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Travel - Economics of Hotels Motels and the Lodging Hospitality Industry
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 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
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!" 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
Automobile Weather Vane
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
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
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.
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.