The Effect of Terrorism on Tourism

The Effect of Terrorism on Tourism

Table of Content

Introduction3

Research background3

Significance of the Study6

Chapter 2: Literature Review8

The Global effects on tourism of September 11th attacks8

Key Themes in the Literature11

Impacts of terrorism on demand16

Chapter 3: Methodology21

Survey Work21

Chapter 4: Result and Discussion25

Chapter 5: Conclusion39

Research implementation42

Chapter 1: Introduction

Tourism is an industry where both demand and supply can be sensitive to extreme events such as terrorism or political violence ([Richter and Waugh, 1986] and [Ryan, 1993]). The absence of terror or violence is a pre-condition generally accepted for the development of destinations ([Israeli and Reichel, 2003] and [Sönmez, 1998]). However, in the last decades, the world has been increasingly threatened by terrorism, and acts of violence have increased in many countries, some of them enjoying in parallel an increasing popularity as destinations (Sönmez, Apostolopoulos and Tarlow 1999). These events can be considered a handicap at conflict and novel destinations, since tourists used to show marked preferences for tranquility and peaceful social environments ([Neumayer, 2004] and [Reisinger and Mavondo, 2005]).

Research background

The impact of terrorism on consumer choice and tourism decisions has been an area of research concern on demand. However, most of these studies have utilized a times series approach. For instance, (Enders and Sandler, 1991) and (Enders et al., 1992) used monthly data and time series analysis to prove a significant negative impact of terrorism on tourism revenues in Spain and other European countries, and to support substitution effects between countries as a result of the tourists' goal of minimizing the risk of facing a terror attack. This result was also found by Drakos and Kutan (2003), while (Pizam, 1999) and (Krakover, 2005) show that both the severity and the frequency of the terror events are negatively correlated with tourism demand. In another study, Pizam and Fleischer (2002) confirmed for Israel the hypothesis that the frequency of terror acts caused a larger decline in demand than the severity of those visits. More recently, Coshall employs an “intervention analysis” to explore the dynamics of the impact of terrorism events on those visiting United Kingdom and UK tourists going abroad. He found that “the expenditure was robust to such events in the 80s, rapidly returning to the norm after the crisis” (2005:592).

An interesting path of research in estimating the effect of terrorism events on the tourism industry has followed the work of Krakover (2005). This author proposed an index that collects the level of terrorist activity in a specific period of time. Thus, a zero represents a period with no terror event and a 9 a period with the maximum level of terror activity. A relevant application can be found in Fleischer and Buccola, who employ Krakover's index in order to estimate the effect of terrorism events on the demand and supply of the Israeli hotel sector. They find that “the severer the war of terror climate, the lower the international visitor demand” (2002:1339). More particularly, they found that “tourists last an average of two months in reacting to increases in ...