The Economic Contribution of Hotels

1
The Economic Contribution of Hotels Guest
Houses to the Irish Economy

• Presentation to Irish Hotels Federation
• Peter Bacon Associates
• ECONOMIC CONSULTANTS
• 27 February 2001
• Ormonde Hotel
• Kilkenny

2
Structure of the Presentation

• Conclusions
• Summary Measures of Economic Impact
• Structural Characteristics of Business
  Influencing these Measures
• Approach Methodology Underlying Estimates
• Regional Analysis of Results
• Analysis according to Classification of Hotels

3
Conclusions

• Hotel Guest House Revenue leads to over
  1.5Billion contribution to GNP, or 2.2 per cent
• Since 1992, direct contribution has been
  maintained and total contribution is up
• Employment intensity is increasing , direct
  employment 46,822 FTE over 76,500 in total
• Regional employment role very important
• Future lies in raising importance of room
  services
• Regulatory regime appears anachronistic

4
Hotels Guest Houses Annual Contribution to GNP
(Per cent)
5
Hotels Guest Houses Contribution to Employment
(Numbers of FTEs)
6
Model of Economic Impact of Hotel Guest House
Activity

• Payments for Hotel Services

Purchase of inputs services
Salaries, Profit
Taxation Payments
Purchases of Goods Services
Salaries, Profit purchases of Goods services
Spending by Government on goods services
7
Multipliers Used to Estimate GNP Employment
Impacts (Effects in Million FTE Jobs per
1Million of Hotel Revenue)
8
Limitations of Multiplier Analysis

• Requires very detailed database, inevitably dated
• Multipliers assume the supply side is elastic,
  not generally true and certainly not the position
  in relation to current labour market
• Difficulties associated with attributing spending
  to differenent types of service

9
Distribution of Hotel Revenue by Department
Classified by Grade of Hotel (per cent)
10
Distribution of Hotel Revenue by Source
Classified by Hotel Grade (Per Cent)
11
Distribution of Hotel Bedrooms By Hotel Grade
By Region (Per Cent)
12
Distribution of GNP Impact by Region (Per cent)
13
Distribution of GNP Impact by Hotel Grade Per
Room (per cent)
14
Regional Distribution of Employment Impact (Per
cent)
15
Distribution of Employment Impact By Grade of
Hotel By Hotel Room (Per cent)
16
Summary

• Significant impact on GNP which has been
  sustained during expansion of 1990s
• Employment intensity has increased in recent
  years
• Significant contributor to employment, especially
  regional aspect
• Future growth requires focus on room services
• Regulatory regime an impediment