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lonDon 2012 - HeRoIsM oR HUBRIs

Image: London 2012

LONDON 2012

HEROISM OR HUBRIS?

Since the modern Olympic Games were founded in 1896, many cities have discovered that the honour of hosting them can bring mixed blessings. Nevertheless, London put in a strong bid for the 2012 summer Olympics.

It was a close-run race, with London beating Paris by only 54 votes to 50. The promise of regeneration for one of the most impoverished parts of east London, and the involvement of former Olympic athlete Lord Sebastian Coe, swung the jury in London’s favour. Although the budget has more than quadrupled since the initial bid, the London Organising Committ ee of the Olympic and Paralympic Games (LOCOG), is justifi ably proud of their smooth implementation of the London games. The public cost of the games is £9bn, ten percent of which has come directly from Londoners. A further £1bn has come from sponsors. But has it been money well spent?

Visit London… Please?

While received wisdom says that the Olympics are great news for tourism, the latest market fi gures show that 2012 will be litt le bett er than 2011. David Edwards, head of research and forecasting at VisitBritain, estimates that there will be around 31 million visitors to Britain in 2012, and that overall visitor spending will be around £18 billion – both fi gures that are unchanged from 2011. Mr Edwards blamed a worldwide lack of consumer confi dence for the static numbers. "Without the Games, it would be a much more challenging year," he said.

Londoners who had hoped to make a quick profi t from the games by renting out their property have been disappointed. Liam Bailey, Head of Residential Research at Knight Frank estate agents, told World Property Channel that rental values in London were continuing to fall despite the Olympic summer. "Reports that prime rental accommodation in London could be in short supply due to this summer's Olympic Games have clearly not yet been borne out. While this could be because the high demand for short lets simply wasn't there, it could be argued that the demand was in eff ect removed by LOCOG [which released] a further 600,000 hotel room nights which were previously set aside for offi cials and the media,” he said. Homestay and short term rental companies are still trying to move their stock of properties for the period of the Games. Accommodation has been heavily discounted. For example, a garden fl at in Chelsea that sleeps four is available for less than £170 per night – far from the £5,000-a-week rents that some Londoners were expecting to make. Although VisitBritain is hopeful that the Olympics will be a “summer-long advert for London”, the experience of previous Olympic hosts suggests that tourism often slumps after an Olympic Games. Take the example of Sydney, where tourism fell sharply after the 2000 summer Olympics and didn’t begin to reach previous levels until 2009. While the Olympics may be propping up the London tourism industry in a year of shaky consumer confi dence, there is litt le guarantee that there will be any lasting positive impact. In a 2007 study of major sporting events, economists Harry Solberg of Sør-Trøndelag University College and Holger Preuss of Johannes Gutenberg University found that: “A growth in the number of tourists [for a sporting event] does not indicate whether growth was caused by a positive shift in demand, supply, or both. Indeed, a positive shift in supply with no corresponding shift in demand can make sport events unprofi table for the host destination, particularly the tourism industry.” With hotel occupancy rates at just 85 percent this summer and few signs of a sustainable increase in tourism to London, new entrants to the accommodation market are likely to be disappointed with their long-term prospects.

Is your Journey Really Necessary?

While the Olympics won’t bring unprecedented numbers of tourists to London, it will signifi cantly increase the strain on the transport infrastructure as athletes, sponsors and spectators travel between venues. For months, Transport for London (TfL) has been encouraging commuters and residents to stay at home during the Games. The Canary Wharf area of London - home to the UK headquarters of some of the largest fi nancial institutions in the world including HSBC, Citigroup and Morgan Stanley - is likely to be severely aff ected by the Games. TfL forecasts that Canary Wharf station will be a major “pinch point” during the games as it lies between the main Olympic venue in Stratford and the equestrian and gymnastics venues in Greenwich. Several fi rms are encouraging their staff to work remotely if possible, with HSBC predicting that 30 % of their 8,500 employees may choose to work at home. But TfL needs at least 30 % of the 100,000 commuters that use the station every day to stay at home if the system is to keep moving. Local demand for bus, car and taxi journeys must also fall by 30 % during the Olympics to prevent gridlock. Road traffi c in London will increase sharply from the beginning of July as 80,000 athletes, sponsors, IOC offi cials and media organisations descend on the city. To ensure that offi cials, athletes and sponsors can get around the capital, TfL has drawn up an Olympic

lonDon 2012 - HeRoIsM oR HUBRIs

Route Network (ORN). Costing £70m to implement, the ORN closes major roads to all non-Olympic traffi c between 6am and midnight throughout the Games. Two thousand people are involved in marking the changes to the road network, and a team of enforcement personnel will be responsible for keeping the network clear during the games. “Our strong advice is to avoid driving in central London, around the ORN, and around venues,” said Garrett Emmerson, TfL’s head of surface transport.

The Impact on Business

For the sponsors of the Olympics, the benefi ts are already apparent as they capitalise on their exclusive rights to publicly promote their involvement with the Games.

Atkins, the engineering consultancy that helped to design the London games, is using its status as a “London Olympics Offi cial Supplier or Provider” to win business from Asia and the Middle East. It has just won a contract to advise the Qatari Government on its plans for the 2022 World Cup. Atkins chief executive, Uwe Kruger, told the Financial Times, “We delivered the Olympics under budget and ahead of time; we are seeking to utilise the experience from that terrifi c opportunity in Asia and elsewhere in the world.” The company plans to increase the value its overseas operations from 55 to 75% of its total sales revenue in the next three years on the back of its Olympic involvement. Procter and Gamble (P&G) are using their sponsorship to build international recognition for its corporate brand, as well as the many individual personal care brands that it holds.

