Economic Trends

UK businesses fear post-Olympic downturn

8 May, 2012 By: Jena Tesse Fox

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Reuters is reporting that hotel company Millennium & Copthorne is concerned that a "post-Olympic hangover" could impact growth in London.

Wong Hong Ren, M&C's CEO, said that the company was seeing strong demand for its London hotels during the Olympic period, but was worried that the impact of Europe's economic woes would deter cash-strapped Europeans from visiting the UK capital once the games and festivities are over.

The company posted a 31.5 percent increase in first-quarter pretax profit, and is looking to diversify its customer base as visitor numbers from Greece, Spain, Ireland and Italy show no signs of improvement.

M&C said RevPAR rose by 5.6 percent on a like-for-like basis, driven higher mainly by pricier rooms, with a 7 percent increase in London. However, the "Rest of Europe" region underperformed, with RevPAR declining 5.4 percent as nearly half of all euro zone economies struggle to get out of recession.

Similarly, a finance expert in Stoke-on-Trent has warned the Olympics will not provide much in the way of an economic boost, local website ThisIsStaffordshire is reporting.

Richard Platt, divisional director at investment management firm Brewin Dolphin's Festival Park office, said the firm believed this summer's event would lead to only a "short term boost, at best," and that while London may see long-term benefits of investment in infrastructure, he does not expect the overall economy to improve.

"A study by the European Tour Operators Association found that hosting the Olympics did not have a positive effect on tourism in either Greece or Sydney," he told the site, claiming that those Games had the opposite effect. "The main beneficiaries will be the hotel industry (due to short term increased prices), London pubs and southern train and bus operators."

While the long-term effects of the Olympics cannot be predicted with any real certainty, it seems premature to start worrying about post-Games fallout before the first event takes place. While London has famously stepped up hotel development in recent years, and has a wide range of options, events will also be held outside of the city, and those looking to avoid the crowds will almost certainly take a holiday elsewhere, leading to increased numbers throughout the country. We'll have to wait until the summer to see if Edinburgh and Cardiff see a windfall from the Olympics, but it seems likely that many businesses will come out ahead.

Topic : London, Olympics, Hotels
External Source : This Is Staffordshire, Reuters