Impact of Olympic Games on Hotel Industry

Running head: HOSPITALITY MANAGEMENT 1
Hospitality Management
Student Name
Institution

HOSPITALITY MANAGEMENT 2
Introduction
Impact of mega-events such as Olympic Games on hotel industry is immense that can be
felt within the country before and after the Olympic Games event. The history of Olympic
Games dates to many centuries in history with the impact being an area of study that has
received the attention of many researchers. The impact of Olympic games on hotel industry
especially of hosting country is an area of interest. Impacts of mega-events include positive and
negative with most studies taking the center to investigate the positive impact and little negative
impact of these mega-events. Analysis of the impact with the main focus on hotel industry is
important since the hospitality framework determines the ability of the host country to Olympic
Games. In addition, the positive impact of mega-events has resulted in more demand for the
event with many countries not having a chance to host the event. These benefits make the
analysis of impact within the hotel industry important for more understanding of Olympic Games
as a major event (Kaspar, 2014).
The analysis of the impact of Olympic Games on hotel industry is important as this help
identify areas that need improvement. Firstly, the impact of Olympic games in the hosting
country hotel industry is linked to the overall growth that can be attributed to Olympic games in
that country. The analysis of literature particularly on the impact of mega event helps evaluate
the preparedness of the industry for mega-events in case of those events. Moreover, the impact of
mega-events on the industry also is used to measure the change trend in the hotel industry of the
past years. Secondly, metrics that determine the impact of mega event assist in planning for an
event that can cope up with rising impact of events in the hotel industry (Li, 2014).

HOSPITALITY MANAGEMENT 3
Literature review
Overview of the impact of the mega event (Olympic Games) on the hotel
industry
Mega-events especial sports events such as Olympic Games has a high impact on the
hotel industry of the hosting country and the region. Mega-events can be described as those
events that attract many participants that are from various countries regionally or globally. Mega-
events include events such as world sporting activities, regional sporting activities or champion
games that attract the attention of people from all over the world. Some of the common mega
sporting events include Olympic Games, FIFA World Cups, European Championships,
Commonwealth Games and Asian Games among other sporting mega-events.
Olympic Games is one of the mega sporting events that bring together people from all
over the world. People attracted to Olympic Games are not normally athletes only but also other
people that come touring the country (Li, 2014). Many Olympic Games has been conducted
since the inception of modern games in the 17th century. As highlighted by Hu and Singh (2008),
Olympic games that have been hosted by various countries throughout the world has attracted the
attention of more than 800,000 people at the time of the event. The number varies with some
countries having more than one million visitors coming to watch games. The cost of hosting
these events has also been estimated as high as over $40 billion indicating that the need to host
this event must be considered. For instance, during the Beijing 2008 Summer Olympic Games
that occurred in China spend over $40 billion to prepare and host this mega event. Moreover, the
Olympic Games has resulted in dramatic change in the various market factors within the host
country with the latest being hotel industry (IOC, 2013a).

HOSPITALITY MANAGEMENT 4
Preparation of the host country to host Olympic Games take more than nine years and
during this period many preparations are made. Some of the preparation includes field
preparation, infrastructure preparation, and hospitality preparations. This makes the hosting
country to invest in terms of time, resources and skills for this world event. The impact of
Olympic Games is felt in the political, environmental, social and economic level of the economy
of the hosting country. The benefits of hosting Olympic Games can be felt in short time and in
long time duration. The impact of the event is not only felt within the hosting country but also
regionally as neighboring countries are not left with millions of visitors. These benefits make
hosting of Olympic games very competitive and the highest score is on the economic benefits
that are realized at all sector of the economy of hosting country. One such benefit is realized
within hotel industry of the hosting country (Fourie & Santana-Gallego, 2011).
The hotel industry has been one of the growing industries worldwide with more boosts
occurring during mega-events such as Olympic Games. Hotel industry plays an important role in
the mega event within the country. Benefits of Olympic Games can be felt from the broad
perspective and on the narrow perspective (Kasimati & Dawson, 2009). On the broad
perspective, the image of the hotel industry is changed during the preparation and hosting of
Olympic Games in a country. This also involves the attraction of investors into the country that
particularly invests due to the upcoming mega event. The period of these investments is always
estimated to be after the announcement of the event to occur in a country. The Olympic Games
normally attracts many investors that invest thereby changing the image of the hotel industry in
the country. The narrow perspective of the impact of Olympic Games in the hotel industry is felt
through various factors changes. These include employment rate, revenue gained, and
development of infrastructure and growth of hotel industry (IOC, 2013).

HOSPITALITY MANAGEMENT 5
According to Feng and Humphreys (2012), hotel industry includes various services such
event planning, lodging, transportation, theme parks, cruise line, and additional fields within the
tourism industry. Change in the hotel industry especially in case an event is hosted in the country
is normally measured using some metrics. Some of these metrics include occupancy rate (Occ),
supply, demand, revenue, average daily rate (ADR), and revenue for per available room
(RevPAR). Within the hotel industry, market demand can be described as the sum of demand for
hotel services in the market, particularly during the mega event. Supply can be described as total
estimated services that hotel industry can deliver to customers at a particular period of time. In
hotel industry occupancy rate is one of the metrics that is used to measure the ratio of rooms
occupied to the number of rooms available within a period of time. Average daily rate (ADR) is
described as the average rental income per paid occupied room in a given time period. Revenue
for per available room (RevPAR) is another metric used in lodging that represents the total
revenues gained due occupancy of many rooms (Li, 2014). Some of the examples of Olympic
games and the impacts on those countries can be analyzed based on the hotel metrics.
The history of the impact of Olympic on the hotel industry
The impact of Olympic Games on hotel industry can be traced to the history of the event
itself. The history of modern Olympic games can be traced back to the period between 1796 to
1798, the Olympic Games was reformed from the ancient Olympic Games to a more modern
event. During this period, the Olympic Games took shape with the first modern event held in
Ramlösa (Sweden) in 1836. The event was attended by more than 25,000 people spectators that
watched the event live. The international look Olympic was held in Athens in 1896 where
modern features of a typical mega event were first seen (Smylie, 2013).

HOSPITALITY MANAGEMENT 6
There are changes that have occurred in the nature of games held during Olympic games.
For instance, since the inception of Olympic Games, women started participating in games in the
1900 Olympic Games held in Paris Exposition (Li, 2014). Moreover, four years later 650 athletes
participated with 580 coming from the United States. During this time period, many different
games were also instituted with some being Summer Olympic Games, Winter Olympic Games
and Paralympic Games among others. The overall turnout has also increased at the time making
the overall impact of Olympic Games tremendous within the host country. Economic benefits of
the Olympic Games were thus felt at every level within the country and demand for hosting
event thus rose. As cited by IOC (2012), Olympic games have taken shape with youth mega-
events also taking the center of the events and this prompted the development of an international
Olympic committee to overseeing and organizes the games. Members of this committee were
selected from many nations across the world to represent those countries (IOC, 2013).
The 21st century Olympic Games has transformed initial 14 nations of 1896 to more than
88 nations with more than 10, 500 competitors in 2012. The number of competitors has been
fluctuating in the recent event with more competitors realized in the 2012 event as compared to
other 2014 (Li, 2014). This is based on the scope of the participation that has not been regulated
in terms of political environment within a country willing to participate. In addition, the modern
day Olympic games have increased in terms of attendance especially spectators and participants.
The increase in the overall number of visitors coming into a host country is also related to
country's response to this influx of a huge number of visitors. Moreover, the number is also felt
particularly at the industry level with hotel industry is one of the beneficiary industries during the
mega event within the country (Smylie, 2013).