Hotel rates for London 2012 Summer Olympic Games: let the gouging begin!

It figured to happen, but it's still astonishing to see a report by Oliver Smith in the Daily Telegraph that talks about how a few London hotels are hiking normal rates by as much as 10 times for next summer's Olympics.

Smith reports that a majority of hotels haven't released their rates for the Olympics period (uly 27-Aug. 12) next year but that a double room at the Sheraton Park Tower in Knightsbridge (see photo) is being quoted at an incredible $979 per night. This month, however, you can get a room for the relative bargain price of $338.

It's far worse at the Berjaya Hotel in Kensington, where room rates typically range from $144 to $322, but for the Olympics are currently set at, wait for it, $1,616. That's even more than an airline ticket from Toronto once you add in the bag fees and taxes and licenses and airsick bag stocking fees and carpet cleaning taxes and pretzel processing fees.

Having covered the Olympics for some 23 years, I suspect it won't end up nearly as bad. I mean, everyone THINKS they're going to get rich on the Olympics. Few people do.

Oh, rates will be up. Certainly they'll be up. And the top hotels will be quite full. But the smaller places out in Oxford or down in Dover who think they're going to capitalize on some huge influx of wealthy Americans or Qatar residents are likely to be disappointed, just as nobody out in Abbotsford I know of became independently wealthy from the 2010 Winter Games in Vancouver.

Tom Jenkins, chief executive of the European Tour Operators Association (ETOA), told the Telegraph that previous experience shows visitor numbers to London are unlikely to rise next summer. Which makes sense. The Olympics bring money and tourists, but almost anyone who normally would visit London in summer will instead pack off for Paris or Barcelona and avoid the five-ring crunch. Which is what happens in almost every Olympic city.

The Telegraph story said hotel rates in Beijing during the 2008 Olympics "were up to 10 times more expensive than normal, a figure that is thought to have contributed to a 30 per cent decline in visitors to the city in 2008 compared with the previous year."

“Mega events like the Olympics are primarily domestic events that put off travellers from abroad,” said Mr Jenkins. “Theatres in the capital are banking on a 70 per cent downturn in business during the Games, yet hotels still think they’ll be going gangbusters.

“In Athens [host city of the 2004 Olympics] around 15,000 hotel rooms were sold. London has 125,000 rooms to sell. Such optimistic pricing in the face of such disparity is extremely brave.”

The Telegraph points out that London Mayor Boris Johnson last month launched something called the London Visitor Charter, aimed at making tourists aware of "businesses and attractions that have made a firm commitment to reasonable and fair trading terms” during the Olympics.

So far more than 40 companies and venues – including Eurostar, the O2 Arena, Hampton Court Palace and the taxi firm Addison Lee – have signed up to the charter, but, apparently, no hotels have yet joined.

A spokesperson for Starwood Hotels, which owns the Sheraton Park Tower and W London, said: “Our prices over the Olympic period are based on the rates we charge during other high-demand periods in London. We take a long-term view and we certainly will not alienate future customers by over-pricing rooms during the Olympic period.”

I'm not sure how that comment jives with the Telegraph report that the Sheraton Park Tower is nearly tripling its rate from this summer to next, but there you go.