With 305 days to go the Olympic Games and over 40,000 rooms allocated to the London Olympic Organising committee (LOCOG) over the Olympic period, speculation over occupancy levels and rates inLondonover the games is rife.
Spats between hotels and operators have already manifested over hoteliers blamed for hiking prices for Olympic packages sold at thousands of pounds by operator Thomas Cook. See hoteliers anger – http://bit.ly/pUUSKk and the Thomas Cook defence at http://bit.ly/nTVP1b
Stringent Conditions inhibit buying
Concerns are rising over sky high rates for the remaining 50,000 rooms in London not yet allocated to LOCOG. Mary Rance, Chief Executive of UK In Bound the association that looks after the interests of inbound operators highlighted Operator concerns that the combination of high rates plus stringent minimum stay restrictions of up to 10 nights, plus significant up front deposits make it almost impossible for inbound Operators and the independent traveller to book into the city. See http://bit.ly/rfCBPJ
Rooms that remain unallocated by LOCOG are not due to come back on to the market until the end of January 2012, so for those hotels that actively yield room rates, prices are likely to remain high over the period.
Not all Revenue Managers are with the programme!
However, not all revenue managers are on the ball in terms of yielding rates over the Olympic period. Jon West, Managing Director UK & Ireland HRS Hotel Reservation Service warns hotels to check the rates loaded across all channels during the Olympics. This follows incidences in the last few weeks where HRS has witnessed high booking volumes into hotels selling rooms in London that are comparatively cheap. And this has come as a nasty shock for some hotel operators. “We are urging all our hotels to check that they have the correct selling rates loaded now for the Olympic period. Some hotels were not aware of the demand for rooms over the period and had not adjusted rates to match demand. We are not responsible for the rates loaded by our hotels and room rates that represent exceptional value over the period will sell quickly.”
Our advice is to re-visit your revenue management strategy and check that you are happy with all rates across all channels and all contracted third parties for the whole of the Olympic period plus shoulder periods where impacting events will also affect demand – these include:
- The Queen’s Diamond Jubilee
- Farnborough International Air Show
- The Olympic Games
- The Paralympic Games
When are the London Olympics 2012?
- The Olympic Games are from July 27th to 12th August 2012
- The Paralympic Games are from 29th August – 9th September 2012
When is The Queen’s Diamond Jubilee 2012?
- Events to mark The Queen’s 60 years on the throne will take place in the first weekend of June 2012, with an extra bank holiday being created.
When is Farnborough International Air show 2012?
- July 9th – 15th 2012
When is Ramadan 2012?
- Ramadan will start on Friday 20th July 2012, and continue for 30 days. Since the holiday begins on the preceding sunset the celebration will begin on the sunset of Thursday 19th July see http://bit.ly/r50FDP
What time period should my revenue strategy cover?
- From The Queen’s Diamond Jubilee onwards i.e 1st June to end September 2012
What business opportunities are available throughout the Olympics?
- LOCOG has taken up an allocation of 40,000 rooms so far to cover the Olympic period. Rooms that remain unallocated will be released back to the market in late January 2012
- Event planners are looking for meeting rooms and locations for corporate and sponsored events over the period
- Corporations, the media, and Sponsors are looking for exclusive use of properties over the period
- There will be visitors to the city via inbound tour operators and independent travellers – independent travellers will be searching for rooms via your normal GDS and OTA channels; make sure you have the correct rates loaded now
- Visit London2012.com for more details
What rates should I sell at?
A fair pricing charter is being co-ordinated by VisitBritain and Visit London that businesses can sign up to show their commitment to reasonable and fair trading terms during the year of 2012. For more information see http://bit.ly/oP1XQg Over-inflating prices will in the long term do damage to your business so be reasonable about rates quoted. It is possible that corporate business you rely on now may not want to visit London during this time, so take steps to find out who will be staying and how much business you may need to replace. Set your strategy based on your projected demand and closely monitor how well that strategy is working over that period. Adjust the strategy to accommodate any unanticipated fluctuations in business.
What about the Displacement effect – will I lose all my normal business?
The “stay-away factor” or “displacement” is common to many host countries and cities of major sporting events and occurs when concerns around pricing, overcrowding, safety and general disruption keep normal, leisure visitors away and/or displaces them to other areas. This displacement is often based on misperceptions and the impact may be felt throughout the whole year if left unaddressed. Whilst the long term economic and tourism legacy benefits of the Games far outweigh this short-term loss, VisitBritain, Visit London, ETOA and UK Inbound are working to collectively tackle this issue.
The Facts from Oxford Economics
The Games are forecast to generate tourism gains totalling £2.34bn for the UK as a whole and £1.85bn for London according to the Oxford Economics report – see http://bit.ly/ozg2Od . The displacement effects linked to the Games are estimated at £375mn forLondon and £258mn for the rest of theUK.