The eyes of the world will be trained on the UK this summer, but will the benefits really outweigh the costs of the 2012 Olympics?
“The estimated economic impact of the Games is significant,” says Rob Allen, chairman of UK events industry association Eventia. “On top of a £5.1-billion total stimulus to the London economy, there’s a predicted £750-million increase in consumer spending during the Games and a £1.37-billion increase in economic output each year for the three years that follow.”
The problem is the estimated cost of the Games has spiraled from £2.37 billion in 2005, when the bid was won, to £9.3 billion, according to the latest official Public Sector Funding Package, with a recent Sky Sports investigation suggesting it could rocket to £24 billion.
Yet some claim you can’t put a figure on the economic benefits. According to Sir Martin Sorrell, head of advertising giant WPP, in an interview given when the opening and closing ceremony plans were announced: “With regards to the perception of London and the UK and a tourism legacy, you could say the Games will be priceless.”
The UK events industry already contributes £36 billion annually to the national economy, according to a 2011 report from Britain for Events, a trade body for the industry. It predicts that the industry will create an additional £1.8 billion of economic value as a result of the Games, while the sector will grow to £48 billion by 2020.
It doesn’t take a genius to work out the economic benefits of the Government working closely with the events industry
But with the government having pumped so much money into the Olympics, why should Westminster do more? The answer lies in the revenue breakdown. Some £30.3 billion (84 per cent) of the £36 billion generated by the events sector comes from business – conferences (£18.8 billion), trade shows (£9.3 billion), and corporate hospitality and motivational events (£2.2 billion). The delegates that these activities attract, or “business tourists”, account for 25 per cent of overseas visits to the UK and 28 per cent of inbound tourism earnings. Furthermore, business tourists spend on average £131 a day – 72 per cent more than leisure visitors. Wielding this kind of spending power, it doesn’t take a genius to work out the economic benefits for the government, representing UK plc, working closely with the events industry to boost these numbers.
Unlike many sectors, the 530,000 people employed by more than 25,000 companies in the events industry are not restricted to certain geographical areas, but spread across the UK. In fact, it could be argued that it is in the more disadvantaged areas where events have the greatest impact.
“Business tourism generates an estimated £277 million of direct gross spend into the Newcastle-Gateshead economy, supports 6,332 full-time equivalent jobs, benefits 11,339 employees in total across the destination and contributes to an overall visitor economy estimated at £4 billion,” says Adrian Evans, senior business tourism manager at NewcastleGateshead Convention Bureau.
The events also create opportunities for local businesses. “Everyone benefits when a major conference is being held in the area, from shops, restaurants and coach companies to the actual conference facilities and hotels,” says Janet Reuben, chief executive of Visit Hull and East Yorkshire. “It also helps raise the profile of the destination and change perceptions.”
Meanwhile, Faye Sharp, marketing director at UK events agency Zibrant, points out that events can focus attention on particular disciplines or sectors providing platforms for local organisations to tap into. “This could be through creating an appropriately themed offering or, if relevant, seeking sponsorship opportunities,” she says. Many conferences these days also incorporate a related boutique trade exhibition, in which local businesses could participate.
Surely there can’t be many sectors that offer such a broad range of economic benefits and business opportunities at both the national and local scale.