On 6th July, 2005, the UK won the bid for becoming the host country to stage Olympics Games in London for the year 2012. Such decisions have been brought forward with itself various levels of arguments and key analysis in the light of social and tourism theories. The possible impact of such decisions is related to be different from the viewpoint of every analyst. Some consider it to be having positive effects upon the economy such as increased tourism and international exposure to the UK, and better ties with the nations participating in an international event. On the other hand, economists and industry analysts cite it as a bad idea with more cons than pros. The long lasting effects of London Olympics could be devastating for the economy in whole. This short research paper aims to shed light on the various effects of staging these events have on the economy of Great Britain in light of tourism theories. Furthermore, it aims to develop a balance in between theories and practical approach to realistically found out the most accurate possible after effects after witnessing the historical analysis of various countries that staged Olympic Events.

1. Effects of London 2010 Olympic games upon the Tourism, Hospitality
and Events industries in the UK

2. Abstract
On 6th
July, 2005, the UK won the bid for becoming the host country to stage Olympics
Games in London for the year 2012. Such decisions have been brought forward with itself
various levels of arguments and key analysis in the light of social and tourism theories. The
possible impact of such decisions is related to be different from the viewpoint of every analyst.
Some consider it to be having positive effects upon the economy such as increased tourism and
international exposure to the UK, and better ties with the nations participating in an international
event. On the other hand, economists and industry analysts cite it as a bad idea with more cons
than pros. The long lasting effects of London Olympics could be devastating for the economy in
whole. This short research paper aims to shed light on the various effects of staging these events
have on the economy of Great Britain in light of tourism theories. Furthermore, it aims to
develop a balance in between theories and practical approach to realistically found out the most
accurate possible after effects after witnessing the historical analysis of various countries that
staged Olympic Events.

3. Research – Literature Review
There is a general thinking that whenever a country hosts any event at an international
level, its economy gets boosted in terms of employment and foreign revenue. However the other
side of the picture should always be analyzed before coming to a final conclusion. James (2006)
is very optimistic about the view that the London Olympics would uplift Great Britain’s image in
the world and would help in boosting the tourism industry due to pouring high levels of foreign
reserves. He also mentions that in order to fully utilize the benefits of London Olympics, the
country has to meet a number of challenges confronting the tourism and hospitality industry in
order to meet up to the expectations. However Richard, (2006) in in his posting on the official
website of the London Olympics 2012 is strictly against the view that the tourism industry would
get benefits from this international event. According to a study by ETOA, those nations that
stage mega international event witness a drop fall in tourism before the event begins and thereby
receive no long term benefits of tourism.
ETOA further said that there were trends of falling tourism rate and stagnation before the
Olympic events that took place in Sydney, Seoul, Barcelona and Atlanta. Eric Cohen (1995)
argues regarding the poverty of tourism theory that there are various approaches that need to be
understand and to realize the after effects of tourism on the country. Adrian & Mike (2001) agree
to this view that there is a dire need to develop a system that develops and helps to understand
the different theories in tourism industry due to ever changing market conditions.
The volatile economic effects of recession has gathered mixed views of analysts that at
one side see hosting these events as a positive signal to end of recession and on the other side
call it a mere politically based view of uplifting the economy. The theories are always subject to
limitation, whether it be in the field of economics, or sociology. This is because theories are old
and based upon assumptions and in order to understand them fully, there is a certain need to
develop a conceptual framework that takes into account rigorous developments and progressions
taking place in the modern field of tourism (Adrian & Mike, 2001).
Most of the theories developed on tourism do not take into account the practical factors
and sadly speaking no relevant or solid theory had been developed especially focused to improve
the industry’s environment after the recent global recession. The UK government expects that the
British tourism industry would flourish due to the fact that London is becoming an attractive spot
day by day for foreigners as a result of London Olympics taking place in 2012.
Tourism alliance, on their official website states that staging mega events like Olympics
can boost economic growth, especially in the tourism industry. Seoul and Barcelona have
witnessed themselves becoming a part of a prominent world holiday destination spot after
hosting the Olympics in their respective countries. However these can be categorized as short
term economic growths that have no grounding to justify the long term positive economic impact
on the hosted country. Beijing hosted the recent Olympics and built a special stadium for this

