The Effects of Terrorism Towards the Hotel and Tourism Industries

Ever since the 9/11 attack which took place in New York City, America in 2001, the world is never the same again. Since then, more and more terrorists’ actions are being reported throughout the world, almost on a daily basis. Following the unfortunate and deliberate action by the terrorists, people’s fear on such occurrences has increased twice fold. This, in return, has changed the world’s perceptions on such activity. Two major wars, for example, have broken out under the Bush administration, resulting in a massive death toll suffered by either side. Securities have been tightened, and more people are losing their liberty and freedom due to it. Furthermore, such incidents have truly affected the overall world’s hotel and tourism industry, which showed significant downfall due to acts of terrorism. ISHC (2004) has referred to the terrorism act as one of the top ten global issues and challenges in the hospitality industry.

Francesco Frangialli, the Secretary-General of the United Nations World Tourism Organisation (UNWTO), was cited as saying that “unprecedented and brutal act of terrorism is likely to have profoundly negative consequences for domestic and international tourism” and characterized terrorism as "an enemy of peace and tourism”. Such allegations truly have truth in it. Graham Miller of University of Westminster in London stated that tourism is the world’s number one industry, and the services are reliant on people’s safety and security, either physically or financial. Both, however, are threatened by terrorisms. The tourism industry generates substantial economic benefits to both host countries and tourists' home countries. The main benefits of tourism to a country are foreign exchange earnings, tax revenues, business opportunities for budding entrepreneurs, and employment for workers in the industry. According to the UNWTO, tourism is one of the top five export categories for as many as 83% of countries and is the main source of foreign exchange earnings for at least 38% of countries, while the World Travel and Tourism Council estimates that tax contributions related to tourism worldwide were US $800 billion in 1998. The hotel accommodation sector alone provided around 11.3 million jobs worldwide in 1995, according to the United Nations Environmental Programme (UNEP), with UNWTO estimates that tourism represents 7% of jobs worldwide. According to UNWTO in 2009, the worldwide contribution of tourism to gross domestic product (GDP) is estimated at some 5%. Tourism’s contribution to employment tends to be slightly higher and is estimated in the order of 6-7% of the overall number of direct and indirect jobs. However, terrorisms’ act will certainly play a huge role in diminishing such figures as it can bring the whole industry down. Goss (2003) has cited Marvin Cetron, stating that “The economy is like an 800-pound gorilla. When it is down, hospitality is one of the first sectors to be hit,” Post 9/11 showed that the economy stalled and fear of further terrorist acts sent travel and tourism into a nosedive, reducing occupancy rates at hotels such in New York City to around 40 percent. Even usually recession-proof destinations like Washington, Orlando and Las Vegas saw sharp and lasting declines in business and leisure travel. The adverse effect of terrorism towards the hotel and tourism can also be seen in Egypt, where a terrorist attack targeting visitors to the Temple of Hatshepsut in Luxor, threw Egypt's tourism industry into turmoil. Visitor arrivals to Egypt declined by 13.8 per cent from 1997 to 1998, and Egypt's international tourism receipts decreased by 45.4 per cent in 1998 compared to 1997.

Marvin Cetron (2006) has cited Demicco and Fannin, in stating five measures and solutions that can be taken by hotel industry to overcome such effects. First of all, hotel’s managements should change the norm perception that beefing up hotel’s security will affect the brand name and price of the hotel. This is not true as today’s consumer considers safety to be among the most important factors when selecting a hotel. Secondly, hotels should create a culture shift from a culture of liability paranoia to one obsessed with guest and employee safety. Hotels should also refer to credible sources when assessing terrorist threats in their hotels. For example, in America, the American National Standards Institute (ANSI) and the National Fire Protection Association (NFPA) provide standards such as NFPA 1600 for national emergency preparedness and business continuity and NFPA 730-2006, which is designed to reduce security vulnerabilities to life and property. Apart from that, management should perform pre-employment background checks and develop comprehensive site security/emergency management plans based upon a security vulnerability assessment. Systematic risk assessment must also be regarded as mandatory and its function should be continuous in the hotel.