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The Economic Impact of the Hospitality
Industry
Tilak Ramaprakash
Introduction
The hospitality industry refers to places away from home where people can
stay, eat, and drink. This industry makes a huge contribution to the economy of
the United States. For example, hospitality is a significant source of
employment. The industry also creates jobs indirectly in other sectors like
supply and delivery, marketing, and agriculture.
The hospitality industry comprises several sectors, including hotels, food
services, gaming, cruise lines, and travel. Hospitality and tourism have much
in common, as both encompass hotels, food service outlets, casinos, travel,
entertainment, and tourism-related activities. Lodging and accommodation
constitutes the largest sector. It accounts for nearly a fifth of travel and
tourism spending. Travelers spent about $300 billion on hotels in 2017. This
industry supports almost 2.1 million jobs in the United States. On the other
hand, food services account for roughly 16 percent of travel and tourism
spending. In 2017, travelers spent $254 billion on food services, sustaining
nearly 2.1 million jobs in the United States.
The hospitality sector contributes significantly to the local and regional
economies, both directly and indirectly. They contribute directly when
customers pay for services such as lodging, food, and entertainment, and
contribute indirectly when these companies buy goods and services from
other suppliers and merchants.
More businesses will be established if a destination attracts many visitors and
tourists, resulting in healthy competition. This will boost the economy through
an increased fiscal effect. City governments will benefit from hotel and
property taxes, so more hotels lead to more money for municipal services. As
hotels facilitate increased spending, people and companies enjoy a higher
quality of life, making the destination more enjoyable for everyone who lives
there or visits.
Many hotels today are developing restaurants that source their ingredients
from local farms. Small farms find it difficult to compete with large
agricultural enterprises. Hence, buying directly from nearby farms encourages
these farmers to continue providing food to supermarkets and eateries. Taxes
earned at the local, state, and federal levels fund the government, resulting in
increased government spending on social amenities, infrastructure
improvements, and essential services.
Most guests who book hotels are often unfamiliar with the location. Hotels
are well aware of this, and display pamphlets in the lobby or leave information
about local businesses in individual rooms. By introducing visitors to popular
tours, restaurants, and entertainment options, hotels contribute to the local
economy as guests spend money on these businesses throughout the city.
According to Coldwell Banker Richard Ellis (CBRE), an American investment
and real estate firm, the average revenue per available room (RevPAR) of
hotels located in the country's significant markets fell by 58.8 percent in 2020.
In contrast, hotels located outside the major markets and in rural areas
experienced a 35.9 percent decline in RevPAR.
Because they rely heavily on business, group, and foreign travel, all of which
came to a virtual standstill in 2020, hotels in primary markets suffered a
revenue crunch. On the other hand, hotels in smaller markets were considered
isolated and safer, with a lower risk of being exposed to COVID-19. According
to the most recent edition of CBRE's Hotel Report, by the end of 2021, all 65
major accommodation markets in the United States are expected to
experience increased RevPAR for the year. The larger markets will experience
a 46.8 percent increase in RevPAR, compared to smaller markets' 36.3 percent
jump.

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The Economic Impact of the Hospitality Industry

  • 1. The Economic Impact of the Hospitality Industry Tilak Ramaprakash
  • 2. Introduction The hospitality industry refers to places away from home where people can stay, eat, and drink. This industry makes a huge contribution to the economy of the United States. For example, hospitality is a significant source of employment. The industry also creates jobs indirectly in other sectors like supply and delivery, marketing, and agriculture.
  • 3. The hospitality industry comprises several sectors, including hotels, food services, gaming, cruise lines, and travel. Hospitality and tourism have much in common, as both encompass hotels, food service outlets, casinos, travel, entertainment, and tourism-related activities. Lodging and accommodation constitutes the largest sector. It accounts for nearly a fifth of travel and tourism spending. Travelers spent about $300 billion on hotels in 2017. This industry supports almost 2.1 million jobs in the United States. On the other hand, food services account for roughly 16 percent of travel and tourism spending. In 2017, travelers spent $254 billion on food services, sustaining nearly 2.1 million jobs in the United States.
  • 4. The hospitality sector contributes significantly to the local and regional economies, both directly and indirectly. They contribute directly when customers pay for services such as lodging, food, and entertainment, and contribute indirectly when these companies buy goods and services from other suppliers and merchants.
  • 5. More businesses will be established if a destination attracts many visitors and tourists, resulting in healthy competition. This will boost the economy through an increased fiscal effect. City governments will benefit from hotel and property taxes, so more hotels lead to more money for municipal services. As hotels facilitate increased spending, people and companies enjoy a higher quality of life, making the destination more enjoyable for everyone who lives there or visits.
  • 6. Many hotels today are developing restaurants that source their ingredients from local farms. Small farms find it difficult to compete with large agricultural enterprises. Hence, buying directly from nearby farms encourages these farmers to continue providing food to supermarkets and eateries. Taxes earned at the local, state, and federal levels fund the government, resulting in increased government spending on social amenities, infrastructure improvements, and essential services.
  • 7. Most guests who book hotels are often unfamiliar with the location. Hotels are well aware of this, and display pamphlets in the lobby or leave information about local businesses in individual rooms. By introducing visitors to popular tours, restaurants, and entertainment options, hotels contribute to the local economy as guests spend money on these businesses throughout the city.
  • 8. According to Coldwell Banker Richard Ellis (CBRE), an American investment and real estate firm, the average revenue per available room (RevPAR) of hotels located in the country's significant markets fell by 58.8 percent in 2020. In contrast, hotels located outside the major markets and in rural areas experienced a 35.9 percent decline in RevPAR.
  • 9. Because they rely heavily on business, group, and foreign travel, all of which came to a virtual standstill in 2020, hotels in primary markets suffered a revenue crunch. On the other hand, hotels in smaller markets were considered isolated and safer, with a lower risk of being exposed to COVID-19. According to the most recent edition of CBRE's Hotel Report, by the end of 2021, all 65 major accommodation markets in the United States are expected to experience increased RevPAR for the year. The larger markets will experience a 46.8 percent increase in RevPAR, compared to smaller markets' 36.3 percent jump.