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Going for gold: A look at 5 Olympic markets
June 28 2012

An in-depth look at hotel performance for the past five Olympic host markets could serve as a forecast for what London has in store. 

  • Hotels in Vancouver largely have maintained RevPAR levels since the Winter Olympics two years ago.
  • The 2006 Winter Games in Turin, Italy, brought on a large amount of new construction, which proved to be detrimental in the long term.
  • The impact of the Olympics has increased Salt Lake City’s ability to stay competitive in the convention market.

GLOBAL REPORT—As London prepares to host the 2012 Summer Olympics, fears that the market will suffer a slump after the games is a common concern throughout the city.

According to forward-booking data from TravelClick, however, hotels in London already are reporting strong business immediately after the Olympics for the August Bank Holiday weekend, an improvement of 24.2% in comparison to last year.

This news might ease area hoteliers’ minds in the short term, but only time will tell if the market will bask in the afterglow of the Olympic flame in the long run.  A look at the supply, demand and performance in the past five Olympic host markets could be telling of London’s future.

2010: Vancouver
As a market with high barriers to entry, Vancouver, Canada, saw very little new hotel construction after 2003 when the city won the Winter Olympics bid, according to Carrie Russell, managing director of HVS Canada.

In February 2010, the month of the Olympic Games, the Vancouver market had a supply of 212 hotels comprising 25,895 rooms, according to data from STR, parent company of

“It wasn’t a case where we didn’t have enough rooms in the region to meet the demand,” Russell said.

In all, 23 new hotels were added to the hotel market’s supply from 2003 when the bid was announced to present, according to STR Global, sister company of

Vancouver’s bid included a cap on room rates so hoteliers could not charge more than a certain percentage over their average daily rates. However, “there were certainly hotels that were built after that commitment period that were able to charge dramatically higher rates than the hotels that already committed to the cap rate,” Russell said.

Hotels in Vancouver largely have maintained RevPAR levels since the Winter Olympics two years ago, she said.

The market experienced a RevPAR of $204.25 Canadian dollars ($198.93) the month of the Olympic Games, which was a 162.6% increase over February 2009.

Vancouver’s RevPAR year-to-May 2012 stood at CA$84.41 ($82.29), an increase of 1.9% from the same period in 2011.

A few factors, including a new building added to the city’s convention center in time for the Olympics, have played a role in the solid performance. “2011 was a very strong convention year,” Russell said.

“We got really lucky … We got something that really enhanced the offering of the city that should strengthen the overall market in years to come,” Russell said.

2008: Beijing
The 2008 Summer Olympics enhanced Beijing’s image as an international hub to the rest of the world, said Mark Lettenbichler, VP and area GM of the Ritz-Carlton, Beijing Financial Street. “It enjoyed a significant period of high growth and development as it ramped up to the (2008 Summer Olympics).”

The market has added 332 hotels to its supply since winning the Olympic bid in 2001, according to STR Global.

And while the increased inventory coupled with the economic downturn in 2009 certainly impacted the hotel market, Lettenbichler has high hopes that supply and demand will balance out.

Today, “the city continues to benefit … with the infrastructure projects and venues which were built specifically for the Olympics,” Lettenbichler said. The speed with which those projects were constructed would not have been possible without the Olympic Games deadline, he added.

RevPAR for Beijing stood at 468.96 Chinese yuan ($73.78) as of year-to-May 2012, a 14.3% increase over the same period last year. The market’s RevPAR hit its peak the month it hosted the Olympics in 2008 with 1,580.32 Chinese yuan ($248.27), a 183% increase over August 2007.

“Beijing 2008 was a major debutante party for the city as China (took) its place on the world stage,” Lettenbichler said.

2006: Turin, Italy
The 2006 Winter Games in Turin, Italy, brought on a large amount of new construction that proved to be detrimental in the long term, according to Fabrizio Trimarchi, executive VP of Jones Lang LaSalle Hotels in Italy.

“The city increased the overall supply by 5%,” he said.

Seven hotels have been added to the Turin market from 1999, when it won the Olympic bid, to YTD 2012, according to data from STR Global.

Hotel performance increased in the beginning of 2006, but by the end of the year, the market returned to pre-Olympics operating levels. “So the problem is now we have a lot of supply which is underutilized in the city,” Trimarchi said.

Those working in the Turin travel industry tried hard to push tourism in 2007, 2008 and 2009 but had little to show for it, he said. The destination was promoted as a convention city as well as an Italian food capital, but there was very little response by business and leisure travelers.

Hoteliers looked into other options to balance out the supply and demand in the market, according to Trimarchi. “In some cases, I heard (about) the potential transformation of these rooms into something else … such as residential housing, but there is evidence they were not successful in this.”

Transactions in the region also are at a low point, Trimarchi said. Jones Lang LaSalle Hotels has been attempting to sell a hotel near the Turin airport for quite some time and has had little success. “This is indicative that the market is not very sufficient at the moment,” he said.

Year-to-May 2012, Turin’s RevPAR was €51 ($63.52), a 0.6% decrease from the same period last year, according to STR Global. The market experienced a RevPAR of €162.21 ($203.80) the month it hosted the Olympics in 2006, a 187.1% increase over February 2005.

2004: Athens
In the three years following the 2004 Olympic Games, the Athens hotel market was in a state of euphoria, according to Pavlos Papadimitriou, senior associate at HVS’ Athens office.

“I think it was quite neglected (before) then, so after the Olympics with all this exposure and additional awareness that Athens gained, I think things worked well,” he said.

Although Athens’ bid was announced in 1997, most of the newer supply brought in to meet the demand of the Olympics was developed between 2001 and 2004, he said. “With all the hotels in the market and all the supply coming into the market and all this money invested … I think that Athens was in a very good position.”

Now, the economic and sociopolitical crises in Athens have left the city in a near-abandoned state, he said. “The protests, sociopolitical arrests are not good promotion for the city because most people coming to Athens are not business people, they are leisure tourists. I think it’s a big issue for the Athens market.”

Athens had 465 hotels comprising 28,018 rooms in the 3-, 4- and 5-star categories as of year-end 2011. The city had 491 hotels comprising 29,199 rooms in the same categories as of year-end 2010, according to the Hellenic Chamber of Hotels.

If the political situation stabilizes, the tourism market has the potential to rebound, he said.

2002: Salt Lake City
Salt Lake City saw an explosion of inventory—somewhere around a 38% growth in rooms—between 1998 and 2002, said Scott Beck, president and CEO of Visit Salt Lake. The boom included the market’s first select-service properties in approximately two decades.

Salt Lake City also saw an increase of limited-service hotels along highway exits, he said. “Post-Olympics, that’s the market (segment) that has certainly struggled the most.”

According to STR, the Salt Lake City market has added 87 properties to its supply since 1995, the year its bid for the Olympics was announced.

The Olympics put Salt Lake City on the map as a U.S. convention market, Beck said. And the expansion of the city’s convention center in 2006 continues to play a large role in absorbing the increased hotel supply added before the Olympics.

“We’ve seen phenomenal year-over-year growth in the last two years. So far this year, we are tracking a 12% increase,” he said.

The market’s RevPAR stood at $59.87 year-to-May 2012, an 8.7% increase over the same period last year. Salt Lake City experienced a RevPAR of $159.28 the month it hosted the 2002 Olympics, an increase of 187.3% over February 2001.

“For cities like Salt Lake, our experience with the Olympics was a life-changing moment,” Beck said. “It’s very different from a city like Vancouver, which has an international audience.”

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