Impact of terrorism on tourism industry


Pakistan is a developing country and it is after its freedom trying his best to grow its economy in every section. Like all other industries, Pakistan, tourism industry is in growth stage and there is a need to promote Pakistan as a tourist destination but since last few years tourism industry had to suffer a lot and terrorism is a major factor causing the fall of tourism industry In pakistan. Terrorism has gradualy effected the economy of whole world but developed countries are more strengthen to recover it back but countires like Pakistan needs extra steps to take to get back on the track.


The scope of the research is tourism industry in Pakistan in which the internal situation and circumstances would be analyzed by discussing the imapcts of terrorism on the tourism industry.


  • Tourism is a service based industry comprising a number of tangible andintangible components. The tangible elements include transport, foods andbeverages, tours, souvenirs and accommodation, while the intangible elementsinvolve education, culture, adventure or simply escape and relaxation.
  • Occupation of providing local services such as entertainment, accommodation and catering for tourists
  • An industry created by travelers.

World Tourism Industry

Travel and tourism industry is one of the world's largest industries with annual revenueapproaching $500 billion (Source: World Tourism Statistics 2000-2002, 29-01-05) andalso one of the most fragmented. From 1950 through 1998 international tourist arrivals haveincreased 25 fold. The corresponding receipts from tourists have increased 211 fold.

International tourism has increased exponentially since 1950.

Table 1 (above) shows the arrivals, receipts, and the corresponding index numbers in terms of10-year intervals starting from 1950. With this growth the industry has become significantly more competitive, and the marketing role of National Tourism Organizations (NTOs) has taken on added significance. (Source: World Tourism Statistics 2000-2002, 29-01-05)

Status and Trends of Global Tourism Growth

In 2000, global visitors totaled 698.8 million (an increase of 7.4% over 1999), generatingtourism receipts of US$476 billion (up 4.5%). Europe has maintained its position as themost popular region with the biggest market share of 57.7% of total arrivals (403.3million visitors). This was followed by the Americas (market share of 18.5%) and AsiaPacific (16.0%). If, however, South Asia and the Middle East were to be considered aspart of the Asia Pacific, the region would become the second biggest market with a19.8% share. (Source: Asia Cooperation Dialogue on Tourism, 10-01-05)

Factors in Tourism Growth

Increasing leisure time: In 1936, the International Labor Organization convention provided for one week's leave per year for workers in developed countries. In 1970, thiswas expanded to three weeks, and in 1999 to four weeks. (Source: WorldTourismStatistics 2000-2002, 29-01-05)

Increased disposable income: Spending on leisure in the UK has risen from 9 per cent ofhousehold income in 1978 to 17 per cent in 1998 (Tearfund: Tourism: An Ethical Issue,2000). In 1998-99, the UK Family Expenditure Survey found UK households spent £936a year on holidays: 4.5 times more in real terms than 30 years previously. (Source: WorldTourism Statistics 2000-2002, 29-01-05)

Falling real cost of air travel: Between 1978 and 1998, the real cost of air travel fell by35 per cent (Air Travel Association). A thousand miles of air travel now requires 61 hours less work than it did a generation ago. (Source: World Tourism Statistics 2000- 2002, 29-01-05)

Tourism in South Asia

South Asia felt the impact of the increased tension between India and Pakistan and the war in Afghanistan. Arrivals were down 4.5%, with Nepal, Pakistan, and Sri Lanka suffering the biggest declines.

Components of Tourism Industry

Though there are many definitions for tourism, it could be simply defined as a "travel andstay of a non-resident". In order to travel to a particular area there must be a reason. Forexample a person may travel for leisure, business, visiting friends and relatives, healtheducation etc. He/she chooses a destination for one or the other reason. Transport isnecessary to travel and accommodation to stay at the destination (Source: InformationTechnology: Its use in tourism industry, 7-01-05). So, tourism as an industry has threemajor components:

  • Attraction
  • Accommodation, and
  • Transport

In the developed world, today, all these components have reached at their peak in satisfying their customers' needs aided by modern technology. These components havealso came a long way to offer a range of products which suit the needs of multitudetourists around the world, and are still working hard to cater to an ever changing test ofthem. (Source: Information Technology: Its use in tourism industry, 7-01-05)

Perspectives of Tourism

Any attempt to define tourism and to describe its scope fully must consider the variousgroups that participate in and are affected by this industry. Their perspectives are vital tothe development of a comprehensive definition. The four different perspectives oftourism can be identified:

  1. The tourist. The tourist seeks various psychic and physical experiences and satisfactions. The nature of these will largely determine the destinations chosen and the activities enjoyed.
  2. The businesses providing tourist goods and services. Businesspeople see tourism as an opportunity to make a profit by supplying the goods and services that the tourist market demands.
  3. The government of the host community or the area. Politicians view tourism as a wealth factor in the economy of their jurisdictions. Their perspective is related to the income their citizens can earn from this business. Politicians also consider the foreign exchange receipts from international tourism as well as the tax receipts collected from tourist expenditures, either directly or indirectly.
  4. The host community. Local people usually see tourism as a cultural and employment factor. Of importance to this group, for example, is the effect of the interaction between large numbers of international visitors and residents. This effect maybe beneficial or harmful or both.

