Brand New View

The Best Hotels for the London Olympics Are In...?

You might say London would be the best place to stay if you are going to the Olympics. That's certainly logical, but oh so unimaginative. Instead, Katie Kelly Bell of Forbes Magazine writes that 'The Best Hotels for the Olympic Games Are In Paris.' Traveling from Paris to London on the Eurostar is only 2 hours. I've done this journey before and it is great to have such easy access to two of the world's most incredible cities.  Of course, if you are not a fan of traveling under the English Channel in a tube for part of your journey, then you might as well stay in Paris and watch the Olympics on TV. I love Bell's quirky headline, and it reminds me of a similar headline from a print ad for a hotel a couple of decades back. I don't recall the hotel company, but I do recall the ad saying "The Finest Hotel in Boston is not in Boston...". The headline drew me in just to find out what the heck the ad was describing. It is counterintuitive and creative, and serves as a useful reminder to sponsors to think expansively about their sponsorship marketing communications at the Olympics. Of course, TOP sponsor creative campaigns are mostly conceived and ready for launch at this point, but that shouldn't stop sponsors from stepping beyond their comfort zone in an effort to appeal to the global fan base.

How London Will Cope with Increased Visitors During Olympics...

An additional 700,000 people will visit London during the 2012 Olympics. How London will cope with the added travel is not precisely known. An article today by Reuters' Michael Holden discusses the challenges the increased visitor numbers poses for London aviation authorities. Heathrow is already at 99% capacity and the other London area airports of Stansted and Gatwick are close to maxed out as well. There will be a meeting on March 22 between major airlines and government transportation authorities to hopefully agree to a plan that prioritizes air traffic needs during the Games. The stakes are high, of course. The economic gain each Olympics anticipates is always at risk if the transportation part of the preparation plan inadequately meets the needs of the increased traveller load. Furthermore, Olympics-specific travel delays threaten to affect regular air travel as well. The concerns are theoretical at this point since the potential for an agreement that satisfies all parties remains. However, the transportation authorities and the airlines would be remiss if they under-planned how to address the increased travel that is already confirmed (and, therefore, not theoretical...). Such concerns are part of the complex web of decisions Olympic organizers face, and not all of it is specifically under their control. But the blame will center on the Olympics if London's various transportation parties cannot reach an agreement, detracting from what should otherwise be a positive mega-sports event.

The Olympic Games Effect--the first statistical evidence

Among the hoped-for benefits of hosting the Olympic Games is a boost in economic activity resulting from, among many factors, the increase in tourism. A recent study of travel bookings in the UK, Europe, and the US shows significant increases in arrivals immediately prior to the Games, reservations for travel from the US to the UK around the Olympics, and reservations from Europe to the UK. At the same time, the feared exodus of Britons does not appear to be taking place, at least as of now. Instead, they are 11% more likely to stay in London during the Games than at the same period of time in 2011. This will help keep the locals spending locally, and tourists adding value on top of that. While we are still months, to even a year away, from knowing the full economic impact resulting from the Olympic Games, the earlier indicators are positive. These are certainly welcome signs in the UK where economic austerity measures have otherwise hampered growth and, in fact, the UK is on the brink of entering another recession. In response, the National Institute of Economic and Social Research urges the UK government to temporarily loosen spending cuts to spur growth. With tourism looking promising and local citizens staying put during the Games, the Olympics are doing their part to contribute to the country's economic vitality.

The London Olympics Colors

London Olympics organizers will be asking citizens located in or near key Olympic competition areas to plant flowers based on the the colors in the 2012 London Olympics logo (the jagged, controversial logo designed by Wolff Olins and unveiled in 2007). Those colors are magenta, green, blue and orange and the Games organizers believe emphasizing these colors anywhere and everywhere possible will help make the 2012 Olympics visually memorable to visitors and viewers. Requesting such cooperation from citizens is easy, but getting locals to follow through is a bit harder. Assuming an additional amount of national pride bubbles up in the coming months, one can imagine Britons doing their patriotic duty by planting Olympic-influenced flowers. Viewed through the lens of business branding, coordinating colors around the main Olympic venues will certainly help create a consistent look for the Games. It will be interesting to see whether Britons in other parts of the country also step up to reinvent the classic English garden to honor the Games.  

