London 2012 Summer Olympic Games Controversy
VisitBritain chairman quells London Olympic myths and mysteries
eTN: I have been talking to UK tour operators, and the sentiment is that they feel that London hoteliers might be shooting themselves in the foot by overpricing and room blocking. What do you think?
CHRISTOPHER RODRIGUES: I think one or three things. I think that first of all, what do I think about availability of rooms? I think there will be rooms available, and there are invariably, rooms available as we approach the Games.
eTN: From a tour operators’ perspective, this could be very tricky.
RODRIGUES: The issue for tour operating is it is… I respect their… Tom Jenkins [executive director of the European Tour Operators Association] and I talk about this regularly. I respect the tour operators’ perspective and their lead-time requirements. But the nature of this is that the tour operators are probably of the categories for people who might be disadvantaged, which is not many, the tour operators, because they have long lead times, have tended to be disadvantaged, because hoteliers, understandably, are reluctant to take blocks of rooms out of an inventory where they might get a superior yield, and give them to tour operators at the normal rate. So what happened was, the hoteliers moved their rates from the normal deep discount, which most tour operators get, to closer to normal rack rate. I’m not going to quote individual hotels, but that is my understanding. The tour operators then said, we can’t sell these rooms, if the cost to us is rack rate. The hoteliers said, but I’m discounting 18 months or 12 months in advance of the games. And so the nature of the tour operating business is that it requires long-term lock up. The nature of tourism, particularly to the UK, is that the majority of hotel rooms are not sold through tour operators. They are sold direct. We are a big city for online booking, we’re a big city for FIT [free independent travel], we’re a big city for people doing their own packages and doing their own bookings and not buying tours. I mean, we’re also a big tour city, but we’re also a very big non-tour city. And so the hoteliers’ perspective is – I’m not saying right or wrong – but the hoteliers’ perspective is, if I’m going to discount, if I’m going to move my rates, I’m going to move my rates much closer to the event when I’ve got a better line on my sight of occupancy, and I will then distribute it through the “Expedias,” through the “Travelocities,” “the last-minute.coms,” because London as a destination, is a destination that can sell online. So I think one of the things that you will see is a considerable last-minute or short-notice online booking. Clearly, that doesn’t suit the tour operators. I am very empathetic, but there are other sectors who are well-suited by last-minute bookings. They are not complaining. You talk to the “last-minute.coms” of this world and the “Expedias,” they are not complaining.
eTN: You’re right, because a lot more rooms are being allotted to them than normally would have been under normal rates.
RODRIGUES: I think there will be rooms when the supply and demand equalizes in the final run up. We are talking about the final release of rooms coming in the next few weeks. I think at that point in time, that, combined with the airline, and to a lesser extend, Eurostar, perspective of availability means that there will be a push to marry up available airline seats and available hotel rooms to overseas visitors and there will be product available. That is what we, as a national tourism organization, have been working with the hoteliers and the airlines on. So, subject to the final view as to what the availability is, there will be product coming onto the market. I believe that at the moment, you will see product between the Jubilee and the Games. That is to say, in June and July, before the Games, there is still capacity. If you go online, you can see there’s capacity, because prices are not exceptional at all. I also believe that after the Games, there is going to be both a major interest in coming, because people will get all excited about what they’ve seen on the television, and there is, at the moment, and I think there will be for some time, availability. So, if I were selling Britain, here’s my story. Firstly, Britain is available 366 days in this leap year – just make sure you distinguish between Britain and London. London is quite the leader in the Games, but I believe stock will be available at the last minute or in the last 6 or 8 weeks, as the final supply and demand comes into balance. Secondly, there is space available between June and the beginning of the Games now – go online and look. And thirdly – and there’s a lot going on between the Jubilee and the Games – and then finally, in the autumn, which is always a glorious time to come to this country, the market’s still wide open for fall bookings. So, the real message is, don’t ignore Britain this year – there’s a lot going on, and there’s space available. Actually, the message, Nelson, I have consistently given, as this isn’t the first time anyone has interviewed me about this.
eTN: From what I gather from what you just said, so the hoteliers are expecting big yield, but the other side of that is, if they don’t get that business, they will discount it heavily if it goes to last-minute.coms.
RODRIGUES: You said heavily, I did not use a magic word to describe what they will do. I didn’t say heavily, but what I think you are saying is, in a world where hoteliers run sophisticated yield management systems, we all know that they wait until relatively short notice. They tend to look three months ahead – three or four months ahead, right?
