City Prepares for Olympics, Wants Visitors to Come Post-Games

City Prepares for Olympics, Wants Visitors to Come Post-Games
Leader: Doane Liu, executive director of the city’s tourism department. (Photo by Thomas Wasper)

The Olympic and Paralympic Games will return to Los Angeles in the summer of 2028 for the first time in four decades. The Games are expected to drive tourism and make an indelible impact on L.A., as the events usually do for their host cities: the economic impact from the 1984 Games on Southern California totaled $3.3 billion and kicked off a slew of city projects.

The next four years will be a busy preparation period for city planners, the LA28 Olympics nonprofit organizing committee, real estate developers, public transportation projects, hotel owners and more.

To host the Olympic Games, the International Olympic Committee requires that a city has at least 40,000 hotel rooms for spectators and an Olympic Village that can house 15,000 athletes, referees and officials. Some of these assets are already built into L.A., and several boxes have been checked: the Athlete’s Village will be located at UCLA and the Media Village will be housed at USC. According to Janet Evans, an Olympic medalist in swimming and the chief athlete officer of LA28, the Villages will require no new construction.

Venues such as the Los Angeles Convention Center, SoFi Stadium, the Kia Forum, the Rose Bowl and the Long Beach Arena already host regular events. Evans said that those existing resources make the upcoming Games more “sustainable.”

“We’re fitting the Olympics and Paralympics into our city, we’re not reshaping our city for the Games,” Evans said. “I mean, the Coliseum was built in hopes of securing an Olympic Games, so the tradition is strong (and) rich for our venues, but it’s also very exciting to have these grand new, incredible stadiums being built … because we are such a sports town.”

Development has been slowed

Athlete: Janet Evans is a former Olympian and chief athlete officer of LA28.

While the city doesn’t plan to fully transform itself, some real estate developers and business owners are looking to build or upgrade properties. According to Sonnet Hui, general manager and vice president of downtown-based Project Management Advisors Inc., the city is experiencing more upgrades of existing facilities than construction of fresh infrastructure. She said that hotels are looking to renovate guest rooms and public spaces to prepare for an “influx” of guests, and that her firm is seeing increased mixed-use development.

“We’re seeing things starting to stabilize, there’s more interest and projects are starting to restart, but in the last year a lot of projects went on hold because of interest rates,” Hui said.

She added that regulations such as the United to House Los Angeles ‘Mansion Tax’ measure have impacted real estate transactions, slowed down forward-thinking plans and led to more “opportunistic development.” She added that, while things will likely ramp up in the next year, timing may get tight to finish development in time for the Games.

“I think it’s going to be a mad rush,” Hui said. “All eyes are on Paris right now for the (2024) Olympics and how they roll out their services. Once that Game is over there’s going to be a lot more creative thinking as it relates to L.A. and how we prepare for the 2028 Olympics. We have so many commercial assets with high vacancy rates and I’m hoping there’s going to be renewed interest in repurposing a lot of the infrastructure and facilities that we have in L.A.”

Alan Reay, president of Newport Beach-based Atlas Hospitality Group, said he believes the city has enough hotel rooms to support the Olympics, but agreed that interest rates and market trends are “overpowering” anyone looking too far ahead in the future. Renovations completed now, he said, might require another renovation by 2028. He added that his firm is not seeing many hotels being planned solely for the Olympics, but that hotels that were already being planned may see the event as a benefit.

“On the development side, if you are already under construction those projects will helpfully get finished although there are a few projects in Los Angeles mid-construction that are in foreclosure,” Reay said. “But we’re seeing a lot of the hotels that are being planned be delayed or abandoned altogether.”

Reay said developers and business owners must look past the Olympics and evaluate the economy as a whole to see if renovations will be worthwhile in the long-term.

Doane Liu, executive director of the city’s tourism department, agreed with Reay’s sentiment that business owners need to ensure that building projects will be beneficial after the Olympics’ relatively brief run. He added that, as part of L.A.’s bid to host the Olympics, the city committed to deliver the Games “without building anything.”

“It’s not prudent to make huge investments for a 10-day event … you’ve got to be able to sustain that after the Olympics leave,” Liu said. “That’s kind of been the city’s philosophy, too. We’re not going to make huge infrastructure investment or venue investments. There’s obviously going to be a need for labor … and we’re going to do our best to make sure that visitors keep coming after the Olympics and keep all of those people employed.”

An influx of visitors

Host: The opening and closing ceremonies of the Olympic Games
will be at SoFi Stadium in Inglewood.

