Olympic Tourism and the Beijing Olympic Summer Games 2008

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

ABBREVIATIONS

PREFACE

I The development of tourist packages in context of the Olympic Games
I.1 Characteristics of the market of Olympic tour operators, its clients and products
1.1 The Olympic Games and tourism
1.2 The market of Olympic tour operators
1.2.1 Size, structure and participants
1.2.2 Market characteristics
1.3 The Olympic tourist
1.3.1 Number of Olympic tourists
1.3.2 Types and characteristics of Olympic tourists
1.4 The Olympic product
1.5 Concluding comments
I.2 The framework of Olympic Games and its influence on the product development
2.1 Influence of the IOC and OCOG
2.1.1 The product development before the host city selection
2.1.2 The phases of product development after the host city selection
2.2 Influence of the Olympic host city and country
2.3 Influence of the business environment
2.4 Concluding comments
I.3 Influencing factors on the development of tourist packages for the Olympic Games
3.1 Organization of tickets
3.2 Organization of accommodation
3.3 Organization of transportation
3.4 Organization of sightseeing
3.5 Concluding comments

II The development of tourist packages in the context of the Olympic Games in Beijing
II.1 Influencing factors on the development of tourist packages for the Beijing Olympics
1.1 Research aim
1.2 Research method
1.3 Overview of the research results
1.4 Concluding comments
II.2 Crucial factors influencing the development of tickets
2.1 Amount, pricing and design
2.2 IOC and BOCOG regulations
2.3 Concluding comments
II.3 Crucial factors influencing the development of accommodation
3.1 Characteristics of the hotel market in Beijing
3.1.1 The quantitative and qualitative hotel market situation
3.1.2 Characteristics of the Chinese hotel industry
3.2 Reliability and the legal and contractual system in China
3.3 Olympic inexperience and insufficient quality standards
3.4 The tour operator’s reaction
3.5 Concluding comments
II.4 Crucial factors influencing the development of transportation
4.1 Characteristics of the city of Beijing
4.2 Language and freedom of action
4.3 Transportation capacities and Olympic competition schedule
4.4 The tour operator’s reaction
4.5 Concluding comments
II.5 Crucial factors influencing the development of sightseeing
5.1 Characteristics of Beijing and China
5.2 Chinese tourism policies regarding sightseeing
5.3 The tour operator’s reaction
5.4 Concluding comments
II.6 The Olympics in Beijing – a special challenge?!

RESULTS AND PERSPECTIVES

REFERENCES

ATTACHMENTS

LIST OF FIGURES AND TABLES

Figure 1 Main factors influencing the tour operator’s product development for the Olympic Games

Figure 2 Influence of the IOC and OCOG on the Olympic tourist package.

Figure 3 Correlation of the Olympic host city bidding process and the tour operator’s work

Figure 4 The main phases of product development for the Olympic Games

Figure 5 The influence of the host city’s characteristics on the Olympic tourist package

Figure 6 Influence of the host city’s business environment on the Olympic tourist package

LIST OF TABLES

Table 1 Hotel industry changes in host cities

Table 2 Most frequently mentioned factors by interviewed European tour operators influencing the product development for the Olympic Games in Beijing

Table 3 Accommodation requirements for staging the Olympic Games

Table 4 Beijing’s hotel market situation in 2006 and

Table 5 Types of hotel ownership in Beijing and China

Table 6 Main influencing factors and solution approaches named by the interviewed tour operators regarding the product development for the Beijing Olympics

Table 7 Degree of influence of the main influencing factors on the development of the components of an Olympic tourist package for the Beijing Olympics in

Table 8 Catalogue of the official tour operators in the EEA for the Olympic Games 2008 in Beijing and further interlocutors of the bachelor thesis

Table C-1 Responses to the questionnaire

Table C-2 Responses to the questionnaire

Table C-3 Responses to the questionnaire

Table C-4 Responses to the questionnaire

ABBREVIATIONS

illustration not visible in this excerpt

PREFACE

Problem

“Olympic Games have their own laws.”^[3] This statement is used by nearly every manager dealing with the product development of tourist packages for the Olympic Games and reflects the complexity and peculiarity of the product Olympic journey. Its development cannot simply be compared to the development of a mass package holiday to a specific destination. The development of tourist packages for Olympic Games is subject to various influencing factors that result from their organizers as well as from the characteristics of the Olympic host city and its political, economical and sociocultural environment. The better the tour operator is able to adapt to these circumstances, the more successful its Olympic products will be. With regard to the next Olympic Summer Games 2008 in Beijing it is therefore crucial to examine and understand the peculiarities that arise from the general framework of the Olympic Games as well as from the host city’s environment.

