The real metropoles have an advantage
but urban clusters can do very well, depending on the density and quality of the logistics, train, subway, motorway,
such a cluster allows more hotels in reach and spreading of sport facilities for re-use.
A relatively small city like Amsterdam (population 850,000) handled 18 mio tourists in 2016 (average 50,000 a day)
and on Queens/Kings birthday it is handling about 800,000 visitors (indicating the logistic strenght).
From this article some economy:
https://www.cfr.org/backgrounder/economics-hosting-olympic-games
To consider is that the income of tickets is with less than 10% only a fraction of the cost.
2008 Beijing: total cost: FC 20 Billion USD, Actual 45 Billion USD, and ticket revenue only 274 Mio USD, or 0.6% !!!
2012 London: total cost: FC 5 Billion USD, Actual 18 Billion USD, and ticket revenue much better but only 1.2 Billion UDS, or 7%
TV is delivering much more than tickets. In Beijing 4% of the total cost, in London 22% of the total cost.
The economics however of the Olympics is rather perverse because the IOC takes away 50% of the TV income to sustain her fancy VIP organisation !
An organisation that is so fantastic that Toronto decided not to bid on the 2024 Olympics because they decided that the needed 60 Million bidding cost were already too high.
Imagine.... all that money burning at the bidding from all these countries trying to get it.
I think the madness is at the IOC, and once that is adressed, practical solutions are much more likely to evolve.
on that madness and corruption of the IOC:
https://www.flotrack.org/articles/5053760-the-iocs-true-ideals-corruption-and-greed