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The Olympic effect on tourism growth

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Published: Mon, 5 Dec 2016

Every country’s ultimate key factor is to sustain and achieve the title and designation of being the ‘ultimate tourism destination’. Promotion is a well-known method used in a variety of countries in order to value the above distinction. Mega events are one of the most common promotion techniques, and the Olympic games is an example of this. Research showed that Sydney “gained £5 billion rise on tourism in the five years after the Olympic Games of 2000.” ‘Mega events’ attract a lot of customers and this gives the potential of promoting their destination prospects to tourists. However both positive and negative methods arise when establishing and developing this method of promotion.

The hosting country experiences a lot of positive effects such as the investment in the country, the creation of new jobs and the most important is the increase in tourism due to the Mega Events. On the other hand, negative effects can include congestion, pollution and inflation (Li, S 2010).

The tourism industry is rapidly growing, due to the explicit amount a country invests in trying to increase their tourist percentage and create a sense of awareness, creating a competitive climax between countries. Therefore the Olympic games is an effective way to encourage tourists to visit the host city and therefore at the same advertising it. Preparation, effective and efficient strategic methods are substantial for the government to implement in order to achieve their persuaded goals. The government is the main source for helping country host a Mega Event and the strategies will then be used to benefit from the Olympic Games.

Event tourism is ” the people who visit a destination for the primary purpose of participating in or viewing an event” (Turco, Riley & Swart, 2002). However it hasn’t been a long time since event tourism and management, the main source of international tourism has been advertised and developed by countries.

Furthermore, in every Olympic Game there are associations that visit the host city to discuss or even supervise the situations formed around this Mega Event. The International Olympic Committee (IOC) are sustained as the before-Olympic visitors. The IOC is responsible to review the development of the projects. Following, the associates of international federations for a range of sports, observe the procedure of the facilities. Last but not least the participants are the third group of visitors that visit the host city in the pre-Game phase. These individuals attend the host city to experience the weather and the sport venues. The fair number of tourists that visit the host city before the Games, contribute to increase tourism (Sport Journal).

By taking into account the positive effect that a country can get from Mega Events, then the government is encouraged to bid for a Mega Event. The host city will receive a lot of benefits such as social, environmental, cultural and economical functions. Greene (2003) states that the hosting city will obtain a new level of investment in the tourism sector by presenting a positive image for the country.

Mega Events generate large economic effects due to the size of the event (Owen, 2005). Additionally, it has been discussed that the most essential impact is the economic situations, which arise us a result of such an event (Li, Blake, 2009). The host city depends on such event in order to experience an economic growth. Olympic Games will act as an injection to the circular flow of income and could improve the economy (Owen, 2005).

Furthermore, the Olympic Games will be a magnet of investment either in the form of public funding and private investment to be spent on sports venues, tourism facilities and infrastructure improvements (Owen, 2005). In order for the host city to experience economic growth through the Olympic Games the government should use its resources effectively, this will result to an increase in employment, redeveloping rural areas, improving the infrastructure etc (Li, Blake, 2009).

Sydney’s Olympic Games 2004 had many economic impacts during it’s twelve year period, from 1994/5 to 2005/6. These twelve years were divided into three classes: Pre-Games, Games Year and Post Games (Li, Blake, 2009).

The pre-Games period is a fundamental contributor to the host city due to the fact that the city is hosting a lot of tourists because of the Mega Event and the advertisement that the country is receiving. Also, the construction of the Olympic venues and the infrastructure of the host city take place at that period of time. In the Games year the impacts are the revenues that are generated from the Olympic Games, and the expenses of operating the games. This income comes from visitors that visited to watch the games, and other tourists that avoided the Olympic Games. The post Games impact is mainly the legacy that the Olympics left to the hosting city. It is the long-term impact that will bring an increase in investment, tourism and the pull of new business to the city (Blake 2005).

In the pre-Game period in Sydney Olympics had to finish the Olympic Venues for the masses of tourists that will come to watch this Mega Event. The construction stage was remarkable (Greene,2003). With respect to the article on the Economic Impact Of The Sydney Olympic Games, by new South Wales Treasury (1997), approximately $2.5 billion of both public and private investment were spent on the infrastructure development. A lot of positive effects resulted from the construction, such as it encouraged more demand for capital and labour, resulting to an increases output and employment. The host city attracts a lot of tourists before the Olympics as well. This generates more economic benefits for the host city (Li, Blake, 2009).

