Impact of Terrorism on Tourism - International - June 2007

Table of Contents

• IntroductionDefinition of terrorism
• Terrorism distinguished from warfare, revolutions and criminality
• Most terrorist acts are politically motivated
  • Figure 1: Types of terrorist group, 1968-97
• Most terrorist incidents involve bombings
  • Figure 2: Tactics used in terrorist incidents, 1968-2007
• Bioterrorism
• Data Sources
• Overview
• Recent trends in international travel
• Growth in international travel slowed to snail' s pace
• Europe and the Middle East less affected
  • Figure 3: Outbound trips by region 1990-2005 (in millions)
• North America worst affected
  • Figure 4: Trend in arrivals by region and sub-region, 1990-2005 (in millions)
• Terrorism as a Post-War Phenomenon
  • Figure 5: Terrorist incidents, by region, 1 January 1968 to 23 March 2007
• Few terrorist attacks directly target tourists
• Terrorist activity impacting tourism worldwide
  • Figure 7: Terrorist incidents by region, 1 January 1968 to 23 March 2007
  • Figure 8: Terrorist incidents, by selected country/region, 1 January 1968 to 23 March 2007
• Africa
• Americas
• Asia Pacific
• South Asia
• Sri Lanka
• Indonesia
• Philippines
• Thailand
• Europe
• Eastern Europe
• Middle East
• Case Studies: Terrorist Incidents Affecting Tourism
• Africa
• Mombassa, Kenya -- November 2002
• Little impact on arrivals
  • Figure 9: Inbound arrivals and receipts in Kenya, 2000-05
• Official warnings against travel to the country
• Morocco -- Casablanca bombings, May 2003
  • Figure 10: The trend in arrivals in Morocco, by nationality, 2001-06
  • Figure 11: The trend in hotel overnights in Morocco by nationality, 2001-06
• Terrorism back on the agenda
• Effect attenuated
• Danger of losing the French market
• Tunisia -- April 2002 attack on Djerba
• Tunisian government forced to admit that it was terrorism
• Clearly the work of outsiders
  • Figure 12: Incoming arrivals to Tunisia, 2000-05
• Different behaviour of incoming markets
  • Figure 13: Incoming arrivals in Tunisia, by selected national origin, 1995-2004
• Americas
• The impact of 9/11 is still being felt
• Arrivals fell by 20% between 2000 and 2003
• Overseas arrivals were still 22% below 2000 levels in 2004
• All major European markets down by >20% except the UK
  • Figure 14: Foreign arrivals in the US by major incoming market, 2000-04
• Foreign arrivals still below year 2000 levels in 2006
  • Figure 15: Trend in the top-ten US incoming markets, 2000-06
• US outbound travel
  • Figure 16: Total US outbound travel, broken down between North America and overseas, 1995-2005
• Outbound travel to Europe
  • Figure 17: US outbound travel to Europe by country, 1995-2005
• Outbound travel to the Caribbean and Latin America
  • Figure 18: US outbound travel to the Caribbean and Latin America by country, 1995-2005
• Outbound travel to Africa and the Middle East
  • Figure 19: US outbound travel to Africa and the Middle East by country, 1995-2005
• Outbound travel to Asia and Oceania
  • Figure 20: US outbound travel to Asia and Oceania by country, 1995-2005
• Inbound receipts
• Outbound expenditure
  • Figure 21: US international travel and tourism balance of trade, 2000-06
• Influence of 9/11 on German travel plans
  • Figure 22: Survey: Answers to the question, "Will the 9/11 terrorist attacks in the US influence your next holiday trip?", 2001-02
  • Figure 23: Survey: Further questions asked to those who admitted that their travel plans were influenced by 9/11 or "didn' t know", 2001-02
• Asia/Pacific
• India/Kashmir
• India' s incoming is only a tenth of China' s
  • Figure 24: International arrivals in India, 1995-2006 (' 000)
• Indonesia
• Bali
  • Figure 25: October 2005 Bali bombing deaths and injuries
  • Figure 26: The ten leading incoming national origin markets to Bali, 2001-05
• Marriott Jakarta (2003)
• Australian Embassy blast
• Terrorism' s impact on Indonesia
  • Figure 27: Visitor arrivals to Indonesia, 2000-05
• Impact by source market
  • Figure 28: Incoming arrivals to Indonesia by selected region/country
• Comparison of Bali 2005 and the 2004 attack on the Australian Embassy
  • Figure 29: Visitor arrivals to Indonesia by month 2005 vs 2004
