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22 June 2012
• Between 2012 and 2015 The Games will generate economic benefits worth £5.33bn
• 79% of post-Games economic benefits will be generated outside London
The London 2012 Olympic and Paralympic Games will deliver an £804m consumer spending injection for the UK this summer and an economic legacy worth £5.33bn by 2015, according to the report, Realising a Golden Opportunity: Visa Europe’s London 2012 Olympic and Paralympic Games Expenditure and Economic Impact Report. The report looks at the consumer expenditure and economic output related to The Games and its distribution across the country. It is based on Visa’s unique insight into consumer spending in the UK and spending data from previous Games and major sporting events.
The Games open on the 27th July and in the seven weeks following, international visitors will spend £749m, representing an 18% increase on the level of spend that would be expected if The Games were not taking place in 2012. Spending by domestic consumers will increase by £54m during The Games. The knock-on effect of this increased consumer spending translates into widespread economic impacts and an increase in output worth £1.21bn over the seven week Games period.
Longer term economic impact findings:
The report considers the legacy impacts of The Games between 2013 and 2015 and looks at the predicted increase in visitor spending and economic output attributable to the Olympic and Paralympic Games and its distribution across the country.
Dr Steve Perry, Commercial Director at Visa Europe commented: "The London 2012 Olympic and Paralympic Games represent a fantastic opportunity for the whole country. While the host city will be the centre of Olympic activity and the initial spending beneficiary, The Games are a showcase for the whole country. Visitor spending and associated economic output will rise on the back of the nation’s higher profile as a desirable destination in coming years. This economic legacy will be distributed across the country: from 2013 to 2015, 79% of the £4.12bn economic output will flow to areas outside of London and the biggest winners will be high street retailers and hotels."
This spending and economic output will be driven by the raised international profile of the host city and country, by concentrated international media exposure and the benefit of ‘word of mouth’ recommendations from Olympic visitors returning home. Areas such as the South West and Scotland, already popular with tourists, should experience a significant uplift in spending and economic output in the years following The Games.
Industry sectors benefiting during The Games:
During the seven week Games period, industries most closely associated with tourism such as retail, hotels and entertainment will feel the benefit of The Games. The domestic consumer will contribute a smaller proportion of the overall benefit but UK residents are expected to switch from traditional patterns of consumer spending and get into the Olympic spirit by stocking up on supplies and entertaining at home. Supermarkets look set to be a clear winner from this consumer behaviour.
Overall, the principal winners from the increase in spending by sector are expected to be:
• High Street retailers: £210 million
• the Hotels sector: £138 million
• Supermarkets: £88 million
• the Entertainment, food and drink industries: £46 million
• the Travel sector (airlines, car hire, etc.): £46m
Dr Perry continued: "Businesses serving international visitors will capitalise on the presence of Olympics and Paralympics fans looking to make the most of their visit to the UK. Retailers will also feel the impact as UK residents celebrate their nation’s time in the spotlight with Games parties and gatherings to support the British team as they aim for gold on home turf."
About the report:
The report is based on an econometric model which projects the effect the London 2012 Games will have on consumer spending using Visa cardholder data which accounts for £1 in £3 spent in the UK. This information has been used to predict spending in the UK were The Games not taking place and has been supplemented with Visa cardholder data from previous Games and the FIFA World CupTM to determine the likely uplift in spending and economic output. This report builds on the previous expenditure and economic impact report published by Visa Europe in June 2011, using updated spending figures and additionally examines the impacts of The Games across the UK’s regions. It does not quantify additional benefits to the economy such as stimulus to the construction sector and long term benefits of improved infrastructure; therefore it provides unique insight into how consumer spending alone will impact the economy.
Using accepted econometric models, the report also considers how this increase in consumer spending will go on to affect the wider economy. The increase in economic output predicted in the report includes the knock-on impacts to businesses from increased consumer spending and the ripple effect this has on other businesses in the supply chain. The knock on values vary by sector, but are typically an additional 30-40% of the increase in initial consumer spend.