Research Report: Economic Impact of the UK Hospitality Industry

This research project examines the significant contribution of the UK hospitality industry to the nation's economic development. The report begins with an executive summary, introduction, and importance of the study, highlighting the industry's role in GDP, employment, and tourism. A comprehensive literature review explores existing research on the UK hospitality sector, its economic impact, and growth trends. The methodology section details the research approach, data collection methods, and data analysis techniques employed. Preliminary results and discussions are presented, followed by an analysis of the findings, limitations of the study, and references. The study uses secondary data to analyze the industry's performance and its influence on the UK economy, considering factors such as capital investment, employment rates, and government support. The report emphasizes the hospitality industry's continuous expansion, job creation, and contribution to the overall economic landscape of the United Kingdom.

RESEARCH PROJECT

EXECUTIVE SUMMARY
In the modern era, every industry operating in UK has positive impact on the economic
development of the nation. Country like United Kingdom has fifth largest national economy
which is measured in terms of nominal Gross Domestic Product. The present topic being selected
for the present study is “To identify the contribution of UK hospitality industry on the economy
of the country”. The present study being carried out has supported in gaining knowledge about
the hospitality sector and the ways through which it is leading to economic development.
Further, the key factors which have contributed in selection of research project is the area of
interest. Hospitality industry in UK is continuously expanding and providing contribution to the
gross domestic product of the economy.
In 2014 there contribution was £57 billion (4% of total GDP). This industry had provided
various employment opportunities in the country by which there is increase in per capital
income. Considering the present study deductive approach has been employed where research is
based on entire hospitality industry and findings can be applied to specific to firm operating in
the industry selected. Primary information has not been collected and secondary one has been
acquired through books, journals and online articles. Descriptive design has been undertaken and
qualitative technique has been used for data analysis.
On the basis of literature review it has been identified that entire hospitality sector of UK
is operating efficiently and it is one of the main reason behind economic development of the
nation. Further, it is providing job opportunities to the people on continuous basis along with
development which is taking place in the form of infrastructure etc. Apart from this, imports
along with exports are rising at faster pace which are leading to inflow and outflow of cash.
Capital investment has been increased and it is fruitful for the entire country.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
IMPORTANCE OF THE STUDY..................................................................................................2
LITERATURE REVIEW................................................................................................................3
Introduction..................................................................................................................................3
About UK hospitality industry.....................................................................................................3
Economic impact of UK hospitality industry..............................................................................5
RESEARCH SPECIFICATION......................................................................................................6
Research questions.......................................................................................................................6
RESEARCH METHODS................................................................................................................7
Research approach.......................................................................................................................7
Data collection.............................................................................................................................7
Research design...........................................................................................................................7
Data analysis................................................................................................................................8
PRELIMINARY RESULTS............................................................................................................8
RESULTS AND DISCUSSION......................................................................................................9
LIMITATIONS OF THE STUDY................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
In the modern era, every industry operating in UK has positive impact on the economic
development of the nation. Further, companies have started to cross their national boundaries and
due to increase in presence at global level contribution towards economic development is rising.
In short, the overall development taking place in every country is due to the industries and
overall sectors operating. Country like UK is economically sound where large number of
industries operates is financially sound and this has supported the entire nation to grow. Apart
from this, some unfavorable conditions are present in every economy such as recession which is
a kind of economic downturn and due to this reason it becomes difficult for every industry to
operate efficiently (Duncan, Scott and Baum, 2013).
Country like United Kingdom has fifth largest national economy which is measured in
terms of nominal Gross Domestic Product (GDP) and it is tenth largest in the world. Further,
service sector contributes 78% of GDP where financial service industry is regarded as one of the
most important sector. The entire economy of UK is boosted by production and North Sea oil. In
short, the overall growth in the economy is leading to rise in level of job opportunities and every
industry is able to obtain the real benefits of development.
The present topic being selected for the present study is “To assess the impact of UK
hospitality industry”. Further, the present research totally focuses on the hospitality industry of
UK which is growing at faster pace in the modern era. In short, it is playing major role in the
economic development of nation. In London, many places are present which attracts tourists
from other nations and it is contributing in the development of country. Apart from this, it is well
known fact that one of the main reasons behind development of many nations is tourism and is
one of the major sources of income for the government. The entire hospitality industry takes into
consideration the provisions of accommodation, drinks and meals.
Major tasks which industry involves are catering, licensed clubs, etc. Contribution of
hospitality industry in overall economic development of UK has increased as compared with past
where new companies are entering into the market on continuous basis (Wang and Tsai, 2014).
