China's Olympic Sized Bust
China impressed everyone with its Olympic opening ceremonies, but when it comes to profit, the Olympics disappoint China business owners.
Vancouver, London, Chicago Take Note
Paula Bronstein / Getty Images
A shopkeeper waits for a sale at an antique market in Beijing. Some Chinese poured their life savings into buying businesses or sprucing up their shops ahead of the games, but it’s paid off for few.
Many in Beijing were counting on a tourism bonanza, but it didn't happen.
Li Qiang can't wait for the Olympics to end Sunday. He had expected his Sichuan restaurant, a couple of miles from the Olympic village, to be packed with tourists during the Games. But it's been unusually quiet. One day this week, business was so slow that Li let two of his seven staff members go home in the middle of the lunch hour. Three others sat in the corner watching television.
"Everybody thought the Olympics would be great for business," he said. "It turned out differently."
Air China, the nation's flagship carrier, saw its international passenger traffic fall by 19% from a year earlier.
Many owners of small restaurants, hotels and shops in Beijing are wearing long faces this summer, especially those who poured their life savings into buying businesses or sprucing up their shops ahead of the Games.
Apartment owners, too, had hoped to cash in on the bonanza, with some jacking rents up to five times normal levels, according to the official New China News Agency. But of more than 20,000 apartments posted for short-term rent, only 8,000 were leased during the Games, it said.
In a traditional Beijing hutong neighborhood near the centuries-old Drum Tower, a popular tourist attraction, the new owner of the Shuangsi, or Double Temple Hotel, had the Olympics in mind when he borrowed about $140,000 to buy the two-story building at the end of last year.
Even at a discounted rate of less than $20 for a single, only half of the 27 rooms are now occupied, said the 32-year-old, who would give only his surname, Li.
Similar disappointments are what Vancouver 2010 and London 2012 have to look forward to. Chicago 2016 (a hopeful) should take heed but it won't. Chicago may be in better shape because the recession is likely to be over by 2016, but I still doubt it would be worth the expense.
The opening ceremonies were fantastic, but where was the payback?
Many will suffer, few will benefit. Vancouver in particular is unlikely to be prepared for such an outcome. All that glitters is not gold.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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