Chris Webber | May 30th 2012 | @MgThinking
They say there’s an exception to every rule. While most Olympic host cities have been left disappointed by the long-term impact of their investments, the Barcelona games are credited with transforming the city’s economic fortunes. Hoping that they can learn the magic formula for success and apply it to East London, those responsible for delivering the London Olympics have been regular visitors to Spain’s second city. Anyone expecting a similar kind of economic boost is likely to end up disappointed, but plans to use the Olympics as a catalyst for some much needed housing investment could still end up yielding a positive result for London.
Apart from the sun, sand and sea, one of the main differences between Barcelona and East London is their starting points. Before the Olympics, Barcelona was an underperforming city with a lot of unfulfilled tourism potential. The large scale infrastructure investments and massive publicity boost associated with hosting the games helped the city reposition itself as a major tourist destination. As a result, the number of people visiting Barcelona every year (as measured by the number of people staying in the city’s hotels) has tripled from just 2.5 million in 1993 to 7.4 million in 2011.
London, of course, is already a leading tourist hub, with about 15 million international visitors per year, so the potential for a Barcelona-style expansion in visitor numbers is limited. Some might argue that the Olympic park has the potential to act as a major tourist attraction, but one has to question how big a draw it will be for tourists fifteen or twenty years from now. There is bound to be some temporary boost to tourism, but a sustained impact seems unlikely.
A review of plans for the area after the games shows a refreshing realism about this. Rather than expecting the area to become a new tourism or business centre, planners have earmarked sites for some much needed housing; the chronic shortage of which forces Londoners to live in some of the most expensive property in Europe.
Companies have already been shortlisted to build Chobham Manor, the first new Olympic park neighbourhood to be built after the games comes to an end, and a deal is expected to be finalised in June. A further four neighbourhoods will follow, complementing the more glitzy plans for a “city within a city” in neighbouring Stratford.
There are reasons to be optimistic, but we shouldn’t get too carried away. Academics often make the point that simply building new houses, shops or stadiums doesn’t make an area more prosperous. For that you need entrepreneurs, skilled workers and thriving businesses, which are all much tougher nuts to crack.
In Barcelona, this demand side stimulus came from the long-term increase in tourism, which now acts as a key source of income for the city. It might be unrealistic to expect the London games to have a similar kind of impact, but there’s a chance that won’t be quite so important in London’s case. After all, the UK capital is already one of the world’s most high performing urban economies, so it’s less in need of the economic boost that Barcelona so clearly benefited from. Instead, what London needs more than anything else is housing. If the games can act as a catalyst for increasing the supply of homes then London might provide another exception to the rule.
Watch our free live webinar on July 11th 2012 to hear independent experts discuss how businesses can benefit from major events like the Olympics.