The Economic Impact of the Winter Olympic & Paralympic Games

Faster, higher, stronger*

In October 1998, the Vancouver Whistler 2010 Bid Society formally submitted a bid to the Canadian Olympic Association (COA) to be the host "community" for Canada's bid for the 2010 Olympic Winter Games and Paralympic Games, (hereafter collectively referred to as the Games or the Winter Games). Vancouver Whistler was subsequently selected by the COA as the Canadian contender. In accordance with the required practice, the success of the bid was followed by dissolution of the Bid Society and formation of the Vancouver Whistler 2010 Bid Corporation (VW2010).

On July 13, 2001, the International Olympic Committee (IOC) selected Beijing as the host city for the 2008 Olympic Summer Games over several contenders, including Toronto. The demise of the Toronto bid signaled the start of the sprint by VW2010 to finalize a winning bid for IOC selection in 2003 as host for the 2010 Winter Games. It also freed up the COA to throw its full weight and resources behind the 2010 bid.

Why do cities pursue the Games? Cities choose to host Olympic Games for very different reasons. While the development of sport, athleticism and world peace are underlying themes of all Olympic Games, the decision to host an Olympic Games has as much to do with the social, psychological or economic stimulus that can be derived from such large events. Some cities have used the Games as a catalyst for urban renewal. The 2000 summer Olympic Games in Sydney, for example, were developed on a site that had been home to an unusable swamp, a meat packing house, a brick works and a munitions dump. Some countries have used the Games to legitimize their claim to first world economic status. All hosts aim to rise their international profile.

Hosting the Games also creates a platform to showcase leading aspects of the economy or leading edge technology The so-called "greening" of the Games is a predominant theme in recent host city selections by the IOC. Sydney responded by, among other things, developing their athletes village to continue after the Games as the world's largest solar-powered settlement. British Columbia might wish to showcase applications of fuel cell technology, for example.

For British Columbia, hosting the Games is fundamentally an opportunity to replicate the kind of economic and psychological stimulus and the considerable enduring incremental economic benefits the province achieved with Expo 86. The ability of a "hallmark" event of this nature to foster a public sense of economic momentum, which in turn fosters new investment and economic growth, should not be ignored. Unfortunately, there is no credible method to estimate these impacts with any accuracy before the event and they are not reflected in numerical outputs reported in this paper.

Setting aside the non-monetary benefits of the Games, VW2010 and its guarantor, the Province of British Columbia, will want to know under what cost and revenue conditions the Games can be expected to generate a positive incremental economic impact in British Columbia. The bidding process and construction program required by the IOC dictates that the host city is selected about seven years before the event. That schedule forces the bidding cities to make their bid commitment based on estimates of economic impact and financial forecasts developed from seven to ten years before the Games event.

To measure this impact of bidding for and hosting the Games, and the impact of the attendant international media exposure on tourism volumes, we have developed a sensitivity model to estimate the Gross Domestic Product (GDP), tax revenue and employment effects under a range of cost and tourism conditions. The model is described in Appendix A and is referred to variously as the model, the Games model and the 2010 model.

While t he modern Olympic Games have taken place on a more or less regular schedule for almost 100 years, lack of consistency in data collection and reporting makes meaningful comparisons amongst Games impossible except at the broadest level. The comparative analysis that has been done focuses almost exclusively on the Summer Games. More significantly, very little academic research focuses on quantifying the   long-term economic impacts of such hallmark tourism events and little data exists to permit comparison of forecasts with actual results.

Reports from relatively recent winter Games at Nagano (1998) and Lillehammer (1994) provide interesting anecdotal evidence but often lack context. The official Lillehammer post-Games evaluation report, for example, states overnight visits rose by 65% in the four years leading up to the Games, but does not distinguish between resident and non-resident visitors - a critical distinction in calculating incremental economic impacts.

More difficult still in estimating the likely tourism implications of the 2010 Games is measurement of the role of geography and place recognition on visitor volumes. Some evidence and logic support the proposition that hallmark events like the Olympic Games, held in high profile and universally recognised cities such as London or Paris or Los Angeles have a much smaller impact on international visitor volumes to such cities than do such events held in less widely known cities, such as Vancouver. Similarly, countries such as water-locked Australia, geographically remote from the most of the first world economies, presumably have a tougher time building the volume of international visitors, even for hallmark events, than would British Columbia with the USA at its doorstep.

The seven year gestation stage for the Games exposes the costs and benefits of the event to a variety of internal and external risks Ultimately, the economic success of the Games will depend on early recognition of these risks, development of risk containment strategies and careful planning, cost control and skillful execution.

Finally, the economic impact of winning the bid and hosting the Games is maximised by treating the project as an opportunity to raise, to a new plateau, international awareness of, and interest in British Columbia as a year round tourism destination,.

Those seeking a comprehensive understanding of the business and economics of the Olympic Games are directed to Economics of the Olympic Games - Hosting the Games 1972 - 2000 by Holger Preuss.¹

*Baron Pierre de Coubertin

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