UK Olympic tourism unsustainable room rate hike alleged

UK tourism prospects jeopardised by unsustainable hotel terms "frenzy of greed"

London hoteliers appear to have begun ratcheting up room prices for next year’s Olympics, in one instance to more than five times their normal rates, and apparently laying down draconian terms and conditions on tour operators

With London 2012 already begun selling 6.6m tickets, it is hoped that overpriced accommodation will not deter visitors.

Most tour operator bodies appear shocked by the price hikes.

Said Mario Bodini of JacTravel and UKinbound “Hotels appear to be gripped by a frenzy of greed. If only they were reasonable and retreated from these extortionate terms, we would have a chance of avoiding the Beijing tourism disaster where bookings were 30% down (on the previous year) the month before the Games and 20% down the month after."

"As things stand, tour operators soon will not have enough time to market London even if hotels recant and offer sensible terms.”

Examples going the rounds are:

• One four-star London hotel, which normally charges £200 per room per night, is demanding £1,100, according to a wholesale tour specialist, who asked for neither the hotel nor his company to be named for fear of jeopardising future business.
• Another four-star hotel is quoting £297 per room per night, against £131 this year, and another is asking for £266 against £142.
• One three-star hotel has nearly trebled its 2011 room rate for the Olympics, demanding £235 a night, and another three-star hotel has doubled its £80 a night rate to £162.

And draft reservation agreements seem to demand 100% cancellation fees. Payment terms are also draconian with up to 70% in advance being demanded with the balance in January 2011.

Chris Foy of Visit Britain told the UK Financial Times that the hotel price rises were “a situation we’ve been aware of . . . It is not a surprise this is coming up”.

Locog, the London organising committee, has block-booked 40,000 hotel rooms for Olympics officials, international federations, foreign media and others at rates agreed before London won the bid in 2005.

Said Tom Jenkins of ETOA: “Whilst the hotels rates supplied to LOCOG are very reasonable and sensible, those that are available to the leisure tourism industry remain above what is normal for London in August."

“Demand from normal tourists is always depressed during the period of an Olympic games. The operators who bring foreign tourists into the capital are facing raised costs and falling demand. When we surveyed inbound tour operators last week, they foresaw a fifty per cent drop in arrivals in London for the summer of 2012.”

“The irony is that an Olympic Games never delivers visitors in the numbers that host cities anticipate. Athens sold no more than 8,000 rooms a night to sports fans travelling from abroad. London has 125,000 rooms to fill. Normal tourism is being driven away for a bonanza which has a long tradition of being illusory.” 

“The terms and conditions currently being demanded by hotels for bookings during the 2012 Olympic period appear to be so aggressive that many established inbound tour operators are set to take tourists away from London, despite the apparent appeal of the Games.”

“In addition to the high rates and financing costs, tour operators are concerned about the commercial risks of parting with their cash and giving it to hoteliers whose businesses are often heavily laden with debt.  A compromise would be to pay funds into an escrow account but this is often rejected by hoteliers.”

Mario Bodin added: “Hotels do not appreciate that Olympics tour operators don’t receive payment this far in advance and that they have to commit to buying tickets in order to have a product to offer.  Olympic tour operating is becoming an increasingly risky business, particularly with other events competing for corporate and consumer spend that year such as the European Football Championships.”

The European Tour Operators Association (ETOA) recently released a report showing that Olympic host cities regularly overestimate the number of hotel rooms that will be required.  It predicts that of the 125,000 or so rooms in London, fewer than a third will actually be filled by Olympic visitors. 

Valere Tjolle
Valere Tjolle is editor of the Sustainable Tourism Report Suite.

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