The Impact of Terrorism on the Tourism Industry post September 11th - Two Case Studies: New York and Bali.

Contents

1. Introduction

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2. New York

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3. Bali

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4. Responses

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5. Conclusions

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6. Links

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On September 11th 2001 two of the four jets hijacked that day were crashed into each one of the World Trade Towers, symbols of America's wealth and financial power, killing 3748 people (USA Today). These attacks would have a profound impact on many different areas of everyday life especially the economy, both in the USA and across the rest of the world, but importantly for this site the Global Tourist Industry. The bomb attack in the resort of Bali was as shocking as the September 11th, these bombs acted as a hammer blow to the tourism industry. This site will look at both attacks and the impacts on Tourism Industry in each respective area and how they are now trying to overcome the tragedies that have befallen them.

On the surface New York City and Bali appear to have very little in common and indeed until the 12th of October 2002 they didn't. New York is a Global City situated on the eastern seaboard of the world's most powerful country, whilst Bali is one of many island's that make up the country of Indonesia, the world's most populous Muslim national. New York attracts tourists through its vibrancy and variety of man made attractions, while Bali is known for its peace and tranquillity and its natural attractions such as its miles of beaches, rainforests and coral reefs.

Typical Tourist view of New York.	New York's Geographic Location.

New York Basic Facts:

They don't come any bigger than the Big Apple - king of the hill, top of the heap, New York, New York. It's got its fair share of the tired, the poor, and the huddled masses, but it also has world-class museums, big statues, even bigger buildings, outrageous excess, and a whole lot of whooo-wheee! (Lonely Planet 2004)

New York City is known throughout the world as a big, vibrant and multicultural, 24 hour city. It is home to 8 million people many of them immigrants from European nations such as Italy and witnessed a population explosion in the early 20th Century. Before the terrorist attacks of 2001 New York was a very attractive tourist destination, especially in the 1990's, after the problems of crime and degradation that had swept New York in the 1980s had seemingly been cured. Tourists from around the world were drawn to attractions such as Broadway, Times Square, Shopping Malls, Ellis Island and of course the Statue of Liberty

On the morning of the 11th September 2001 two domestic passenger aircraft were hijacked by terrorists and crashed into the World Trade Centre Site, one into each of the 110 storey World Trade Towers. In the following hour each of the two towers would collapse completely destroying the World Trade Centre complex and large parts of Lower Manhattan. The shocking images of death and destruction were carried by the media into homes and businesses all across the world. These terrorists' attacks would have a variety of impacts all across the globe but the purpose of this Case Study is to analyze the impacts on the New York Tourist industry.

The travel and tourism sector is critical to New York City. This sector represents 6% of the economic output, employing 470,000 people. In 2000, this sector generated $34 billion in revenues a record year. The New York Tourism Industry in 2001 was already beginning to struggle before September 11th; this was shown in a report by the New York Chamber of Commerce. "Weakness in the travel and tourism sector was apparent prior to September 11th, reflecting the country's general economic slowdown. National airlines had already experienced a 2% decline in passengers, starting in the first quarter of 2001. Hotel occupancy had fallen by 10% to 15% in the first two quarters, compared to a year earlier. Car rentals were down by 5% to 10% in the first eight months of 2001, compared to 2000." These figures though in the context of what would happen in the immediate aftermath of September 11th, would appear as nothing more than a mere blip.

The September 11th terrorist attack which occurred at the peak of the meeting, convention and leisure travel season, has led to a marked decline in the number of people who intend to visit New York City. The attack has affected every type of visitor, international and leisure travelers have scaled back their travel plans the most. In a survey conducted in October for the New York Chamber of Commerce Economic Impact Report, as many as 38% of international leisure travelers who, prior to September 11th, intended to visit New York City in the next year have changed their minds. A small portion who had not intended to come have now decided to visit (9%), leaving a net of 29% deciding not to visit New York during the next twelve months. The Chamber of Commerce also noted that International passenger traffic rates took longer to recover after the Gulf War than domestic passenger rates.