Objectives and structure of the bachelor thesis

The aim of this thesis is to present the most crucial factors that influence the work of a tour operator during the development of tourist packages for Olympic Games. Some of these influencing factors can be applied in a similar degree to every Olympic Games while others alter significantly with the changing Olympic host city and put completely new demands on the tour operator. In order to examine this proposition the thesis is subdivided into two main parts. The paper will focus on the Olympic Summer Games only as Olympic Winter Games are characterized by a fewer number of participating athletes, nations and sports as well as by a smaller interest of media, economy and spectators.^[4]

The first part of the thesis will provide a general overview regarding the specialties of the product development for Olympic Summer Games. It starts by outlining the characteristics of the market of Olympic tour operators and presents the different categories of Olympic tourists and products. Subsequently, the thesis will identify the crucial factors that influence the tour operator’s actions during the product development for an Olympic journey. In order to establish a connection of the main elements of an Olympic tourist package and the influencing factors, they will be finally applied to the development of tickets, accommodation, transportation and sightseeing.

A considerable part of the factors that influence the creation of an Olympic tourist package cannot solely be examined in an isolated form and need to be related to the specific Olympic host city. Therefore, the second part of the thesis will focus on the example of the Beijing Olympic Summer Games in 2008 and places the product development of tickets, accommodation, transportation and sightseeing in the particular environment of the Chinese host city. The thesis wants to illustrate that the work of an Olympic tour operator is not only influenced by the general regulations of the Olympic organizers but also by the political, economical and sociocultural environment as well as the characteristics of the host city. It aims at figuring out how strong the product development of the main components of an Olympic journey is affected by the different influencing factors.

Considering the differences between the Chinese and European political and economic systems as well as between their values and culture it is supposed that the product development for the Olympic Games in Beijing will put very challenging demands on European tour operators. Therefore, the paper will identify the most decisive influencing factors that result from the environment in Beijing and China and their effects on the tour operator’s work. Moreover, it will demonstrate how Olympic tour operators in Europe face the peculiarities, challenges and difficulties of the product development process for Beijing and which solutions they find in order to successfully develop an Olympic product for 2008. In conclusion, the results of the thesis will be used in order to determine the degree of influence of the presented factors on the development of the components tickets, accommodation, transportation and sightseeing.

The information presented in both parts of the bachelor thesis is based on primary and secondary data analysis. As secondary data information about the development of tourist packages for Olympic Games is scarce primary data have been collected by a professional working experience of the author and several expert interviews. The author’s experience was made during an internship at a sport tour operator in fall 2006 and during a one week stay in Beijing in November 2006. The interviews addressed primarily to the official Olympic tour operators in the European Economic Area (EEA) and members of the Beijing Organizing Committee of the Olympic Games (BOCOG). The interviewees have been chosen on the basis of their experience and knowledge regarding the Olympic product development and its influencing factors as well as the overall organization of the Olympic Games in Beijing. Moreover, their responses should help to answer the question whether for a European tour operator the product development for the Beijing Olympics represents a special challenge in comparison to previous Olympic Games. Secondary data have been collected by literature and Internet research.

Various articles and papers dealt already with tourism and Olympic Games. However, most of them analyze the effects of Olympic Games on a tourist destination and focus on the travel movements that the Olympics produce. By contrast, poor information can be found about how the journeys of the tourists traveling to Olympics are organized and which demands Olympic Games put on the establishment of a tourist package. This paper aims at providing more detailed information about this part of Olympic tourism.

I The development of tourist packages in context of the Olympic Games

The first part of the paper will provide a general overview regarding the characteristics of the product Olympic journey and the crucial factors that influence its creation. Initially, a brief overview of the Olympic tourism development and the market of Olympic tour operators in the European Economic Area will be drawn before the characteristics of the main Olympic tourist groups and the components of an Olympic tourist package are identified. Following, the thesis will outline the main factors that affect the development of an Olympic tourist package. The influence of the regulations of the International Olympic Committee (IOC) and the Organizing Committee of the Olympic Games (OCOG) on the tour operator’s proceeding will be shown by analyzing the main phases of the Olympic product development. Moreover, it will be examined how the guidelines of the Olympic organizers and the characteristics of the Olympic host city as well as its particular business environment influence the creation of an Olympic journey. In order to draw general conclusions regarding the peculiarities of the product development for Olympic Summer Games the identified factors will finally be applied to the organization of tickets, accommodation, transportation and sightseeing which represent the most important components of an Olympic tourist package.

I.1 Characteristics of the market of Olympic tour operators, its clients and products

1.1 The Olympic Games and tourism

Olympic Games did not arise out of tourist motives. Nonetheless, they developed tourist relevance and became an important tourism driver. When in 1896 the first Olympic Games of modern days were staged in Athens primarily local people were present in the stadium. During the first half of the 20th century journeys to sporting events such as the Olympics were reserved to a minority. This was provoked by the exhausting conditions of travel and difficult political and economical situations. After the Second World War the number of participating countries and foreign spectators increased thanks to the improved living conditions, the enthusiasm for sports and the rapid development of the tourism industry.