Further, government is also providing direct support to the entire sector so that appropriate
services can be rendered to target market. Apart from this, hospitality industry of UK employs
2.4m people that involve both public and private sector. Annual turnover is around £90bn and is
contributing around £34bn in gross tax revenues. This data directly represents the direct
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contribution of entire industry in economic development which is favorable for country like
London. Overall, the revenue received by rendering tourism service is used in the development
of nation and provides support to government. Moreover, it is providing large number of
employment opportunities to the people living in the society which is around 5 percent and in
near future employment rate is expected to rise. Therefore, in this way hospitality industry of UK
plays major role in economic development.
IMPORTANCE OF THE STUDY
The present study being carried out has supported in gaining knowledge about the
hospitality sector and the ways through which it is leading to economic development. Further,
the key factors which have contributed in selection of research project is the area of interest
where researcher is having proper knowledge about the hospitality market of UK and due to this
reason; it has become easy to assess its overall impact on economic development of the nation.
Moreover, researcher is having interest in this field of hospitality which has encouraged
undertaking this study. Apart from this, some other factors are also present which involves the
rising development of hospitality industry in UK. One of the main reasons behind economic
development of UK is the growth of hospitality industry as demand for tourism is increasing at
faster pace and the entire nation is able to gain larger number of benefits with the help of this.
The present topic being selected is important for the researcher as through this, it is
possible to know the role played by hospitality industry of UK in the economic development of
nation. Further, with the help of this, the way in which development is taking place in terms of
employment, GDP growth, etc. can be known. Further, it is a well known fact that economy of
UK is growing at a faster pace but identifying the role of hospitality industry behind the same is
important. Therefore, this is one of the main reasons due to which selected present topic is
significant for the researcher.
The entire study is significant at corporate level where companies operating in hospitality
sector can easily know their contribution in the economic development of the nation. On the
other hand, it is possible for government also to know the overall growth taking place in this
sector which will be favorable in near future also. At the present demand for hospitality services
in the market of UK is rising at faster pace where tourist from other nations prefer to visit
attractive places. This is encouraging new companies to set up business in this sector and is
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favorable for the nation also. Hospitality companies are contributing in the development of the
country which is in the form of employment, infrastructure development etc (Goodall and
Ashworth, 2013). Apart from this, it is well known fact that people living in the society are
having high purchasing power and due to this reason; they are capable enough of purchasing
hospitality services even if they are costly.
Further, hospitality firms are introducing new services time-to-time which is capable
enough of attracting large number of visitors in the market. Apart from this, economic condition
of UK allows businesses to offer hospitality services as per need and requirement of the society
and it is also contributing in development of the nation. Therefore, in this way, these are some of
the major factors which have supported in selection of research project and are fruitful for the
entire research being carried out.
LITERATURE REVIEW
Introduction
Hospitality industry of every nation plays most crucial role in economic development as
the range of services delivered by every hospitality firm are capable enough of attracting
customers from different areas. As per view of Köseoglu, Topaloglu and Lester (2013)
hospitality industry takes into consideration different companies which are indulged into
practices of delivering accommodation services along with meal etc. Behind every economy
there are some industries which supports in development and in the modern era hospitality sector
is the one (Köseoglu, Topaloglu and Lester, 2013). In country like London hospitality industry
operates on wider basis and delivers large number of services to people living in the society.
However Sloan, Legrand and Chen (2013) argued that each and every sector of UK is sound and
is capable enough to carry out overall operations. So, this is providing large number of
opportunities to the entire nation and companies are able to operate efficiently.
Further, government of London supports every industry so that services can be delivered
to customers as per their requirement. So, this has also contributed in the development of the
entire nation and has lead to favorable outcomes (Sloan, Legrand and Chen, 2013). Apart from
this, some unfavorable situations are present such as recession which is a kind of economic
downturn and in turn it has adverse impact on many industries. According to Wang and Tsai
(2014), one of the main reasons behind success of hospitality industry in UK is the economic
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development of the country and this is encouraging other firms to enter into this sector with the
motive to grab opportunities. Further, it is well known fact that business environment in which
firm operates is very complex but when economy of any country is sound then businesses can
easily survive in the market for longer period of time. As compared with past the entire
hospitality industry of UK has grown at a fast pace (Wang and Tsai, 2014).
About UK hospitality industry
As per view of Terrelonge (2015) the entire hospitality sector of UK is the major
contributor to the economy of UK in terms of financial, employment etc (Terrelonge, 2015).
Approx 10,000 hotel businesses are operating in the market of UK and it has been estimated that
alone hospitality industry contributes £1.3bn which is beneficial for the entire nation. According
to Perkins (2015), the entire industry is the key driver of employment where large numbers of
people living in UK have been employed. The figures provided by the office of National
statistics has highlighted that overall economy of UK has grown by 1% and it is expected that
more visitors will be attracted towards this industry in near future (Perkins, 2015). According to
Brotherton (2012), overall growth in international visitors to London has been slow and this is
likely to grow in near future. Apart from this, purchasing power of people living in London is
high and it is one of the main reason due to which they prefer to purchase hospitality services on
continuous basis (Brotherton, 2012). Around 400,000 people are working in the service sector
and every firm is able to deliver to positive environment to the residents. In near future, it is
expected that hospitality industry will grow by 4.6 percent.