The main reason for the decline in visitor numbers to New York after September 11th is the concern about security. The fear factor in travel is real; it is quoted that 40% to 50% of potential visitors do not feel safe traveling now, although New York is not in a class by itself. Both domestic and international visitors are equally leery of traveling to other major U.S. cities. At the same time, the events of September 11th have led people to think differently about a range of things.

Tourist Industry Figures Post September 11th:

• 21000 people made unemployed in the Tourism Industry as a direct result of Sept. 11th.
• Projected that 9300 more jobs could be lost if downturn continues through 2002 into 2003.
• At worse the Travel and Tourism Industry expects to lose $13 Billion at best $7 Billion up until 2003.
• In October 2001 Airline Travel to October decreased by 57%.
• Within New York Airports and Airlines lost just over $750 million in revenues in 2001.

While the people of New York spent billions of dollars at the city's travel and tourism establishments, visitors to the city spent $14.5 billion in the year 2000. These visitors are categorized as follows:

• 6.8 million Travelers from overseas who made up 18% of visitors but spent $5.4 billion
• 11.6 million Overnight visitors from elsewhere in the nation who spent $6.8 billion;
• 19 million day visitors who spent $2.3 billion

On a per visit level, international visitors are significant to the travel and tourism sector spending almost 40% more than domestic visitors. Four countries account for more than 40% of international visitors: the United Kingdom (17%), Canada (14%), Germany (7%) and Japan (6%). In the immediate aftermath of September 11th it was these big spending tourists from abroad, who stayed away from New York, and contributed heavily to the downturn in the New York Tourist market.

New York hustle and bustle.	Marketing New York as a Tourist Destination.

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Picturesque Bali	Location of Bali

Bali Basic Facts:

"Bali is so picturesque that you could be fooled into thinking it was a painted backdrop: rice paddies trip down hillsides like giant steps, volcanoes soar through the clouds, the forests are lush and tropical, and the beaches are lapped by the warm waters of the Indian Ocean." (Lonely Planet 2004)

The paradise gloss has been manufactured and polished by the international tourist industry rather than by the Balinese themselves - who don't even have a word for paradise in their language - and it pays scant regard to the political and economic reality of life on Bali.

The 2002 Kuta bombing marred Bali's tropical 'Loveland' image, and for some time the island, heavily dependant on the tourist dollar, fell into decline. Prior to the evening of Saturday 12 October 2002, Bali was the glittering jewel in the deteriorating crown of Indonesia. A series of precision bomb attacks aimed at Western holiday-makers claimed 203 lives - many of them tourists - and left many hundreds more injured. The Sari Club, near popular Kuta Beach, bore the brunt of the attack when an explosion ripped through just before midnight. The bombing was carried out by Muslim extremists with links to al-Qaida, the same group who carried out the September 11th attacks.

These images show the aftermath of the Bali bomb, images seen around the world of this one time Island Paradise. The affect of images like these beamed into homes and businesses and printed in newspapers across the world have had a disastrous affect on the tourist industry in Bali and Indonesia as a whole.

Tourism is a key earner of foreign exchange for Indonesia, generating 10 percent of total export income. Indonesia gets about 5 million visitors a year, with about a quarter of them arriving directly in Bali by air. (CNN Online) Figures from the World Travel & Tourism Council show that before the Bali attack, travel and tourism was expected to generate $20 billion in economic activity for Indonesia this year and provide 5.75 million jobs or 6.1 percent of total employment. Its contribution to Indonesia's gross domestic product this year was expected to be 3.4 percent. The Bali attacks came just as the long-time island paradise has been emerging from the downturn after the September 11 terror attack in the United States the previous year.

Before the bomb the island traditionally has been seen as a low-cost holiday destination for young people. It draws about 200,000 Australia visitors a year, and there are usually some 20,000 Australians in Bali at any one time. The immediate impacts on the tourism industry in Bali were severe as the terrorist attack prompted a mass exodus of foreign tourists from Bali.

