Olympics impact on hotel development

Every industry experiences change, growth and evolution over time. The tourism and hospitality sectors are no exception, especially when major events come to town.

In a previous article, we analyzed UEFA Euro 2020’s impact on hotel inventory and how landing a major event is like “hitting the jackpot” with a significant influx of visitors needing accommodation for a specified time period. Most of the time, hosting a “mega event” means opportunity to ensure the accommodation infrastructure can support the event.

With that in mind, we took a look at how hotel supply has grown around the Summer Olympics during the past two decades. This provides an added layer to measure the impact from the most recent mega event in Tokyo.

Sydney 2000 – The NSW capital saw a 4.1% hotel supply increase with 39,125 new rooms. At the same time, demand in the market fell 0.9 for the year. Sydney and Beijing were the only Summer Olympic host markets since 2000 to see demand dip year over year. 

Athens 2004 – Among all the markets included in this analysis, Athens saw the lowest supply increase (+3.3%) with 21,336 new rooms during its host year. Also different than the other host cities, Athens saw its highest number of new rooms in the Midscale/Economy classes and its lowest number of new rooms in the Upscale/Upper Midscale classes. 

Beijing 2008 – Due to the 2008 economic crisis, Beijing had a challenging Olympic year with demand down significantly (-4.7%) at the same time as a supply influx (+17.5). The market’s highest number of rooms in 2008 (97,600) came in the Upscale/Upper Midscale classes.

London 2012 – With 121,312 new rooms, the U.K. capital saw a 4.4% supply increase during its host year. New rooms were spread fairly evenly across the classes with the most coming in Upscale/Upper Midscale (46,663).  

Rio de Janeiro 2016 - Rio de Janeiro hosted the Olympics just two years after Brazil hosted the 2014 FIFA World Cup. Overall, for 2016, Rio opened 31,960 new rooms (+16.8%). The issue for the market was filling those rooms once the event has passed.

Tokyo 2020 – The most recent Olympic competition was, undoubtably, one of the most unique due of the closed-door nature of the competition. Because the pandemic pushed back development timelines and caused a high volume of temporary room closures in 2020, Tokyo’s year-over-year hotel supply increase was 19.4% in May 2021. To remove some of the pandemic impact, we also look at year-to-date data. There, Tokyo’s 5.1% increase as of August 2021 was far less.  

Next stop: Paris 2024 – The next stop for the Summer Olympics will be Paris 2024. As of 29 September, STR’s AM:PM platform showed just 12 new hotels adding 1,647 rooms in the market from 2022 through 2024. Paris is one of the largest hotel markets in Europe, and even with such a large existing inventory, further development is anticipated.

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