Dominic Lawson: Why were the warnings that the Games would damage tourism ignored?

There's a surprise: yesterday's edition of this newspaper had the news that the London 2012 Olympic Games are set to lose the country billions of pounds of tourism revenue. Yes, I was being sarcastic. While the story is an important one, anyone who had investigated the experiences of recent host cities could have predicted exactly this outcome. Indeed, they did predict it. They were ignored by exactly the same New Labour ministers who, not satisfied by the £900m folly of the Millennium Dome, were determined on splashing out more than 10 times that amount in return for international political bragging rights over two sporting weeks of hyperventilated nationalism.

They justified this grotesque outlay of public finance (which, equally unsurprisingly, grew to four times the original bill of £2.4bn) on the grounds that it would bring a vast increase in tourism revenues. Thus, as i reminded us yesterday, Tony Blair had declared in 2005 that this would be "a once in an era opportunity for British tourism"; and his "Minister for the Olympics", Tessa Jowell, had said two years later that "tourism will receive a £2bn boost".

Perhaps they believed this when they said it but, if so, that exonerates them only from lying, not from wilful ignorance: every piece of detailed research into the economic impact of the Olympics on host economies suggests that the event has been more of a curse than a blessing for the national tourism industry.

Some years ago the European Tour Operators Association (ETOA) produced a study which concluded: "There appears to be little evidence of any benefit to tourism of hosting an Olympic Games and considerable evidence of damage." As the ETOA report observed, there are good reasons for this apparent paradox: tourists are put off by the prospect of higher than normal hotel prices and of overcrowding, while the sort of people who travel to watch sport tend not to be interested in the theatre or other cultural attractions. This was always going to be a particular problem for London, it warned.

A month ago Andrew Lloyd Webber confirmed it: he said that West End booking from tourists for July and August were at just 10 per cent of their normal level, and theatreland was "in for a bloodbath of a summer". He added that this was partly because "people can't get into hotels ... they've all put their prices up".

It turns out this has been exacerbated by the London Organising Committee of the Olympic Games (Locog) overestimating by a quarter the number of rooms that would be required for officials, media and sponsors. It has now handed back (how gracious!) 120,000 of the 600,000 nights it had booked for those assorted chums. Too late: millions of people had already made their summer holiday plans, which now do not include London.

Now you might reasonably say (although not in front of the sponsors) that the Olympics are about much more than making money. The last Government set characteristically hubristic targets for increased sports participation – "one million more people playing sport three or more times a week" – which it claimed would form part of the "Olympic legacy", while the Strategic Regeneration Framework required the "Olympic effect" to "eliminate the social and economic inequalities" between the six host boroughs and the rest of London within 20 years. To this end, the event's guiding force, Lord Coe, claimed: "The new sports venues for the Games will help to tackle serious lifestyle-related conditions such as childhood obesity, heart disease and diabetes."

So how's all that going? No other host city had increased sports participation as a result of staging the Games and, seven years after the then Government set its target, the number of people here playing no sport at all has continued to increase. Second question: if a fraction of the £10bn the state is spending on the Olympics had instead been allocated to preserving state school sports fields from being sold off, would that have had more of an impact in "tackling childhood obesity"?

And a supplementary: if Lord Coe chooses to justify his extravaganza on the basis that it is all part of the great fight against childhood obesity and diabetes, would he care to comment on the fact that two of the London Olympics' biggest sponsors, whose logos will be festooned across our screens throughout the event, are Coca Cola and McDonald's?

It would be unfair to say that no one will benefit from the Games coming to London. The property pages have been producing articles forecasting great profits for those with homes available to rent out in the capital during the two weeks of the event.

The Department of Media, Culture and Sport revealed last month that it now requires no fewer than 23,700 security staff to "protect" the Games – twice the number suggested at the outset. it has even been suggested by the Defence Secretary, Philip Hammond, that ground-to-air missiles would be deployed "if operationally necessary". So, good news for those whose business thrives on fear and alarm.

Good news, too, for staff on the Docklands Light Railway, whose union leader, Bob Crow, managed to negotiate for them a £2,500 bonus in return for agreeing not to disrupt the Games.

But the best of all news is for the politicians and sports bureaucrats who committed us to spending £10bn on facilities for two weeks of running and jumping: they will have the best seats in the stadium entirely free, and will be chauffeured there in special lanes while the rest of the capital's inhabitants are snarled up in traffic jams of Olympic proportions. Anyone who begrudges them that is clearly a killjoy, and not participating in the Olympic spirit.