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Feature - Chasing Olympic gold

Tallying up the balance sheet for businesses during the Winter Games

Prepare for the worst but hope for the best.

For years business owners likely to be touched by the 2002 Salt Lake Winter Olympic Games were told by officials that few make money when the Games come to town.

"What’s the point of having them?" many asked when told this startling fact.

The rationale, said officials, lies in a complicated set of data which shows that areas which host hallmark events enjoy greater numbers of visitors for the next five to 12 years.

"In the short term I think the Games are only part of where the gain has come from," said David Baird who heads up economic development for Salt Lake City’s Downtown Alliance.

"We have had invaluable global exposure of Salt Lake City, also Park City, so we are primed now for new development.

"We are also definitely on the radar screen for many, many more conventions."

Statistics show that more tourists went to Calgary in the years after the Games than would have been expected if the winter Olympics had not taken place in 1988. The same is true of tourist numbers to B.C. following Expo 86 in Vancouver.

Salt Lake is predicting the Games will generate US$2.5 billion in revenue over the next five years. They expected visitors to spend around US$348 million during the Games. The average cost of a room was expected to be US$205 per night and most people were expected to stay 7.7 nights.

Here at home, the Vancouver-Whistler 2010 Bid Corporation and the provincial government have used their own figures to predict an economic legacy over 12 years of over CDN$3 billion.

If you add in revenue from a new Vancouver convention centre the net economic activity over 12 years is expected to be CDN$8.1 billion.

Many would argue the extra revenue may be offset by the cost to taxpayers of hosting such events.

According to the General Accounting Office, the Salt Lake Games cost US$342.2 million, although an investigative article in a recent Sports Illustrated suggested the Games cost the American public US$1.5 billion.

The 1988 Calgary Winter Games cost the taxpayers about CDN$500 million. The 2000 Sydney Summer Games, three times the size of a Winter Games, cost the public AUST$1.18 billion.

Others would argue it is worth the public expense to generate future revenue, and interest, and be part of such a spectacular and historic event.

Whistler and Vancouver won’t know until 2003 if they have won the right to host the 2010 Winter Games.

But fact-finders for the bid and the government are already searching for answers about how the province and the country can maximize the opportunities the Games would bring.

The Whistler Chamber of Commerce has already hosted information forums with speakers addressing a top 10 list of concerns put forward by local businesses. And it plans to host more.

The list of concerns include accommodation and housing, transportation, lasting benefits, local business opportunities, infrastructure, local support, security, cost and funding sources, quality of services for guests and locals and Olympic merchandizing.

And 2010 Bid organizers and committee members went to Salt Lake to learn whatever lessons the 2002 Games had to teach.

"My objective was not to get caught up in the party but to really go behind the scenes and talk to businesses that were not only in the venue communities but outside the venues," said Gordon Goodman, director of sustainable development at the 2010 Olympic Secretariat, and director of the Sustainable Tourism Office for the provincial government.

What stood out above and beyond anything else, said Goodman, was the importance of planning ahead, educating businesses, and forming direct channels of communications between business associations and those organizing the Olympic Games.

"The big high level stuff I learned was that you really have to plan for this," said Goodman.

"You have to engage with all the organizing committees because as they are setting up events and festivals and parties all of a sudden you could find your business has lost its access because there is something going on for a couple of nights in front of you."

One of the most effective organizations Goodman came across was the Park City Main Street Alliance.

It negotiated with the Olympic organizing committee in Salt Lake which wanted to turn the main street into a pedestrian plaza for the torch relay and as a site for entertainment.

"The Main Street Alliance said, ‘OK you can do that, but you have to make sure that we can have access for deliveries and you won’t set up a big tent in front of our shops,’" said Goodman.

"They negotiated with the organizers. They came up with a fairly comprehensive agreement. It was a negotiation, no question."

And, for the most part, it was a successful one.

"Amazingly enough we had great success," said Paul Brown, owner of the Wasatach Brew Club on Park City’s Main Street and head of the business alliance.

