Olympics usually not the financial boon for host cities they're cracked up to be

Tourist pub empty during Olympics
Empty tables are seen outside a pub near Covent Garden in central London, Wednesday, Aug. 1, 2012.
AP Photo/Sang Tan

(CBS News) It happens every four years, in a frenzy of hope, anticipation and yes, greed. A venue competes for selection as the Olympic site with the delusional belief that an event that lasts barely three weeks will save the city's entire economy. As a result, massive overbuilding, hype, then overcharging resulting in sticker shock and then, lots of seats to fill and hotel rooms to unload at the last minute.

Complete coverage of 2012 London Olympics

This year is no different in London.

Traditionally, London sees 300,000 foreign and 800,000 domestic tourists per day during the month of August. The Olympics have driven away many of those - a loss that outweighs whatever financial benefits there might be from the Games.

Businesses are struggling as locals stay home and traditional tourists stay out of London altogether. Ironically, this is a great time to visit, since there are barely lines for attractions, theaters and restaurants; hotels are available and slashing rates; and even airfares are sliding back down to reasonable levels.

To date, London has budgeted about $18 billion for the Games. Compare that to Atlanta, which spent $2.4 billion in 1996 and Sydney, which spent $6.8 billion in 2000 and is still struggling to fill the rooms it built. Athens, which spent $15 billion in 2004, is dealing with venues that are in disrepair because it cost hundreds of millions to maintain them. Beijing alone seems to have benefited in terms of tourism, but only after spending a whopping $40 billion in 2008 -- the most expensive Olympic Games in history.

Are people spending? According to Visa Inc., international visitors to the London 2012 Olympic Games spent nearly $700 million on their Visa accounts during the opening week (July 23 - 29). What are they spending on? Not what you might think: Services ($133.7 million), entertainment ($95.5 million), airlines ($82.9 million), retailers such as book stores, antique shops and drug stores ($71.8 million), and hotels ($69.3 million).

In fact, TripAdvisor's recent Industry Index Survey found many of Britain's hoteliers felt that the Olympics and the Diamond Jubilee have been "non-events" for business. Of the 2,500 U.K. hotel owners surveyed by TripAdvisor, 58 percent said the Games would have no impact, while just 35 percent think they will see either a short-term or long-term positive effect.

It all comes down to a definition of terms. There's a big difference between rooms that are "booked" and rooms that are "blocked." LOCOG (the London Olympic Organizing Committee) blocked rooms months ago for sponsors, VIPs, media, and workers. And when those rooms go unused, they go flooding back onto the market.

And now, hoteliers are slashing prices. According to Hotwire, you can still get last-minute rooms at reasonable rates for the duration of the Olympics, such as a three-and-a-half-star Mayfair-SoHo area hotel from $179 a night or a four-star hotel in Ealing from $117 a night. Hotels.com has three and four-star hotels for well under $200 a night.

As for those coveted tickets that Americans could only get by lottery or in an expensive package -- just turn on a TV to see all the empty seats. Olympic venues hosted 370,000 spectators on Monday, at 88 percent of the seating capacity.

Tempted? You could fly to JFK to Heathrow on a last-minute ticket - departing Tuesday, Aug. 7 - and return after the closing ceremony for less than $1,000 ($992 on Brussels Air and United via Orbitz). Compare that to the more than $1,500 per ticket that tickets cost London-bound travelers who booked months in advance.

Or you can take my advice and go -- after the Olympics. That's when the sales really start, and they'll continue through the end of September. We're not just talking London, but all of the U.K., and that includes Scotland, Ireland, and Wales. Some hotels are reporting occupancy projections of less than 24 percent from the middle of August through September.

Translation: a huge buyer's market. Expect huge airfare sales to Europe to start showing up as of Aug. 6.

For more travel tips and news, visit PeterGreenberg.com.