Candidate Cities for 2016 Summer Olympics: ORC Finds Rio the Most Cost-Effective
September 9, 2009
NEW YORK—With the much-anticipated October announcement of the winning host city for the 2016 Summer Olympics, ORC Worldwide surveyed prices of goods and services in each candidate city—Chicago, Madrid, Rio de Janeiro, and Tokyo—and compared them to London, the host of the 2012 Summer Olympics. Rio appears to be the most attractive option from a cost perspective—it’s 18 percent less costly than London, followed by Chicago (11 percent) and Madrid (3 percent). In Tokyo, well-known as expensive, prices are 42 percent higher than London. ORC’s pricing agents compile data on a representative market basket of nearly 200 items in more than 300 cities worldwide.
How do the costs for wining and dining stack up? “Although the bill for a restaurant meal with a nice bottle of wine doesn’t vary widely across the different locations, Chicago and Rio are slightly less expensive than London, with Madrid and Tokyo at least 18 percent more expensive,” according to Siobhan Cummins, managing director of ORC’s Europe/Middle East/Africa operations. “Celebrating a gold medal with a glass of beer is currently the most affordable in Rio, or perhaps Madrid, but beer in Tokyo and Chicago is more expensive than in a London pub.”
If traveling to London for the 2012 Olympics, one might find a price break for meals early in the day by purchasing breakfast cereals. Although you might pay more than 5 pounds sterling (GBP) in Tokyo, 3 GBP in Chicago, or 2 GBP in Madrid, cereals in London average 1.55 GBP. “So, you can at least get a good start to your London day,” Cummins adds. The cost of getting around to those Olympic venues in London—especially by taxi—is expensive compared to the others. But if you opt for a bus or underground, Rio is by far the cheapest, followed by Chicago.
Is there an Olympic effect? Reviewing the price changes in the last two Summer Olympics cities, ORC found a 15 percent increase in Beijing prices in the year of the Olympics, and a continued sharp rise this year. “However, we saw little effect on prices in Athens.” Cummins explains, “This finding suggests that perhaps the Beijing changes were due to significant growth in the economy, accelerated by the Olympics. It will be interesting to see how London fares in the run up to the 2012 games and beyond.”
Exchange rates play a major role in determining whether or not a location is expensive. For example, although hotel costs in Beijing have dropped steadily since 2007, the yuan gained significantly against the pound in 2008. “Staying in Beijing was pricier for U.K. visitors during the Olympics. At the same time, Beijing prices were rising. As the exchange rate went against the pound, the British celebrating their medals found a significant hole in their pockets,” according to Cummins. On the other hand, during the Athens games, the pound was at a high against the euro, which made Athens much more affordable for London fans.
If the International Olympic Committee factors in local prices when selecting the 2016 host city, Rio and Chicago are strong candidates from a cost perspective. But 2016 is seven years away, and there will be many influences on prices between now and then. In the meantime—London 2012!
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