Whether or not the 2012 Olympic Games will be good or bad for British businesses is a multi-headed monster of a question. Dan Matthews invited some of the UK’s most dynamic entrepreneurs to have a stab at the answer.
Summing up the spectacle of London’s hosting of the Olympic Games, one BBC broadcaster uttered a sentiment that even the most sceptical Brit would struggle to disagree with: “Can we afford it? Probably not. Was it worth it? Undoubtedly yes.”
Rather like spending the rent on a wildly successful party, we went for broke and pulled off a spectacular show. But now that the fireworks have all plopped back to earth and fizzled out, questions are being raised over an earlier pledge that the economy, as well as national self-esteem, would receive a boost.
Ministers said massive infrastructure investment would regenerate East London – check; that the spectacle would showcase the Capital and Britain generally – check; and that businesses would benefit from a surge in footfall around the city – erm…
Sponsors certainly benefitted. John Lewis reported sales 14.9 per cent higher in the week to 11 August compared with the same period last year. Meanwhile, sport-related sales soared 178 per cent during the same seven days.
Adidas predicted that its massive sponsorship package for London 2012 would nudge it passed Nike as the world’s foremost sporting brand, while even McDonald’s no doubt saw an upswing from its metropolis-like restaurant erected in the shadow of the Olympic stadium.
But non-sponsors were far from guaranteed a boost. London hotel owners, who ahead of the Games imagined massive demand from spectators, whacked their prices up only to see occupancy rates tumble.
Spend per room also slipped because guests left early and returned late from events, forsaking the mini-bar and in-house dining for refreshments scoffed and glugged between events in the Olympic Park.
Meanwhile, questions hanging over the London transport system’s ability to cope with an influx of passengers persuaded many ‘everyday tourists’ to delay trips, causing a drop in footfall in parts of London not touched by the Games.
Jonny Holmes is co-founder of VendEase, a vending machine operator with interests stretching from Brighton to Birmingham, but concentrated mainly in the South East. Like many he anticipated a spike in demand from London hotels, but instead experienced a drop.
“Well ahead of the Games we started doing some work for Cadbury who were the official treat provider. They contracted us to install machines at LOCOG and dotted around the Olympic park during the construction phase,” says Holmes.
“Without this we probably would have seen a net drop in demand. The hotel side of it is down quite a lot. But the event itself has showcased London well and we’ll see some benefit in years to come. If we had been solely reliant on hotels it might have been a different story.”
Nick Thistleton, co-founder of upmarket karaoke business Lucky Voice, agrees that the event was a huge success but adds that the leisure industry was hit hard by what he calls “transport scaremongering” which turned London into a “ghost town”.
“As a vehicle to bring lots of business to London, I think it was quite a dramatic failure,” he says. “It’s a great shame that someone somewhere decided that it wasn’t worth a few Tube delays to turn London into a bubbling mass of involvement and celebration.
“Anyone who lives or works in Central London knows that it turned into a ghost town during the Olympics. The transport scaremongering was extremely effective and people stayed out of town in droves.
He adds: “Everyone with leisure businesses was negatively impacted and we were no exception. The tourist influx never materialised and our regulars were encouraged to stay at home.”
One business that has benefitted from the Games glow is Vive Unique, a business connecting tourists with homeowners who are prepared to rent their property in short bursts. Co-founder Claire Whisker describes the event as “a real catalyst” for establishing the business which launched in July 2011.
“We ran an initial flyer campaign and were inundated with homeowners wanting to rent out their homes for the Olympics,” says Whisker.
“Most were unaware of the potential of, and year-round demand for, short lets in London and were delighted when we were taking bookings for them at Christmas, Easter and other times during the year. The Olympics has helped to raise awareness of what is now a growing industry.”
The near-term picture for entrepreneurs is mixed at best; at worst statistics gatherers could soon be pointing to figures showing that the UK’s recession became even more entrenched in August. But what about the longer-term?
The Olympics is advertising that money can’t buy: a sustained two-week spotlight beaming down on London with warm, benevolent rays. If tourism fell over the summer then businesses, at least based in London, should see a jump compared to normal demand in the autumn and next year.
There are even more difficult-to-measure factors, such as a likely dink in public attitudes to health and exercise which could help lower NHS care bills over time, allowing more expenditure on medical supplies from the private sector.
Looking ahead, Alastair Stewart, managing director of Etc Venues, says the next year will be crucial for British businesses in recouping some of the costs of hosting the Olympics.
“Short-term, the effect of the Olympics on our business has been negative with significant disruption to normal business directly attributable to the unnecessarily alarmist messages about transport,” he says. “The real test will be in 12 months and whether any of the goodwill and uplift in the nation’s morale can be sustained – let’s hope so.”
But Jonny Holmes says there could be a smattering of things to look forward to: “The impact will vary on different sectors – hotels had overall a negative immediate reaction but they should experience a return over the next few years. It’s also possible that people will have postponed trips until later in the year.
“There’s quite a lot of legacy work that we are pitching for on the construction side of our business, lots of converting of various sites into apartments and the like.
“There was a global audience and it is pretty much accepted that we did a good job as a host, so you’d like to think that people will want to come and see it. It would be hard to put a value on that advertising.”
Whether or not the UK economy breaks even on the Games may never be proved, but the fact that there are winners and losers is unquestionable.
One thing is certain: businesses are hoping – and politicians are praying – that the legacy of this glorious event will tip more entrepreneurs into the former category than into the latter.
Dan Matthews is a director of the Supper Club, an exclusive membership organisation offering peer-to-peer advice to some of Britain’s best entrepreneurs.
By Dan Matthews