Riots and the road to London 2012

September 2, 2011

The mindless violence seen recently on the streets of British cities reminds us just how thin the veneer that binds us as a society has become.  These were not race riots, ed or politically or economically motivated. A criminal minority used one incident as the excuse to arbitrarily take to the streets to cause trouble and recklessly endanger lives, bronchi causing the majority to live in fear for their homes, families and businesses.

The pictures of burning buildings being beamed around the world in an Olympic year must concern any company that has hopes of benefiting from an Olympic dividend in 2012.  The fact that the England v. Netherlands friendly was called off, and other football matches postponed, only underlines how vulnerable sport is to events in the wider community.  With the economy not showing any signs of real recovery, the Olympics had looked like a beacon around which many businesses might focus their marketing efforts.

LOCOG itself is relatively safe financially.  It has sold the majority of tickets and knows that there is latent domestic demand that will most likely close any final gaps.  Sponsors have already contracted around a third of the £2 million budget and the IOC’s contribution is assured.  The only uncertainty is around merchandise revenues if Olympic tourists choose to stay at home.

It is primarily smaller commercial businesses that are most likely to suffer with any fall-off in visitors.  Those operating in the in travel, tourism, hospitality and related retail industries are particularly vulnerable, especially in the capital although those in the overall supply chain outside will also feel the pinch. Many may already have made capital investments in upgrading services with the expectation of increasing profits in 2012.  A softening in projected demand could be disastrous and the banks are unlikely to be sympathetic in providing appropriate support in the current economic environment.

It remains to be seen how much damage has really been done to tourist confidence.  Certainly the hotspots of Trafalgar Square, Parliament Square, South Bank and Covent Garden appeared to be operating ‘business as usual’ even on the worst days of the unrest. The weakness of Sterling against the Euro may also be a positive contributing factor, with Europeans also more likely to take a balanced view of the risks based on their own exposure to similar disturbances at home over the years.

One thing is for certain though: the police have been given a timely reminder of just what can go wrong.  Maybe like theatrical lore, a bad dress rehearsal predicts a fabulous first night.  Humans are often accused of shockingly short memories – let’s hope this is true and that the world will quickly forget and start booking to attend the biggest sporting event on earth in London next year.