The Impact of the Olympics on Tourism

Tourism

Boston 2024 has told us that hosting the Olympics would “put Boston on the map.” However, Boston is already on the map. Boston ranks seventh in the US in terms of international overnight visitors and international overnight visitor spending. During the summer months, Boston and Cambridge hotels are at near full capacity.

Tourism plays an important role in Boston’s economy. With the rich history evinced by our 58 national historic landmarks and enviable museums, it’s easy to see why. However, when a city hosts the Olympics, tourists turn the other way in order to avoid the congestion, and the sports tourists who come only for the Olympics aren’t coming to explore the cultural offerings of the city.

Olympic boosters often argue that hosting the Olympics increases tourism. Boston 2024 representatives regularly claim that the London 2012 Games—and not, say, a weak pound—were responsible for the increase in tourism in 2013. However, research doesn’t bear out such predictions of Olympic-sized gains.

London 2012

Jamie Elliott, “Olympic bargains galore as London's theatres and hotels slash rates,” The Guardian, July 7, 2012, http://www.theguardian.com/uk/2012/jul/07/olympics-london-hotels-slash-prices.

“Hotel bookings in the capital are down 35% in July and 30% in August, according to the latest published figures from hotel room wholesaler JacTravel, which books half a million London bed nights a year.”

“Rooms in central hotels can be obtained for as much as 30% below the usual rates and tickets for some West End hits are being offered at half price.”

“A survey by the European Tour Operators' Association last November showed that advance bookings for the Olympics period were down 90% compared with last year.”

“The cost of seeing a London show in July and August has also fallen, as theatre seat bookings have slumped by 20% or more, according to Chris Ryan, director of marketing for Encore Tickets, which sells two million West End theatre tickets a year.”

Peter Woodman, “London Tourism Struggles During Olympics,” The Independent, July 31, 2012, http://www.independent.co.uk/news/uk/home-news/london-tourism-struggles-during-olympics-7994159.html.

“London's tourism industry is struggling to compete with the impact of the Olympic Games, which has left the host city a ‘ghost town,’ businesses said today.”

Mark Rubinstein, president of the Society of London Theatre: “Normally tourists will visit central London but they are mostly here to see the Games.

Sri Balay, online sales manager at Leicester Square Box Office: “Theatre in general is pretty quiet. We have a lot of visitors going past but they are going to Olympic events or spending a lot on hotels.”

Steve McNamara, general secretary of the Licensed Taxi Drivers Association: “Anecdotally our business is down by about 20-40 per cent depending on the time of day.”

A spokeswoman for the British Museum: “Anecdotally at the moment, it is looking like we are about 25-30 per cent down on the same time last year.”

Christopher Woodward, director of the Garden Museum: “The positive has been that visitors have been very happy but the negative has been that we have been hit by the loss of wedding receptions which is a major source of income to the museum.”

Shawn Pogatchink, “Trade Body Says UK Tourism Slumped During Olympics,” Associated Press, August 13, 2012, http://bigstory.ap.org/article/trade-body-says-uk-tourism-slumped-during-olympics.

“A survey of more than 250 tour operators, hoteliers and visitor attractions found that tourist traffic fell all over Britain, not just London, said UKinbound, a leading trade association representing British tour operators and other businesses dependent on tourists.”

“The group's survey said that of its members, 88 percent reported some losses during the games compared to the same period last year. The businesses reported that visitor numbers were down by 10 to 30 percent compared to last year, Rance said.”

Miles Quest, spokesman for the British Hospitality Association: "The people who came to the games really didn't do very much sightseeing, didn't do very much shopping, didn't do very much eating out…London's hotels have hit about 80 percent occupancy, which is not higher than typical August rates.”

Rebecca Smithers, “UK Tourist Attractions Suffer Plunge in Visitor Numbers,” The Guardian, October 8, 2012, http://www.theguardian.com/business/2012/oct/09/uk-tourist-attractions-plunge-visitor.

“Some major London attractions hosted 60% fewer visitors during the two weeks of the Games, the Association of Leading Visitor Attractions (Alva) said, while many further afield suffered one of the worst trading periods since foot and mouth disease gripped the British countryside in 2001.”

“Overall, those [attractions] in London saw an average decrease of 15% in visitor numbers in May-August compared with the same period last year.”

“In the capital, gardens and outdoor attractions suffered the largest single decrease of 21.3% in visitor numbers, as heavy rainfall made visitors turn their backs on normally popular destinations such as London Zoo (run by the Zoological Society of London) and the Royal Botanic Gardens.”

“But heritage sites and cathedrals – including the Tower of London, St Paul's Cathedral and the Houses of Parliament – were also casualties, with visitors numbers slumping by 20.3% and retail and catering spending by 20.2% and 8.6%. Visitor numbers to museums and galleries in London fell by 13.1%.”

Vancouver 2010

Mark Shaffer, “Looking Back on the Vancouver-Whistler Winter Games,” Policy Note, February 6, 2014, http://www.policynote.ca/looking-back-on-the-vancouver-whistler-winter-games/.