4. purpose. The stadium exceeded well over $1 billion when it initially boosted economic growth
due to rise in employment rate and fueling growth in the tourism industry. After the Olympics
were held, the country witnessed one of the worst ever impacts of this event where the stadium
eventually came to be useless and thousands of workers and previously employed people now
left stranded as they lost the income earning opportunities in their own country.
Lessons can always be learnt from this recent example. The Beijing Olympics that took place in
2008 left the economy with severe side effects. Lee (2008) says that in order to meet the IOC’s
demands after winning the bid for hosting the Olympics in Beijing, the Chinese government dis
its utmost effort that it could to make it the most astonishing and remembered event of the
millennium. This investment continued from 2001 to 2008, the time period China took after
bidding the place for hosting Olympics; 7 years. In order to improve transportation, the
government significantly increased its spending that could be witnessed from the fact that over
$1.1 billion had been spent on improving the transportation alone for the country.
In order for England to have more positive impacts of hosting London Olympics than negative
ones, it is better that the government plays a key role in balancing its spending on improving
public facilities including transportation, communication and at the same time on its own
economy benefiting the residents.
One key element to understand the after effects of London Olympics on its tourism and
hospitality industry is very important; time factor. Most of the previous studies on Olympics
were conducted after winning the bid and before hosting the event. Little had been done on the
national and international level to get accurate data to realize the most authentic and true effects
of Olympics, after this event had been taken place. Either the lack of political will was present
due to which this study could never take place, or the infrastructure especially designed for
hosting Olympics had not been in use after hosting the event.
A big threat to the London Olympics can be drawn from the fact that there is no reliable set of
data to study the after effects of Olympics. Olympics is an international event that is held only
once in four years. Brown & Masey (2001) strongly argue that Olympics do not bring with itself
any financial benefits. The 1972 Munich Olympics and 1976 Montreal Olympics witnessed
financial losses of more than 850 GBP in total. However the Los Angeles Olympics and
Barcelona Olympics of 1984 and 1992 respectively resulted in net benefit of roughly over 215
million in total. It is clearly evident that the benefits are not as promising as the side effects are.
An input-output model has been used in order to describe in details the effects of London
Olympics on the UK economy. An input output model is in the form of a matrix where major
inputs and outputs of the economy get listed down along with varying levels of changes to note
the different aspects of changes in production and consumption and anticipate a demand and
supply theory. The IOC does absorb all debt to itself for hosting this event. Although IOC has
stake in the shares of revenues for hosting Olympic Games, yet it is the responsibility of the host

5. country to bear all debt and financial expenses. Considering the fact that many companies
including Flyglobespan and XL airlines have gone bankrupt leaving thousands of passengers and
crew members stranded as they wait to get bailed out, the UK government is confronted with
many challenges in order to boost up their economy.
The British government is already in the process to manage its increasing public debt by raising
tax rates and cutting public expenditure. The situation is not very promising in the country but
since it has won the bid for hosting Olympics, it is on the brink of getting it organized with not
more than 2 years remaining to witness a mega event. George Osborne has come up with the
recommendation of cutting public expenditure severely affecting the police, welfare and councils
of the British economy. The Chancellor of England says to cut the welfare spending by as much
as 7.1% by April. It is not clear whether these efforts are part of agreement to finance Olympic
Games or just another measure to curb recession.
Historical 81 billion dollars would have been cut over 4 years had been witnessed this time. It is
anticipated that more than 500,000 jobs could be lost in effect of these precautionary measures to
heal the rising debt of the British government, according to BBC UK (2010).