However, Jones, Hillier and Comfort (2016) argued that it is not easy to determine the
exact growth rate of the industry as large number of challenges exist which businesses have to
face at the time of carrying out operations in the market (Jones, Hillier and Comfort, 2016). In
London, addition 6430 rooms can be opened in next few years and this can assist in increasing
the overall supply of services which is beneficial for the hospitality customers also. As per the
views of Goodall and Ashworth (2013), the entire hospitality sector is facing large number of
challenges along with geopolitical challenges but overall contribution in the economic
development is increasing which is fruitful for the nation. The entire industry is adaptable to
changes taking place in the business environment and this has supported country like London in
every possible manner (Goodall and Ashworth, 2013). It is well known fact that country whose
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hospitality industry is not operating efficiently has to deal with various issues which are
associated with development.
However, Cooper (2013) argued that large numbers of investors are easily attracted
towards hospitality industry of UK as they are able to view the increasing opportunities present
in the market such as rise in income level, market share etc. According to Duncan, Scott and
Baum (2013) the rising demand for hospitality services is also encouraging businesses to indulge
into different activities through which superior services can be delivered to target market.
Therefore, in this way the growth in entire industry is beneficial for London where development
can easily take place at a fast pace (Duncan, Scott and Baum, 2013).
Economic impact of UK hospitality industry
Hospitality industry in UK is continuously expanding and providing contribution to the
gross domestic product of the economy. In 2014 there contribution was £57 billion (4% of total
GDP). In accordance with the study of Tribe (2015), this industry had provided various
employment opportunities in the country by which there is increase in per capital income (Tribe,
2015). In 2014, hospitality industry of UK had provided 2.9 million jobs (Economic contribution
of UK hospitality industry, 2010). This figure was equivalent to the 9% of total employment in
UK. Survey conducted by Peric and Vitezic (2016) shows that, this industry had recorded growth
of 17% in terms of employment in past 5 years. In UK, this industry is at fourth position in terms
of employment (Peric and Vitezic, 2016).
Contribution
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HOSPITALITY
Hotels
 Milestone hotel
 Hotel La palace
 The Arch London
Restaurants
 Adam’s
 L’Enclume
 Midsummer House
On Economy
 GDP growth
 Employment
opportunities

With the increasing areas in hospitality industry various tax revenues streams has been
generated for the UK exchequer. In this aspect, Ladkin and Sziva (2015) had stated that
hospitality industry is providing significant contribution in the tax income of the country which
had assisted in government in making further development (Ladkin and Sziva, 2015).
Contribution by hospitality industry to the exchequer was £41 billion in previous year.
According to the Guillet (2015), hospitality has direct correlation with the tourism industry. Due
to this aspect, with the betterment in hospitality industry revenue from tourism industry is also
increased (Guillet and Law, 2015). In addition to this, increasing international tourists is
enhancing foreign currency of the government. This industry had also made increase in export
services of the county which had supported in attainment of better position in balance of trade.
Study of Bonilla-Priego (2015) shows that by 2020, there will be 40 million overseas visitors a
year. This estimation is made on the basis of Visit Britain’s growth strategy target and their
published figures (Bonilla-Priego, Font and del Rosario Pacheco-Olivares, 2014). According to
Rogers (2013), increase in number of visitors will upgrade global position of country and it will
be a good market to the employers (Rogers, 2013).
There are various multiplier effects provided by hospitality industry to the economy in an
indirect manner. It is because; organization operating in this industry is providing business to the
suppliers of UK. As per the view point of Sainaghi (2013), induced impact is resulted from the
expenditure made by workers employed by the industry and their direct supply chain (Sainaghi,
2013). Study of Jones (2016) shows that the total addition made by induced gross value added to
UK GDP is estimated to have been £49 billion in 2014 by the hospitality industry. This aspect
had improved living standard of the individuals by which there is increase in their purchase
power (Jones, Hillier and Comfort, 2016).
In accordance with the study of Rahimi and Kozak (2016), for each ten job contributed
by hospitality industry of UK, another five supported jobs are created due to the increase in
induced spending. These factors create multiplier effect in the economy. Furthermore, capital
investments are made by industry for growth and development which enhances productivity and
efficiency of the business operating in it. It has been stated by Rahimi (2016), infrastructural
development had contributed in growth of economy as it creates value addition in the industry. In
addition to this, hospitality industry had also assisted in growth of business services such as
agriculture, transport and communication (Rahimi and Kozak, 2016).