“As for tourism, the incremental effect of the Games was minimal, contributing very little to GDP or employment. There were many reasons for this including the financial crisis of 2008, a strong Canadian dollar and what some suggest was a failed marketing campaign. Regardless, as compared to the pre-Games forecast of 40,000 to 56, 000 person years of tourism-related employment due to the Games (with the government of course touting the high end of that range), PWC estimated the total tourist industry impact at less than 10,000 person years of employment.”

“No Post-Olympics Tourist Bump in Sight for B.C.,” The Globe and Mail, October 25, 2011, http://www.theglobeandmail.com/news/british-columbia/no-post-olympics-tourist-bump-in-sight-for-bc/article559092/.

“For the first eight months of 2011, the number of overnight international visitors to the province was actually down by more than 200,000, compared with a similar period for 2009, the year before the Olympics.”

Beijing 2008

Anita Chang, “Despite Olympics, China Sees Drop in Visitors in 2008,” USA Today, January 8, 2009, http://usatoday30.usatoday.com/travel/destinations/2009-01-08-china-visitors_N.htm.

“The number of travelers to China dropped by 2 million in 2008 in what was supposed to be a banner year for tourism but became one dampened by Olympics-related security measures and the global economic crunch.”

Sampling of Scholarly Work

Heather Mitchell and Mark Fergusson Stewart, "What Should You Pay to Host a Party? An Economic Analysis of Hosting Sports Mega-Events," Applied Economics 47, no. 15 (January 2015): 1550-1561, http://www.tandfonline.com/doi/full/10.1080/00036846.2014.1000522#abstract.

Abstract: Governments all over the world put huge amounts of money into bidding for, and then hosting, sports events like Football’s World Cup or the Olympic Games. They also give money to professional sports teams and other mega-events to encourage them to locate within a particular constituency. This article examines the statistical relationship between tourism and three Football World Cups and five Olympic Games, finding very little positive effect. Given this conclusion, the article looks at why governments continue to bid for these competitions. It presents evidence that shows that these sports contests make people happy, and argues that politicians capitalize on this feel-good factor; harnessing the hubris associated with these events for political gain. The article then contends that the best way to reduce the politics associated with bidding for mega-events is to allocate them via an auction, rather than the wasteful rent-seeking methods that are currently used.

Kathleen Gruben, Steven Moss, and Janet Moss, “Do the Olympics Create Sustained Increases in International Tourism?” Journal of International Business Research 11, no. 1 (January 2012), https://www.questia.com/library/journal/1P3-2750829401/do-the-olympics-create-sustained-increases-in-international.

Abstract: The purpose of this study is to examine international tourism as a legacy of the hosting the Olympics. Sustained tourism after the Olympics is hypothesized to be a result of the massive media coverage of the event and the host city. The media exposure is thought to create a positive image of the host city and generate international tourism. The largest media market for the Olympics is the US. In this study air passenger traffic from the US to eight Olympic host cities is analyzed pre and post event. Time series models are used to forecast the trend in US air passengers to each city. Tests for increases in passenger volume during and post Olympics are performed. The results show no sustained increase in international tourism from the US to the host city in the post Olympic period.

Mike Weed, Dikaia Chatziefstathiou, Suzanne Dowse, Louise Mansfield, and Ian Wellard, Understanding Olympic Tourism Flows (Canterbury, UK: Canterbury Christ Church University, 2012), https://radar.brookes.ac.uk/radar/items/948e3936-292c-629d-05a5-33ded81616b5/1/.

“The Olympic and Paralympic Games undoubtedly have an impact on tourism, and the positive impacts in the host city can be significant. However, SPEAR’s research into the measurement of Olympic tourism flows shows that claims about Olympic tourism are usually pre-Games predictions rather than post –Games evaluations. It also shows that negative effects, such as people staying away from the host city because they think the Games will make it too busy and too expensive, or the possibility that the host city will draw tourism flows away from the rest of the host country, are rarely accounted for. Finally, Olympic tourism flows that have no additional impact, such as people deciding to travel to the host city during the Games as a replacement for a trip at another time, are often counted as positive impacts.”

Shina Li, Adam Blake, and Chris Cooper, “Modelling the Economic Impact on International Tourism on the Chinese Economy: A CGE Analysis of the 2008 Olympics,” Tourism Economics 17, no. 2 (April 2011): 279-303, http://www.ingentaconnect.com/content/ip/tec/2011/00000017/00000002/art00003.

Abstract: International inbound tourism to China has grown phenomenally since 1980 and the hosting of the Olympics in 2008 was an important milestone. This paper takes the first step in applying computable general equilibrium (CGE) modelling to forecasting the economic contribution of tourism generated by the Beijing Olympics. CGE modelling has been widely applied to different tourism issues in many countries. In China, it has been used in fields such as taxation and international trade. However, economic impact studies on China's tourism using CGE modelling have not been found. The paper includes two types of estimations: ex ante and ex post. The ex ante estimation was conducted before the Beijing Olympics and thus predicted the impact of international tourism based on historical data, such as previous literature and historical statistics. The ex post estimation was conducted several months after the Beijing Olympics and the estimation was based on up-to-date statistics published by the China National Tourism Administration. The economic impact generated from the two types of estimations is compared. It was found that, while the economic impact of international tourism was predicted to be positive in the ex ante estimation, this impact was analysed as negative in the ex post estimation.