The Olympic Housing Phenomenon
by Pete Wade
Frankly, I dislike self-proclaimed experts. But, since Beijing was my 16th Olympic Games, and I have rented flats and houses for past Games on four continents for thirty years, I guess that I probably qualify for this designation as well as anyone.
The Issue: The best housing solution for visitors during the Olympics is to rent a personal home from local residents. Seasoned travelers get a much more enriching cultural experience from the Olympics by immersing themselves in the local "scene," rather than staying in another bland, expensive chain hotel. Naturally, some travelers are shy about venturing away from the safety and predictability of a big chain hotel, to taste the local experience of a strange city. But, those who do try this will come away from the Games with dozens of rewarding life experiences that make the Olympics far more meaningful than mere sports and medals.
The Problem: There is a natural temptation for local residents to speculate on how they might profit from having the Games in their city. And, since the Games are awarded seven years before the start of the actual Games, there is a long time for homeowners to brood over rental decisions and trade rumors. But, since the vast percentage of Olympic visitors are ordinary people on ordinary budgets this sets the scene for a conflict of expectations. The local Olympic Organizing Committee (your local group who plans all of the details for your city's Games) locks up a majority of hotels for officials and families of visiting international committees and media, making the Games housing appear to be sold out for four to five years before the start of the Games, an artificial situation that only fans the flames of expectation among homeowners.
The Result? When visitors planning on attending a particular Games look for “reasonable” lodging, they often find that some hotels and private owners are asking outrageous amounts (sometimes 2-1/2 to 3 times "normal" market rates) and they ultimately decide to stay home and watch the Games on TV. The image of ''the World is coming to my City, and an extra million visitors will mean a bonanza for lodging.” This has happened at every Summer Games since Barcelona in 1992, and every Winter Games since Lillehammer in 1994 (Note: Lillehammer is a small village of 14,000). Local Olympic Organizing Committees also have “official visitors housing” services but they uniformly end up holding a high percentage of unrented properties, and after the Games the news media is full of reports from angry renters who were promised windfalls and were disappointed. It is a classic example of a "lose-lose" situation with disappointed potential visitors staying home, and disappointed homeowners with empty homes/flats. I have newspaper articles from Atlanta, Sydney, Athens and Torino all describing this situation post-Games, and I wonder why the host cities don't learn from each other's past experiences. In fact, recently the impact has been worse on Winter Games host cities because the latest host city (Torino with 1.2 million inhabitants) and the upcoming host city (Vancouver with around 1 million) are the two biggest cities ever to host the Winter Games. Remember, most of the Winter Games have been hosted by winter resort villages like St. Moritz, Cortina, Squaw Valley and Lake Placid, each with inhabitants numbering in the tens of thousands, not millions. The bottom line? Only sketchy data exists, but clearly much more than half of all available Olympic rentals go unrented. And, with today's economy, it's not likely going to be better for homeowners.
How Does Housing Work at the Games?
First, there IS a fortune to be made in housing, but not by most normal homeowners. Travel agents, sponsors, media and the International Olympic Committee and their member National Olympic Committees must have enough housing for their constituencies. Accordingly, they spend big amounts of time and pay nice premiums several years before the Games, locking up housing for their members, guests and families. They negotiate hard, but they can't take chances in not having enough housing to meet their needs. Their success hinges on having at least enough housing. In fact, the local Olympic Organizing Committee has to guarantee a certain level of housing availability for these groups to even qualify for being considered for the Games. This is why all of the better local hotels are theoretically sold out years before the Games. And, some homeowners with larger, more luxurious homes sometimes get early commitments too. These kinds of properties do get substantial premiums over normal rates. But, this “gold rush” is over five years before the start of the Games, and long before ordinary homeowners start to even think about what they want to do for the Games.
Second, local Olympic Organizing Committees always over-estimate the number of visitors to their Games. And, rarely do the local housing “experts” do a good job of homework in researching what happened in past Games. Part of this is political (selling the Games to the community) and part is local ego (there are a hundred reasons why "mine will be better than theirs").
Third, the travel agents, sponsors, media and Olympic organizations always over-estimate what housing they will need for their constituencies. Why? There is not much of a penalty for having a few extra rooms, but there is a huge penalty for not being able to house all of their VIPs, many of which can be expected to change their minds and cancel at the last minute. It's a planning nightmare, and it always leads to lots of surplus housing especially in the last month before the Games. Typically, several weeks before the Games, the local Olympic Organizing Committee will start to allow the hotels to begin to release surplus portions of their rooms that they have put aside for the local Olympic Organizing Committee. In Beijing and Torino, this began to happen a few months before the Games. Reports have it that this is already starting to happen in Vancouver. In Beijing, over half of the four- and five-star hotels had empty rooms during 2008's Summer Games.