• Travel warnings still in force
• Philippines
  • Figure 30: Trend in tourist arrivals and receipts in the Philippines, 1998-2005
• Travel warnings in force
• Sri Lanka -- Tamil Tigers
• Flights to Sri Lanka suspended
  • Figure 31: International arrivals in Sri Lanka, 1995-2006 (' 000)
• Travel warning in effect for the north and east
• Thailand
• 2006 New Year bombings in Bangkok
  • Figure 32: International arrivals in Thailand, 1995-2005 (' 000)
• Europe
• France
• Corsican terrorism -- an ongoing problem
  • Figure 33: Corsican hotel performance, 2003-04
• Israel
• Worst hit by 9/11
  • Figure 34: Arrivals in Israel and the southern Mediterranean region, 1995-2006
• Spain
• ETA
• Incidents not restricted to the north west
• Ceasefire broken
• The cost of Basque terrorism
• Businesses forced to pay for ' protection'
• Inward investment impacted by terrorism
• Direct impact on tourism
• Madrid 2004
• Effect on tourism attenuated
• Turkey
• Tourist sites targeted
  • Figure 35: Inbound arrivals and receipts in Turkey, 1995-2005
• UK
• London bombings, July 2005
  • Figure 36: The details of the July 2005 London bombings
  • Figure 37: Visitor arrivals in the UK by selected month, 2005-06
  • Figure 38: Trend in forward booking to the UK by selected month, 2005-06
• Behaviour of individual incoming markets
  • Figure 39: Incoming visits, overnights and spend to London by selected country, 2000-05
• Ryanair hit by the blasts
• Hotel performance following the July 2005 bombings
  • Figure 40: UK hotel performance, July 2005/July 2004
• Provinces benefited
  • Figure 41: UK hotel performance, August 2005/August 2004
• August 2006 terrorism plot
• Fears that some plotters were still at large fuelled the chaos
• Links with prior incidents
• Terror alerts raised to the highest level
• US airlines warned in advance
• Chaos at London airports
• France and Spain impacted too
• Discovery of the plot comforted those advocating tighter controls
• Liquid explosives hard to detect by existing scanning equipment
• Easy to make a liquid bomb
• Tighter controls and more delays at airports
• EU restrictions
• The financial impact of the August 2006 terrorism plot
• IHC benefited from the terrorist scare
• Middle East
• Egypt
• Luxor was targeted a decade ago
• The impact was significant, but so was the rebound
• Terrorists have followed the trend in tourism development
• Seaside resorts have been the more recent targets
• Taba, October 2004
• Sharm El Sheikh, July 2005
• Dahab, April 2006
• Immediate impact on the travel trade of the Dahab attacks
• Terrorism becoming more decentralised
• Until Taba, it was just talk
• Video-taped declarations of the suicide bombers
• Key operatives killed in police shoot-out
• The impact of Sinai terrorism
  • Figure 42: The trend in Egyptian incoming arrivals and receipts, 1995-2006
• Growth in tourism slowed by terrorism
• Comparing Sharm El Sheikh to Luxor
• Similar, but with important differences
• The composition of the incoming market has changed
• UK market takes over the number one spot
• Jordan
  • Figure 43: The trend in Jordanian incoming arrivals and receipts, 1995-2006
• Reaction of the Tourism Industry and Authorities
• Airlines
• The impact of 9/11 on airlines was immediate and direct
• US domestic market worst hit
• IATA promotes the harmonisation of air travel security standards
• The "Simplifying Passenger Travel" initiative focuses on ' unknown' passengers
• Key opportunities
• Biometrics implementation
• Risk assessment using biometrics
• Link biometrics to registered traveller programmes
• Advance passenger information (API)
• Security Check Lane Management
• Common User Self Service (CUSS)
• E-tickets implementation
• Communication of SPT recommendations
• SAS rolls out biometric security
• The government should pay
• SAS is already experimenting with biometric security checks
• In-flight security standards
• Security of the flight crew compartment
• Aircraft search procedure checklist
• Training programmes
• Flight and cabin crew security training in the US
• National Strategy for Homeland Security (NSHS)
  • Figure 44: List of basic crew member security training elements required by law, 2005
