London 2012: the impact on small business

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Photo:Michael Pead

In sporting terms London 2012 has been a resounding success. Even sport-phobe and self-described ‘underwhelmist’ Charlie Brooker begrudgingly confessed to enjoying the Games.

However, after lavishing a figure equivalent to nearly half of the annual transport budget on hosting the Games, can UK Plc ever justify the cost in hard-headed business terms?

Arguably not, according to Professor Stefan Szymanski, an expert in sport economics at the University of Michigan: "In terms of an identifiable macroeconomic impact, I think it's hard to think of any good examples where [the Olympics has] shown up in the GDP figures. As economic events, they're not a big deal.” 

The Games doubtless bring economic benefits. But differentiating between additional spending – for example by overseas spectators who otherwise wouldn’t have visited the UK – and displaced spending – by tourists who would have visited the UK at some point regardless, whether this year or next – is an impossible job.

You can, however, compare the fortunes of sectors within an economy and different geographic areas.

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Were there an Olympics of commerce, the construction trade would emulate GB’s success near the summit of the medal table. Some 987 British firms won contracts for London 2012.

Footfall

Retailers, pubs and restaurants in Central London could be compared to Australia, which has accrued an unusually low medal tally. Widely expected to flourish during the Games, West End eateries and theatres have reported a drop of footfall between 25-30%.

"Businesses expected an Olympic 'bump', which hasn't come to fruition," says Jim Zambrano, founder of Scout London, a guide to leisure and entertainment in London. "Year-on-year things are pretty much the same, but many vendors came into 2012 expecting that they would have a bumper August, and that hasn't materialised.”

On the opening day of the Games Experian, the research group, reported a 10% fall in trade at Covent Garden. Confusing the picture, however, a 12% week-on-week and 16% year-on-year increase in footfall has been observed by the Heart of London, a lobby group for West End businesses.

But the incredulity of below-the-line comments on the Telegraph’s report on the story – one notes the suspicious preponderance of hats and scarves in the accompanying Oxford Street picture – suggests few believe these figures. 

"Trade hasn't been as good as expected," says Nigel Owen, owner of the Queens Head in Kings Cross. "A lot of people appear to have left the city. It also feels like there are a lot less tourists around with money to spend. But saying that, July and August are also the quietest months of the year because of school holidays and people going away."

Ed Francis, who opened the Hampshire Hog in Hammersmith, West London, in October, has also noticed a “slight downturn in daytime business since the Olympics kicked off.”

However, even this minor drop-off is arguably just displaced trade because “people not involved in the Olympics are just taking their holidays now,” as Francis speculates. “We’ve had a few tourists in who are staying at local hotels, but it’s not been the huge increase that everyone expected.” 

Also in West London, but more central, is restaurateur Rohit Chugh. The founder of ROTI CHAI, a Marble Arch-based Indian street kitchen, admits “lunch has quietened down a bit” but has noticed a palpable “feel-good factor”.

He also speculates that some Olympics-fatigued East Londoners could be fleeing the circus on their doorstep to visit newly tranquil West London. “There’s a different crowd, with regulars perhaps leaving town and people taking the chance to travel to a different part of town,” he suggests.

Nearly two thirds of hotels in the capital had rooms available with the Games about to start at the end of July, according to figures from hotel booking app JustBook. The expectation of an Olympic bonanza for hotels ignored the evidence of previous Games. Deterred by fears of overcrowding, tourists numbers visiting China and Greece during Beijing 2008 and Athens 2004 respectively actually fell.

However, One Fine Stay, which helps people rent out their homes while they’re on holiday, has certainly prospered, particularly thanks to the collision of the Olympics with the school holidays.

 

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