6. Conclusion
The paper concludes with providing mixed reviews of the London Olympics effects upon
the hospitality and tourism industry of the United Kingdom. While it is not uneasy to generate
roughly 2 to 3 billion GBP in revenues due to increased tourism, it also should be realized that
this positive effect would never be easy to accomplish without solving the challenges with
British government is confronted of. Andrew, (2007) states that the British tourism industry is
anticipating bad impacts of London Olympics due to the fact that the government is doing its
best in order to drastically cut its public spending. The target of a 2 billion GBP revenues could
be hampered if the government keeps making and following these policies.
The government is already in efforts of cutting the public expenditure on foreign
marketing that does not promise any god results to the tourism industry of the UK. The benefits
of hosting London Olympics by the ministers are inflated and not in real aspect anyway at all, as
stated from the above mentioned article reference.
The UK government has to increase its public spending or bring soft changes to its public
spending cuts if it wants to boost its economic growth via tourism industry. More studies should
be conducted to analyze the after effects of hosting Olympics in London. This would ensure a
more transparent policy planning structure that could be adapted in order to improve the
economic performance of UK.
Analysis of past studies conducted upon the after effects of staging Olympics in other
countries should be understood in details to devise policies that could target economic growth of
the tourism industry and the economy at whole in the long run, after London Olympics gets over.
Olympics have always been held debated in the light of various tourism and social theories.
However the biggest drawback of theories is that they rely on pure assumptions that cannot be
ignored in today’s highly complex practical business environment theories are deigned to
elaborate our understanding of different concepts regarding any industry or economy, but limit
our knowledge in all practical terms. Practicality needs to be taken into account at all times
whenever any policy needs to be crafted.
The British government now needs to spend more attention in developing its tourism
industry and should spend good amount of allocated budget on this sector to make it more
prominent at international level in front of the entire world. This is a massive opportunity for UK
to showcase itself positively to the entire world in all aspects. However, without sound strategy
and investment in tourism industry, the promising results are far from being visible down the
road. Urgent attention needs to be paid to the tourism industry so that it flourishes as more and
more jobs get created giving people opportunities to earn decent income.

7. References
1. James, 2006. London Olympics 2010. [online] Available at
http://www.caterersearch.com/Articles/2008/08/22/310164/London-Olympics-
2012.htm [Accessed 22 April, 2011]
2. Eric, 1995. Contemporary Tourism – trends and challenges: sustainable authenticity
or Contrived Post-Modernity?
3. Adam, 2005. The economic impact of the London 2010 Olympics. [online] Available
at
http://utsescholarship.lib.uts.edu.au/dspace/bitstream/handle/2100/994/Impact%2020
05_5.pdf?sequence=1 [Accessed 22 April, 2011].
4. Adrian & Mike, 2001. The trouble with tourism and travel theory? [online] Sage
Publications: London. Available at
http://webspace.ulbsibiu.ro/ilie.rotariu/html/the%20trouble%20with%20tourism%20t
heory.pdf [Accessed 24 April, 2011].
5. Lee, Choong-Ki, & Tracy Taylor, 2004. Critical Reflections on the Economic impact
Assessment of a Mega-event: the case of the 2002 Fifa World Cup”
6. Tourism Alliance, 2011. London 2012: Tourism Boom or Bust? [online] Available at
http://tourismalliance.com/downloads/London%202012%20(Nov%202007).pdf
[Accessed 24 April, 2011]
7. BBC UK, 2010. Spending Review 2010: George Osborne wields the axe. [online]
Available at http://www.bbc.co.uk/news/uk-politics-11579979 [Accessed 25 April,
2011]
8. Andrew, 2007. Tourist industry gives stark warning over London Olympics. [online]
Available at http://www.guardian.co.uk/uk/2007/jan/03/olympics2012.olympicgames
[Accessed 25 April, 2011]