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The Economic Importance Of Hospitality Industry Tourism Essay

The hospitality industry is growing very rapidly and contributing nearly 10 % of the world’s GDP (Boella, 2000). In the last decades the hospitality industry has got much importance of vigorous process of expansion. Consequently the hospitality industry is expanding globally and promoting its growth in a changing multicultural environment. Hospitality is being built at regional, national and global levels. Internationally oriented hospitality industry with different companies competes also locally and regionally. A great number of indicators show the sign of economic growth predicted by the International Monetary Fund and this growth will be distributed unevenly in developing countries (6.4 %) and (2.2 %) in advanced nations. Hospitality industry constitutes many subsectors; hotels and restaurant is one of most source of economic growth.

Tourism and Hospitality

The terms tourism and hospitality are co-related and grouped together as a single industry. However these both hospitality and tourism industries are viewed as two individual sectors. There exist overlapping between these two. Tourism is defined as the persons travel and goes for the places outside of their usual environment for less than one year to accomplish their business purpose and for leisure; they are not employed there on visiting places. Hospitality is the provision of the accommodations, venues, meals and drinks to those people who are out of their homes. People of UK enjoy these services and also other non-resident residents. Both of these industries cover the restaurants, accommodations, hotels and other exhibition activities. Tourism is not the subsector of the Hospitality merely a source of the tourist services. In this way we have made a clear difference between two overlapping industries (www.baha-uk.org). We carry on our subject further to complete the task of hospitality and its subsectors. Hospitality industry may include the following sectors.

Licensed clubs

Food shops

Catering activities

In-house catering

Exhibition and fair organizer’s activities

Activities of conference organizers

Other food services

These are the areas of the hospitality industry which provide the services in different ways. Hospitality is the focal point in those countries where tourism is the major export industry. Cross border flow of business people and capitals has flourished the hospitality industry. The hospitality is the main source of foreign currency exchange and largest employers to employ the workforce. Hospitality brings the different cultures together in global community. Countries suffering from trade balances look the hospitality and tourism to close the gap. Therefore the hospitality is a not concept but it is a driving force in the global market. Lifestyle and globalization of business is communicated in foreign languages and coping with different political and social systems. Hospitality companies require the globally think to survive and competing hospitality organizations work maturely in UK and U.S. The companies competing in all aspects of the hospitality industry will move across their national boundaries. The view that in future the global entities with advantages will compete due to globalization is in not acceptable.

Hotels are classified on the base of the season and services as we can distinguish between the Motel 6 and four season hotels. The Marriot Company is well established and covers the price and service levels and serves the extended stay and luxury vacation segment.

Marriot hotels Resorts and Suits

Courtyard by Marriot

Spring Hill suits by Marriot

Marriot Conference centers

Marriot Vacation Club International

Residence Inn by Marriot

Marriot operates and owns a luxury group of hotels as a segment of market.

The hotel chains grew after the Second World War and more greatly in the following two decades. The trend to rise beyond the national boundaries is due to pressure of growing hotel companies. These companies march to reach the critical point where the property is sufficient to satisfy the tourism and providing their needs. Hotel sub sector of hospitality may reach to a point where no other option for the customer is left. The hotel market which is set in America and their leadership may cast attention to potential for moving it into Asia/Pacific markets to compete the regional companies. These global Hospitality companies introduce the global brands and products to their customers. Large numbers of hotels have developed the single brands and products in a very uniform fashion in global market. It is also observed that tourists and travelers are in demand of unique local products from the hospitality industry. In response the global companies have tried in a way to reflect in a local design.

The hospitality sector (hotel and restaurant) are the essential components of this industry. Luxury hotels with other services like beds, breakfast, inns and also cover wide range of accommodation services. The International Hotel and Restaurant Association (IH&RA) has represented the hospitality industry at global level.

Hotel developments are important for the new opportunities of jobs and stimulate the local economies. Generally hotels provide the two types of the services: (i) accommodation and (ii) dining services. Customers of this industry include the foreign visitors, domestic households and institutional buyers. Competitive pricing, availability of services and extent free services are the main three factors which affect the lodging facilities and selection of hotels. In the past five years the visitors have been growing at the annual rate of 9%. Hotels are the main and popular source of accommodations for more than 50% of foreign visitors. Due to increased demand of accommodations the every segment of the hotel industry has been steady expanded. It is estimated that hospitality economy will be grown to 2.8 million jobs by 2015 in UK.

Hospitality and Hotels

We are interested to know about the business types of the business covered by the large resort hotels. Hotel provision comes into general context of hospitality with many dimensions providing the shelter and body comforts. Hotels and other establishment catered for those mobile people who go for their personal and work lives. It was recorded that total of nearly 700 million tourist have arrived at international level. This data shows the 241.5 million increases for the last ten years and annual growth rate approached at 4.9%. Most important region where tourist arrived was the Europe with 4.5% annual change in market growth less than the Middle East (10.7%), Eastern Asia and Africa with 6.6% growth and Western Asia (8.8%) (Brotherton, 2000). Availability of capital is very crucial and key drive for the hotel development and hotel companies. The main source for the hotel development comes from the personal support, loans, investing companies, stock and shares and governments.