"We had heard from Nagano and Lillehammer... don’t plan on retiring on the money you make the year of the Olympics. They were saying that obviously, for the 17 days of the Olympics business can be very good, but the rest of the season surrounding the Olympics you can expect to be off as much as 50 per cent.

"With that in mind the chamber (of commerce) became pretty proactive as far as trying to avoid pitfalls."

In the year prior to the Games aggressive marketing was launched informing potential visitors that the resort was open for business, affordable, and construction-free.

Many in Park City were concerned that removal of the town’s name from the official bid, as has happened to Whistler, would spell doom for the town.

But innovative marketing of Park City as "The Alpine Heart of 2002" turned it into the darling of visitors, competitors, and the media.

Brown’s restaurant experienced record numbers while the Olympics were in town. That created its own headaches as staffing became an even more important part of the equation for success than it was during an average ski season.

Like Whistler, Park City businesses struggle with staffing every year. This year, said restaurant owner Brown, he phoned old staff and offered them jobs for the Olympics, even the ones who lived out of town. It was up to them to find somewhere to stay, but it would be worth it financially as he offered bonuses to all his hourly staff.

"When I first did (the bonus) I was estimating how much it was going to cost and wondered about it," said Brown.

"But five days ago I saw it was paying its dividends now because out of the entire course of the Olympics I had one person who showed up a couple of hours late, that was it.

"No one called in sick. Everybody showed up and did their work. That’s pretty amazing."

Most eateries did well and retailers selling Olympic merchandize made money too, thanks to the 20,000 to 40,000 people who visited Park City every day during the Games.

There were even a few surprise winners.

"I’m swamped. I’m swamped," was the greeting callers received when they phoned Plaza Dry Cleaners in Park City as the Games got under way this month.

"We thought it might be busy, but it’s crazy," said Plaza manager Tyson Johnson.

The small business already had some hotel contracts lined up well before the Games came to town. Then two months before some big chain hotels approached them for guest services.

"Then two weeks before the Games the military asked us to do their uniforms," said Johnson.

The dry cleaners had to hire a new staff member, get all the staff in early, and stay open an hour later to make sure they could handle the extra work without compromising service to their regular customers.

"Well, you have to look after your own customers," said Johnson. "They are the ones that stay around."

That’s an important message for business said Goodman of the 2010 Bid.

"The best way to look at it is to try and retain your traditional customers," he said.

Location is also key. In Salt Lake stores only 100 metres off the main footpaths had their dreams of gold turn to lead.

At Sanders Rare Books business was down almost 50 per cent.

Research shows that virtually all businesses suffer a slow down in the months leading up to and after large events like an Olympics because visitors believe it will be too busy, too unpleasant due to construction, or too expensive to visit. So maintaining a strong relationship with regular customers is important.

But while visitation may drop, room-rates go up and studies show the rates stay 13 to 22 per cent higher even after the Games have left town.

To buffer loss of visitors, said Goodman, resorts must organize conventions or festivals to draw crowds and keep business going through this period.

He believes Whistler is already ahead in the money-making game because it is geared towards pedestrian traffic. Many of the businesses that did poorly during the 2002 Games were off the beaten track.

Whistler Chamber of Commerce chairman John Nadeau believes the Games would be good for Whistler.

"I think if you take a long-term view the impact that events like this have on visits is positive and clearly there will be more money spent overall in the resort on a long term basis," he said.

Like some other local business people he is concerned that visits to Whistler may be "flat-lining" by 2010 and an event like the Olympics may be the boost the resort needs to keep it ranked No. 1.

But he is also cautious, believing businesses need to educate themselves about the Games in order to make sure they get the most benefit they can.

"I think we have an awful lot of solid entrepreneurs in Whistler and as the information increases and as they come to understand what the facts are the entrepreneurial spirit will win out," said Nadeau, who has experienced both the Winter Games in Calgary in 1988 and the Montreal Summer Games in 1976.

Information is power. For the year leading up to the Games in Salt Lake business associations held monthly meetings to discuss issues and share information.

It’s a must for businesses to go, said Brown of Park City’s Main Street Alliance.

"I would encourage the associations, whether it be lodging, merchants, restaurants, or retailers to stay in the loop," said Brown.

