Economic impacts of the hotel industry: an input-output analysis

Purpose - The purpose of this paper is to be limited to provide an overall economic structure linked with a particular hospitality industry by identifying the economic structure of relations between the two hotel industries and other industries within a particular state in the USA. Design/methodology/approach - The analyses of output, labor income and employment multipliers from the input-output system were performed using the IMPLAN 3.0 software. The study attempted to compare the hotel/motel industry (industry code 411) and the accommodations industry (industry code 412) with the top ten industries and averages of each set of multipliers to estimate the relative importance and contribution of the two hotel industries to the economy of Texas. After this comparison, the aggregated input-output tables and multipliers were prepared to determine the economic inter-relationship between the two combined hotel industries (industry code 411 plus industry code 412) and the non-hotel industries, using the criteria of the NAICS (North American Industry Classification System). Findings - The three findings of this study are summarized as follows. First, the two hotel industries impacted the state economy due to a high induced effect from output and a considerable direct, indirect and induced effect from labor income and employment, despite their relatively lower multipliers and the economic downturn in the state. Second, the hotel-related industry had a strong inter-dependent relationship with the finance and insurance-related industries. Finally, while the hotel industry generated more labor income and employment than did the other accommodations industry, it is interesting that the other accommodations industry created more output than did the hotel industry. Research limitations/implications - Other than limitations pertaining to assumptions of input-output model, an input-output analysis alone cannot become the best analytical method for decision-making. The study was a cross-sectional study with 2009 data and did not incorporate a time-series flow of the state economic structure over several decades. A study of the inter-relationship among varied states bordering the state could be worthwhile to identify the flow of inputs and outputs. Originality/value - Despite a considerable number of research in measuring the economic impacts, this paper was of great significance, in that the economic impact of the hotel industry that has never been performed in a particular state of the USA was analyzed. Additionally, these quantified economic data and results should be helpful to future plans and policies associated with the hotel industry.