There are various types of tourism, such as:

  1. International tourism:
    1. Inbound tourism: Visits to a country by non-residents
    2. Outbound tourism: Visits by residents of a country to another country
  2. Internal tourism: Visits by residents of a country to their own country
  3. Domestic tourism: Internal tourism plus inbound tourism (the tourism market of accommodation facilities and attractions within a country)
  4. National tourism: Internal tourism plus outbound tourism (the resident tourism market for travel agents and airlines)
  5. International tourism: Inbound tourism plus outbound tourism

Traveler Terminology for International Tourism

Underlying the conceptualization of tourism is the overall concept of traveler, defined as"any person on a trip between two or more countries or between two or more localitieswithin his/her country of usual residence." All types of travelers engaged in tourism aredescribed as visitors, a term that constitutes the basic concept of the entire system oftourism statistics. Visitors are persons who travel to a country other than the one in whicthey generally reside for a period not exceeding twelve months, whose main purpose is other than the exercise of an activity remunerated from within the place visited.

Tourist Suppliers and Activities

A tourist industry can be described as shown in figure below.

The diagram above illustrates the structure of the international tourism industry; the makeup of domestic tourism is very similar. The role of intermediaries between the customerin the originating market and the supplier of the various products and services in thedestination is of significance for both independent and packaged travel. (Bennett, O; Roe,D; Ashley, C; Sustainable Tourism and Poverty Elimination Study)

Tourism is often seen as an industry where foreign interests dominate. Yet this is a misrepresentation in many ways. Overall tourism is characterized by small and mediumsized businesses. The major players are typically:

  • Tour operators in originating markets. This applies to Europe, Canada and Japan. Large companies are less characteristic of other outbound markets. These tour operators will work with ground handling companies in the destination, who may devise and set up all the details of the package and the foreign company's role may be only to market that product in the originating market. Such ground handling companies are typically small and are often locally owned;
  • International transport companies, primarily airlines, cruise companies and car rental. In Europe and Canada airlines are often linked with the tour operator, with the tour operator owning an airline and frequently travel agencies as well, the latter in order to secure distribution for their products. Car rental companies are normally franchise arrangements with the actual business being locally owned and operated;
  • International hotel companies. However, these chains are relatively poorly represented in developing countries and even when they are, the hotel is commonly owned by local interests. The role of the international hotel company is limited to management, typically on a 10 to 25 year management agreement which allows the management company to exit e.g. if losses are being incurred. There are locally owned regional and national hotel groups including in India, East and Southern Africa.(Bennett, O; Roe, D; Ashley, C; Sustainable Tourism and Poverty Elimination Study)

Categories of Visitors

Visitors are subdivided into two categories:

Same-day visitors: visitors who do not spend the night in a collective or private accommodation in the country visited: for example a cruise ship passenger spending four hours in a port.

Tourists: visitors who stay in the country visited for at least one night: for examples, a visitor on a two-week vacation.There are many purposes for a visit, notably pleasure, business, and otherpurposes, such as family reasons, health and transit.

International Regulatory Bodies

There are numerous trade associations within tourism representing different componentsof the industry, mainly national or local in character. Among the international bodies arethe:

  • World Tourism Organization (WTO). Based in Madrid, the WTO is a United Nations agency which has governments as members. The membership is biased towards the developing world. The WTO has a Business Council with a modest private sector membership.
  • World Travel and Tourism Council (WTTC), an organization of Chief Executives of large travel related multi-national companies which have beenactive in promoting environmental responsibility via Green Globe. This is now a separate for profit organization.
  • International Hotel and Restaurant Association (IHRA) based in Paris with a membership of national associations, individual operators and hotel schools, and the International Hotels Environment Initiative (IEHI), a non profit program of the Prince of Wales Business Leaders Forum, headquartered in London.
  • Pacific Asia Travel Association (PATA) which is a distinctive body in that it is a regional organization with an extensive membership drawn from both the public and private sectors. There are other regional organizations such as the Caribbean Tourism Organization and the Regional Tourism Organization of Southern Africa, but these tend to driven more by the public sector rather than the private sector. (Bennett, O; Roe, D; Ashley, C; Sustainable Tourism and Poverty Elimination Study)


Travel & Tourism Consumption represents the value of products and services that havebeen consumed by visitors. It is the basic demand-side aggregate used to construct anexplicitly defined production-side 'industry' equivalent for comparison with all otherindustries.