During the period of the Games a lot of money circulates in the economy of the host city mainly, from the ticket sales, licensing, donations and most importantly from television rights. Furthermore the expenses that are included is security, medical services, transport and the cost to operate the press and broadcasting center (Li, Blake, 2009).

Mega Events usually last for a short period of time. During this short period of time a lot of people come to the country to view this spectacular event. This generates a lot of revenue to the host city, “a boost to the country’s economy”(Clarke,2004). With reference to Chalip (2000), almost all of the hotels in Sydney were full from tourists. However, after the games, researches showed that tourism was high during the Games Year but not as high as expected to be. (Berman, 2009).

Despite of all the compensations produced by the Olympics, there is also a downside. Crowding out and price inflation are two negative effects that a lot of countries ponder. Locals are usually relocate during the Games Year, and some of them rent their houses in order to make a profit (Clarke, 2004).

As demonstrated in Figure1, Sydney predicted to have a $2.100 million growth of GDP during and after the Olympic Games, due to the increased number of tourists. All of the above resulted to an increase in the standard of living in Sydney.

Usually in every decision and resolution an opportunity cost takes place by spending a large amount of money on sports venues, infrastructure development etc (Owen, 2005). All of the investment used to built all of the above are cut from other public needs. For example, poverty, alleviation, health care and education, which are some aspects that produce benefit and value to the economy. (Li, Blake, 2009).

Furthermore, in the pre Game phase a lot of jobs were generated due to the construction of the sport venues , infrastructure and the transportation system. However this is only for a short period of time, when the facilities are completed most workers lose their jobs. In the Games Year there was an 18% decrease in the construction sector in Sydney, continuing with further reductions in the next years. In addition, in the post Games period the hotels had a 65-70% decrease, with their rates falling up to 5%. As pointed out in Figure1, Sydney’s employment dived from 24.0 to 3.0, followed by a pause in the economic growth. Also, hotels located outside of Sydney did not gain much from the tourists that attended the Olympic Games. However, the hotels which gained from the Games had a vast advantage against their competitors due to the revenue they received.

A common questioned asked is, “What happens to all of the Olympic venues after the Olympic games?”. A lot of the venues remained unused after the Olympics. Other stadiums were renovated to host other sort of events. All of these facilities were costly to preserve. In fact some of them were closed down. For example, the Sydney Olympic venue was renamed Olympic Park 2000, transformed in a way so that they would be able to host all types of events. This transformation was carried out in order for the facility to host events and generate profits. However, some specialists fight over the fact that this renovation perished the Olympic Spirit (Chalip, 2000).

One of the government strategies for the Sydney Olympics 2000 was to improve the public transportation system. Before the Olympics, Sydney faced a lot of congestion problems, during the Games traffic congestion was not a problem. The system was working efficiently. Another serious problem is the leakage of economic benefits from the country. The Australian government fought and dealt with this problem by advising the Australians to make private investments and also, for business to employ locals for any work, this improved the commonwealth in Australia.

Mr. Payne director of the Marketing International Olympic Committee in 2000 acknowledged that “Australia is the first Olympic host nation to take full advantage of the Games to vigorously pursue tourism for the benefit of the whole country. It’s something we have never seen take place to this level before and its model that we would like to see carried forward to future Olympic Games in Athens and beyond” (Australian Tourist Commission, 2001). Furthermore, this shows us that Sydney tried to take full advantage of the short-run economic effects and to follow the long-term ones.

Mega Events alter the entire image of the host city, and with further assistant from the government this could bring new companies that want to trade or invest in Australia. Also, the advertisement that Olympics provide to the hosting destination is an increase in tourism (Cooper, et al 2008). A further Australian government strategy implemented was to use the advertisements to advertise Australia as the ultimate tourism destination in order to catch the attention of more tourists. As a consequence, an increase in the long-term economic effects provoked Australia.

Besides that, the Australian government wanted to increase tourism and take advantage of the Olympic Games. They should have concentrated and persuaded visitors to explore other parts of the country not only Sydney where the Games took place. This would have resulted in the future for further tourism (Chalip, 2000).

Mr. Payne’s statement for Australia taking full advantage of the Olympic Games, shows that the government strategies were successful. Two projects were formed to attract oversea investors “Meet in Australia” and “Australia Open for business”. Under these two projects Australian companies cooperated with foreign companies. The oversea partners and offices decided that Australia is the best destination to send their employees as a ‘bonus’.

