Impact of 2012 Olympics on Hospitality

Proposed Working Title

2012 Olympics and its impact on the hospitality industry of London.

Research Background / Context

On 6th July’ 2005 London was selected as the host city for the 2012 summer Olympic and Paralympics Games. The games is often labelled as the “greatest show on earth” which involves thousands of sports persons both men and women from around the globe aiming to reach the ultimate in sporting achievement. The Olympic Games will take place entirely in London, but the bid team had stressed throughout their campaign that the games would benefit the whole of Britain.

The proposed research is on the impact of the hosting of the 2012 Olympics in London and its impact specifically on the hospitality industry. Other studies have been done on the impact of the Olympics viz. Olympics Games Impact Study (OIGS) which is a study by Price Water House Coopers in December 2005. It was commissioned by DCMS and the London Development Agency to assess the likely benefits of hosting the Olympics and Paralympics in 2012 in social and economic terms.

This year i.e. 2008, Olympics will be hosted by China in Beijing and it is assumed that industry and people in general will benefit immensely in terms of more employment opportunities and the effects of the same will last longer. It had also given a significant boost in construction activity. With hosting of the Olympic Games in Beijing it is foreseen that the tourist arrivals in China will increase considerably well beyond 2009.

According to a survey carried out by Pacific Asia Travel Association (PATA) in association with Visa International called the Asia Travel Intentions Survey 2007 in which 9 out 10 respondents in the survey planning to attend the Olympic games intended to visit other part of China.

When we compare the impact of the earlier Olympics on the host cities it has been noted that their impact on inbound-tourism growth can range from a moderate blip on the visitor вЂ"arrival charts to an unequivocal inflection point which triggers significant long-term growth. Athens 2004 would have benefited from its investment in urban regeneration and transport infrastructure. Before the Games Sydney 2000 was a great city to visit and now is better again after its Olympic experience. Atlanta 1996 was located within 2 hours flying time from major US cities. It was a major domestic convention hub before the Games with comparatively few international visitors. But as inbound statistics reflect, Atlanta is still a major domestic convention hub with no hard evidence of an Olympics afterglow in the inbound market.

Barcelona 1992 achieved incredible tourism-image transformation but the hotel market in the post-Olympic era was badly over-supplied for several years. Whereas Seoul 1988 opened its inbound tourism industry. The city added several hotels and infrastructure investment which dramatically improved the tourism appeal and till now Seoul remains a strong hotel market. As seen here Barcelona and Seoul were the two most successful cities in creating additional inbound traffic. But the point to note was that both these cities had low-profile tourism at the time of hosting the games and so they had much to gain from the hosting of the games.

When we refer to the term Hospitality we normally refer to the relationship between a guest and a host. Hospitality in industry parlance would mainly refer to jobs for hotels, restaurants, casinos, catering, resorts, clubs and any other service position which deals with tourists. Hospitality can also be the act of generously providing care and kindness to anyone in need.

The hospitality and tourism industry is the largest and fastest growing industry in the world. The World Travel and Tourism council estimates that Travel and Tourism as a global economy are directly and indirectly responsible for 11% of GDP, 200 million jobs, 8% of total employment and 5.5 million new jobs per year until 2010. (Walker)

The main characteristics of hospitality business being that it is open 365 days a year and 24hours a day. Walker also talks about the Multiplier effect in the economy due to tourists. He says that tourists produce secondary impacts beyond their original expenditure. When a tourist spends money to travel to stay in a hotel or to eat in a restaurant that money is recycled by those business to purchase more goods thereby generating further use of the money.

According to Manson, Hospitality industry is diverse and falls in to two sectors viz. Commercial and Welfare, the distinguishing factor being the relationship with the customer. In the Commercial Sector, customer exercises freedom of choice in deciding which hotel, cafÐ"©, restaurant, bar or club to go to. In the Welfare sector customer is usually part of a captive audience and element of choice is removed in case of NHS Trust Hospital, prison, nursing home, school or the armed forces. The Commercial sector is profit driven, Welfare sector is characterised by cost recovery principles.

According to Mason, The UK hospitality industry is a diverse mix of large medium, small and micro sized enterprise scattered across the country. It is estimated that 96% of the hospitality industry is made of micro (employing upto 9 people) and small (employing upto 99 people) business. These account for 75% of all employees in an industry which like the allied areas of leisure and tourism is dominated by the service sector.

The UK hospitality industry has experienced continued annual growth in employment opportunities and the billions of pounds spent on tourism takes no account of supporting industries who benefit e.g. Kitchen equipment manufacturers, suppliers of furniture, food, drink, crockery etc. (Mason)

Rationale for the Chosen Topic

The reason for choosing the proposed topic was due to fact that the hospitality industry being in the service sector is of interest to me. The hotel industry has always fascinated me and would like to have more insight into the same, possibly for a career change or have a start up of my own.

During the past month and a half since my arrival in the UK, I have noticed that that the Hospitality sector especially restaurants and hotels have a thriving business and was interested how a mega event like the Olympics will have an effect on the Hospitality Industry.

In order to find the impact of the hosting of the 2012 Olympics on the hospitality industry esp. Hotels, restaurants, bars etc it will be advantageous if an assessment can be carried out. Also the requirement