The summer Olympic games in Sydney 12 years ago may not have been the cash cow officials were hoping for. But Beijing’s successful run four years ago has organizers in London optimistic.
The U.K. government is estimated to have spent about $15 billion on venues, key infrastructure projects, hotels and new stores related to this summer’s games in East London.
The investment, which is below the estimated $42 billion spent by Beijing in 2008, goes far beyond the two-week event. British Consul-General Danny Lopez said it has revived East London and will have long-term economic benefits.
“This is not about the 28 days of the games, it’s about what it means for the future of the country, for the future of our generations and, economically, it’s a transformation of East London,” Lopez said.
That area on the outskirts of the booming city was an “industrial, polluted wasteland” a few years ago, he said. But it has since been transformed into a modern, tech-savvy metropolis that he estimates will become “the creative and technology hub of Europe” after the two-week games are over. That will not only help boost tourism, but could draw in new businesses as well.
“This is an area that didn’t have that before, didn’t have the transport infrastructure, didn’t have the know-how,” he said.
As much as two billion pounds of tourism revenue could be generated after the games. East London’s revamp could also lead to the development of 11,000 new homes and generate some 8,000 employment opportunities, Lopez said.
“The more you invest, the more you get out of it, of that I absolutely have no doubt,” he told FOX Business at an event held in New York City’s Times Square on Wednesday to promote the 100-day countdown to the games.
With Intercontinental Hotels Group (NYSE:IHG) acting as the Olympics' partner hotel chain, more than 100,000 hotel rooms should be available for the event, including Holiday Inn and Crowne Plaza properties.
The event will mark the first Olympic Games where people are required to use some type of public transportation, given the clogged roads, to get to the arenas. While Lopez called that a “huge, huge challenge,” he said that “London’s ready for it.”
London’s public transportation was an element of the Olympic bid which scored poorly in the International Olympic Committee’s initial evaluation. That means much of that $15 billion investment has gone to revamping the city’s public transportation system, which has a long-lasting impact.
Jonathan Armstrong, a London-based partner at Duane Morris, feels differently.
"I think we're generally very excited about the Olympics but at the same time a little apprehensive of how the infrastructure issues might work," he said. "Today our major motorways all displayed Olympic travel plans messages showing us how big the travel issues might be."
London expects around 800,000 extra bus passengers and an additional 4,000 train services that will run during the games with longer trains.
One alternative to public transportation are so-called “Boris Bikes,” or a public bicycle sharing system, sponsored by U.K. bank giant Barclays (NYSE:BCS), which allow people to pick up bikes and drop them off at thousands of kiosks spread throughout the city.
The Boris Bikes, which expanded to East London in March of this year, saw a considerable increase in activity during earlier transportation strikes. In 2010, a 24-hour tube strike led to a 23% increase in the use of Barclays Cycle Hire bikes, according to Transport for London.
The games open with what is expected to be a lavish opening ceremony on Friday, July 27. London typically has about 1.5 million visitors in August, but the Olympics are expected to boost that number by at least another million.
Despite the transportation worries, Armstrong said he thinks the Olympics will be “hugely beneficial” to London’s economy.
“The new Westfield shopping centre is already bringing in crowds and the infrastructure improvements and access from the so-called Silicon Roundabout technology cluster, and from France with the high speed rail link, all look promising,” he said in an e-mail.
One major looming question is what will happen with the stadium after the games are over. A deal with English football club West Ham United to move into the Olympic Stadium collapsed earlier this year.
Armstrong said he thinks a key soccer club needs to be signed into a contract in order to ensure the stadium continues to generate revenue after the Games.