RODRIGUES: So right now, we are in mid-March, so they are looking at mid-April, mid-May, mid-June. They are thinking about the run up to the Jubilee, and they are just beginning to focus on the period between the Jubilee and the Olympics, and I think you will see increasingly offers available, because from my understanding, the carriers also have some availability. It’s quite interesting, if you look at their British Airways site with their sale on business and first, which finishes on the 13th of March, and if you look at the windows when they are putting product on sale, it’s absolutely transparent about where the inventory is. And there is inventory between the Jubilee and the beginning of the Games, and London will be looking at its best, and the Jubilee is going to be a time when the whole of the nation is celebrating, and visitors can be part of it.
eTN: I know you spoke of talking with Tom Jenkins. They have been, for instance, firm in their position from day one, that the Olympics will damage travel and tourism in London.
RODRIGUES: Yes, it is detrimental for tour operators. They talk their own book. They are not speaking for the industry. January and February have been very good months so far. History has said, major event years, whether it’s World Cup or Olympics, tend to be years in which you get a drop in performance, and our forecast, the forecast I gave to the Financial Times at the beginning of the year, is that flat year-on-year in volume terms will be a great outcome, because history says that is the case. So far this year, in January and February, the lead statistics are suggesting we are having a good year. The challenge that we have is that some business travel organizers – nothing to do with tour operators – corporations have said we are not going to hold meetings in London because of the inventory. I’m empathetic with that. So, whilst you get more Olympic visitors, you lose business travel over these periods of these big events. While there will not be a lot of business travel taking place in the Jublilee weekend, because of what we call here a bank holiday weekend in the UK. So, those kinds of things will have a negative effect. The reason that I share with you the idea that there is availability around the Jubilee is, the normal business travel occupancy in London will not be there over the Jubilee weekend, because it’s a bank holiday. So, there are rooms available. One of the things I think that I would like to suggest to you, Nelson, is that different people have a different lens on what it does. Tom and I have discussed at some length that the real focus for the tour operators now is getting their inventory in place for 2013, because the amount of publicity about the attractions of Britain that is going to take place in June through September is stupendous. 2013, therefore, becomes a fantastic year to sell the UK. So, they need to move their focus onto selling 2013. When you talk to the sophisticated guys like Tom, that’s exactly what they are doing. The tour operators have a very – I’m not saying they’re wrong, to be clear – I’m just saying they have a narrow specialist view of the impact of a major event on their business.
eTN: You did offer an observation in our last interview, eluding to tour operators looking elsewhere besides London for this summer. I want to relay the response to you. The response has been, well, they say this is rubbish, because London is the driver of British tourism, and the second response was that it’s easy for him to say, he’s a public servant. What is your response?
RODRIGUES: First of all, I understand what they are saying about London. The Games are on for 40 days; the whole cycle is 40 days. So London is available, it’s been available now, it’s available in the autumn – there is no reason that they cannot sell London outside of the Games period, and there’s every reason why they should encourage people to go outside of London. When I talked to The Travel Corporation to shift more people, most tour operators, they are absolutely focused on developing the whole of Britain and not just London. So I think my response is 40 days does not constitute the whole year, and London is not the only place in Britain. Now they may say, he would say that, wouldn’t he, and the answer is, yes I would.
eTN: Some are saying that there has not been a full disclosure of ticket holders for the Games. Some are also saying that a majority of ticket holders are from within London and its vicinity. The concern is that if these ticket holders are in London and from the surrounding areas, they wouldn’t be needing accommodation.
RODRIGUES: That’s absolutely true, but my understanding is the ticket holders are from our international and from all over Britain. So, the people from all over Britain need hotel rooms. An overseas tour operator is not in that business – that’s their lens. If you are a hotelier, you are absolutely in the business of encouraging people from around Britain to the Games to stay overnight, and they will.
eTN: So there is a disclosure of who the ticket holders are?
RODRIGUES: I have not seen the data on the geography, but there is nothing that I have heard that would suggest that the ticket holders are all Londoners. I’m a Londoner – I wish I had some more tickets than I have. I have to apply like everyone else. I got three events.
eTN: The statistics that have released are conflicting. ETOA, of course, has their own statistics, which show that London Olympics will bankrupt tourism. However, the World Travel & Tourism Council, on the 2nd of March, released a statement saying UK will actually grow 1.3 percent in 2012.
