London during the Olympics is a tale of two cities. To the east is the bustling and oft-photographed Olympic Park, buzzing with athletes, spectators and the global media. To the west is the traditional shopping and entertainment district, now likened to a ghost town.
So where is everyone? Some officials say they're just displaced away from London's traditional heart. Many businesses, however, blame London Mayor Boris Jonson, the transit bosses and the Games organizers for scaring them away. Foreseeing a huge strain on the city's public transit network, Londoners were told repeatedly to seek alternative routes, work from home or take a vacation.
The message, it seems, worked all too well.
Tourists, too, hearing of potential transit issues and overflowing crowds, took heed of the message, avoiding London at all costs during its peak visitor months of July and August.
The end result: an Olympic-sized disaster for businesses in a city already stewing in the doldrums of recession.
The Olympic Myth
The noticeable divide in London during the Games is a stark reminder of what many have called the Olympic myth -- the idea that the Olympic Games will become an economic windfall.
Prime Minster David Cameron said last month that, despite a price tag in excess of £9 billion ($14 billion), the Games should not be seen as "an expensive luxury in tough times."
"It is precisely because times are tough that we have got to get everything we can out of them to support jobs and growth in the economy."
"I am confident that we can derive over £13 billion ($20 billion) benefit to the UK economy over the next four years as a result of hosting the Games," he added, saying "when you add in the benefits from construction, the total gain will be even greater."
Cities lobby at great length for the honor of hosting the world's athletes at the Olympic Games. It's seen as an honor and a boon, something that will help revitalize neighborhoods, provide world-class facilities and attract hordes of tourists. At least that's the theory.
Yet, at each Olympic Games -- and particularly the summer ones, which are held in larger cities -- the same scenario unfolds: Organizers and government officials tout the astounding economic benefits of the Games. The city, basking in the glow of Olympic pride, goes along with the officials. In the end, however, the so-called benefits rarely surface.
The big talk from officials also blindsides businesses, which make decisions based on the expected gold rush.
Take the hotels in London, for example. Many doubled or even tripled their rates for the weeks of the Olympics, anticipating overwhelming demand. But because the rates were so high, travel agents that would normally offer package tours to the city had trouble selling the trips. They criticized the hotels for putting off ordinary summer vacationers by pricing themselves out of the market, even as more than a third of the rooms remained unsold.
The price distortion began, in earnest, seven years ago when Olympic organizers block-booked 40,000 of London's 100,000 rooms for athletes, officials, sponsors and the media. Then, in January, organizers released 20 percent of the rooms back onto the market. Despite the glut of rooms, hoteliers had maintained the high prices and minimum stays until a month before the Games, at which point they finally acknowledged that an anticipated visitor rush had failed to materialize. They dropped rates but were unable to fill to capacity. Rooms at four-star hotels in London's top neighborhoods are now going for as little as £170 ($265) per night, with those farther from the action selling for less than £100 ($155).
A survey from Hotels.com found that, on average, the going rate for London hotel rooms is down 25 percent during the Games.
And it's not just hotels. Running the gamut from tour companies to movie theaters, everyone has been affected. A critic for the Sunday Express called it "an Olympics bloodbath for the theater." Some shows on the West End have reportedly considered shutting their doors during the Games due to a lack of ticket sales, and cinema operators are similarly incensed.
Public perception that a critical mass of Olympic tourists would make London an unpleasant place to be during the Games certainly hasn't helped. Instead of everyday tourists mixing with Olympic tourists, most "normal" tourists booked trips to places far from the action.
Yet, the transportation system that was supposed to have been overflowing with up to 1 million extra visitors has coped easily with an early Games increase of just 7.5 percent. Some riders have even reported quieter than normal tube stations.
London officials are now left wondering which doomsday scenario they should have anticipated: stampede or ghost town.
The Pattern Continues
Hosting the Games is a gamble and an extremely costly one at that when you combine the expenditures for construction of new facilities, upgrades of existing infrastructure and security. The 2004 Athens Olympics, for example, was expected to cost $1.6 billion and ended up costing 10 times that amount, contributing to Greece's current debt crisis. Athens had hoped to attract at least 105,000 hotel guests each night but instead averaged about 14,000.
Four years earlier, Sydney set a goal of attracting over 130,000 tourists during the Games. It saw just 97,000 and experienced no growth in tourism in the years thereafter.
For its part, London has managed to attract up to 100,000 visitors a day, more than any previous Olympics. Yet, the European Tour Operators Association says this is well behind the typical summer peak of 300,000.
The Association of Leading Visitor Attractions, which represents major attractions like the Tower of London and British Museum, said attendance has been down by a third in the last two weeks, compared to 2011.
Cash registers don't appear to be ringing so loudly at the stores either. A survey from research firm Experian found that customer levels in central London shops last Saturday were down by almost 12 percent compared to the same time last year. Even in East London, site of the Olympic Games, shopping was down by 7.5 percent.
Steve McNamara, general secretary of the Licensed Taxi Drivers Association, told Sky TV that, anecdotally, business was down by up to 40 percent.
"Normally, about 90% of our customers are Londoners, but they've all left the city and haven't been replaced by tourists," he said. "I don't know where all these tourists are or how they're getting about, but London is like a ghost town."
Economists had long warned that the Olympics may not provide much of a boost for Britain's recession-hit economy once all the construction work and investment was complete. Now, it's becoming increasingly clear that these economists were right.
Yet, there is something to be said for holding the Olympic Games. It boosts national pride, fosters a city as a brand and puts a place like London in the minds of the world. For a city whose tourism numbers have been on the decline, it's hard to argue that that visibility could hurt in the long run.
That, in fact, is what many local officials are insisting now. "Incalculable" benefits in terms of increased trade and tourism, they say, will benefit Britain for years to come.
"It is important to look at the big picture," the government said in a statement Wednesday. "The games are a global advert for London with benefits that will be reaped for many years."
The tourism minister is also optimistic.
"I sincerely hope that we will see a boost in this area after the Olympics and I hope and expect that people will conclude that we're pretty good at putting on events," John Penrose said at a press conference Monday, according to CIT Magazine. He added, however, that other cities could learn from London by having "everyone working together from local government to tourism bodies, to accommodation and transport providers.
"They all need to be singing from the same sheet."