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Travel - Economics of Hotels Motels and the Lodging Hospitality Industry

Updated on March 21, 2016

The travel industry is an important part of the American economic engine. From lodging to air to car rental to food and entertainment.

As we learned during the recession, this industry is a weather vane of the country's economic climate. When down all sectors are headed down IF they are not there yet. When up, it is a solid, conservative forecast of consumer sentiment.

This industry is vitally important to America not just for economic forecasting but also for economics. This sector continues to provide a number of work opportunities for millions of Americans. What is great is the fact this industry is labor intensive and cannot be imported from overseas. So just how big is this industry to our nation? What portion of the GDP does the travel industry contribute? Let's us explore these terms and the impact that these terms have on our economy and the lives our family and our community.


Travel Industry

travel industry clip art symbol in black and white of  a person asleep in bed with a roof
travel industry clip art symbol in black and white of a person asleep in bed with a roof | Source

Travel Industry Economics

2009 showcased the travel industry as a weather vane for American economics. Dipping 1.8% from the prior year, gross domestic product for the United States was $14.003 trillion. The closest competitor for the United States was Japan at $4.993 trillion.

Remember, the size of the number does matter, a trillion has 12 zeros after it:

Trillion = 1,000,000,000,000........12 zeros (aka one million million; 1012[1]

Billion = ____1,000,000,000........ 9 zeros

Million = _______1,000,000........ 6 zeros

For more number information: http://www.jimloy.com/math/billion.htm


The question mark is the explosive growth of China. Many predict that in 2010, Japan will outpace the US's gross domestic product. Of course, much of this stems not just from the growth of Japan and China but from the decrease in the US.

The cost of contraction of 2.8 % of $14 trillion sounds small overall doesn't it? Yet, this is billions of dollars. In fact, 3% of 10 trillion is 3 billion. The real cost of this drop in GDP is not dollars or the percentage of the GDP, the real cost is the loss of jobs within the American economy.

The travel industry provides jobs. Many of these jobs are basic service jobs often representing only 80-90% of the economic value because this industry is built upon the foundation of gratuities and trips to motivate and maintain a high level of service.

So what is the real value of the travel industry's GDP? If is listed as $186 billion, so the range would be 10-20% more or in essence $200 billion.

As a percentage of the overall US GDP it is small - $200 billion/$14 trillion = under 2%. Yet the actual workers amount to 7.5 million people.

Answers.com shares with us the "population of the U.S.A is 305,529,237!" [2]So 7.5 million workers out of 305 million residents, gives us an outstanding 24% of the population is working and depending upon the travel industry.


Robin Feeding Chick Weather Vane

Source

Automobile Weather Vane

Source

Economic Power of the Travel Industry

Travel Powers Wisconsin View Economic Impact Summary

Spending: $9.7 Billion |Tax Receipts: $1.5 Billion |

Employment: 115,600 Jobs|Payroll: $2.2 Billion
(Includes both domestic and international travel impact)

Travel Powers Illinois View Economic Impact Summary

Spending: $30.7 Billion |Tax Receipts: $5.5 Billion |

Employment: 305,100 Jobs|Payroll: $8.6 Billion(Includes both domestic and international travel impact)

Travel Industry National Figures

Travel Powers America

Spending: $704 Billion |Tax Receipts: $113 Billion |

Employment: 7.4 Million|Payroll: $186 Billion

2009 Global GDP

Top 10 Richest Countries by Estimated 2009 GDP


By 2010, it is predicted that China will its explosive growth will be the second largest country in the world in regards to gross domestic product. Why is this important? Because it showcases who is buying - who the target market of the world is becoming. China will out pace Japan and be second only to the United States.

Here are the 2009 global statistics on GDP:"

1. United States … US $14.003 trillion (down 1.8% from 2008)

2. Japan … $4.993 trillion (up 1.4%)

3. China … $4.833 trillion (up 9.8%)

4. Germany … $3.060 trillion (down 16.6%)

5. France … $2.499 trillion (down 12.8%)

6. United Kingdom … $2.007 trillion (down 24.9%)

7. Italy … $1.988 trillion (down 14.1%)

8. Spain … $1.397 trillion (down 13.3%)

9. Brazil … $1.269 trillion (down 19.3%)

10. Canada … $1.229 trillion (down 18.6%)"


Read more at Suite101: GDP Estimates for Richest Countries in 2009: Latest International Monetary Fund Wealth Predictions by Country

2009 National Economic Impact of the Travel Industry

Travel Powers AmericaSpending: $704 Billion | Tax Receipts: $113 Billion | Employment: 7.4 Million | Payroll: $186 Billion


With the travel industry reporting $186 billion annually and the United States GDP at $14 trillion, the percentage that industry contributes is under 20% but still a significant number of jobs at 7.4 million.

Please keep in mind the $186 does not include tips and gratuities which are a large part of this industry actual payroll. So the real figure is 10-15% higher.

United States Employment Provided by the Travel Industry

Source

Travel Industry Employment 2009 - 2008 Change

2008 - 7719.4 thousand

2009 - 7393.6 thousand

Difference: 325.8 thousand or 325,800 jobs lost

Population of the United States in 2009 305 million


Source

American Hotel and Lodging Association

Serving the hospitality industry for nearly a century, AH&LA is the sole national association representing all sectors and stakeholders in the lodging industry, including individual hotel property members, hotel companies, student and faculty members, and industry suppliers. Headquartered in Washington, D.C., AH&LA provides members with national advocacy on Capitol Hill, public relations and image management, education, research and information, and other value-added services to provide bottom line savings and ensure a positive business climate for the lodging industry. 

ource: http://www.ahla.com/content.aspx?id=30945

The travel industry is an important sector of the American economy. It employs close to 24% of the population and it is the weather vane of the economy. What happens to the travel industry is a good indicator of what is about to happen to the economy overall. Stay tune as we track this vital component of American life and see where this weather vane is pointing.

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    • GmaGoldie profile imageAUTHOR

      Kelly Kline Burnett 

      5 years ago from Madison, Wisconsin

      Pavlo Badovskyy,

      When leaders are viewing their industries that provide employment, the travel industry is often overlooked. Sadly, maids here in the United States are no longer receiving tips and this I fear will hurt not just the travel industry but economy of the locals. Forgetting those who serve hurts others and ourselves. IF we are privileged enough to travel we must take care to act responsibly and recognize the position of a maid is no different than the bellhop - tips are essential - our economy depends upon it.

    • Pavlo Badovskyy profile image

      Pavlo Badovskyi 

      5 years ago from Kyiv, Ukraine

      TRavel industry can bring such a good money. Some countries depend only on travel and tourism. It can bring much investments into the economy as well as new places for people. Great hub!

    • GmaGoldie profile imageAUTHOR

      Kelly Kline Burnett 

      7 years ago from Madison, Wisconsin

      David Livingston,

      The travel industry is an important element to our economy and a compass of the economic strength of our country. It is an item often overlooked.

    • profile image

      DavidLivingston 

      7 years ago

      All good. Interesting read. Thanks.

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