RODRIGUES: Thank you, yes; I rest my case. Each power has a narrow, specialist view of the world. I respect that, but ETOA is not the British tourism industry. ETOA is a group of overseas tour operators. They have a very narrow focus, and a different focus from the rest of the world. I’m not saying that their business has not been impacted; I know that it has been, but that is not the total tourism industry of Britain. It is a domestic industry, and it’s an international industry, and 19 percent of the people who come to Britain, last I heard, were on tours; 81 percent were not. I think the 81 percent have a voice.
eTN: From your perspective as the VisitBritain Chairman, what are the short-term and long-term benefits of hosting the Olympic Games? Make your case.
RODRIGUES: The long-term benefit is that it showcases the country to people in a way that gives you immeasurable coverage. And the combination, from my perspective, of the royal wedding, the Jubilee, and the Games, gives us an incomparable period in which to showcase Britain. There is considerable collaboration. I was at an event last night with 120 visitors from Mexico, and the Mexican tourism team, and the Mexican economic ministry – it is a classic example. The British, the Ambassador, the foreign office, the British Council, UK trade and industry, and ourselves were all promoting Britain. So, it is a fantastic window on Britain, and a way that VisitBritain is harnessing media interest is to complement coverage of the Games, with stories about the whole of Britain – all of the things that people come to Britain for. Whether its stories about cultural heritage or contemporary music, or exhibitions or art – every story gets put in front of 5,000+ unaccredited media. You can’t buy coverage like that. It is immeasurable in its value. So the trick is to showcase Britain during the year of these amazing events, and then to harness partnerships with the industry to encourage people to come to Britain so that the greatest campaign is both an aspirational campaign and a campaign, one, in partnership with a very significant number of partners – the British Airways, the easyJets, the Hiltons, the Radissons, STA Travel – and it’s ended up as the biggest marketing push over four years that we have ever done in this country. So, what do the Games do? It’s immeasurable showcasing and a call to action for partnership with the industry to get people comparing value stories as to why they should come to Britain this year and in subsequent years. That’s the value of these events. What you have to offset – going back to where we started – is that in the year of major events, if you do nothing, inbound tourism declines, because tour operators tend to avoid a country in a year in which there is a major event for all the reasons we talked about. So, you have to offset the decline in tour operators simply to stand still. The other thing is that people say, if you don’t do any work, people say well, maybe I’ll give it a miss this year; I’ll try Britain next year. So, one of the obligations you have, if you are having a major event is that you have to work very hard to offset the negative impact in the short term, and that we are doing – so far, so good – and you have to work very hard to take advantage of the showcasing benefits in the long-term. That’s the logic of managing a real major event, and it’s true for everyone.
eTN: I made an announcement on Twitter that I was going to be speak to you. I’m going to share with you some of the questions that have been sent to me. The first one is, where will the sales comes from, if most of the people who have tickets are from the UK within easy reach of London?
RODRIGUES: That’s not the case. There’s a lot of people in Britain, they are not mostly in London. The system used by LOCOG [ London Organizing Committee of the Olympic and Paralympic Games] did not favor anyone. The public tickets, you applied for, the computer sorted out by random draw, who got what. It had no geographic override. I don’t know where that story comes from, but there is no fact that I know that supports that. It’s a bit of hearsay.
eTN: Second question is, what’s the point in people coming to London during the Games, if they can’t get a ticket, and we hear that all the tickets are sold out to a sports-mad British public?
RODRIGUES: Well, first of all, there are further tickets coming available in the not too distant future. If you listen to LOCOG, there’s a final release of tickets coming available. Secondly, the whole of Britain is just as attractive as it was. Thirdly, there is going to be a spectacular set of things going on in the capital, in addition to the Games. Fourthly, there are major public stations where [there are] big screens around the country, where you can go see the events on big screens. So, I understand that if your primary reason for coming is you want to see the Games live, in person, then that can only be satisfied by getting a ticket, though you’d have to apply, if you haven’t gotten tickets already, there are still some on sale in packages, and there will be more coming on sale both for the Games and there are still plenty of tickets available for the Paralympics. For having been to the Paralympics, that is the most spectacular experience. There are a lot of people who could now apply for Paralympic tickets and have all of the excitement of London and get in and see major Paralympic events – there’s no shortage of tickets for those. If what you want to do is see the 100-meter finals, then I don’t know of any tickets still available. And if you want to come and see the Paralympics, there are lots of tickets available. There will be more Olympic tickets going on sale in the not-too-distant future. The bulk of them have been sold. There’s a huge amount going on in Britain – there’s a World Shakespeare Festival, there are cultural events, so you can enjoy all of the things that are going on, but you might not have a ticket to the Games. That’s reason enough for me, why I’m coming to visit. There’s some wonderful shows on. If you talk to the West End Theatre guys, they are concerned that if people are going to the Games, they’ll be exhausted and not come in the evenings. So if you are not going to the Games, you’ll get really good theatre tickets. Museums open during the Games, they are free as well as they were when they weren’t. So, you’ll probably get more people… because many of the people will be at the Games, many of the London attractions will not be crowded. What a wonderful time to go.
eTN: I suppose their argument might be, well, what about the rooms? Where are you going to put these people that are not here for the Olympics?
