Assessing the Impact of Tourism on the Hospitality Sector’s Share to Gross Domestic Product: From the Ghanaian Perspective

Abstract

This study assessed the impact of tourism on the hospitality sector’s share to the real Gross Domestic Product (GDP) growth of Ghana. It employed the quantitative research approach and the explanatory research design. The study used time series data from 2007 to 2017 on tourism variables such as tourism receipts to GDP, tourism expenditure to GDP, number of international tourism arrivals to GDP; economic variables or transmission channels such as imports to GDP, exports to GDP, real exchange rate and hospitality sector’s share to GDP growth. Theoretically, this study was grounded on the tourism-led growth hypothesis which helped in explaining the link between tourism and economic growth. Regression analysis was employed as the analytical tool for this study. The study established that tourism drivers such as tourism receipts, tourism expenditure, and number of international tourism arrivals have statistically significant positive relationship with hospitality sector’s share to the country’s real GDP. Again, the study found a reverse positive relationship between hospitality sector’s share to real GDP and tourism expenditure. Also, it was observed that a positive relationship existed between tourism drivers (tourism receipts and international tourism arrivals) and tourism expenditure. In addition, there was a statistically significant positive relationship between imports to GDP and hospitality sector’s share to real GDP. There is the need for new policy direction to develop and promote tourism activities and the hospitality sector to make them more attractive to regular tourists and potential ones. The Ministry of Tourism, and Hotel and Hospitality Association of Ghana need to financially support the business activities of the local companies in the industry to enable them expand and develop economies of scale to improve their export activities to generate more foreign exchange.