In 1984, the Olympic Games in Los Angeles had been a milestone regarding the development of the Games as they had been the first to be completely financed with private capital.^[5] At that time the Olympic organizers began to sell Olympic rights to television networks and sponsors. Companies discovered the marketing opportunities that the Olympic values and the high media coverage could provide to their products. This sport-media-business alliance developed rapidly and made the Olympics an economic good through corporate sponsorship and high rates for broadcasting rights. The Olympics became a real mega event with an enormous rise in the number of sports, events, participating countries and athletes. Moreover, the size of the Olympic venues increased and permitted that more visitors could experience the competitions live in the stadium. Simultaneously, cities and regions discovered the valuable promotional opportunities that the Olympics can offer. Thereupon, as a matter of course, more and more people were interested in the Olympics and a rising number of tourists were willing and could afford to travel to the Olympic host city. In consequence, the market of specialized tour operators offering tickets and tours to the Olympic Games increased. The work of these tour operators and thus the organization of journeys to Olympic Games changed in tandem with the alteration of the whole Olympic event. Without the financial support from economy and sponsors the today’s Olympic Games could not take place. The increasing commercialization and popularity of the Olympics have changed the organization of Olympic journeys. Over the last two decades, the creation of Olympic tourist packages has become more complex and expensive. Price increases are normal over time but the Olympics have undergone sudden cost increases particularly with regard to tickets and accommodation. Their purchase has become more complicated and demanding. Winners are those tour operators or agencies that have the official right to sell Olympic tickets. The following chapters will illustrate which challenges tour operators face when developing tourist packages for today’s Olympic Games.

1.2 The market of Olympic tour operators

The organization of journeys to Olympic Games is accompanied by various constraints that become already evident when examining the market of Olympic tour operators. No tour operator can decide spontaneously to offer Olympic tourist packages. The following part will introduce on the one hand the size, structure and characteristics of the market of Olympic tour operators in the European Economic Area that is to say in the 27 member states of the European Union as well as in Norway, Iceland and Liechtenstein. On the other hand the chapter aims at giving a first insight in the specific Olympic environment and the demands that it puts on the tour operator’s work.

1.2.1 Size, structure and participants

Sport tour operators that offer tourist packages for the Olympic Games can be assigned to the market of passive sport tourism. Passive sport tourism is defined as the passive participation in competitive or recreational sports while traveling to and staying in places outside the usual environment.^[6] While tourism only reinforces the tourist’s experience, sport represents the key motivator for traveling. Passive sport tourists are attendees at sporting events, they experience sport passively but practice an active travel action. Olympic sport tour operators have specialized in this type of tourists and tourism. However, the market of passive sport tourism travel is relatively small. In Germany its market share lies between one and two percent, whereof journeys to Olympic Games make up only a part of it.^[7] This figure indicates that tour operators specialized in this field work in a niche market.

The structure of the market participants for Olympic journeys is initially determined by regulations from the International Olympic Committee (IOC). The IOC passes to every National Olympic Committee (NOC) the right to determine one official tour operator responsible for the official Olympic ticket sales in its respective country. In Germany, every four years the German Olympic Sports Confederation (DOSB)^[8] repeats to make this bidding for which any tour operator can apply. After the selection by the NOC, the chosen tour operator becomes the sole official ticket agent for the next Olympic Games in its country and receives a specific amount of tickets as well as a certain hotel quota from the Organizing Committee of the Olympic Games (OCOG). Normally, the official tour operator also offers transportation possibilities as well as sightseeing options for the Olympic destination. The duration of contract between the NOC and the official tour operator differs from country to country. In order to be the official ticket agent, the official tour operator has to pay a high amount to its NOC. In Germany, this has recently been a six digit euro amount.^[9] This circumstance makes it difficult for smaller tour operators to enter the market. However, apart from the official tour operators there are also unofficial ones offering journeys to Olympic Games. As the IOC acknowledges only one official tour operator in every member country, unofficial tour operators have to purchase all components of their Olympic product on the free market and tickets from partners. Therefore, for these tour operators a strong network of contacts is indispensable.

In Germany DERTOUR live is the official ticket agent of the German Olympic Sports Confederation and also offers transportation and sightseeing options for the Olympics. DERTOUR live is the sport and event division of DERTOUR which is one of the largest German tour operators. As in Germany, the NOCs of most other European countries have assigned one tour operator with the official ticket sale and the organization of Olympic travel packages. In some cases one agency is even responsible for several countries like the official agency for Great Britain Sportsworld Group that also handles the ticket sale and the arrangement of tourist packages for the NOC of Denmark, Liechtenstein and Switzerland. However, in some countries the NOC does not select an official tour operator for each Olympic Games. With regard to the Olympics 2008 in Beijing this applies to Spain, Iceland, Malta and Cyprus. In this case, tickets are only sold by the NOC itself or via Internet.

1.2.2 Market characteristics

Apart from the described regulations of the IOC, the differences in the constitution and structure of the aforementioned European market of Olympic tour operators result from several influencing factors.

