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The Olympics Impact on Hotels and Restaurants Report

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Updated: Aug 18th, 2022

Introduction

Many cities and nations across the world fight for an opportunity to host the Olympic Games for economic reasons. In general, nations anticipate that holding the Olympic Games will create an opportunity for increased profits and new jobs for the host city or country (Toohey, 2007). As a result, interested nations are often willing to spend heavily on the preparations involved while preparing for an event such as the Olympics.

Any visitor who spends money on food or accommodation facilities in the host city creates an impact that extends to other areas of the economy. Hotels and restaurant are, for example, expected to hire more staff to cope with the increased number of visitors. Part of the income earned from visitors to the Olympic Games may also be used to buy food for the visitors from farmers, and this creates a stream of income for the farmers.

This notwithstanding, there are several concerns that have been raised concerning the impact of one-time events like the Olympics on the local economy.

This paper discusses the impact of the Olympic Games on hotels and restaurants located within cities hosting the games. For most people, hosting an Olympics event presents a lucrative opportunity for the hospitality sector in the host cities to make quick profits within a short span of time.

Impact of the Olympic Games on Area Hotels and Restaurants

Although one-time events such as the Olympic Games are capable of attracting many visitors to the host country or city, there is the likelihood that this may not translate to huge economic gains for hotel and restaurant owners in the host city as assumed by many (Santo & Mildner, 2010).

Seemingly, the ability of such events to stimulate the local economy is usually hindered by the fact that visitors to the host city end up displacing tourists who would have otherwise visited the city. The tourists may choose to stay away in order to avoid congestion in the host cities that are commonly associated with the Olympics or other similar events.

More often than not, hotels and restaurants in the host cities inflate the prices of their services to a level that most tourists cannot afford. To benefit, restaurants that are located in other cities or in places that are far from the place where the Olympic Games are being held have to lower their prices drastically to attract those fleeing from the host cities. Contrary to popular belief, restaurants made a loss during the London 2012 Olympics (Nicholls, 2012).

The impact was also felt by those who had prepared themselves to offer services to the affected restaurants. Nevertheless, restaurants situated close to the Olympics venues benefited.

In general, hotel occupancy in host nations gets affected for the entire period of the Olympic Games. While the occupancy level of hotels and restaurants in the host cities increases that of other cities in the country experience a major reduction in the number of visitors. The Olympic Games held in Sydney in the year 2000 demonstrate this (Santo & Mildner, 2010).

While the hotels and restaurants in Sydney enjoyed a higher percentage of occupancy, those in other cities reported huge losses. Domestic leisure activities by school going children and their parents during the holiday were also seriously affected by the Olympics.

During the Sydney 2000 Olympic Games, it was also reported that the average spending of tourists on hotel and restaurant services declined (Oxford Economics 2012). A similar occurrence was witnessed in Athens in 2004 as well as in Beijing in 2008.

Security during the Olympics is a very critical consideration. Ordinarily, the host country is required to ensure that the country can cater to the security of an additional number of people. This is further complicated by the fact that some people may enter the country posing as genuine visitors while their intention may be to cause havoc and to create a sense of insecurity.

As a result, governments are compelled to put strict measures in place to protect its nationals as well as those visiting to witness the Olympic Games. Unfortunately, these measures interfere with the normal activities of the hotels and restaurants. Certainly, this drives tourists away, and residents are likely to change their routines and leisure spending patterns if they are unenthusiastic about such events or the visitors who come to the events.

Ghost effect is a term that was used to refer to the absence of people on the streets during the 2012 London Olympics. Taking note of the advice by the Mayor of London, most residents chose to avoid the city (Kühn, 2012). They instead opted to work from their homes during the Olympic Games.

The outcome of the Mayor’s action was the poor business for hotels and restaurants, and owners complained about the loss of business. Although the decision by the Mayor was meant to caution residents against increased traffic jam and a crowded city, it left hotel and restaurant owners wondering what to do with deserted streets and no customers to sell to.

As pointed out by most hotel and restaurant owners, only restaurants located near the Olympics venues befitted. Other restaurants in the city recorded a very low number of customers, and this led to the loss of income.

The organizers of the event were blamed for creating fear among the residents that caused them to stay away. For some hotel and restaurant owners, however, this was a good opportunity for residents to come out of their homes and enjoy the quietness of the city created by the excitement about the Olympic Games.

Although hotels and restaurants are expected to recruit more staff to meet the increased demand of services created by the Olympics as explained earlier, the jobs created are usually temporary and only last for the duration of the Olympic Games (Ponomarenko & Plekhanov, 2014). Soon after the Olympics are over, those who had been employed lose their jobs almost instantly.

Conclusion

While hosting the Olympic Games may profit hotels and restaurants in the host cities, this may be at the expense of hotels and restaurants in other cities or towns in the country. The increased number of visitors in the host cities may be a result of people moving from other cities to watch the Olympic Games.

When this happens, the host city may be crowded with visitors while the other cities experience a reduction in the number of visitors. This is, however, subject to the pricing by the hotels and restaurants in the host cities.

Even though hotels and restaurants may register poor business performance during the Olympics, there are various sectors of the economy that benefit.

References

Kühn, K. (2012). Olympic ‘Ghost Town’ Effect Hits Restaurant Trade. Web.

Nicholls, L. (2012). Olympics Boosted UK Tourism but Came at a Cost for Hospitality Businesses. Web.

Oxford Economics. (2012). The Economic Impact of the London 2012 Olympic & Paralympics Games. Web.

Ponomarenko, O. & Plekhanov, A. (2014). Economic Impact of the 2014 Sochi Winter Olympics. Web.

Santo, C & Mildner, G. (2010). Sport and Public Policy: Social, Political, and Economic Perspectives. Champaign: Human Kinetics.

Toohey, K. (2007). The Olympic Games: A Social Science Perspective. Cambridge, MA: CABI.

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IvyPanda. "The Olympics Impact on Hotels and Restaurants." August 18, 2022. https://ivypanda.com/essays/the-olympics-impact-on-hotels-and-restaurants/.

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IvyPanda. 2022. "The Olympics Impact on Hotels and Restaurants." August 18, 2022. https://ivypanda.com/essays/the-olympics-impact-on-hotels-and-restaurants/.

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IvyPanda. (2022) 'The Olympics Impact on Hotels and Restaurants'. 18 August.

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