By Keith Weir
LONDON (Reuters) - Hosting the Olympics this year will give Britain's struggling economy and its companies only a short-term boost, and the construction sector has already enjoyed most of the benefits, credit ratings agency Moody's said on Tuesday.
Britain, which went back into recession at the start of 2012, has spent nine billion pounds ($14.6 billion) building the Olympics venues mostly in east London and the government had hoped the Games would help to revive the economy.
Moody's described the Games as a "huge marketing opportunity for corporates" but echoed the view of many economists that the Olympic effect was likely to prove fleeting.
"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, 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," he added. The Olympics often attract sports fans at the expenses of higher spending business travelers and general tourists who decide to stay away for the duration.
London will host the Olympics from July 27-Aug 12, becoming the first city to stage the Games three times. Its last Olympics were the 1948 "Austerity Games" just after World War Two.
Moody's expects that corporate sponsors who bankroll the Games will benefit most. However, it does not believe that this alone will be enough to have a positive effect on their ratings.
The International Olympic Committee has long-term agreements with 11 companies including Coca-Cola and McDonalds who pay a total of almost $1 billion for worldwide rights to sell their products on the back of the Games.
London has raised a further 700 million pounds through one-off sponsorship deals with the likes of British Airways and Adidas.
Britain is staging a series of industry summits around the Games to showcase its business expertise and try to win building contracts as major sporting events head to fast growing economies such as Russia, Brazil and Qatar.
However, long delays at passport control at London's Heathrow airport in recent days have risked undermining the message that Britain is "open for business".
Airlines using Heathrow would be prepared to pay higher landing fees to reduce long queues at the British hub before the Games in London, according to Willie Walsh, Chief Executive of British Airways' owner IAG.
Looking at individual sectors, Moody's said construction may already face a slowdown as work for the Games, which have regenerated a rundown part of London, is almost finished.
Moody's noted that British construction activity had fallen by more than 10 percent since the start of 2008, although this would have been even worse had it not been for Olympic-related work.
Balfour Beatty, Britain's largest construction company which developed the Olympic swimming venue, has warned that jobs are at risk as work dries up.
However, it is not all doom and gloom. The hotel sector can expect some positive revenue per room numbers during and around the events. However, Moody's cautions that this could result in some weak year-on-year comparable results in 2013.
Official Games hotel supplier InterContinental stands to benefit, while France's Accor has also seen a positive impact from the Olympics.
Advertising and marketing companies such as Britain's WPP and Publicis Groupe of France were also set to reap rewards from a year featuring the Olympics, the European soccer championships in June and the U.S. Presidential election in November. Such a combination occurs only every four years.
(Additional reporting by Rhys Jones; editing by David Stamp)