British Airways-London 2012 Official Olympic Partner

The modern Olympics, in addition to being the most complex sporting event in the world, have also evolved into a sophisticated marketing stage for companies with significant financial resources. There are four sponsorship tiers for the modern Olympics:

1. TOP (The Olympic Partners)-the highest level of sponsorship conferring exclusive global rights to sponsoring companies;

2. Domestic/Official Olympic Partner-which give sponsors domestic sponsorship rights (but not global);

3. Official Olympic Supporters (these are usually experts in vital logistics and related expertise); and

4. Official Olympic Providers and Suppliers (these firms provide vital goods and services).

TOP sponsorships are the most expensive, whereas Providers and Suppliers are the most affordable, relatively speaking (although none of the sponsorship levels are cheap...). I discuss the various sponsorship tiers in my latest book, The Olympic Games Effect, with a specific emphasis on the TOP program. The IOC sponsorship programs are vital to the ongoing success of the Olympics because the vast majority of the funding goes to support the NOCs (National Olympic Committees) of over 200 countries and territories, as well as the OCOGs (Organizing Committees of the Olympic Games--for the host cities), enabling the athletes from around the world to participate in the Games who otherwise could not afford to do so.

British Airways (BA) is a domestic sponsor, meaning the airline has Olympic marketing rights that can be used across the UK and in London. One of BA's responsibilities is to safely transport the Olympic flame to the different destinations where Torch Bearers cannot travel on foot (such as across large bodies of water, or small ones for that matter...). BA views their sponsorship as a rare opportunity to showcase the company, the UK and also be associated with the values and reputation of the Olympic Games. Marketers will appreciate that this is not an easy undertaking, and certainly isn't as simple as throwing money at the Olympics. Indeed, BA has four pillars in their Olympic sponsorship that, collectively, go to the heart of sports sponsorships: clear activation planning.

First, BA is using the sponsorship to emphasize their role as a leader in aviation in the UK. That may strike some as unnecessary considering BA is clearly the dominant carrier. However, companies around the world are always trying to tell us why they are special, and BA's use of the Olympics perhaps nudges them toward a more distictive and exclusive leadership status. Second, BA is using the Olympics to create a more emotional connection to the company. Emotional connections are among the key reasons sports sponsorships are increasingly popular among companies around the world--sports fans are uniquely loyal to their sports, teams and athletes. Third, BA is using the Olympics as a rallying point for its own employees, serving as a source of internal pride, if you will. Long gone are the days when employees are expected to do what they are told. Today, employees want to join companies that are pursuing something special and meaningful, where they can feel like they are part of a larger cause, and not just slot fillers earning a wage with little understanding of how their work contributes to the greater good. Sponsoring the Olympics overtly supports a larger global effort to bring people together from around the world to celebrate sport. Fourth, BA intends for their Olympic sponsorship to produce economic gain for the company by attracting more customers and building long-term business partnerships with other companies. This latter pillar is, of course, what shareholders and market analysts want to hear. After all, investing tens of millions of pounds without a plan for generating a positive return on investment would not be a popular decision.  

Listing these four pillars isn't enough. As sports marketers know, successful sponsorships are intended to guide the tactical decision making required to realize the commercial gains. An interview with Frank van der Post, Managing Director of Brands and Experience at BA,sheds a bit more light on BA's London 2012 Olympic sponsorship efforts. His enthusiasm for and optimism about the Olympics is refreshing. 

Rolling Stones and London Olympics?