Liu added that the city’s geographic size is an asset to planning for the Olympics, by allowing the impact of the Games to be intentionally spread around the city to different “hubs.” One significant impact will be tourism. He said that the city is nearly back to pre-pandemic levels, estimating just under 50 million visitors this year compared to 51 million in 2019.

“We’re hoping that the lead up to the Games, the new construction and all the new attractions that we have in the city will be able to sustain that, maybe not at the exact highest level, but will continue to grow,” Liu said. “There’s certainly going to be impacts on the city, but it’s only for 10 days, and the benefits that we are getting from hosting the Olympics could last a lifetime.”

Another notable impact may be on L.A.’s notorious level of traffic congestion. Evans and Liu noted that, back in 1984, then-Mayor Tom Bradley collaborated with ports and the trucking industry to shift shipping traffic patterns. Liu said that deliveries were re-scheduled to occur late at night and in the early-morning hours. He also noted a sense of “civic pride” as citizens worked to manage traffic by carpooling, and that many employers made accommodations for employees’ commutes.

“I think there was such a focus placed upon what traffic would look like during the Olympic Games in 1984 that a lot of people made alternative plans, a lot of people took public transport at the time,” Evans said. “The organizers did specific things to alleviate some of that (traffic), and I also think the public did utilize whatever … resources there were.”

Potential for profit

Leader: Doane Liu, executive director of the city’s tourism department. (Photo by Thomas Wasper)

Renata Simril is president and chief executive of the nonprofit LA84 Foundation, which was created with Southern California’s endowment from the 1984 Games to promote and expand youth sports opportunities in the region. The Foundation said it has supported 4 million kids, funded 2,500 nonprofits and trained 200,000 coaches.

Simril said that the Olympics had been a series of “financial disasters” for hosting cities in the 1970s and 1980s. Factors for this include the Munich massacre, in which 11 Israeli team members were held hostage and killed by terrorists during the 1972 Games, and the U.S. boycott of the 1980 Summer Olympics in Moscow. The cost overrun for the 1976 Games in Montreal, Canada is still the highest on record for any Olympics at $6.1 billion, with an overrun of 740%. By comparison, the Rio de Janeiro 2016 Summer Olympics had a cost overrun of 51% and the London 2012 Summer Olympics had a cost overrun of 76%.

After L.A. won the bid to host the 1984 Games, there was a significant focus on how the city could avoid repeating the fiscal consequences of the Montreal Olympics. As a result of strict controls on cost expenditures, an emphasis on corporate sponsorships and low construction costs due to the utilization of existing arena structures, the 1984 Olympics generated a profit of about $223 million The estimated economic impact on Southern California from the 1984 Games totaled $3.3 billion, according to LA84.

“It became the sponsorship model and the television rights model, and a lot of innovations that were initiated during the 1984 Games made it a huge success,” Simril said. “I think our ability to host Games (with financial efficiency) is because of the abundance of riches that we have in athletic facilities, both professional and collegiate, that allows us to minimize what needs to be built.”

According to the LA28, the 2028 Summer Games’ forecasted budget is about $7 billion. Those costs are expected to be fully covered by revenue streams such as sponsorships, ticket sales and funding from the IOC. LA28 chair Casey Wasserman told The Ringer that there is “good and bad” to the Olympics being privately funded.

“The good is we get to do things in a rational, business-driven, economically-minded way,” Wasserman said. “The challenge is … that the Olympics in L.A. will be the largest peacetime gathering in the history of the world. It is a level of complexity and scale that is unimaginable.”

He noted that LA28 expects to spend 85% of the budget in the last 18 months before the Games.

“This means you better know what you’re about to spend, because you don’t have time to course correct if you go over budget,” Wasserman said. “Once you start you kind of have to finish because (in July 2028) that torch is showing up at SoFi, whether we like it or not.”

Wasserman also noted that the “scale of infrastructure” L.A. has developed in the last 40 years is “stunningly different.” New arenas since 1984 include SoFi Stadium, Arena, BMO Stadium and Intuit Dome, the latter of which is expected to open this fall.

Simril said the city’s extensive collection of sports arenas and campuses for housing means that the Games will be less expensive to put on than in other parts of the world. Still, the economic impacts of the upcoming Games are yet to be seen.

“It’s unfair to put a burden on 2028, to say that the Games will be profitable,” Simril said. “A lot can happen between now and 2028, geopolitically and economically. The team at LA28 is focused on putting on great Games, but we don’t know if there’ll be a surplus or profit … we just need to let the process run its course.”

No posts to display