Fourth, the rumor mill. There is a rush for bragging rights on who made the biggest killing in renting their home or flat. Everyone "knows someone" who got triple the “normal” rate for renting their place. And these rumors rip through the rental pool like forest fires . . . until it is a month before the Games, and their own homes are still vacant.
All of this can be daunting to someone considering the rental of their home/flat during the Olympics. But, it does not need to be. Here are some suggestions.
Ten Commandments for a Homeowner considering Olympic rentals
1) Don't get greedy. Your potential renter is likely to resemble YOU. Would you pay $300 - 400 (USD) for a room that would “normally” be expected to bring $75 - 100 a night? For 17 to 20 nights? On top of airfare . . . and event tickets ... and out-of-home meals ... and local transportation? The Olympics are a lifetime experience but do the math and ask yourself that question. Then maybe you will see why so many potential Olympic travelers stay home. And, in today's economy, these decisions will be even tougher than at any other time in the last 50 years.
2) Be wary of your advisors. The Olympics will only come to your city once in your lifetime and unless you know someone just like you in a city that has rented Olympic housing before, you will be at the mercy of inexperienced "advisors" and the rumor mill. Rental agents and the local Olympic housing service will very likely have no experience with what goes on during the Olympics, and since they have no personal experience, their guess is as good as yours.
3) Be careful using rental agents. Not only will local agents rarely have any personal experience with the Olympics, they have nothing to lose if your home goes empty. It's only two weeks of the year. It's not their livelihood, so you won't get the same level of attention as you would in selling your home. Do you actually need a rental agent, someone who wants 25 - 40% of your rental amount, possibly making your home's cost non-competitive? What will you get out of that? Don’t get the impression that I am anti-real-estate agent. On the contrary, they provide an invaluable service when they have experience in your market. But, it's not the same for the Olympic period.
4) Pay attention to the quality of your renters. One way for travelers to beat the system of excessive Olympic rental rates is to pack the house. Especially with younger, footloose types, ten people in a two bedroom house? Not unheard of. Smokers? Pets (yup, some people do bring them)? Kids (better put away the knick-knacks and fancy electronic equipment)? Screen your renters; get references and healthy damage deposits.
5) Make your mind up early on whether or not you want to attend the Games yourself. The Olympics are indeed a lifetime experience, one not to be missed if it's in your city. With such a high likelihood of not renting your place, it might make more sense to make up your mind to stay home and enjoy the Games.
6) Make sure you know where your home stacks up relative to other competitive rental choices. All one-bedroom flats are not created equal. Some things make a much bigger difference to Olympic travelers than they would to ordinary travelers who visit your city. Location and transportation are more important because normal transportation options are not predictable during the Games. Proximity to good public transportation, close shopping for essentials (i.e., food) and the internet are big pluses. Your granite countertops, 42" plasma TVs and mountain views won' t matter much to renters who will be spending 10 - 16 hours a day outside the home on the run between events, travel and restaurants.
7) If you haven't rented your place by the last few weeks before the Games, don't give up. If you are realistic with your pricing, you may get more calls during the last month before the Games than you did during the previous year combined.
8) Can you deal with the cultural uncertainties of renting to someone from another culture? If you are uncomfortable with having someone use your home who: a) doesn't speak your language; b) cooks some unusual stuff in your kitchen, and/or smokes some unusual stuff in your living room, you had better think that through now, before you have to figure out how to deal with it. Most Olympic travelers are sophisticated travelers and are North Americans or Western Europeans. But, not all. All cultures do not deal with contracts, rules and regulations in the same way. Who is going to police it anyway? So what are you going to do with someone who smokes cigars for a month in your flat even if you do have a non-smoking clause in your contract? Now what?
9) You can do homework too. Today, with the plethora of communications options available to anyone, you can get good information if you are willing to take the time to look for it. Two decades ago, Olympic travelers had only agents and the newspapers to look for lodging alternatives. Today with eBay, Google and Craig’s List (and their dozens of local look-alikes ), both travelers and renters have a much better chance to research what is really happening (versus the rumor mill). But, remember this cardinal rule . . . what's still listed is what hasn't sold yet!
10) Having a visitor, especially a foreign visitor, in your home is not just a revenue source; he/she can also enrich your Olympic experience. Even if you aren't in your home during the Games, be a good ambassador to visitors. Take the time to meet them, and maybe invite them for a welcoming snack or drink. Put a face on the rental experience . . . it will be worth the effort.
Olympin Collectors Club newsletter, December 2009