Estimates indicate that immediately after the attack of 12 October, Bali's tourism industry virtually collapsed: Airlines cancelled and re-routed a number of their scheduled flights; tourists went home or left to other nearby destinations such as Fiji and the Philippines. As a result, hotel occupation rates tumbled from a comfortable 70 per cent to less than ten per cent. In absolute terms, it can be estimated that from an average of 100,000 tourists present in Bali at any time, not more than 15,000 stayed on. Moreover, it can be assumed that the tourists who stayed on were of Indonesian origin as they represent 15 per cent of all visitors to Bali, and those who left were foreign tourists, leaving behind a devastated tourism economy, especially as far as foreign exchange is concerned.

An estimated 5.1 million tourists visited Indonesia in 2001, contributing 5.3 billion dollars to Indonesia's balance of payments (about 9.2 % of total exports). Most of these tourists appear to end up in Bali at one stage or other. Bali's Minister for Culture and Tourism estimates that the island's tourism economy employed 65% of the total labour force, i.e. 1.1 million of the 1.71 million people in employed in Bali. The hotel and restaurant sector alone produced in 2000 a share of 21% GDP and probably employed an even higher share of the labour force. An estimated drop of 80% in tourism activities would therefore put a total number of close to 300,000 people out of employment in the hotel and restaurant sector, and three times as many in the whole tourism economy including the supply sectors. It is hoped that the initial wave of tourist cancellations are short lived so that further jobs are not lost.

As Bali is considered a magnet for tourists to come to Indonesia and also visit several other parts of the country, the Minister for Culture and Tourism estimates that as many as 2.7 million people may be out of their jobs across Indonesia soon if tourism does not recover quickly. He said that Tourism employed more than seven million people in the South East Asian and last year brought in 4.7 billion dollars in revenue, or about 10 percent of Indonesia's GNP.

The loss of foreign tourists from developed nations especially Australia, UK, USA and Japan will cost the islands tourist economy dear. Visitors from these four nations accounted for 20% of the total number of visitors to Bali before the bomb and it remains to be if these visitors will be attracted back in the numbers in which they visited before. A study by Nottingham University projected that, "as a result of a suspected fall in tourism, the study predicts that employment will fall by 21.4 per cent in the first year, 12.8 per cent in the second and 4.2 per cent in the third." This though is dependent upon the bomb only having a three year affect on the tourist industry.

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The terrorist attacks on New York and Bali have had catastrophic affects on their respective economies and especially on their tourist industries. The September 11th attacks led to an economic slump which, coupled with security concerns and the war on terror, had an adverse on affect on the Global Tourism Industry. The Bali bomb just over a year later didn't have the same impact has the September 11th attacks on the global economy in general, but it have a adverse affect on the tourist industry that was showing signs of recovery.

The tourist industry in Bali however will I believe take much longer than New York's tourist industry to recover. New York is much more able to remarket itself as a tourist destination because of the financial muscle that its various different levels of government and companies possess. New York can point to the new security measures in place to reassure potential visitors that New York is once again a safe place to visit. Bali though is situated in a volatile Muslim country as shown by conflicts in neighboring islands such as East Timor. The whole economy in Bali virtually geared around tourism and its main selling point was that it was a safe island paradise, a world away from the troubles of the rest of the globe. This illusion has now been banished forever and therefore the island will have lost forever its main appeal for attracting foreign tourists.

Another issue for Bali and other countries in South East Asia is that many western governments including the UK and US, still caution against travel in these areas. They still see these countries as at particular risk of attack, although neither government has issued travel warnings to developed nations even in the wake of the Madrid bombings. This warning was recently issued by the British Foreign Office, "We advise against all non-essential travel to Indonesia. There is a high general threat from terrorism in Indonesia. We continue to receive information that indicates terrorists are planning further attacks, including against Westerners, throughout the country. If you are already in Indonesia you should consider leaving if your presence is not essential. If you choose to remain in Indonesia you should exercise extreme caution in public places such as, but not limited to, hotels, nightclubs, bars, restaurants, shopping malls, outdoor recreational areas, public and commercial buildings, transport terminals, and places of worship. Until warnings such as these are lifted then the Tourist Industry in Bali will continue to struggle to recover.

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