Steps in Creating Local Economic Opportunity
By David Michael Jerome SVP Corporate Responsibility, InterContinental Hotels Group | March 11, 2012
The hospitality industry plays a vital economic role in local communities throughout the world. Travel and tourism is one of the world's largest industries, generating US$6 trillion or 9% of global GDP and supporting 260 million jobs, according to the World Travel and Tourism Council. Many of those jobs are created by the hotel sector, giving our industry a tremendous opportunity to help local communities prosper. But why is creating local economic opportunities so important? And how should hotel companies go about driving local economic growth in a way that has long term benefits - both to the communities in question and to businesses themselves?
The truth is that while tourism is an important source of wealth for both developed and developing countries, not everyone in those countries gets to participate in economic growth. As Harvard University's report 'The Role of the Tourism Sector in Expanding Economic Opportunity' puts it: '...when we think about eradicating poverty, we should think broadly about creating economic opportunity. Economic opportunity enables people to manage their assets in ways that generate incomes and options.'
We were one of the case studies included in Harvard's study, undertaken through Harvard University's Corporate Social Responsibility Initiative at the JFK School of Government. Working in partnership with Harvard, IHG and other companies have shaped new ways of opening up economic opportunities globally. In the above-mentioned report, Harvard commended our IHG Academy programme for developing human capital for the tourism sector, and we've incorporated their findings about the roles hotels can play in society as part of our strategy. I'll come back to the IHG Academy programme later. First, I want to explore the extent to which our industry impacts on the world economy.
Far Reaching Effects
In early 2011, IHG commissioned Oxford Economics to look into the economic impacts of the hospitality industry in general and IHG in particular, focusing on three key markets - the US, UK and Brazil. Combining the information from the study with worldwide information on rooms available, rooms sold and hotel revenue by country, Oxford Economics estimates that IHG global hotel operations and the spending associated with our hotels supports close to 2 million jobs and $100 billion USD in sales.
Now, any consideration of the hotel industry as an engine of growth needs to take into account the multiplier effect. We're all aware that the impacts of our hotels go well beyond providing rooms and jobs, and that the economic reach of the hotel sector extends far beyond its direct contributions to taxes, employment, income and GDP. The supply chain of our industry has a knock-on effect, creating business activity in nearly all other economic sectors. Hotel guests spend money in the retail, recreation, transportation and restaurant sectors. And hotels provide a forum for business meetings, trade shows and conventions which in turn generate economic growth.
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