Nathan Homer, P&G's UK and Ireland Olympic Projects Director, told the BBC that the main driver behind their sponsorship deal, “is to build the business. Anyone who does a partnership deal and says it is not to build their business, then you wonder what they are doing it for." P&G expect to make $500m in additional sales worldwide revenue this year on the back of its Olympic involvement. its reputation for corporate and social responsibility by sponsoring the Mayor of London's “Capital Clean Up” campaign and running a sports coaching programme under the Gillett e brand. Payment partner Visa is pursuing an aggressive policy of exclusivity. Visa came under fi re for insisting that all online purchases of Games tickets be made using Visa cards. It has also removed 27 ATMs from the Olympics venues and replaced them with just eight Visa-only cash machines. Visa insists that the exclusivity clauses in its sponsorship agreement allow them to ban the use of other cards in the Olympic areas. The stringent rules drawn up by the IOC to protect sponsors are drawing criticism from the many other businesses that are involved with the games. All non-sponsor businesses that won contracts to work on the 2012 Olympics were compelled to sign a “no marketing rights” protocol which prevents them from even mentioning their links to the events in advertising and press releases. Tom Foulkes, head of marketing for the London-based engineering and construction group, Arup, said they were prevented from disclosing the projects that they had delivered at the Olympic Park because of the protocol. Adam Marshall, director of policy at the British Chambers of Commerce, said that that suppliers have been unable to create games-related job titles and are restricted to mentioning Olympic bodies only in materials that list at least nine other clients. He went on to point out that some of the protocol’s restrictions would remain in place even after the games. Pierre Williams, spokesman for the Federation of Small Businesses, said, “In its almost paranoid att empts to protect the Olympic brand and its corporate sponsors, it has largely destroyed the goodwill that was there for the taking from (non-sponsor) businesses supplying the games.” While sponsors are happy with their involvement in the games, there are few signs that the “Games Dividend” is trickling down to local businesses and communities. East London has one of the highest rates of deprivation not only in London but in the country as a whole. While the Games have created some jobs for Londoners, there is much local bitt erness that the jobs created have not been as numerous, nor as high quality, as many had hoped. Meg Hiller, the Member of Parliament for east-London borough Hackney, said that the Games hadn’t delivered sustainable employment and skills. “It’s not just one-off litt le jobs that people want and need, it’s the long term jobs that are important,” she said. The organiser of the Games, LOCOG announced that in total some 12,000 temporary jobs in security, retail, catering and cleaning had been created, but many more roles are being fi lled by 70,000 unpaid volunteers. The positions advertised by security fi rm G4S were oversubscribed ten times within days of the adverts being posted. Meanwhile the latest unemployment fi gures show that over 426,000 Londoners are unemployed and the host borough, Newham, has a 15 % unemployment rate – the second highest in Britain.

The Olympic Legacy

“The best Olympics regenerate neglected districts, inspire children to take up sport and leave a city furnished with world-class venues and rolling in Olympic dollars – Barcelona is a good example of this. The worst are poisoned chalices that leave a nation in debt and a city overrun by white elephants – look no further than Athens,” wrote Simon Usborne in the Independent as the Beijing Olympics drew to a close. The districts where the Olympics are being hosted are among some of the most neglected districts in Britain, with childhood poverty and unemployment endemic throughout east London. But so far the number of jobs created has been small, the impact on tourism has been disappointing, and local and national businesses have been hampered in their eff orts to build international trade based on their Olympic involvement. The sporting legacy has also been called into question: sports facilities across London are closing as councils bear the costs of the Olympics, and the organisers have insisted

that the walking and cycling routes that link the centre of the city to the Olympic districts must be closed for the duration of the games. Local resident Gerhard Weiss told the London Cycling Campaign, "It makes absolutely no sense to invest in a walking and cycling route to the Olympic Park and then ban walkers and cyclists at the time when it’s likely to be most popular." Whilst the Games themselves have not delivered demonstrable benefi ts to the people and businesses of east London, perhaps the infrastructure, quality housing, and skills and experience that will remain after the games will deliver a lasting improvement to the prospects of this deprived corner of London. That will require a commitment on the part of the organisers, to tend to the legacy of the games in the months and years to come. Poor legacy planning can lead to a disastrous aftermath to the games, as the experience of recent hosts has shown. “While many factors are behind the crippling debt crisis, the 2004 Summer Olympics in Athens has drawn particular att ention,” Greek journalist Derek Gatopoulos told the Huffi ngton Post in June. “If not the sole reason for this nation's fi nancial mess, some point to the games as at least an illustration of what's gone wrong in Greece.” Sydney also struggled for ten years to turn its Olympic park into a thriving suburb. Barry O'Farrell, the Premier of New South Wales and former Minister for Western Sydney , said, "Because of a failure to capitalise on the legacy you don't have to go very far to get an argument from people that…whilst it was a great two weeks in Sydney's life it hasn't actually delivered much extra to the city." Michael Knight, who chaired the Sydney Organising Committ ee, warns: "The team I led, we were so obsessed with gett ing the Games right we didn't have a lot of time to think about the afterwards. If we had our time over again we'd probably have a second team on that from the beginning." While they have successfully delivered the summer Games, when it comes to creating a positive legacy for the people and businesses of east London the organising committ ee still has plenty to do. Image: London 2012