The size and the travel behavior of a country’s population have an impact on the market design. A comparison of selected European countries will illustrate this situation. The secretary general of the National Olympic and Sports Association of Iceland, Stefan Konradsson, stated that only 10 tourists from Iceland went to the Olympics 2004 in Athens.^[10] Considering this small demand Iceland does not select an official tour operator. However, this is not true for every small country as for example the NOC of Liechtenstein selected the Sportsworld Group as their official agency. It can be assumed that the Sportsworld Group is interested in such a cooperation in order to have the official ticket right for that country. The fact that the Sportsworld Group is responsible for several states permits it to secure a greater amount of tickets and accommodation. As the demand for journeys to Olympic Games in countries like Denmark or Liechtenstein is quite small, it can be supposed that the Sportsworld Group uses their remaining tickets and accommodation quota in order to satisfy the high demand for these components in Great Britain. Moreover, some NOCs of smaller countries decide to select an official agency in order to pass on the financial risk, which is characteristic for the ticket purchase, to a tour operator.^[11]

Moreover, also the travel behavior can influence the structure of the market. In 2005, about 68 percent of the journeys made by German tourists went to a foreign destination while this had been only about 6 percent in Spain.^[12] Due to the higher interest of Germans in traveling and in traveling abroad, the DOSB chooses one tour operator for the distribution of tickets and other tourist components. By contrast, the NOC of Spain does not select an official ticket agent for the Olympic Games in Beijing which probably derives among other things from the preference of Spanish tourists for domestic tourism.

The market constitution can also be linked to the popularity of a sport and the success of athletes in a country. The image of sport that is increasingly created by media and economy influences the interest of people in journeys to sporting events such as the Olympics. A mixture of the above named factors determines the demand for journeys to Olympic Games and the overall structure of its market.

Moreover, the relatively small size of this market arises from the risks by which it is characterized. A lot of companies tried already to enter it but failed because of its difficult business environment that is going to be analyzed in the following chapters.^[13] The organization of journeys to Olympic Games is accompanied by a long-term pre-financing. The main part of the costs for an Olympic product has to be paid long in advance as the time of purchase and the time of the beginning of the event are far away. The tour operator has to bear this risk, particularly if deposits have to be made very early, contingents cannot be given back or high cancellation fees have to be paid. For the Olympic Games in Sydney in 2000 DERTOUR live had to pay 75 percent of the bought goods and services by 30th April 2000 although the Olympics did not start until the 15th September 2000.^[14] For the Olympics 2004 in Athens the majority of goods and services had even to be paid at 75 percent about one year prior to the Games.^[15] DERTOUR live also states that a utilization rate of 95 percent per passive sport travel is necessary in order to reach its objectives.^[16] In case this rate cannot be attained DERTOUR live has to balance the deficits by other tours. Thus, a sudden decline in demand can have drastic consequences for the tour operator. Moreover, the purchase of tickets and accommodation which represent the decisive parts of a tourist package for the Olympic Games has become more difficult and cost intensive. The increased interest in the Olympic Games makes the ticket purchase more complex and risky. Despite a high demand the tour operator is not always able to answer to every enquiry. Tickets for specific events are very difficult to obtain because of an international high demand and restricted capacities in the stadiums. Furthermore, at a particular time tickets have to be taken at a fixed number, have to be paid at 100 percent and cannot be returned to the OCOG. In order to satisfy the client’s demand for the Olympic product the tour operator is forced to procure specific goods for the expected number of clients very early and has to accept high financial risks.

Due to the described factors the market of tour operators offering trips to the Olympic Games is quite small and differs from country to country. However, once a tour operator has established its products, this market can be very attractive and lucrative.^[17] A further advantage is that the product Olympic journey is able to respond to varying customer preferences as the Olympic Games offer a wide range of different forms of sports taking place in the same period. Tour operators having the Olympic Games in their portfolio have thus a comparative advantage to those specialized in only one or a few numbers of sports. To be protected against the difficulties and disadvantages of this market strong partnership with federations, officials and sponsors as well as to other Olympic tour operators or agencies are convenient means.

1.3 The Olympic tourist

In order to develop a product for the Olympic Games successfully, it is a precondition to analyze and determine the types of tourists traveling to Olympic Games. The following chapter will identify the strongest groups of Olympic tourists as well as their main characteristics and demands towards an Olympic journey. In conclusion, the results are used in order to define the most important components of an Olympic product.

1.3.1 Number of Olympic tourists

The majority of Olympic spectators are inhabitants of the host city and visitors from the surrounding region.^[18] In accordance with the definition of the term tourist, visitors have to stay at least one overnight in order to be qualified as a tourist.^[19] Therefore, a significant part of Olympic spectators cannot be declared tourists. The total number of tourists traveling to Olympic Games is indicated differently in literature. As it is quite difficult to predict tourist figures for the Olympic Games, host cities often overestimate the number of Olympic tourists. In 2000 for example 132,000 Olympic-specific international visitors went to the Olympics in Sydney.^[20] Considering that a considerable part of these visitors were athletes, media representatives, officials as well as members of the NOCs, IOC, OCOGs and International Federations (IF) the number of actual Olympic tourists that travel as spectators to the Games is quite small.^[21] However, they still represent the strongest number of Olympic tourists.