Travel & Tourism Consumption includes:

  • Personal Travel & Tourism, more formally known as consumer expenditures, which captures spending by economy residents on traditional Travel & Tourism services (lodging, transportation, entertainment, meals, financial services, etc) and goods (Durable and Nondurable) used for Travel & Tourism activities.
  • Business Travel by government and industry, which mirrors Personal Travel & Tourism's spending on goods and services (transportation, accommodation, meals, entertainment, etc), but represents intermediate inputs used in the course of business or government work.
  • Government Expenditures (Individual) by agencies and departments which provide visitor services such as cultural (art museums), recreational (national park) or clearance (immigration/ customs) to individual visitors.
  • Visitor Exports, which include spending by international visitors on goods and services.Travel & Tourism Demand builds on Travel & Tourism consumption to include Travel &Tourism products and services associated with residual components of final demand. It isused to construct a broader 'economy wide' impact of Travel & Tourism.The residual elements of Travel & Tourism demand are:
  • Government Expenditures (Collective) made by agencies and departments associated with Travel & Tourism, but generally made on behalf of the community at large, such as tourism promotion, aviation administration, security services and resort area sanitation services.
  • Capital Investment by Travel & Tourism providers (the private sector) and government agencies (the public sector) to provide facilities, equipment and infrastructure to visitors.
  • Exports (Non-Visitor) which include consumer goods sent abroad for ultimate sale to visitors (such asclothing, electronics or petrol) or capital goods sent abroad for use by industry service providers (such as aircraft or cruise ships). By employing input/output modeling separately to these two aggregates (Travel & Tourism Consumption and Travel & Tourism Demand), the Satellite Account is able to produce two different and complementary aggregates of Travel & Tourism Supply: The Travel & Tourism Industry and the Travel & Tourism Economy. The former captures the explicitly defined production-side 'industry' equivalent, direct impact only, for comparison with all other industries, while the latter captures the broader 'economy-wide' impact, Direct and indirect, of Travel & Tourism. Through this process, the Satellite Account is also able to determine that portion ofsupply, which it Imports from abroad. Next, the satellite account breaks down bothaggregates of supply (Industry and Economy) into the direct and indirect impacts ofGross Domestic Product (GDP), the main escalator of economic production, as well asthe various components of GDP (Wages & Salaries, Indirect/Transaction Taxes,Operating Surplus, Depreciation and Subsidies).Beyond the regular TSA accounts, aseparate analysis is also provided of Personal Income Taxes paid by Travel & Tourismgenerated employment and Corporate and Property Taxes paid by Travel & Tourismcompanies. Finally, one of the most important elements of the Travel & Tourism SatelliteAccount is the Employment results, which can now be quantified for the basic Travel &Tourism Industry and the broader Travel & Tourism Economy.
  • T&T Industry Employment generally include those jobs with face-to-facecontactwith visitors (airlines, hotels, car rental, restaurant, retail, entertainment,etc).
  • T&T Economy Employment include T&T Industry \ Employment plus those aceless jobs associated with: Industry suppliers (airline caterers, laundry services, food suppliers,wholesalers, accounting firms, etc).
  • Government agencies, manufacturing and construction of capital goods and exported goods used in Travel & Tourism.
  • Supplied commodities (steel producers, lumber, oil production, etc).

Economic Significance of Tourism to Developing Countries

Developing countries currently have only a minority share of the international tourism market (approximately 30 per cent) but their share is growing. International tourism arrivals in developing countries have grown by an average of 9.5 per cent per year since1990, in aggregate across developing countries, compared to a growth of 4.6 per cent inarrivals worldwide. The tourism industry makes important contributions to the economiesof developing countries, particularly to foreign exchange earnings, employment, andGross Domestic Product (GDP). This is shown in Table 3 below. On average,international tourism receipts account for around 10 per cent of export revenues ofdeveloping countries. Tourism's contribution to GDP varies from 3-5 per cent in Nepaland Kenya to 25 per cent in Jamaica; contribution to employment is estimated at 6-7 percent in India and South Africa. (Bennett, O; Roe, D; Ashley, C; Sustainable Tourism andPoverty Elimination Study)

The economic significance of tourism varies greatly from country to country, with thoseeconomies most highly dependent on tourism tending to be small island states. In Fiji, forexample, tourism is the largest source of foreign exchange and the most importantcommercial source of employment, providing over 26 per cent of export revenue andsome 16 per cent of GDP. (Bennett, O; Roe, D; Ashley, C; Sustainable Tourism andPoverty Elimination Study)

Tourism data does not provide the full picture of its economic significance. Statistics cover the contribution of international tourism to national GDP. They hide the significance of domestic tourism (and may under-estimate regional tourists traveling byland), and the importance of tourism to a local economy. For example, tourism accountsfor approximately 0.8 per cent of GDP in India, but it has been estimated that tourism(domestic and international) accounts for approximately half of economic activity in thehill region of Uttar Pradesh, popular for pilgrim trails. (Bennett, O; Roe, D; Ashley, C;Sustainable Tourism and Poverty Elimination Study) groups speaking over 20 different languages and wearing distinctive costumes, but allunited by the Islamic faith. (Shaw, I; 1996)

The land of the Pur (as the Urdu name Pakistan translates into English) is strategicallyplaced at the crossroads of Asia, where the road from China to the Mediterranean meetsthe route from India to Central Asia. For thousands of years, this junction has been amelting pot of diverse cultures, attracting traders and adventures, pilgrims and holy men. (Bennett, O; Roe, D; Ashley, C;Sustainable Tourism and Poverty Elimination Study)

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!