With Olympics ahead London hotels ‘pricing themselves out of market’

LONDON (Reuters): Bookings at London hotels for the Olympic period are down by around a third on last summer, with travellers being put off by high prices, a British travel agent said on Wednesday, dampening hopes that the Games will help to revive Britain’s economy.

Credit ratings agency Moody’s said last month that the Olympics would provide only a temporary boost to corporate earnings but said hotels would be a clear beneficiary.

However, past Games have shown evidence of a displacement effect - with regular tourists put off by fears of overcrowding and high prices during an Olympics.

Hotel wholesaler JacTravel is forecasting visitor arrivals to London in July to be more than 35 percent down on 2011, and August to be almost 30 percent down.

JacTravel’s chief executive Mario Bodini said that Olympics expectations had been overly optimistic.

“It’s a great event; great publicity for the country, but what we need is sensible hotel pricing, and to make sure it goes back to normal very quickly,” he told Reuters.

The travel agent said a four-star hotel room in central London is normally priced between 80 pounds and 120 pounds ($120-180) per night during in the peak summer season, but this year the range is 200 pounds to 415 pounds.

JacTravel’s customer base includes travel agents, tour operators and online hotel booking engines, and therefore acts a useful barometer for the inbound tourism market.

Hotel prices in London were distorted when local organisers block-booked 40,000 of London’s 100,000 rooms for Games athletes, officials, media and sponsors. In January 2012, 20 percent of these were released back onto the market. “The demand is still there internationally for people to come to the UK,” said Mary Rance, chief executive of trade association UK Inbound, which represents tour operators and hotels.

“There’s plenty of availability in London, more than enough hotel rooms, but rates have to be commercially viable ... Hotels and tour operators have to work together better to maximise the opportunity and fill those beds.”

Rance worries that many visitors to the UK this year may have already come. Britain has just celebrated the Queen’s Diamond Jubilee, the other major event of the summer.

UK Inbound conducted a members’ survey last week which found that between May and August 2012 almost half said their tourism bookings were “slightly lower” or “considerably lower” than the year before, (27 per cent and 21 per cent respectively).

Conversely, 52 percent responded that their bookings were either “considerably higher” or “slightly higher” year on year between January and April.

Tour operators’ worries about a visitor shortfall contrast with available flight data. Research last week by travel reservations group Amadeus found a 13 percent rise in bookings for flights to London for the Olympic period compared with the same period a year ago.

These figures were based on global air reservations booked through travel agencies, not direct bookings, and do not take into account potential traffic on low-cost carriers.

A significant portion of the travellers who have already booked could be the 11,000 athletes staying in Olympic-village accommodation, and spectators staying in private residences.

UK agents say the spike in air bookings can also be accounted for by Games visitors making unusually early reservations whereas summer holidaymakers wait until nearer the time to book and it is these visitors which the UK hospitality industry fears will fail to turn up in sufficient numbers.