Hospitality and Employment

Hospitality is providing more than 10% employment in UK approximately to 2.5 million people. The hospitality business can be divided into two main categories. Firstly the hospitality business (clubs, bars, restaurants, hotels and contract catering), it accounted the two third of this industry. Secondly hospitality services like food outlets and hospitals and account one third of the industry. There are full time and part time employed persons in this sector of the hospitality. It is noted that employment depends upon the working conditions found in the industry as weekends, long hours and other flexibilities (Flynn et al, 2000).

Catering

Restaurant

Accommodation

Hotels

Transport

Visitor attractions

Consumer

Recreational facilities

Government

Intermediaries

Miscellaneous Services

Figure 1: Industrial sector of leisure and Hospitality

The above figure shows the major components of the leisure industry and consumers such as tourists or travelers are the focal point of this industry. Different size’s organizations develop the international market with hundreds of leisure products. These organizations work locally as well as globally in public and commercial sectors. Large leisure product providing companies recognize their targeted customers and think about the things across national boundaries.

Global fast food chains are now common in Europe market for the global fast food chains. Due to development and openness of this growth in world has made rapid growth in their economies. The rapid growth of franchised fast foods at the McDonalds, Burger King and Pizza Hut have invited the youth of America and all around the world to see the culture.

Hospitality industry keeps the hotel business with different products, methods, and technology and less easy to analyze it. Hotel industry produces many products in varying sale markets of the world. It keeps close contacts with its customers who consume the products at the sale points.

Importance of Hotels

Hotels are important globally as providing the facilities for recreation and entertainment, meeting and conferences and business transmission. When hotels are essential for the economies and societies are appropriate to transport. Hotels contribute the output of goods and related services which build well-being of their nations and communities. Visitors spend the hotels and contribute the local economies directly and indirectly. When foreign visitors avail the facilities of these hotels the foreign currency is earned through the visitor’s payments. Hospitality industry becomes the source of employment especially for the labors and management. Thousands of jobs are provided to locals as well as foreigners by these hotels in its different occupations. Hotels are also an alternative source for the locals as amenities. Many hotels are the social centre of their communities (Medlik & Hadyn Ingram, 2002).

In UK the hospitality industry is spread and generates the wealth and employment. It becomes the source where jobs are most required in highlands of Scotland to the South West of England and on major cities like London and Edinburgh. Small enterprises have also strengthened the social fabric of local communities in UK.

Hospitality industry has seen many ups and down in UK during the twentieth century and world leading nations have seen many changes in society. Improvements in economy have paved the way for enhancement in living standards for the majority of people residing in those countries. Many social changes for the industry’s operators are observed including the increased disposable incomes, cheaper and easier travel and more leisure time. The rise in standards of living by hospitality industry varies providing services and products, employment and leisure services. For the tourism the catering; hotel industry is very essential element and considered to be very fastest growing industry and earning the foreign currency. According to British Hospital Association the total value of tourism was estimated 76 billion GBP in UK during the 2003. Cafe, Public houses, in house catering facilities and restaurant were used by the tourists or the people study in the cities other than their homes. People like to eat the meal at these places instead of their homes. In recent years the hospitality industry has made growth in products and services and larger companies are in effort to improve the wages and other conditions of employees. It is noted that most employees generate 40,000 GBP for their employer per year, 10% to 40% labor charges and remainder goes to property costs, fixed cost and profit and material costs. Many changes are expected in hospitality industry in future (Mullins, et. al, 2001). Women are main workforce in hospitality in UK and expect that more progress will be made by the time of the Paralympics Games in 2012. Other significant advantage of this hospitality industry is to recruit the people with few or no qualification and giving them chance to make progress. It is clear from the above discussion that hospitality is major source of income where this industry is established for the services and products in global market. We have largely discussed the contribution of the hospitality industry in the economy of UK. According to British Hospitality Association more than 500,000 employees are engaged in the Hospitality industry of UK. BHA is launching a new opportunity of partnership between government and industry to make shared efforts to achieve the desired and sustainable growth of economy of UK (http://www.bha.org.uk).

Conclusions

In this paper we have discussed the hospitality industry and its major contributions towards the economic growth at local, regional and global level. A clear distinction between hospitality and tourism industry is proven with key examples. One of subsector of the hospitality hotel and restaurant is given with statistics and figures. The impacts of hospitality industry at global level are positive and UK is forefront to get the benefits from this industry. Main advantages of hospitality industry are also part of this paper.


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