"Be there, voice your opinions. One reason I got involved with the Main Street vendors and the food court was because I knew that if somebody from Park City didn’t look after Park City then we would have the Idaho spud man there and the Tennessee barbecue grills on the street.

"We really wanted to keep it a local event. So you have to stay in the loop and go to these meetings because if you don’t go then no one else will."

One area of particular concern for business tenants in Whistler is the rents they might face when the Games come to town.

The hope is that with education most landlords will come to take the long-term view and keep local tenants throughout the Games.

But Goodman, during his trip to Utah, found that while most landlords didn’t gouge, others "had dollar signs in their eyes."

"I saw everything happening there as far as lease agreements went," said Goodman.

"What it came down to again was the businesses having the information in their back pocket and being aware that they may be challenged by their landlord’s understanding what the rules were to deal with those things."

Goodman came across real estate offices, which because traditionally sales are low during an Olympic event, negotiated deals for rental of their office space and wages for their staff.

An older building used as a non-profit art gallery was also facing economic loss in Park City. But the owners rented the space to GM, which not only paid them it renovated the building for free.

"If you have a business that you don’t think you are going to get good dollar value from the Olympics with, why don’t you think about shutting down for a month and renting the space out if that is possible," said Goodman.

"Be entrepreneurial."

Many businesses in resort town operate under the shadow of uncertainty every year. Will there be enough snow to bring in visitors? Will the economy be strong enough to support vacationers and so on.

Most successful businesses prepare for slow years and down-turns. If your in a business that may not benefit form the Olympics, said Goodman just plan for a slow year.

But for those businesses that survive month to month, only a good strategy may pull them through.

"That’s what we have to help them with," said Goodman.

It’s not just small business which will need to form strategies. Big business, like ski resorts, need to plan ahead too.

Utah’s Snowbird resort, which would normally be almost full, had rooms available throughout the Games because people thought it would be too crowded or mistakenly believed it was hosting events.

Skier visits were down at least a third from "normal." There were no line-ups at the chair and skiers enjoyed what was bad news for tourism.

"I think it is going to happen, you can’t avoid it," said Doug Forseth, senior vice president of operations for Whistler-Blackcomb.

"It is how you mitigate it, that is the question. We all have work to do to figure that out and come to grips with it."

Forseth said it’s likely the resort will pull together and do some aggressive marketing to educate travellers about what Whistler can offer even during an Olympic Games. The problem will be accommodation. The resort will be full of "Olympic Family" members.

"I think you have to some extent look at the overall goal we are trying to accomplish and why we are doing it," said Forseth.

"In my opinion, the need to be involved here is one of continuing to promote and perpetuate the sustainability of our business in the valley.

"I believe as you become a mature resort and you don’t have bigger and newer stories to tell you have to find something to keep the excitement and keep people thinking about your resort.

"I believe the Olympics can do that for our community and for our businesses."

But not everyone is convinced.

Van Powel owner of Mind-Body Fitness is concerned that small businesses will face many negative impacts, including lease rate gouging, refusal to renew rental space and even higher taxes in the long run to help pay for the Games.

While he is not opposed to hosting the Olympics in Whistler he is not convinced it is the best thing for Whistler or B.C.

"We see that small businesses in towns which host Olympics don’t have increases in business and in some cases there is a decrease in business during the Games," said Powel, co-creator of WhistlerOlympicInfo.com, an independent information website on the 2010 Games.

"Will those people be compensated? We have seen that corporations like Whistler-Blackcomb will be compensated according to the information we have at this point. What about small businesses that will be affected?

"We are being told to get on board now or possibly loose out. But maybe there are some people who won’t be able to or choose not to and does that mean they will no longer be a viable business in this community?

"On a greater scale you have to look at this and ask if it is an efficient use of taxpayers’ money. The critics of the government’s economic impact study say that it is not.

"Do people in Prince George, or Fort St. John think this is a good use of B.C. taxpayers’ money, giving the people of Whistler a ski jump or a luge run where people can spend $30 or $40 dollars for the thrill of going bob-sledding?"



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