1.3.2 Types and characteristics of Olympic tourists

The tour operator has to identify the types and characteristics of Olympic tourists in order to create a product that corresponds to the client’s requirements. Below the main groups of inbound tourists traveling to Olympic Games will be stated in connection with their most important characteristics and demands on a tourist product.

I. NOC, IOC, IF and OCOG members and guests: This group travels to Olympic Games mainly for organizational and representative reasons. Their members are accommodated in four and five star hotels. Their guests as well as staff and technical delegates require three to five star accommodations.^[22] The tour operator organizes tickets, accommodation and transportation for the NOC and IF members and guests of its respective country.
II. Athletes and team officials: Most athletes and team officials are accommodated free of charge in the Olympic Village. Only a small part needs additional hotel rooms for example if the specific Olympic venue is located far from the Olympic village. Consequently, tour operators are primarily responsible for their transportation to and from the Olympic host city as well as for the provision of tickets. The organization of the transport can be very demanding. Particularly, if the Olympic city is located far away from the athlete’s home destination, stopovers have to be organized in order to guarantee the continuous physical fitness of the athletes.
III. Sponsors and Corporate Clients: Both groups are very demanding regarding the provided services. Sponsors are accommodated in five star hotels only.^[23] Moreover, they have access to a specific ticket amount of very attractive competitions and events such as the opening and closing ceremony or important swimming and athletics decisions. Corporate clients are accommodated in four to five star accommodations and require a more individualized and ample program than Free Individual Tourists (FITs). Corporate clients and sponsors often demand an exclusive program including dinners in very good restaurants or special events such meet and greets with famous athletes.
IV. Media: The majority of media representatives, their staff and technicians are accommodated in the media village. However, a part of them needs accommodation in different hotel categories as generally not all Olympic venues are located close to the media village. Moreover, the tour operator organizes their transportation to and from the host city as well as the transfer to and from the Olympic venues in the host city.
V. Politicians: Tour operators organize tickets, accommodation and transportation for governments and politicians. Regarding the preparations of their journeys particular security aspects have to be taken into consideration when deciding for example on the hotel. Normally, politicians are accommodated in five star hotels and get tickets in the highest category.
VI. FITs: In the context of Olympic Games this group is represented by foreign tourists that travel to Olympics as spectators. According to two surveys made among German FITs after the Olympic Games in Barcelona and Atlanta the number of Olympic tourists increases with a rising social class.^[24] The main part of German Olympic tourists in Barcelona and Atlanta came from the middle class. Additionally, the survey revealed the most important motives of Olympic tourists. Tourism aspects influence their travel behavior but do not represent their most important motivation. Olympic tourists are mainly interested in sport, the atmosphere, the experience of such an important sporting event and in top performances.^[25] The gigantism of the Games with their increasing ticket and accommodation prices discourages younger people to travel to the Olympics and reinforces the tendency that Olympic tourists get older on average.^[26] Regarding the FITs it can be concluded that a significant part of Olympic tourists are demanding regarding the product they buy. As the main part comes from middle classes or higher they call for a journey of high quality and accept to pay a higher price than for a mass tourist package. The main part of them requires three or four star accommodation and second category entry tickets.^[27] When the distance between the home destination and the Olympic destination gets longer, more Olympic tourists are willing to buy additional tourist packages in order to discover other parts of the Olympic country.^[28] For FITs the tour operator has thus to offer accommodation, tickets, transportation as well as sightseeing options.

Concluding, it can be observed that tickets, accommodation and transportation represent the most important components of an Olympic journey. The demand for accommodation in three, four and five star hotels is particularly noticeable. Additional tourist services are inquired particularly by sponsors, corporate clients and FITs. These demands need to be taken into consideration when the tour operator decides on the goods and services it wants to procure for the Olympic product.

1.4 The Olympic product

The aforementioned aspects regarding the Olympic client groups brought already to light the main components of an Olympic tourist product. Generally, it consists of tickets, accommodation, transportation, sightseeing options as well as the organization of dinners, special parties and events. Depending on the tour operator’s objectives, its client structure as well as on the Olympic destination the following types of products are generally offered by Olympic tour operators:

- tickets only
- accommodation only
- transportation only
- sightseeing only
- dinners / parties / special events only
- combination of tickets and accommodation
- combination of tickets and transportation
- combination of tickets, accommodation and transportation
- combination of tickets, accommodation, transportation and sightseeing
- further possible combinations of the main components with dinners, parties and events (e.g. tickets and dinner)

1.5 Concluding comments

The previous chapter permitted to understand the basic characteristics of the market for Olympic journeys, its client profiles and product features. It is particularly noticeable that the market structure and size depend in a high degree on the constraints imposed by the IOC and NOCs. Moreover, the need for high financial investments and risky pre-financing are characteristic for the market of Olympic tour operators. The most important components of an Olympic travel package are tickets, accommodation, transportation and sightseeing. The next chapter will identify the crucial factors that influence the tour operator’s work with regard to the creation of these components.

