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Olympic Meltdown?

Kenneth Tan posts on Shanghaiist about how hotels are lowering their rates in Beijing during the Olympics because the expected influx of tourists doesn’t appear to be materializing.

We were actually one of the apartment owners hoping to cash in on the Olympics. I don’t think we were being greedy–it was only worth it to us to move out during the Olympics if we received an extremely high price, and no one would have rented from us unless they couldn’t find a better deal elsewhere. In any case, a lot of people like us who were thinking of renting out apartments have had to change plans because the anticipated housing shortage never occurred.

Actually, I think that China’s limiting of tourists coming into Beijing (through vague visa restrictions) may be a calculated, smart decision. They could have just opened the gates and mailed out visas to everyone in the world, but–security considerations aside–they would have run the risk of huge congestion and traffic troubles in Beijing during the Olympics.

A lower-than-expected number of tourists before and during the Olympics will certainly cut into the direct revenues that China will get from the Olympics, but I think for China the real prize is the image boost it has the potential to get from the Olympics. If the Olympics go smoothly from a security perspective, and everybody has a great time without having to complain about traffic, there is a huge upside for Beijing and China in the next five to ten years. On the other hand, if people complain about how Beijing came to a standstill with the influx of tourists, or if there are security problems, it has the chance to be very embarrassing for Beijing and China, and could limit the upside gained from the Olympics over the next few years.

Of course, the lower-than-expected number of tourists is due to more than just the visa confusion, and the visa issue itself may be the result of bureaucratic confusion, but I still think it will be a net positive for Beijing and China in the long run.

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