Going for gold

As London gears up to host the 2012 Olympics and Paralympics, SmallBusiness.co.uk talks to companies about whether the promised business opportunities have materialised.

When London won its bid to host the 2012 Olympics six years ago, the government promised it wasn’t only sport that was set to benefit. Businesses throughout the UK were told there would be opportunities to win contracts and gain new business from the influx of tourists during the Games.

David Higgins, then chief executive of the Olympic Delivery Authority (ODA), said at a conference in April 2008 that preparations for the Games were ‘delivering a shot in the arm for UK Plc at a time of need’. He promised that the Olympics would ‘offer businesses of all sizes a range of opportunities’.

With the countdown to the Games having begun last month – albeit not entirely smoothly – most of the contracts and licences for the Olympics have already been won. But it’s not just businesses with official contracts that hope to benefit from the world’s biggest sporting event.

Race for business
Mike Martin, managing director of hospitality company Paragon Sports Management, says the company plans to capitalise on the 2012 Olympics, despite not being an official partner. Its events packages will be designed for the months leading up to the Games and are aimed at corporate and individual clients.

‘We’re looking to get access to the athletes who are competing in the Olympics during the run-up. We’ve already spoken to organisations and individuals who are keen to promote their sport and we want to bring that to the corporate market,’ explains Martin. He believes there will be a market for Olympics-related events in the months prior to the Games, while he argues the cost of many of the official events packages are ‘prohibitive to organisations’.

Martin predicts that during the Olympics, London can expect an increase in visitors, and identifies hotels and restaurants as the businesses most likely to benefit. Regarding the Olympic legacy, he is less certain: ‘I hope the facilities will be used in the future. As a fan and a loyal citizen, I want people to benefit thereafter.’

Looking east
Chief executive of Telford Homes, Andrew Wiseman, views the Olympics as a long-term regeneration project that’s transforming East London. ‘It will help the shift of London eastwards, therefore improving [property] values and the quality of the built environment,’ he says. ‘It’s about the transformation of the whole area.’

Many of the company’s developments are within a three-mile radius of the Olympic Park, and he insists that the prospect of the event is attracting buyers. The apartments at its Matchmakers’ Wharf development in Hackney, which is still under construction, are receiving interest from people keen to rent them out for the Olympics when they can command high rates.

Wiseman is also hoping that the empty ground floor commercial space in its Icona development on Warton Road will draw companies that want to take advantage of the proximity of the Olympics site. There’s been no interest yet but he’s confident that will change.

Limited benefits
Not everyone is so sanguine about the effect of the Games. ‘We’re likely to experience downturns in business,’ says George Westwell, speaking about the predicted impact of the Olympics on Cheval Residences, a serviced apartment company. ‘We don’t believe it’s going to create opportunities for us. In fact, we think the build-up and the expectation of the number of people coming into London has been made out to be a lot greater than it will be.’

Westwell, who is director of the company, is concerned about the lack of enquiries he’s receiving for the period when the Olympics is on but thinks he knows why, based on past Games.

‘The corporate market will stay away while the leisure market will avoid coming at that peak period and will probably choose other destinations,’ he explains.

Cheval Residences offers properties for extended stays, with a minimum booking of seven days, making them unsuitable for many Olympics tourists. Faced with the prospect that he won’t even be able to rely on his regular clientele, Westwell is understandably cynical about the benefits to be gained from the Olympics.

He adds, ‘People are concerned they won’t be able to travel around London, that the Olympics will dominate and, because of that, it’s going to drive prices up. So why not go elsewhere?’

Relocation, relocation
Westwell might be disgruntled, but it could be much worse. Before London won the bid to host the Games, a number of businesses in East London were informed by the London Development Agency (LDA) that they would have to relocate to make way for construction of the Olympic Park.

Hackney Truck Repairs, known at the time as T&N Commercials, was one of the companies on Marshgate Lane that had to find a new site.

General manager Christine Norman says the LDA failed to keep its promise to contribute money towards the company’s new garage in Hackney while it was still trading from Marshgate Lane. Then, just weeks before the company was due to relocate in 2007, the LDA decided it was going to cost more to move the business than it was worth.

‘They couldn’t shut us down by law because we weren’t insolvent so they gave me a one-off payment, which was a lot less than we’d worked out the move would cost us,’ she says. ‘It wasn’t enough to buy the equipment we needed and set up a garage.’

To add insult to injury, the LDA deducted from its payment the cost of the consultants it had brought in to estimate the cost of the move. In 2009, the business went into receivership, weighed down by the extra costs, lost customers and the economic downturn.

It started up again as Hackney Truck Repairs and, undeterred, Norman registered on the CompeteFor website to try and win some business from the Olympics. ‘I would have assumed that with the materials going in and out of the site on lorries, I would pick up some trade and I didn’t,’ she says, adding that companies from outside London have secured work on site and that few local businesses have benefited from the construction of the sports facilities on their doorstep.

Winning work
For those who have won contracts, however, there’s a very different story. It’s not just a matter of the extra business; there’s the prestige of working on such a high profile project.

Cambridge-based Touch of Ginger won a licence to design, manufacture and distribute stainless steel gifts bearing the 2012 Olympics logo, to be sold in stores and online. Managing director Adam Cash explains that the company initially expressed interest through the CompeteFor website and eventually agreed the licence at the beginning of last year. He admits that the tendering process was long-winded. ‘I think that’s the stage at which many companies would be put off but it does separate the wheat from the chaff,’ he says.

The company has been manufacturing products for the Games since last year and employed three more people in preparation for the additional workload. For Cash, it’s been a steep learning curve, but well worth doing. ‘People appreciate that you have to work for these licences and I think that’s given us more credibility,’ he notes.

Jon Davie is managing director of Zone, a digital content agency that has been commissioned by Channel 4 to design and build the website to support the London 2012 Paralympics. The company subsequently won a contract to manage the content on the website and created two full-time editorial positions to take on the extra work.

Lasting legacy
Davie believes that the Olympics and Paralympics are providing businesses in the creative industries with opportunities, but adds that you can’t expect those opportunities to fall into your lap. He acknowledges that historically the Olympics has been subject to negative press around transport, prices, location and the budget but insists that London will benefit.

He adds, ‘Being in a host city during the Olympic Games is an amazing experience, not just commercially but also in terms of being a celebration of the city and of sport.’

Whether the celebrations continue beyond the sporting event remains to be seen. ‘It’ll be interesting to see how the venues in the Park are used post-Games. I know a lot of planning has gone into ensuring that it is a success on that basis and I sincerely hope it is,’ says Martin.

Sports enthusiast Norman has been disappointed by the Olympics and its organisers so far: ‘It hasn’t really done anything for my business. I can’t see how local businesses or the area will benefit, unless they’re going to use the site as a sports facility after the Games.’

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