Bloomberg
by Tim Barwell
Londoners are already seeking tenants to stay in their homes during the 2012 Olympic Games, asking as much as 70 percent more than typical apartment rents to capitalize on an expected shortage of hotel rooms.
About 320,000 foreigners will travel to London in the six weeks from the start of the Olympics to the end of the Paralympics, competing for about 120,000 hotel rooms available by then, the U.K. government’s VisitBritain estimates. About 40 percent of the rooms will be set aside for guests of the organizing committee, said market research company Rubicon.
Websites like Londonrentmyhouse.com are featuring hundreds of houses and apartments near Olympic venues and in towns within commuting distance of the capital. Hotel prices may more than double during the event, making it easier for homeowners in good locations to demand higher rents.
“As the Games get closer, they will be able to name their price,” Jane Ingram, head of Savills Plc’s rentals unit, said in an interview. “It’s definitely worth visitors thinking about coming over to sort accommodation out earlier.”
Julia Bailey is seeking to rent out her one-bedroom apartment in Greenwich, close to the gymnastics arena and about 30 minutes travel from the main Olympic Park in Stratford, east London. She’s asking for about 400 pounds ($632) a week, approximately 70 percent more than current long-term leases.
“It’s a fantastic opportunity to use my property for such an exciting event and also make some money at the same time,” Bailey, 32, said in an interview.
Big Crowds
The London Olympics will attract more visitors than previous summer Games held in Europe, according to VisitBritain, a state-backed organization promoting U.K. tourism. About 250,000 people traveled to the 1992 Games in Barcelona, while 150,000 visited the 2004 Athens Olympics, it said.
“It’s a complete lottery,” Tim Hyatt, head of residential lettings at Knight Frank LLP, said in an interview. “There is a general lack of good quality stock. There is every opportunity it could get a bit silly.”
Hotel rates will rise as demand reaches “unprecedented highs,” Rubicon said in a report last month.
“Hotel stocks are already under pressure, with the London organizing committee already having first call on 50,000 rooms for officials, dignitaries and 22,500 worldwide media expected to attend,” said Rubicon, which based its forecast on research conducted in a four-month period around the Vancouver Winter Games in February. That may drive people to rent out private homes, Rubicon said.
Building Hotels
InterContinental Hotels Group Plc, owner of the Holiday Inn brand, plans to finish building 10 more hotels in London in time for the Olympics, bringing its total in the capital to 11,500 rooms, according to spokesman Leslie McGibbon. The company hasn’t decided what it will charge during the Games.
“It’s a complex process deciding what to charge and there will be a lot of different rates and packages,” he said. Intercontinental Hotels is a sponsor of the event.
Nearly 100 properties are available to rent for the Olympics on LondonRentMyHouse.com. People pay a one-time fee of 20 pounds to place an advertisement until the end of 2012.
“As well as those advertising, I’ve had some very interesting contacts from France and America looking for accommodation,” said Matthew Parker, the founder of the LondonRentMyHouse, where Bailey listed her property. “They will pay well.”
Hyatt said Knight Frank is receiving five to 10 enquiries from people looking to rent out their properties each week. He said professional landlords are unlikely to change contracts so their tenants can sublet for the Olympics. That leaves owner- occupiers to fill the gap.
‘Last Minute’
Rates of 40 percent to 100 percent above long-term levels are typical for private homes, said Sarah Tonkinson, director of short-term rentals at property broker Foxtons Ltd. said in an interview. People should price their properties in that range to avoid a repeat of the 2008 Beijing Summer Games, where apartment premiums of up to 200 percent may have contributed to empty seats at some events, she said.
“There will definitely be a last-minute rush,” Tonkinson said. “We’ll know a lot more next year, when the Games are closer.”
During the 2000 Games in Sydney, a late scramble for accommodation drove up rents, especially near the Olympic village, to as much as 10 times normal rates, according to Charles Tarbey, chairman of Century21 Australia.
“Lots of homes were still available,” he said. “People weren’t willing to pay that much or they clubbed up in places.”
Eight Million Tickets
The Olympics run from July 27 to Aug. 12, 2012, with the Paralympics lasting 12 days from Aug. 29. More than 8 million tickets to events will be sold from April 2011.
The London Organizing Committee wouldn’t comment on accommodation and referred questions to VisitBritain.
“We expect to have plenty of room for everyone who wants to visit London and stay in the city,” Rebecca Smith, a spokeswoman for VisitBritain, said by e-mail. “Visitor figures provided are based on an estimated overall visitor number over the course of the entire Games period, and not all visitors will have a single room.”
Towns with an easy commute to central London may be the “unwitting winners” of the expected price surge, Rubicon said in its report. “Business travelers and tourists may be forced to head further afield to find a reasonably priced hotel room.”
Wimbledon Bonus
In Wimbledon, the London district that hosts the annual Grand Slam tennis tournament, a 5-bedroom property close to the All England Club venue can fetch as much as 7,000 pounds per week during the event, according to Clive Moon, head of Savills Wimbledon. In 2012, residents there will get two opportunities to cash in on rentals, he said.
The U.K’s longest recession on record may make people more willing than usual to rent out all or part of their home, Andrew Buonocore, owner of the olympicletting.com Website, said in an interview.
“Some people actually have a bit more experience of that because of the downturn,” said Buonocore, whose website last month was signing up as many as three people a day wanting to advertise their property. “It’s money that you’ve not anticipated, so it’s a nice little bonus.”
Musician and filmmaker Darren Michael is advertising his Edwardian two-bedroom apartment in Enfield, north London, for a period of eight weeks at around 375 pounds a week on olympicletting.com. That’s about 48 percent higher than the current rate.
Once in a Lifetime
“It’s a once in a lifetime thing,” Michael, 36, said in an interview. “It’s a short-time inconvenience. I just see it as an opportunity to make some money.”
Opportunistic Londoners must be careful not to violate Olympic branding rules if they don’t want to face sanctions from the Organizing committee.
Bruce Abbott, a search-engine optimizer, had to remove his website Hotelslondonolympicgames.co.uk after discussions with the committee. Abbott said he was getting about 4,000 hits a month when he shut it down in October. He set the site up 10 days after London won the Games in 2005.
“They’re spoiling an opportunity for entrepreneurs,” he said. “They want the London public to get into the spirit of the Games, and that could occur by reducing the backlog of visitors without beds,” Abbott said in an interview. Parker said he was allowed to keep his LondonRentMyHouse site after agreeing to drop “2012” from the name.
http://www.bloomberg.com/news/2010-11-11/olympic-bonus-for-home-renters-may-increase-as-london-hotel-squeeze-looms.html