REPORT FROM THE U.S.—A study from Oxford Economics shows the overall economic impact the U.S. hotel industry has had over the past several years, highlighting the industry’s direct and indirect creation and support of U.S. jobs.
The American Hotel & Lodging Association and the American Hotel & Lodging Educational Foundation sponsored the study, “Economic Impact of the U.S. Hotel Industry,” and released earlier this week.
In a news release announcing the study, AHLA President and CEO Chip Rogers said, “We are at a critical moment for our industry. Demand for hotels has never been higher, but we are also facing the tightest labor market in a generation. Together with our foundation, AHLA is working to advance polices that will allow hoteliers to meet our workforce needs, deliver the quality service and amenities our guests expect and deserve, and invest in our employees and communities.”
Here are some of the main takeaways from the study.
Hotel employment and supported jobs
The study found the U.S. hotel industry directly employs 2.3 million people, representing a gain of more than 160,000 hotel jobs since 2015. Overall, the industry supports 8.3 million jobs—equating to more than 1 in 25 jobs. Those supported jobs generate $394.8 billion in wages, salaries and other compensation.
The 8.3 million supported jobs in 2018 is nearly one-sixth larger than in 2015, representing nearly 1.1 million more U.S. jobs, according to the study.
“This reflects strong gains in guest spending and capital investment impacts, as well as increased employment at hotels,” the study states.
A representative hotel with 100 occupied rooms supports 137 direct jobs as well as 104 indirect and induced jobs. This includes 66 jobs at the hotel itself, generating $2.8 million in wages, salaries and other labor income. The representative hotel also provides $5.4 million in total tax revenue, including $1.9 million of direct taxes generated by the hotel.
Guest spending at hotels
U.S. hotel guests spent $548.8 billion in 2018, according to the study. Lodging made up 31% of that amount, coming in at $170.6 billion. The remaining spend falls under transportation (23%), food and beverage (19%), recreation (11%), on-site gaming (8%) and retail and other (9%).
“As a result, for each $100 of spending on lodging (room revenue plus taxes on lodging), hotel guests spend another $222 during their trip,” the study states. “This contributes to broader economic impact in destinations and areas along the trip route.”
In breaking down guest spend between on-site and off-site, guests spent $270.6 billion, or 49% of total spending, on-site at hotels, while $278.1 billion, or 51% of total spending, was off-site. In looking at on-site spending, lodging took the lion’s share at 63%, followed by gaming (16%), F&B (14%), recreation (5%), and retail and other (2%).
For off-site spending, that was led by transportation (46%), F&B (24%), recreation (16%), and retail and other (15%).
Hotels’ economic impact
Overall, the U.S. hotel industry contributed $659.4 billion to the U.S. gross domestic product in 2018, the study found. Its direct contribution amounted to $170.7 billion, and the indirect and induced share reached $345.7 billion.
Through its operations, the industry contributed to $185.7 billion to federal, state and local taxes.
The $185.7 billion in taxes breaks down into several segments, the study states. State and local taxes receive $91 billion, which include $18.8 billion in taxes on lodging (sales tax on room revenue, occupancy taxes, tourism improvement district fees and other taxes), $22.3 billion in sales taxes on other sales (F&B, retail) and $26.7 billion in property taxes. That total also includes $94.7 billion in federal tax revenue, which includes $42.1 billion in Social Security taxes and $31.9 billion in personal income taxes.
The hotel industry directly provided $64.2 billion in taxes in 2018, according to the study. State and local taxes amounted of $39.9 billion, breaking down to $18.8 billion on lodging, $2 billion in taxes on other sales and $8.9 billion in property taxes.
Capital investment
Through the construction of new hotels and renovation projects, the U.S. hotel industry generated $42.4 billion in direct capital investment in 2018, the study states. The construction and renovation projects supported more than 329,000 direct jobs.
“The indirect and induced effects of such activity supported an additional $69.6 billion of business sales (output), and almost 375,000 jobs,” according to the study.