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The hospitality industry industry’s effect on the economy

I had the opportunity recently to attend a presentation by the Greater Houston Restaurant Association (GHRA) of a study they sponsored of the economic impact of the hospitality industry in Harris County. Here’s the high level view:

The study found Houston’s hotels, restaurants and drinking establishments make significant annual contributions to the local economy. The ardent purchasing power of the hospitality industry is both directly and indirectly linked with significant benefits for local businesses in the form of sales, employment, employee income and taxes.

“The combined efforts of the industry have resulted in an apparent economic boon to the Houston economy; the vibrancy of our local industry is a major draw within our city and the surrounding metropolitan area,” said GHRA President, Reggie Coachman. “The economic success of the region’s hospitality industry is directly linked to the thousands of owners, employees, suppliers and wholesalers that support it.”

The study reported hotels, restaurants and their employees contributed an estimated $792 million in direct, indirect and induced state and local taxes in 2011. The majority of direct taxes were property taxes paid by hospitality industry establishments and their employees. For every million dollars of direct industry sales, there was an estimated $700,000 of associated indirect and induced sales related to hospitality industry purchases from local suppliers, hospitality industry and supplier employee purchases from local businesses. Hotels and restaurants remitted $740 million during 2011 in sales and hotel occupancy taxes on consumer purchases.

Hotels and restaurants in Harris County are responsible for directly employing more than 162,000 workers, roughly nine percent of the county’s workforce, and generating $7.9 billion in annual sales revenue. Additionally, there were an estimated 41,800 indirect and induced jobs created to support the industry. The total employment contribution of the Harris County hospitality industry is estimated to be 203,900 full-time and part-time jobs.

The hospitality industry’s total Harris County direct, indirect and induced income contribution totaled $6.0 billion in 2011, including $3.5 billion of direct wages, tips and benefits paid to hospitality industry employees and $2.5 billion of indirect and induced income earned by employees of suppliers and other businesses. For each dollar of direct compensation paid to hospitality industry employees, the total estimated contribution to Harris County personal income was $1.70.

The study was done by Ernst and Young for the GHRA’s 75th anniversary, and you can see the bullet points here and the full study here. One of the things I find impressive about this is that the number of dining and drinking establishments grew from about 5000 in the county in 2001 to about 6000 in 2011, with only 2008 seeing a drop in the total. Given the way the economy has been buffeted in that time, that’s really something. Something they talked about at the presentation is how hospitality is the first job for many people. That was true for me, and I think it does you a lot of good to spend a few months waiting tables or working some other aspect of food service. Given how Houston has grown in stature as a restaurant town, it’s good to see the benefit of this quantified. Now that the GHRA has this study, I hope it will help lead it to the right conclusion about food trucks. Anyway, it’s good stuff, so check it out. Tory, who was also at the presentation, has more.

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