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RESEARCH SPECIFICATION
Aim: The main aim behind carrying out the present study is “To identify the contribution of UK
hospitality industry on the economy of the country”. Further, to accomplish the aim, following
objectives have been set which are as follows:
 To identify the key drivers leading to economic growth of UK.
 To assess the ways through which hospitality industry is boosting UK economy.
 To determine the role of hospitality industry in economic development of UK.
Research questions
 What are the key drivers which are leading to economic growth of UK?
 What are the ways through which hospitality industry is boosting economy of UK?
 What is the role played by hospitality industry in economic development of UK?
These are the key research questions behind developed for accomplishing aim of the
research in appropriate manner.
The first research question being developed is associated with the hospitality industry of
UK and one of the main reasons behind forming same is to analyze the entire market of
hospitality. Further, the entire study is based on economic impact of UK hospitality industry and
through this question it is possible to know whether the entire industry is operating efficiently or
not. In short, to know overall economic impact it is necessary to gain know about the industry
with the motive to reach towards valid conclusion. Setting up this question has supported in
enhancing validity of the entire study. Hospitality industry of UK carries out overall operations
on wider basis and due to this reason it is not at all easy to gain proper knowledge about the
industry. Further, this sector has to deal with large number of challenges at the time of operating
in the market and same can be known through this type of question.
The next research question developed is to understand the role played by hospitality
industry on economic development of London. Through this question it is possible to know how
entire sector is supporting in development of nation in terms of employment, infrastructure,
technology etc. Further, this can highlight the key areas where hospitality sector is performing
better and providing opportunities to country like UK.
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RESEARCH METHODS
Research approach
Two types of approaches are present which are used in the study and they are inductive,
deductive (Goertz and Mahoney, 2012). Selection of appropriate approach supports in
accomplishment of aim of the study and this enhances reliability of research. Further, in
inductive approach results move from specific to general where study is carried out from point
view of specific firm and on the basis of same it recommendations are provided to the entire
industry. Moreover, in deductive approach results move from general to specific where entire
research is in generalized form and findings can be applied to any specific firm.
Considering the present study deductive approach has been employed where research is
based on entire hospitality industry and findings can be applied to specific to firm operating in
the industry selected. One of the main reasons behind selection of this approach is that it has
assisted in accomplishment of the aim of the research.
Data collection
Two types of sources are present namely primary and secondary through which
information is collected (Kitchin and Tate, 2013). In the present study data has been collected
from secondary source. Primary information has not been collected as research is based on
economic impact of UK hospitality industry and such kind of information cannot be accessed
through primary source. Further, secondary data has been acquired through books, journals and
online articles which provides information regarding the growth of hospitality industry of UK.
Research design
It is the blueprint of the study and provides information regarding the strategies employed
for conducting research (Soni and Kodali, 2012). Different types of designs are present such as
exploratory, descriptive etc. Considering the present study descriptive design has been chosen
through which it is possible to provide description of the topic being chosen.
Data analysis
Data analysis is one of the most important part of the study through which it can be
ensured whether expected aims have been accomplished or not (Jensen, Dawson and Falk, 2011).
Information gained with the help of secondary sources will be analyzed by forming different
themes and it has supported in knowing the role played by hospitality industry in economic
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development of UK. Further, this has assisted in enhancing the efficiency of the entire research
and expected outcomes have been accomplished.
PRELIMINARY RESULTS
In the present study only secondary data was results for conducting research and it has
enhanced reliability of the entire study. Further, this information has provided base to the entire
research where it became easy to answer all the research questions in proper manner. Apart from
this, different articles have been considered which have supported in knowing the overall
condition of the hospitality industry. Apart from this, country like UK is economically sound
which provides large number of opportunities to firms operating in this sector. Secondary
analysis has shown that entire hospitality industry is performing better and it is assisting in
economic development. Further, it is providing employment along with other type of
opportunities to individuals who are living in UK and this is fruitful for the entire nation.
Theme 1: Hospitality industry has provided
large number of employment opportunities
In 2014, hospitality industry of UK had provided
2.9 million jobs. This figure was equivalent to the
9% of total employment in UK. This industry had
recorded growth of 17% in terms of employment in
past 5 years. In UK, this industry is at fourth
position in terms of employment. Around 400,000
people are working in the service sector and every
firm is able to deliver to positive environment to
the residents
Theme 2: Hospitality industry has supported in
rising exports of the country
This industry had also made increase in export
services of the county which had supported in
attainment of better position in balance of trade.
There will be 40 million overseas visitors a year.
This estimation is made on the basis of Visit
Britain’s growth strategy target and their published
figures
Theme 3: Entire hospitality sector of UK is
operating on wider basis
Approx 10,000 hotel businesses are operating in the
market of UK and it has been estimated that alone
hospitality industry contributes £1.3bn which is
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