I.2 The framework of Olympic Games and its influence on the product development

Apart from the IOC regulations regarding the market constitution of Olympic Games, the tour operator’s work is influenced by the general framework of the Olympic Games and the peculiarities of their host city. The process of product development and the design of an Olympic journey are closely linked to rules and guidelines of the IOC and the OCOG, the characteristics of the Olympic destination as well as the political, economical and sociocultural business environment of the host city.

illustration not visible in this excerpt

Figure 1 Main factors influencing the tour operator’s product development for the Olympic Games^[29]

2.1 Influence of the IOC and OCOG

The International Olympic Committee (IOC) as well as the Organizing Committee for the Olympic Games (OCOG) influence the proceeding of a tour operator significantly. The power of the IOC is based on the right to award the Olympic Games to one bid city.^[30] Once the decision on the Olympic host city is made the respective NOC establishes an Organizing Committee. The OCOG is responsible for all kinds of organizational aspects, the distribution of tickets and the management of a considerable part of the host city’s accommodation. The tour operator cannot influence the destination and timeframe of the Olympics and has to adapt its work to the procedures and decisions of the IOC and OCOG. Some of the IOC’s requirements made in the run-up to the Olympic Games are advantageous for the tour operator and its clients as host cities generally improve their infrastructure such as the extension of the hotel supply and the transportation system.

illustration not visible in this excerpt

Figure 2 Influence of IOC and OCOG on the Olympic tourist package^[31]

Following, the impact of the IOC and OCOG regulations on the different phases of the Olympic product development before and after the Olympic host city bidding will be analyzed.

2.1.1 The product development before the host city selection

The Olympic host city bidding is a very long and complex process. Figure 3 on page 24 illustrates how the tour operator adjusts its work to the official procedures of the Olympic organizers. They actually determine the phases of product development.

illustration not visible in this excerpt

Figure 3 Correlation of the Olympic host city bidding process and the tour operator’s work^[32]

As the above illustration shows, around 11 years prior to the Olympic Games the countries interested in staging the Olympics generally organize a national competition to which several cities apply. Two years later the NOC of the respective country decides for one of those cities whose application is then presented to the IOC. As the number of candidate cities is already reduced and Olympic Games normally do not take place twice in a row in the same continent, some bid cities can already be excluded from considerations. The tour operator can already begin a theoretical discussion regarding possible future destinations and in some cases even starts searching for potential partners in the bidding host city and country.

The IOC selects the host city seven years before the beginning of the Olympic Games. This decision represents the real starting point for the tour operator’s preparations. At the latest at that moment it has to begin with research regarding the Olympic destination. Considering the quadrennial cycle of the Games this means that there are still another Summer as well as Winter Olympic Games to come when the IOC decides for the next Olympic host city. Consequently, the tour operator has to work on several Olympic projects simultaneously and cannot concentrate on just one Olympic market.

2.1.2 The phases of product development after the host city selection

With the awarding of the Games to one city, the actual product development of the tour operator begins and can be subdivided into the following main phases:

1. Project planning
2. Procurement and pricing of all components of the Olympic product
3. Development of the distribution network and marketing strategy
4. Commercialization and sale of the Olympic products

The following illustration shows these phases and their timeframe more in detail.

illustration not visible in this excerpt

Figure 4 The main phases of product development for the Olympic Games^[33]

Project planning

The phase of project planning prepares the phase of procurement and pricing. As rapidness is an important success factor in the market of Olympic journeys, the tour operator starts its preparations immediately after the IOC’s decision for the next Olympic host city. At the latest at this moment, the tour operator begins profound research regarding the needed components for its Olympic product. Hoteliers and service providers in the Olympic city are contacted and first inspection trips are planned. The aim during the first inspections is primarily to get to know the host city and its peculiarities, to increase the company’s awareness and contact network and create confidence among the new partners. Normally, at this stage hoteliers and service providers do not yet sign any contracts as the period till the beginning of the Olympics is still very long. Nevertheless, in order to provide a basis for subsequent negotiations, it is very important to keep in continuous touch with the gained and potential future partners.

