged visitors.

An Underperforming Industry

Despite a rise in room rate of 17.3% to £177.68 compared with £151.43 in July 2011, London hoteliers saw occupancy fall by 14.9% from 92.1% to 78.4% during the same period. This resulted in a 0.2% year-on-year decline in rooms yield from £139.52 to £139.24.

Outside the capital, a 4.0% increase in room rate from £55.95 to £58.20 was more than offset by a 5.7% drop in occupancy to 75.9%, compared with 80.4% in July 2011. Rooms yield consequently declined by 1.9% to £44.15 from £45.01 a year ago.

“We’re not seeing much evidence of an Olympic-inspired uplift from the data just yet,” said PKF’s partner for Hotel Consultancy Services, Robert Barnard, “but these are still impressive results. Occupancy of between 75 and 80% across the UK as a whole is very respectable.”

“The room rate increases imposed by some operators will undoubtedly have had an impact on occupancy. However, I suspect that the main drag on performance, particularly in the capital, was the anticipation of problems with transport, overcrowding and high prices before the Games opened at the end of the month.”

We now know that many of these concerns turned out to be unfounded, which is something that the sector will be keen to promote. However, many operators remain understandably cautious about the two-and-a-half week ‘shoulder’ period between the end of the Olympics and the start of the Paralympics, so the August results may turn out to be subdued as well.

“We’ve seen the country’s reputation boosted by what have been widely recognised as amongst the best Olympics in recent history,” concluded Barnard, “so I’m confident that the hotel sector will eventually enjoy the benefits of the Games – although probably not until after the last athletes have boarded their planes home.”

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