Hospitality Industry: Impact Of Terrorism On The Industry

Abstract

This paper analyzes the impact of terrorist activity on international tourist flows. To this end, we estimated a gravity equation cross for tourism in the G-7 to a sample of 134 destinations in the period 2001-2003. In this context, we evaluate the deviations from "normal" tourist flows because of terrorist activity, which is considered a negative publicity for the affected countries. The analysis suggests that both domestic and international victims of attacks are relevant factors when foreign tourists make their choice. This result is robust in other specifications. In addition, the impact of terrorism is more serious in developing countries.

Keywords: Domestic terrorism; International terrorism; Gravity model; Negative advertising; Tourist flows

Table of Contents

CHAPTER ONE: INTRODUCTION4

Overview4

CHAPTER TWO: LITERATURE REVIEW6

Egypt and al-gama'a al- Islamiya6

The Kenyan tourist decline9

The Global effects on tourism of September 11th attacks10

Theoretical Model28

CHAPTER THREE: METHODOLOGY32

The Empirical Model32

CHAPTER FOUR: DISCUSSION AND RESULTS38

Data And The Measurement Of Variables38

Results40

CHAPTER FIVE: CONCLUSION43

REFERENCES45

Chapter One: Introduction

Overview

The correlation between terrorism and tourism is undeniable in the modern era because of the strength of the industry and the fact that these sites honeypot, like the pyramids of Geza act as a place ideal target for terrorist attacks in the purpose of causing large amounts of social and economic disruption.

The economy of the 21st century is dominated by three industries of telecommunications, information technology and tourism. Tourism provides 10.5% of global employment with more than 25% in areas such as the Caribbean. It has been estimated that by 2008 more than 100 million people in the world wide will be employed in the sector under the WTO (World Tourism Organization)

The travel industries and tourism have increased 500% over the past 25 years and it is estimated that in 2007 tourists spent 884 billion U.S. dollars in foreign countries on tourism related activities. For many countries in the world in tourism development is the most critical revenue to GDP and therefore a major influence in economic development. The problem is many of these economically less developed countries is that all the political problems they may have can cause conflicts with other groups who have political beliefs could lead to the application of terrorist attacks mainly because of its religious and political opinions and / or real estate.

These actions of terrorist activity in these tourist areas will certainly have a negative effect on the economy. According to Adam Blake and Thea Sinclair accoeding to the WTO, "The contribution of tourism and travel to both industrialized and developing countries is so great that any slowdown in activity levels is a concern. The implications extend beyond the activities directly related to tourism, including airlines, hotels and catering sectors that supply intermediate or final goods that are purchased by companies and employees in the industry so that all sectors of the economy are affected to a greater or lesser effect. "Actually, the quote refers to the overall impact of terrorist attacks and shows how the multiplier effect can work in reverse. For example, an initial drop in ...