The effect of hotel investments on employment in the tourism, leisure and hospitality industries

Abstract

PurposeThe purpose of this paper is twofold: first, to examine the extent to which hotel investments create jobs and, second, to compare whether investment in a particular hotel segment generates more or less jobs in the overall economy and in the tourism, leisure and hospitality industries.Design/methodology/approachThe panel autoregressive distributed lag regression model was used to examine the effect of total hotel investments and hotel investments in economy-scale, midscale, luxury-scale and independent hotels on total employment and employment in the tourism, leisure and hospitality industries in the USA.FindingsHotel investments increase employment in both the overall economy and the tourism, leisure and hospitality industries. Midscale hotels make the highest contribution to employment in the overall economy. Economy-scale hotels make the highest contribution to employment in the overall tourism, leisure and hospitality industries.Research limitations/implicationsThe results support the postulations of growth pole theory. As hotel investment increases, not only does the hotel industry see gains in employment but also does related economic sectors see an increase. Midscale hotels have the greatest positive impact on local labor markets, which is consistent with the assertions of middle-out economics.Practical implicationsCommunity leaders should encourage the type of investment that benefits the broader area as much as possible by incentivizing the type of growth that is related to employment growth.Originality/valueThis study investigates the relations between hotel investment and employment from a theoretical and empirical perspective by providing objective claims inferred from statistical inferences.