RODRIGUES: Going back to what I said, if I am right, that rooms are coming available as we get closer to the Games…
eTN: That would be a perfect scenario, actually, for London. Yes, they’re going to go have the theatre people go and shop, do the theatres…
RODRIGUES: They’re going to do what millions of people do every year when they come to London. All of that is available and then some, I mean, it’s really kind of a silly question. The reason you should come to London, is everything you normally do in London is available. It’s available with gold pins on it, because everything’s being buffed-up for the Jubiiee and the Games, there are additional cultural events going on because of that period, so, all of the things you would normally come to London for are there. What you may or may not have is a ticket to the mainstream Olympics. What you absolutely can get is a ticket to the Paralympics. So all the reasons for coming to Britain and London remain.
eTN: But they might have to wait a little longer to see if they can come, correct?
RODRIGUES: There are hotels available. If they wait a little longer, they may get an even better deal on the price during the Games’ three weeks. But if you want to come during the Paralympics, we have plenty of rooms available at good prices. One of the things that’s marginally frustrating, I have to say, is if you’re the Chairman of the National Tourism Authority, is the lack of facts being used in these arguments. There’s a glass is half full or a glass is half empty view of the world. If you want to say it’s a problem, you take a tour operator’s perspective, which I respect. If you want to come to Britain, you have all of the things you would normally have. You have the excitement of the Jubilee and the Olympics, you can get tickets to the Paralympics, you may even be able to get tickets to the Olympics, and other than the 3 weeks of the Games, there are plenty of rooms available right now at good prices, and there are airline seats available. Egypt is having a big sale at the moment, BA’s got seats in business and first on sale. What is this about there is no availability? I don’t understand the facts that seem to be missing from these arguments.
eTN: How full is London during the Games?
RODRIGUES: It’s not going to be completely full, but it will be pretty busy. It’s going to have a lot more people during sport than it normally does, and it a lot less people during business than it normally does. So if you take the business out of London, there’s a lot of capacity to be filled up by leisure people.
eTN: How many beds per night are left to sell?
RODRIGUES: I don’t have that number, but if you go online – to any of the online web sites – there is still plenty of stuff available, and as I said, it is my belief that in the next few weeks, you will see more stuff becoming available, as the final room supply and demand is equalized.
eTN: This question came through email. Why are we suddenly getting this 20.12 percent discount of UK holiday in 2013, and why is the government promoting it? If the Olympic tourism legacy were so effective, then demand would be high; there would be no need for discounting. What’s really going on?
RODRIGUES: Firstly, the tourism industry is in round numbers an 80 billion pound industry. Seventeen billion of that is inbound domestic. So the first fact is, tourism in every country, and Britain is no exception, is primarily a domestic business. Secondly, the Brits, historically, love going overseas, and there has been a balance of payment deficit on tourism. That is to say, Brits will spend more overseas than foreigners have spent coming in. Three years ago, that deficit was 20 billion pounds. Last year, it was 14, so we’ve made some real progress, but there is still a deficit, and we would love people to spend more of their time here. No space available, which is a seasonal industry, outside of peak periods, there is still plenty of space available. So, getting the Brits to take a weekend in Britain, as opposed to a weekend in a continental European city, makes absolute sense. It keeps the income inside the country. So that’s why the government would like to promote domestic tourism. It’s good for British employment; it’s good for the British economy. Having said that, why are we doing 20.12? Well, firstly, outside of London and outside of the Games period, there is plenty of capacity, domestically – the mantra I have used all along. Secondly, the Secretary of State thought it would be a great idea to highlight this by giving the domestic market story an overall theme, and 20.12 in 2012 was a theme that he was very keen on and, therefore, that VisitLondon is promoting. When you look at what hotels and attractions do, they tend to do offers in short periods. This simply puts a wrapper around the offer. There is no way that inbound overseas visitors can match the number of bed nights bought by the British in Britain. It’s never going to happen. The domestic market is bigger than the international market. The international market is very important. It is our 3rd biggest foreign exchange earner as a country. So it’s very important, and we work very hard to promote that, and we want to continue to promote it after the Games. So, that’s why we came up with the promotion. There will always be capacity unless we get to an extraordinary situation, and capacity is very easily filled by domestic people, and the British love an offer. The 20.12 offer is attractive, and there are lots of offers on the web site. So, it gives small businesses and big, a framework in which to put their offer, so that they can market more effectively. That’s what government is all about – helping fragmented industries to market more effectively. So that’s why we’re doing it.