Procurement and pricing of all components of the Olympic product

This phase is the longest, most cost-intensive and complex one. Four years prior to the Games the intensity of the tour operator’s actions in the future Olympic host city increases considerably. This results from the fact that most tour operators work on two Olympic Summer Games simultaneously. When the Olympics four years prior to the next Olympics have ended, the main focus of the tour operator’s work is put on the preparations for the next Olympic Summer Games. The Olympic product now begins to take shape as hoteliers and service providers begin to fix prices and sign declarations of intent, pre-contracts as well as final contracts with the tour operator. Apart from the procurement of accommodation the tour operator has to conclude agreements with travel agencies, transportation companies and airlines. About two years prior to the Games the contracts with the OCOG regarding tickets and accommodation are negotiated and are generally fixed about one and a half years prior to the Olympics.^[34]

The most intense part of this phase lasts from four years to one and a half years prior to the Olympic Games. The events that determine this period are the end of the preceding Summer Olympics and the publication of the brochures for the Olympics to come. When brochures and other commercialization material are published the main part of procurement has to be finished as the they should include the complete tourist packages with exact hotel names and prices. However, the phase of procurement has not ended yet. Corresponding to demand and its satisfaction with the procurements already made the tour operator continues to purchase hotel quotas and other services. Moreover, the tour operator has to search adequate representatives and tour guides that care for its guests during the Olympics. It also tries to renegotiate contracts, keeps in touch with partners and has to take into consideration specific clients’ demands. The tour operator is even forced to continue the procurement of specific services till the end of the Olympic period for example if important clients change or extend their requests spontaneously.

Development of the distribution network and marketing strategy

The timeframe of the development of the distribution network and the marketing strategy is related to the end of the previous Olympic Games and the start of the official ticket sale about one and a half years prior to the next Olympics. When the official ticket sale starts which is determined by the OCOG all offers of the tour operator have to be finished. Another reason for the early publication of the Olympic brochure is the client who needs to get prepared for the often very cost-intensive Olympic products. Four years prior to the Olympics some clients are already interested in the registration for journeys to the next Olympic Games for example Olympic tourists that participate in an Olympic savings program^[35]. The marketing plans are intensified about two to three years prior to the Olympics. At that time most tour operators publish a preview regarding the next Olympics in their brochures and on their web pages. Depending on the progress of their procurement, some tour operators offer already complete Olympic packages and registration brochures. Thanks to the client’s reactions to these brochures the tour operator can already draw some conclusions regarding the demand for the Olympic product. The intensive preparation of the distribution network begins about one year prior to the publication date of the main Olympic brochure. With the beginning of the official ticket sale this brochure is published and all offers are placed in the distribution channels of the tour operator.

Commercialization and sale of the products

The commercialization of the Olympic product begins with the end of the previous Olympics. About two and half years prior to the Olympic Games it is intensified and some tour operators publish already a preview of their future Olympic products. The final commercialization starts with the beginning of the official ticket sale about one and half years prior to the Games. It is accompanied by the publication of the main Olympic brochure and lasts until the end of the Olympics.

From chapter three on the thesis will focus on the second phase of the Olympic product development with special regard to the creation of the components tickets, accommodation, transportation and sightseeing.

2.2 Influence of the Olympic host city and country

The tour operator’s work and the product design are also influenced by the characteristics of the Olympic destination. The size and infrastructure of a host city can put specific demands regarding logistics on the tour operator.

illustration not visible in this excerpt

Figure 5 Influence of the host city’s characteristics on the Olympic tourist

package^[36]

Moreover, the tour operator’s proceeding is affected by the extension and standards of the tourist infrastructure such as the supply of accommodation in the host city. The prosperity of the host country can be an indicator regarding the prices for tickets and other goods and services. Finally, the geographical location, climate, accessibility, attractiveness as well as the political, economical and sociocultural situation of the host city influence the client’s travel behavior and thus have an impact on the design of the Olympic product. These factors can equally serve as an indicator for the number of Olympic tourists to be expected and for the willingness of clients to book specific components of the Olympic product such as additional sightseeing options.

2.3 Influence of the business environment

Every four years the Olympic Games take place in another city, country and even another continent. The tour operator has to adapt its work and management regularly to the business environment of the changing Olympic destination. This includes different political and economical systems and regulations as well as intercultural and social differences.

illustration not visible in this excerpt

Figure 6 Influence of the host city’s business environment on the Olympic tourist package^[37]

In consequence the sport tour operator can hardly become a specialist of one or a certain number of destinations and has to deal with continuously changing destinations and market situations. In the majority of cases tour operators know their market after a starting phase quite well and can adapt products from year to year thanks to their experiences at the destination. By contrast, the sport tour operator has to know and understand the market in a very short period of time and leaves it after the event if no other important sporting event will take place in the host city in the near future. Therefore, the sport tour operator has more difficulties to establish long-term business relationships at the destination and to obtain competitive advantages. Exceptions constitute sport tour operators that are not only specialized in the organization of passive sport journeys. DERTOUR live benefits from the experience and contacts that other divisions of DERTOUR have already made in the Olympic destination. Another exception represents sporting events that already took place in the Olympic host city prior to the Olympic Games and were part of the tour operator’s portfolio. In these cases tour operators can extend the existing business contacts and benefits from the experiences already made in this market. However, generally, sport tour operators are faced with constantly changing market conditions and different competitive environments when preparing for Olympic Games. Consequently, an essential condition for a successful product development represents a rapid adaptability of the tour operator to the characteristics of the Olympic destination and to a changing political, economical and sociocultural environment of the Olympic city and country.

