...By Pelumi Emmanuel for TDPel Media.
The hospitality industry includes food and beverage, travel and tourism, recreation and many more segments.
The ultimate goal of the hospitality industry is to bring the customer an enjoyable and comfortable experience.
However, it does not mean that the hospitality industry is only crucial for the customers. It, in fact, plays a very critical role in the growth of a country’s economy.
According to reports, every one of the ten jobs can be attributed to the hospitality industry.
Consequently, it is not surprising that the hospitality sector highly contributes to the economic turnover of a country. Let us now look for ways the hospitality industry contributes to the country’s economic growth.
Contributes To Local And National Employment
First and foremost, the hospitality sector contributes to the economy through immediate job creation. At both the local and national levels, a region has different segments of the hospitality industry. As a result, it boosts not only the national economy but also the local economy too. Out of all the various components of the hospitality industry, the tourism sector plays a critical role in the hospitality sector.
Let us take the example of Starbucks to understand how the hospitality sector contributes to employment. Starbucks has over 32,0000 stores in 80 countries. Also, the baristas who work at Starbucks earn an average of $12.47 an hour. Not only has Starbucks given the employment sector a boost, but it also offers its employees many additional benefits, such as ensuring that they receive their first bachelor’s degree for free.
Boosts Local Industries
The hospitality industry plays a crucial role in increasing footfall in the country. Subsequently, it brings plenty of businesses for the local industries of a region. The sectors which highly benefit from the hospitality industry include food production and automobiles.
Marriott is one of the largest hotel chains in the world. In addition, hotels also provide additional services that include flights, cars, tours and yacht experiences. Thus, it not only ensures contribution to a country’s economy through hotels but also by giving a boost to other local industries.
Increases Foreign Exchange Earnings
It is common for international travelers to utilize the services of the hospitality sector when they visit a foreign nation. It, in turn, helps the host country to receive the much-required foreign exchange. The increase in foreign exchange helps the government to strengthen its financial reserves. In addition, a top-notch hospitality sector of a country also brings in a substantial amount of direct foreign investment, which again benefits the economy.
How Much Does the Hospitality Sector Contribute To GDP?
With the increasing rise of the middle class and increased disposable income, the hospitality sector is experiencing healthy growth. As a result, the hospitality sector generally contributes 7.5% of a country’s GDP. Overall, the hospitality industry’s contribution to the GDP is substantially higher than the other sector. Therefore, the hospitality industry is the government’s backbone for many countries.
Even though the hospitality industry is a highly taxed industry, it still manages to bring in significant revenue for a country.
It is why the hospitality industry has the potential to become the most significant driving force behind the growth of an economy. However, to ensure the maximum revenue, the government needs to ensure the right amount of incentives and support to the industry. Furthermore, this support should extend beyond the luxury segment. Only when both small and big hospitality sector stakeholders receive the right amount of support can it contribute significantly towards a country’s economic growth.
The Opportunities Of The Hospitality Sector
Numerous opportunities are associated with the hospitality sector. Firstly, it can help the developing nation escape poverty by contributing to the economy. Secondly, the hospitality industry brings with it a multiplier effect. When the hospitality sector in a region grows, it ensures the growth of numerous other industries.
As discussed, it boosts the employment rate too. It also helps a place preserve and further empower the local art and culture, which contributes to a country’s economy. Also, it is crucial to understand the challenges associated with the hospitality sector to ensure that they are fixed and can bring in higher contributions to a country’s economic growth. Thankfully many countries across the globe understand the importance of the hospitality industry and are providing the necessary support.