eTN: Let me understand the question, because I really didn’t understand it myself. So the 20.12 percent discount – how does it work?
RODRIGUES: It’s for any hotel or attraction offer. There is a VisitEngland web site with offers. The marketing theme was 20.12 for 2012. They are not compelled to give 20.12 percent; if they wish to, they can give 3 nights for 2, which in my math is a 1/3 discount. They can do anything they want. What we are doing is using that to highlight value offers available in the UK. So it is a device for getting a fragmented industry to get its offers in front of an interested domestic population, stimulated by domestic advertising.
eTN: Does this only apply to travelers within the UK?
RODRIGUES: No, you don’t have to be British to go on the web site.
eTN: So this is open to everyone?
RODRIGUES: Yeah. There is not nationality requirement. You can come from Lithuania or Chicago – either will do, or anywhere else.
eTN: So it’s really meant to support tourism to the UK?
RODRIGUES: The primary driver of the campaign is to get Britains to consider taking an additional holiday in the UK, by putting in front of them some great value offers. But if you are a foreigner, you can go onto that web site, VisitEngland.com, and book just like anyone else.
eTN: VisitLondon has been renamed as London in Partners. Why the change?
RODRIGUES: Because London in Partners is bigger than VisitLondon. It is both a tourism agency and a trade promotion agency, and it is a single combined promotional arm for London. So, if you’re going to be educated in London, if you’re going to do business in London, if you’re going to visit London, they are all under one roof now, so they get better coordination and collaboration.
eTN: So VisitLondon still exists?
RODRIGUES: No. VisitLondon’s activities still exist, but VisitLondon, the organization, is now the tourism subsidiary of London in Partners.
eTN: So who’s within the structure of London in Partners?
RODRIGUES: There are a variety of London promotional agencies that have been combined and are now under the chairmanship of Dame Judith Mayhew. So all they did was to combine all of the London promotional agencies – the tourism one, the business one, the educational one – into a single entity.
eTN: What is their role during the Olympics, if any?
RODRIGUES: The same as it is during the rest of the time – to promote Britain. So, there are a lot of business people coming to London during the Games, and there will be a whole series of events, promoted and supported by the government and by London – the Mayor of London – to tell those people not only about the Games, but also to tell them about ways in which they can do more business with Britain. So we are using this not just for tourism, we are using this to promote British trade in the broader sense.
eTN: Thank you so much for taking the time.
RODRIGUES: My pleasure, Nelson, as always. I fully understand the questions you get. As always, some of the questions are a little short on facts, some of them are from a particular viewpoint, which I respect. I’m not saying that the viewpoints of different people are necessarily wrong, but I think the overriding point is that from my perspective as Chairman of the national tourism organization, I have to deal with all perspectives – tour operators, hoteliers, airlines, last-minute bookers, domestic business, international business, and, as always, things that work for one part of the constituency, may not be as attractive for other parts, and that’s life. I wish we could do things that were profoundly attractive for everyone. My job would be even more successful if I could, but unfortunately, you can’t do everything for everyone all of the time, and as Abe Lincoln said, "we have to try and get a balance right."' Not everyone loves the balance, but so far, there is a recent piece of research done by Visa, which I had nothing to do with, although I used to be there in my prior life, which was absolutely fabulous, and it demonstrated, and they researched people how had taken an international trip in the last 2 years and intended to take one in the next 2 years, and it was a big survey around the world. Britain was the 2nd most desirable place to go. We have moved up that ranking, and that’s what the proper job of a national tourism agency is – to build the aspiration to visit, and then to do everything it can to help the trade attract the customers.
eTN: In that respect, you are doing a great job.
RODRIGUES: Hopefully next year, we’ll be on the back at the back of everything that has happened this year. My real hope for Tom [Jenkins] and the tour operators is that they get the kind of demand at the back of 2012 that they deserve.