While official spokespeople deny that the Rolling Stones will perform at the 2012 Olympics in London, the band's guitarist Ronnie Wood has said that the band is indeed in talks to perform, according to various reports in the British press. If true, the London Olympics would certainly be a invaluable way for the iconic band to celebrate their 50th anniversary. Given that London is the only city to have hosted 3 Olympiads (1908, 1948, 2012), a Rolling Stones performance would add yet another distinctive and quintessential 'Britishness' to the Games (Paul McCartney is supposedly in talks to perform as well, and rumors have also hinted for a Led Zeppelin reunion although this seems unlikely since band spokespeople have repeatedly denied this). Irrespective of which bands actually perform at the Olympics, 2012 is a celebratory year for the UK with the Games and also the 60th anniversary of Queen Elizabeth as monarch. A separate but newsworthy note is about Lord Michael Bates who just completed a nearly 3,000 mile walk as he strode up Trafalgar Square in London this week. The reason? He was drawing attention to the Olympic Truce, an ancient Greek tradition that required all wars and conflicts cease during the Olympics (to allow athletes and visitors to travel to the Games without risk). Lord Bates hopes that his journey, which began in April 2011, served a useful purpose in reminding the world of the importance of the Olympic ideal and Olympic values. If you haven't heard about his journey, or about the Olympic truce, then click on the highlighted links.

Olympics Host City Economic Impact

The hope for a positive economic impact is, of course, one of the rationales cities use for bidding to host the Olympics in the first place. When planned and managed well, host cities can reap long-term rewards due to increased tourism and revitalized local businesses, and from an increase in new cultural offerings such as concerts, plays and exhibits that use the former Olympic venues. Economic Impact Studies (EIS) are often used as supporting evidence of the economic gain an Olympics will produce, as I discuss in The Olympic Games Effect. However, EISs are considered suspect by many leading economists, partly because they usually rely on the multiplier effect (ME). In the case of the Olympics, MEs project that the sports event will generate additional spending above and beyond regular economic activity and that the income generated from this spending will be re-spent within the same economic region in subsequent periods. The multiplier is always greater than 1, meaning that a $1 in income generated will lead to value creation well above that initial dollar (1.5, 2.0 or even 3.0 times the initial additional income created). Logically, the implication is that the sports event’s economic contribution to the local community will be positive, substantial, leading to a permanent, increased level of economic performance. But the ME's implication of sustained economic contribution is problematic for many economists because of the unpredictable interaction among complex variables, such as labor market changes (permanent or temporary?) and the unpredictable flow of money (does it go out of the region, thereby not building upon activity within the primary Olympic geography?), among other factors. One of the by-products are inflated rental rates, as I discussed in my February 3 post. The same is true for hotel rates, which brings us to the basic laws of supply and demand. When demand exceeds supply, as is anticipated with respect to hotel rooms during the London Olympics, then prices rise. The question then becomes what is a reasonable price increase? As I mentioned in my February 3 post, some landlords are raising rents 3-4 times above normal rates during the summer, and hotels are expected to increase rates as well. A February 10 article in BBCNews points out that hotel rate increases are averaging 315%, according to the Shadow Minister for London and the Olympics, and a plea has gone out from a disability charity to keep hotel rates reasonable. The economic promise of the Olympics poses a dilemma for London, and other host cities, regarding how they ensure that the economic gains the Olympics are supposed to create don't also end up unreasonably gouging visitors (particularly those with special needs, such as disabled Olympians) and even locals. Inflated prices run the risk of narrowing participation to only those with significant means, undermining the Olympics' reputation as a celebration of sport and international cooperation that brings together people of all backgrounds. This problem is not unique to London, and the challenge for host cities is how to appeal to as many people as possible while also ensuring the economic vitality that their bid promised.

