Every four years, the same predictable behavior crops up in a new country as preparation for the summer Olympic Games begin. For reasons that must have something to do with a combination of ignorance and greed, a large group of investors, private sector money people and government officials get together and decide -- against all logic, common sense and let's not forget historical precedent -- that three week event is about to miraculously rescue the economy of their city.
Without any sort of due diligence -- a simple look at past Olympic venues would almost immediately disabuse them of doing something stupid -- they embark on nonstop building frenzy. No, I'm not talking about the construction of an Olympic stadium or other large arena for the games. The building frenzy is all about adding hotel rooms, increasing airline flights, bringing in cruise ships and, of course, substantially raising prices and fares.
But a quick check of cities like Atlanta, Sydney, Athens and now London reveals that all the massive building and price gouging is misguided.
In Atlanta, they're still trying to fill all the extra hotel rooms from 1996. Sydney has the same struggle. Athens, what can I even say about Athens? Add the surplus of rooms to the euro crisis and you've got an Olympic-scale disaster.
What about overbuilding and greed in China for the 2008 Olympics? Let's just say that China had an unlimited budget, and it exceeded it. And even though there was a huge rooms surplus, China always found a way to fill those rooms. So, China is the exception to the Olympics' greed, build, gouge rule.
Now, London. Consider this:
A business class airfare to London from New York was as high as $9,000 a few weeks ago. Then, British Airways slashed the price to $2,012 round trip. Not just from New York, but from all U.S. gateway cities!
Two weeks before the Olympics 23 percent of London's hotel rooms were still vacant. Hotels are lowering prices in order to fill vacancies. And they won't come close to filling them.
For businesses in London, this is not good news. For travelers, great news, during -- and especially after the Olympics is over.
Hotel occupancies in London (and in Ireland, Scotland and parts of Wales) are already plummeting in mid-August. One of the reasons is that the original quoted hotel prices for the Olympics were so unreasonably high that most folks simply opted not to go to London at all this year. Translation: a huge buyer's market for the entire UK immediately following the Olympics.
If you still want to go the Games -- even at this late date -- you may not be out of luck. Hotels have been saying for weeks that they are fully booked. And that Olympics tickets are sold out. Really? it gets down to a definition of terms and the difference between a booked room and a blocked room.
Right about now, hotels are coming to grips with some tough reality. Room rates have fallen 25 percent from their highs in the last couple weeks; some London hotels have gone down as much as 40 percent.
Some hotels had set their prices three times higher than usual in anticipation of the Olympics.
Major corporate sponsors who have blocked significantly more rooms than they needed are starting to release those blocks. Result: even more vacancies. According to Hotwire, you can book a 5-star hotel in Mayfair for $154 for the week of July 23 or you can find a 4-star hotel in Westminster for $140 rates through the Games and into September.
When the Olympic Games conclude, the UK will be on sale for the rest of the year. No gold medals will be awarded for logic, common sense or pricing. And, if history is any indication, four years from now, the same silly, greedy behavior will once again repeat itself in Brazil.
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