Extortionate Olympics hotel prices could damage sector in long-term

Basing its predictions on data gathered during the Vancouver Winter Olympics, market intelligence company Rubicon believes hotels in the capital can expect to see profits leap during the summer of 2012.

However, hoteliers are being warned to watch their margins so as not to turn off business from the corporate sector, which is expected to plunge by up to 80 per cent during the period.

Long term damage​

Andy Storey, managing director for Rubicon Europe, said that high room rates could potentially damage business in the long term.

“Generally hotel owners fail to put enough attention on the shoulder seasons either side of sporting events, and this is what causes them to do worse than in ‘normal’ years,” he said. “It is no surprise that hotels will be busy during the event itself, but London properties should heed warnings and set pricing and market accordingly.
 
“By recognising past trends, London hotels can now look to manage their pricing effectively throughout the Olympic summer of 2012, enabling them to compete more effectively with their competition and draw in both tourist business and corporate travellers. Business traffic often drops off significantly either side of these landmark events and hotels must be wary of overpricing in these periods.”

Visits from tourists on package holidays to London is also expected to fall during the Games, as tour operators fear they may be priced out of the market.

Non-London hotels to benefit​

The Olympics organising committee LOCOG has first choice of 50,000 rooms for officials, dignitaries and 22,500 international media, putting hotel stocks in the capital under immediate pressure.

Because of this, Rubicon believes towns within an easy commute to London will also find they benefit from the Olympic Games, as business travellers and tourists are forced to find reasonably priced accommodation outside the capital.