• The TSA offers advanced self-defence training for air crews
  • Figure 45: List of advanced voluntary crew member self-defence training elements required by law, 2005
• Initial reactions and suggested improvements
  • Figure 46: Summary of stakeholder concerns about the TSA' s prototype advanced voluntary self-defence training and actions taken by the TSA in response to the concerns
• Airports
• Suicide hijackers have necessitated a re-think of airport security measures
• Deficiencies in conventional pre-departure screening processes
• The human factor must be integrated
• Traditional screening designed to detect metal
• Incremental security costs for EU airlines
• Six-month trial for Simplifying Passenger Travel at Hong Kong International Airport
• Application procedures
• Airports call for global standards
• BAA
• BAA to spend £9.3 billion on airportsThe growing security industry
• Destinations (including governments)
• Australia
• China
• Germany
• Indonesia
• Philippines
• US
  • Figure 47: Question #6 of the Discover America Partnership Travel Poll
• Passport restrictions on US outbound travel
  • Figure 48: US passports issued and applied for, 1996-2006
  • Figure 49: Service charges for American Passport Express
• The new rule only applies to air travel
• Travel advisories
• Announcements concerning travel threats and risks
• Co-operation with affected countries
• Australia warns against travelling to ASEAN venue
• Hotels
• Hotels make tempting ' soft' targets
• Hotels slow to adopt necessary security measures
• Risk varies according to location
• Employees can be a major source of risk
• Food and beverage operations merit particular surveillance
• Using technology to counter terrorism
• Video surveillance at the Wynn Las Vegas Casino Hotel
• Dogs can be effective and ' guest-friendly'
• Conferences and entertainers are charged extra for the dogs
• Saving guests time at the airport
• American Hotel and Lodging Association joins NYPD ' operation nexus'
• Tour operators
• Immediate effect of 9/11 on European outbound markets
• Cost cutting
• Tour operators forced to make concessions
• TUI and Djerba
• The Iraq war
• Istanbul bombings
• The reaction of a US outbound operator
• Insurance
• Business interruption
• Workers' compensation
• Terrorism risk is concentrated and non-random
  • Figure 50: Traditional requirements for insurability
• Lack of coverage for terrorism
  • Figure 51: Government-backed and national terrorism insurance programmes, 2007
• Australia
  • Figure 52: Premium structure for reinsurance
• Austria
• France
  • Figure 53: The French GAREAT terrorism insurance scheme, 2007
• Germany
  • Figure 54: Annual aggregate stop-loss terrorism risk coverage in Germany, 2006
• Israel
• South Africa
• Spain
• Switzerland
• The UK -- Pool Re
  • Figure 55: Industry-wide retention amounts for Pool Re by year
• US
• Most US businesses do not buy terrorism insurance
• ' Adverse selection' a problem
• Limitations and exclusions could limit payouts
• Uncertain future for terrorism insurance in the US
• Without TRIA, financing hotels becomes more difficult
• No move yet in Canada
• Terrorism risk market is broadening
• Airlines
• Most governments have withdrawn coverage
• The problem of WMD
• Trends in the cost of premiums
• Passenger liability
• Premium calculations are not standardised
• Air travel is getting safer
• Insurers' role in enforcing safety standards
• Airports
• Increased cost of terrorism insurance for hotels
• Terrorism insurance still a small percentage of revenues, but could rise significantly
• The question of liability
• Liability for repair
• What if the hotel is ' appropriated' ?
• Economic loss
• Liability towards guests
• To insure or not to insure....
• Travel insurance and terrorism?
• What Next?
• Terrorism still on the rise
  • Figure 56: Trend in terrorism incidents by region, 2000-06
• Iraq is a training ground
• Increased risk for local companies
• Tourists becoming more resilient
• Keeping things in perspective...
• New outbound markets less sensitive to terrorism risk
• Which is the greater threat: terrorism, or our reaction against it?
• Some indication of inbound reforms on the way