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Global Credit Research - 01 May 2012
London, 01 May 2012 -- Although the 2012 Summer Olympic and Paralympic Games are expected to
provide a huge marketing opportunity for corporates, the benefits
are likely to be largely short-lived, providing only a temporary
fillip to corporate earnings, says Moody's investors Service
in a Special Comment published today.
The new report, entitled "London 2012 Olympics Provide a Short-term
Boost, But No Gold Medal for Corporates," is now available
on www.moodys.com. Moody's subscribers can
access this report via the link provided at the end of this press release.
"Overall, we think that the Olympics are unlikely to provide
a substantial boost to the UK economy and believe that the impact of infrastructure
developments on UK GDP has probably already been felt," says
Richard Morawetz, a Vice President -- Senior Credit
Officer in Moody's Corporate Finance Group. "We expect
the net impact of the Olympics on UK tourism will be positive overall,
but far less than gross visitor numbers would suggest."
Moody's expects that corporate sponsors will benefit most from the
Games. However, given the largely one-off impact of
the Games on corporate profits, the rating agency does not expect
that this alone will have an impact on its ratings, which tend to
take a longer-term view.
The hotel sector will be a clear beneficiary and can expect some very
positive revenue per room (revpar) numbers during and around the events
themselves. However, Moody's cautions that this could
result in some weak year-on-year comparable results in 2013.
While increased visitor numbers could boost sales of retail and consumer
products, Moody's expects that any longer-term benefits
will be mainly from increased visibility of the brands, rather than
actual sales.
The advertising and marketing sectors are also likely to benefit not only
from the Games, but also from the UEFA European Football Championship
and the US presidential elections, which make up a trio of events
that occur in the same year every four years.
In addition, the earnings uplift for the transport sector may not
be clear-cut, in Moody's view, as lower-margin
tourist travellers may displace business travellers during the Games.
Some sectors, such as construction, may already be affected
by a slowdown in projects as the infrastructure for the Games is largely
complete.
Subscribers can access this report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_141487.
NOTE TO JOURNALISTS ONLY: For more information, please call
one of our global press information hotlines: London +44-20-7772-5456,
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0800-891-2518, or Buenos Aires 0800-666-3506.
You can also email us at mediarelations@moodys.com or visit our
web site at www.moodys.com.
Richard Morawetz
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Paloma San Valentin
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's: Olympics will give only short-term boost to corporates
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