London Olympics no goldmine for city as fans, locals avoid tourism hotspots

(CBS News) LONDON - Cities that compete to host the Olympics hope the prestige turns into an economic bonanza, but that's not always the case.

It's not exactly as if England's capital city threw a party and nobody came -- in London, it's become a tale of two cities.

People have come, but just not to all the places it was hoped they'd go. The Olympic crowds have tended to stay very much around the Olympic Village, and are not venturing into central London - to the tourism hotspots.

The much-hyped bump in general tourism simply hasn't happened. In fact, quite the opposite: Tourism operators say business is down, way down.

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Nick Palan, managing director of tour bus company Golden Tours, has been in the business for 28 years, and he says tourism in London is down about 25 percent compared to last year.

Amy Seck, one of his tour bus guides, says it has come as a bit of a rude awakening.

"We were expecting to pack the buses, to make them full, but nothing happened."

Restaurants are also seeing decreased demand.

Restaurateur Enzo Oliveri took on extra help and bought extra stock for his restaurant in anticipation of the rush, which never happened.

Oliveri suggests London officials may be partly to blame. "They gave the message, 'avoid London, because it's going to be panic and mad busy.' They shouldn't have said that message. They should have said, 'come and enjoy the Olympics.'"

Not only have the regular tourists stayed away, Londoners are staying at home as well - away from the restaurants, shows and bars - or they've left town.

The surprising thing is, though, this shouldn't be a surprise. It happens almost all the time.

For cities trying to make a name for themselves, the Olympics can be a draw - at least for the future. But for established world cities like London, there always seems to be a drop off.

People scared off by security fears or by jacked-up hotels prices, many of which were later reduced.

Yet, cities like Paris and New York - both of which lost out to London for these games - still seem intoxicated by the prospect of holding them down the road, in spite of the evidence.

"So there's a myth about the Olympics, that somehow just having them is going to solve all the problems of a city," says Mitchell Moss, a professor in urban planning and development at NYU, "The Olympics, historically, have added to problems of cities, not solved them."

British Prime Minister David Cameron is trying to draw people back into London's semi-deserted tourism heartland by issuing his own desperate plea: "Come back into the capital, come back and shop, come and eat in London's restaurants and let's make sure that all of London's economy benefits from this."

To see the Mark Phillips report, click on the video in the player above.

  • Mark Phillips

    Mark Phillips returned to the CBS News London bureau as a correspondent in 1993. He has covered many major stories since then, including the war in the Balkans, the death of Princess Diana and the weapons inspection conflicts in Iraq.

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