2.4 Concluding comments

The previous chapter provided a general overview regarding the decisive factors influencing the Olympic product development and the tour operator’s proceeding. In respect of these factors it can be concluded that one can generally distinguish between those factors that are characteristic to nearly the same extent for every Summer Games such as regulations of the IOC and OCOG and those that change significantly according to the changing Olympic destination for example the supply and quality of the tourist infrastructure as well as the characteristic business environment. The following chapters will now relate these factors to the development of the main components of an Olympic tourist package.

I.3 Influencing factors on the development of tourist packages for Olympic Games

The following chapter will provide a general overview regarding the characteristics of the main components of an Olympic tourist package. It will analyze how the organization of tickets, accommodation, transportation and sightseeing is generally affected by the previously mentioned influencing factors during the phase of procurement and pricing. Crucial aspects will be pointed out that tour operators have to take into consideration when developing these components for the Olympic Games. The focus will be put on the IOC and OCOG regulations and a part of the host city’s characteristics as the effects that they produce can be observed in a similar degree during every Olympic Games.

3.1 Organization of tickets

The admission tickets for the Olympic competitions represent the most important parameter of an Olympic product. As already mentioned, surveys among Olympic tourists identified sport as the most important motive for a journey to Olympic Games.^[38] Ticket quotas allocated to foreign countries can be regarded as the regulating quantity for Olympic tourism.^[39]

The ticket sales are organized by the OCOG.^[40] The number of tickets available for a tour operator depends on various factors. First of all, the total number of tickets depends on the venue capacities of the Olympic city and the number of sports, disciplines and events. The amount of tickets sold to foreign tourists is limited by the tourist capacity of the host city which is determined by the number of hotel beds and the number of citizens who accommodate relatives and friends.^[41] It also has to be taken into consideration that the IOC has to meet its obligations towards sponsors, media and Olympic family^[42] members. The OCOG is obliged to provide as many tickets as required to the IOC and its guests at face value cost.^[43] Sponsors have a pre-emption right and can buy a quota of tickets prior to the beginning of the official sale. Considering this situation it can be concluded that the percentage number of tickets available for Olympic tourists other than accredited guests is very restricted.

[...]

---

^[1] Cp. Financial Times (1-Mar-07)

^[2] Ibid.

^[3] Interview with Brösel (23-Jan-07), vice president, DERTOUR GmbH & Co. KG

^[4] Cp. Schantz (n.d.), pp. 11-13

^[5] Cp. Preuss (2004), p. 16

^[6] Cp. Gammon; Robinson (2004), p. 4

^[7] Cp. Freyer (2002), p. 11

^[8] In August 2006 the NOC of Germany and the German Sports Federation have joined to
form the German Olympic Sports Confederation (DOSB).

^[9] Interview with Brösel (23-Jan-07), vice president, DERTOUR GmbH & Co. KG

^[10] Interview with Konradsson (5-Feb-07), secretary general, National Olympic and Sports
Association of Iceland

^[11] Interview with Kovarik (13-Feb-07), deputy secretary general, Austrian National Olympic
Committee

^[12] Cp. BAT Freizeit-Forschungsinstitut (2005); Instituto de Estudios Turísticos (2005), p. 6

^[13] Cp. Brösel (2002), p. 204

^[14] Cp. Brösel (2001), p. 152

^[15] Interview with Jungemann (14-Feb-07), chief operating officer, Vietentours GmbH

^[16] Cp. Brösel (2002), p. 202

^[17] Cp. Brösel (2002), p. 204

^[18] Cp. Preuss (1999), p. 67

^[19] Cp. UNWTO (1993), p. 167

^[20] Cp. Preuss (2004), p. 51

^[21] Cp. Preuss (2004), p. 51

^[22] Cp. IOC (2002), p. 70

^[23] Cp. IOC (2002), p. 71

^[24] Cp. Messing; Müller (2000), p. 267

^[25] Cp. Messing; Preuss (2002), p. 117

^[26] Interview with Brösel (23-Jan-07), vice president, DERTOUR GmbH & Co. KG

^[27] Ibid.

^[28] Cp. Dreyer (2002), p. 358

^[29] Own presentation

^[30] Cp. Preuss (2004), p. 280

^[31] Own presentation

^[32] Own presentation

^[33] Own presentation

^[34] Interview with Brösel (23-Jan-07), vice president, DERTOUR GmbH & Co. KG

^[35] Such a saving program permits Olympic tourists to pay a monthly amount over the period of
several years in order to put aside sufficient money for the payment of an Olympic journey.

^[36] Own presentation

^[37] Own presentation

^[38] Cp. Messing; Preuss (2002), p. 117

^[39] Cp. Preuss (2004), p. 172

^[40] Ibid., p. 168

^[41] Ibid., p. 171

^[42] The Olympic family includes athletes, coaches, trainers, support personnel, international judges and juries, officials and official guests of the IOC, IFs, NOCs and OCOGs, international media representatives and high-level executives of sponsoring organizations.

^[43] Cp. Preuss (2004), p. 169