Additionally, the smallest city ever that hosted a Mega Event is Athens in the Olympics of 2004. It was the biggest challenge Greece had to face during the 12 year period , before and after the games. In contrast with Sydney which is a huge city in terms of area and population(Sports journal). In 2004 Greece was enlightened and was perceived and evaluated by a number of tourists. This phenomenon gave the chance to Athens to advertise itself and create a new brand image.

Due to this challenge Athens government had to invest, had to fund the projects in general. In the pre-Game phase of the Olympics, in the construction stage to be specific, the development of the infrastructure was remarkable. For example, the airport, metro system, the metropolitan tram all of them were built before the Games (Kent Research Department). The most impressive was the Rio-Antirion bridge, the wanted it to finish before the beginning of the Olympics so the Olympic flame can cross the bridge (Greece after the Gold rush). All of the above are still in use and helps a lot of people with their every day travelling even today.

Moreover, the Total Expenditure for the operations and the assets of the Olympics came up to €11,274 billion. The total expenditure was high because they had a lot of delays and had to pay the extra work in order to finish before the start of the Games. The Greeks sponsored nearly 80% of the total expenditure the other 20.1% of the costs were covered by private funding(PDF). Taking into consideration that Sydney’s budget was much more less than Athens.

Furthermore, during the Games Year in Athens 2004, there was an increase in GDP by 1.3%. This shows a short-term economic impact that Athens experienced. Also, it improved the employment opportunities by 3000 new jobs (Hellenic Republic). The major key factor for the above changes was the 5% increase in tourism in the Games Year.

Who can think what happens to the Olympic Village after the Games? The government decides what to do with it. After the Games the village is inactive. In fact is expensive for the government to preserve the Olympic Village, so it offers them for sale, or long lease, at low prices to single mothers or even to multi-families. An additional option for the government is to turn the Olympic Village to a sports center. This will encourage teams from all over the world to come and train, and also to compete in tournaments. This will generate revenue to the economy and the Olympic Village will still be in use instead of being it being vacant.

Despite of all the problems Athens had, the Olympic Village benefited the society by housing approximately 3000 families. In addition, a lot of the Olympic Venues are still in poor condition because it is very costly to preserve them. The annual cost for the repairs amount to £500 million (Kent Research Development).

The next Olympic Games will be in London in 2012, the UK government strategies are shown to be very effective. To be specific the Olympic Park will be built in East London, which is an underdeveloped area. This will accelerate the development of the area, with the new infrastructure, the new houses and the industrial land that is available (London 2012).

All in all, the estimations for the forecast are not quite accurate because they were made for only one decade. The strategies could be over-inflate and out of reach (Australian Tourist Commission,2001). In order for the forecasts to be accurate all of the organizations involved had to work together to accomplish their economic growth target. However, this is very difficult to accomplish and the target will not be attained if one of the organization fails to meet their perceived goal.(Chalip, 2000).

Concluding, the Olympic Games are a positive attribute towards advertising and marketing a country. It is also advantageous toward the development of the country’s infrastructure, job opportunities and overall the economic growth of the country. Olympic Legacy is a desired objective for every country due to the fact that it develops and lightens a new sense of image to the country and most importantly increases its tourism perspectives.

Comparing the latest Olympic Legacies we can state that Sydney’s Olympic legacy was exceptional, however Athens was quite moderate. As Mr. Payne stated above Australia was the one that made the most out of the Mega Event in contrast to Athens, which did not achieve the preferred and desired level of acquisition.

However the question worth answering is how did Sydney overcome all complications and managed to increase tourism and business destinations in contrast to Athens? Sydney acknowledged all complications that could have arose therefore prepared effective and efficient strategies and methods in order to overcome all possible negative attributes. Sydney was not that successful economically, but by increasing their common wealth this phenomenon gradually diminished over the years. Due to the fact that Athens did not perceive any strategic models and was more or less unprepared in comparison with Sydney resulted to un-successful results. Their growth was minimal and their tourism did not rise enough in comparison to ever country’s tourism percentage increase after a mega Event has been undertaken.

As also mentioned above, Mega Events has a number of positive attributes and effects towards the host city but negative impacts are also present. A large percentage depends of the government strategies and local citizens if the host city succeeds or fails to achieve their key goals and objectives but strategic methods are fundamental to be developed and perceived by every country in order to productively accomplish and attain the title of being the ‘ultimate tourism destination’.


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