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Olympics in Paris: will the expected tourism benefits really be met?

The decision for the double-billing for the Olympics & Paralympics in 2024 and 2028 means that Paris is very likely to host the Olympic flame in the next edition of the event. This should rally the tourism industry: but are the benefits of hosting the event really the ones we imagine?

The Olympics & the Paralympics are a worldwide athletic competition bound to attract visitors from around the globe, as well as thousands of athletes and journalists. Thus, they are generally depicted as drivers for demand that would benefit tourism professionals, and hospitality actors in particular. The benefits are thus generally connected to international arrivals... Is this really the case?

The most comparable experience in this regard is London, which welcomed the 2012 Summer Olympics; like Paris, the British capital is a touristic hub located in a Western country whose economy is mature (as opposed to the BRICS countries which hosted the last summer and winter Olympics).

However, the Office for National Statistics (ONS) has observed that in the 3rd quarter of 2012, the British capital city welcomed 3 million domestic visitors vs. 2.7 million in 2011, but only 4 million international travelers vs. 4.4 the previous year. Occupancy rates actually decreased during the event. Tom Jenkins, General Director of the European Tourism Association (ETOA) stated in August 2012: "For now, the number of visitors is considerably lower than a year ago."

This is mostly due to the 'halo effect' featuring tourist visits recorded in cities which host major events: during such event, the usual visitor base (leisure or business) is replaced by those who come specifically for the event. Usual visitors would rather avoid overcrowded areas, traffic jams and the high prices at properties - thus, they would come prior to the event or once it has already occurred. This is especially true for internationally-renowned destinations (such as London and Paris) where visitors arrive in numbers even when no event is planned.

Hence, hosting the Olympics does actually increase demand, but this is not materialized in terms of numbers of visitors during the event - but rather before and after, and above all in the long run.

During the event, benefits are however mostly financial ones. In London, visitors spent more than €10 billion, representing 7% growth that benefits the local economy as a whole. In hotels, rates are on the rise compared to usual standards:

But since the event creates additional demand, prices will go down after it, which will thus strongly support arrivals.

Why so? Because the event, once it is announced, will free real estate aimed at welcoming tourists, athletes and journalists who attend, take part in or cover the competition. New hospitality products are developed: competitive, adapted to the latest trends, they push the destination's number of visits up. Modernization begun for the events may also encourage further development of the hotel base in the following years.

Thus, while from 2008 to 2010 Paris and London reported a similar hospitality supplies (79,000 rooms within Paris itself vs. 86,500 in Greater London in 2010, with both cities on a slight downward trend from 2008, while there were 155,000 in Île-de-France region), the gap widens afterwards: London added almost 20,000 rooms to its portfolio between 2010 and 2012, whereas Paris and Île-de-France stagnated. This growth in London supported demand and encouraged supply growth in London, which to this day is close to 130,000 rooms in terms of hotels alone.

We can thus expect strong growth in touristic accommodations in Paris with the Olympics & Paralympics' effect. The application file already forecast the creation of 8,000 rooms in addition to the existing 134,000 available in Greater Paris (a smaller area than Ile de France). In addition to accommodations, transportation infrastructures and athletic facilities as well as other tourism structures will be developed to further ongoing post-Olympics growth.

So what should we expect from the International Olympic Committee's decision and its impact on Paris's economy? One thing is certain: one should not draw conclusions immediately in the wake of the competition, but rather in the long run. And while we ask ourselves about the potential for construction and development of the current infrastructures, it also seems important to prepare the "post-Olympics" stage and their conversion.

Georges Panayotis, President of Hospitality ON, stated: "This is great news for the tourism industry and the French economy: following years of scarcity, the positive momentum started with the Olympics will be a way to go higher, to be stronger. This will also be an opportunity to end a deleterious cycle where we were astonished by the increase in private rentals and stagnation of the commercial supply. With the advancement of the Olympics and real estate projects, Paris should be able to benefit from a new and modernized hotel supply, which will support future tourism growth."

Paris 2024: Passion + Purpose par paris2024

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