London's GREAT Campaign

Yesterday I discussed London's plans for using the Olympic venues in the years after the Games have ended. On a related note, the UK has launched a new ad campaign designed to boost tourism over the next four years by targeting 14 major global cities with a simple message, "GREAT". Billboards, posters and digital media with the GREAT message and English imagery (kings, castles, shopping, countryside...) are cropping up in subways and buses in cities ranging from Tokyo to New York (the campaign is concentrating on the markets with the biggest sources of tourism and spending). The GREAT campaign is designed to take advantage of the increased exposure provided by two seminal events this year in the Olympics and the Queen's 60th Diamond Jubilee Anniversary. UK authorities are forecasting an additional 4.6 million visitors over the next four years, increased spending of US$3.6 billion and another US$1.5 billion in business investment. The campaign is noteworthy for its simplicity and integration across multiple media, two important tenets of successful marketing. Combined with clear and measurable objectives, London authorities appear to be taking their post-Olympics planning seriously. The track record for host cities generating sustained economic gain from their Olympic investment is uneven. London is well aware of this and is therefore going to great lengths to ensure the Games produce a positive long-term impact. My book The Olympic Games Effect analyzes marketing communications strategies for the Olympics, particularly for host cities and TOP (The Olympic Partners) program sponsors. Sponsors are responsible for developing their own marketing communications strategies during the Olympics, but they do expect host cities to create compelling marketing that attracts additional visitors during the Games and afterward, thereby supplementing the sponsor's efforts. Detractors of the GREAT tourism campaign argue that London and the UK are already so well known that the additional investment could have been spent more effectively elsewhere. To a certain extent, this is true, although it is pure speculation at this point. Despite London's existing global image, the city is not resting or relying on its reputation as one of the world's great destinations to attract visitors. Like most truly great brands, they regularly seek new ways to refresh their image and to remind us why we love them.

London's Post-Olympics Plan

Naming rights have become one of the staples of sports sponsorship the past 20 years, with stadiums around the world named for their sponsors, most often large corporations. In The Olympic Games Effect I discuss the importance of host cities developing a post-Olympics plan to help them sustain the economic activity that hosting the Olympics helped them generate. The post-Olympics planning process includes determining how to use the Olympic venues so that they don't become white elephants for the host city. London is seeking sponsorship deals for several of its Olympic venues, including the main Olympic stadium. A recent BBC article indicated that proposals are to be submitted by March 1, 2012 and the candidates must explain how they plan to continue London's post-Olympics efforts to promote a health lifestyle. After the Olympics many of London's venues will be converted to accommodate modified needs, reopening in 2013. With the venues expected to be used for cultural events, future sports activities, and concerts, the potential for creating sustainable economic gain is promising. Assuming London is successful with its healthy living approach overall and with the transformation of the Stratford area of London in particular, then the venue naming rights will be an important part of the long-term post-Olympics funding success, adding to London's already well known reputation for being one of the world's most vibrant and interesting cities. 

Rental Prices to Soar in London During Olympics

Londoners, or more specifically renters in London, face the prospect of paying 3-4 times their normal rental rates during Summer 2012, according to a recent article in The Guardian. Supporters argue that the free hand of the market is merely at work and should remain unencumbered by additional laws and regulations. With the Olympics as a quadrennial mega-sports event the increased demand and fixed supply dynamic is to be expected. On the other hand, given the unique position the Olympics have in the world today as an event with a reputation for goodwill the question of social responsibility is reasonably raised by opponents of the rental rate increases. One should not be surprised that hosting an Olympics affects the local economy in both positive and negative ways, as the issue of rents clearly shows. For landlords, this is a once in a lifetime chance to extract additional profit. For tenants, the choice of residence becomes an unintended burden during the Olympics, forcing many to leave London during the summer, thereby affecting their jobs and families. I discuss the challenges host cities face in planning the Olympics in my book The Olympic Games Effect. The LOCOG (London Organizing Committee of the Olympic Games--as well as other host city OCOGs for that matter) does far more than just oversee the development of the Olympic Village and various venues for the purpose of sport. Their mandate also includes working with local government authorities to plan how best to minimize local distress and maximize local support. Despite forthright efforts not everyone's interests can be perfectly protected: if rents are capped, then landlords and proponents of free markets would argue that government interference is preventing economic gain for them directly and from those inflated rent-paying visitors who are also spending on many other goods and services during their stay; and if rents are left uncontrolled, then renters protest that they are being unfairly displaced, or taxed (through increased rents), or both. Of course, visitors would undoubtedly welcome cheaper rents, which might very well turn those rent 'savings' into increased purchases of goods and services during their stay, while also not displacing those who consider London home.