The London 2012 Olympics are quickly approaching, but will the Games be the golden egg or “damp squib for” U.K. businesses?
On one side, the culture secretary sees them as “a once-in-a-generation opportunity to promote the UK.” So far, almost 40,000 jobs have been created as a direct result of the Olympics and Stratford City has been reinvented with vast new construction projects, including the largest shopping centre in Europe.
On the other side, renowned composer Andrew Lloyd Webber fears they will bring a “bloodbath” for London theatre, world-famous music festivals, including The Big Chill, have been cancelled, and even VisitBritain doubts we’ll see any real influx of foreign visitors.
So, where does the truth lie? It probably depends what business you’re in and if you’re betting on making a buck this summer or hoping to dig your way out of the recession for good.
Big business sees boom
New businesses on the Olympic doorstep are likely to boom. The Westfield supermall in Stratford drew in 160,000 customers the first day it opened and is expected to be teaming with locals and tourists all summer.
The British economy has been bolstered by all the activity around the Olympic Village since the bid was accepted in 2005 and companies closely tied to the official venues should fare very well.
However, the majority of Olympic projects –construction of sporting venues, food and drink sales, security etc. - have gone to large firms. Meanwhile, Westfield is teaming with multinational stores. From Apple to Armani and Pandora to Primark, shoppers have a full spectrum of mega chains to choose from. But, small, independent retailers say they’ve suffered the consequences.
This January, the Essex Federation of Small Businesses (FSB) labeled the long-term benefits of the Games a “damp squib” for small companies.
“The immediate effect of the Olympic area where Westfield has been developed has been bad. Local businesses have really suffered because of the shopping mall along with the recession,” South Woodford Business Partnership chairman Kerk Davies told The Guardian.
More than 60 percent of small businesses in the area believe the Games legacy will not help them at all, according to a survey conducted by the FSB. In fact, 25 percent of the 1,674 companies interviewed predicted that the Olympics would have a negative effect.
A separate survey conducted by Olympic sponsor BT of 1,200 companies around the UK found that 72 percent expected their supply chain to be disrupted and 40 percent thought staffing would be a headache because staff would want time off.
VisitBritain, which has received an extra 27 million in funding to drive up tourist numbers, has admitted that the Olympics will put some people off visiting London.
“For some people, a busy and vibrant environment with a global spotlight on it is not where they want to go on holiday, which is fair enough,” a spokesman told The Guardian. “It’s displacement – people who would usually come here go somewhere else.”
While the usual theatre-loving, Tower-of-London-touring visitors may be fewer in number this summer, Stratford is sure to be packed.
Gearing up to serve the 9.7 million spectators, 200,000 workers, and 140,000 athletes and officials expected in the Olympic Park, McDonald’s is building its largest restaurant ever.
However, as the mega McDonald’s heaves with hungry visitors, restaurants outside Stratford may see fewer diners.
“Many of the visitors will be eating in the Games area so restaurants in the West End may suffer,” a spokesman for the British Hospitality Association told the paper.
“And if Britons stay at home to watch the Games on TV – rather than going out to eat as they might normally do – that will impact on restaurants far beyond London,” said spokesman Miles Quest.
Festivals canceled, moved
The festival industry is still gauging the effect the Olympics will have on the upcoming season.
Glastonbury moved its rest year from 2011 to 2012 to avoid a clash with the Games.
HSome festivals that usually take place at the start of August, including Herefordshire’s The Big Chill and Ireland’s Oxegen, have been canceled.
Organisers of The Big Chill said the Olympics had negatively impacted “artist availability.”
owever, the festival had suffered its own problems in the past. Festival Republic took over the event three years ago when it went into voluntary liquidation with debts amounting to 1.2 million. Last year, it was headlined by The Chemical Brothers, Kanye West, and Rodrigo y Gabriela, but it failed to sell out.
‘Bloodbath’ for the West End?
“Nobody’s going to go to the theatre at all,” Lord Lloyd Webber told the BBC.
He feared “a bloodbath of a summer” for the West End, saying that “most of the theatres in London will shut”.
“It’s going to be very tough,” he told the broadcaster, adding that advance bookings were “about 10 percent” of their normal level.
He claimed that three major musicals “are not going to play over the Olympics.”
However, President of the Society of London Theatre Mark Rubinstein, gave a more nuanced assessment of the situation.
“There’s no question that there’s going to be a lot of visitors in London. I don’t think it’s going to be a bloodbath. I think we are going to see different audiences from the summer audience we would normally see in those weeks,” he told The Guardian.
Rubinstein said the key to success would be in getting those new audiences out of Stratford and into the West End.
“There will be an awful lot of visitors whose primary reason for coming is the Games and we need to work harder as an industry to reach out to those people, to run promotions, to run initiatives that will make sure they get the information about what shows are on and how to book,” he told the paper.
‘Wave of excitement’
Excitement for the Games is growing as venues are finished, but there is a north-south divide over how much Britain will benefit in the long run.
Just 22 percent of Scottish businesses believe the UK economy will benefit, compared to 53 percent in the South of England, including London. In the Midlands, just 36 percent believe the economy will be lifted, according to research by RSM Tenon and YouGov on behalf of The Daily Telegraph.
But, as big and small businesses across the country vie for a piece of the Olympic pie, there may be reasons for optimism regarding the long-term benefits of the Games.
Three-quarters of businesses in Vancouver, which hosted the 2010 Olympics, say they have continued to enjoy higher sales, according to the BT survey.
Sixty percent say they have experienced ongoing Olympic-related benefits. Most of the companies that did well were in the media, leisure, and retail industries.
The Government says it is also backing a new tourism fund aimed at generating £1 billion of public relations and marketing activity in the years around 2012, with the target of 1 million extra visitors a year and £2 billion additional spend for the UK as a whole.
“There is a lack of understanding of the economics behind the funding of London 2012. The budget is very closely monitored and people forget that the physical assets from the Games, such as stadiums and buildings, will generate revenue,” John Abbott, director of accountants at RSM Tenon told The Telegraph.
“Positive consumer sentiment is confidence based. More people are likely to be swept up in the wave of excitement surrounding the Games the nearer we get to July 2012.”