"Forecasting Tourism Post 911 New World or More of the Same" Carl Bonham, Christopher Edmunds, and J

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"Forecasting Tourism Post 9/11 - New World or
More of the Same" Carl Bonham, Christopher
Edmunds, and James Mak
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The Impact of 9/11 and Other Terrible Global
Events on Tourism in the U.S. and HawaiiCarl
Bonham, Christopher Edmunds, and James Mak
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Tourism The Fragile Industry

• Safety is a paramount concern of most travelers
• Terrorist incidents and other threats
• Reduce peoples propensity to travel
• Induce travelers to change plans and visit
  safe destinations
• Major events affecting international travel
• Terrorist attacks of September 11, 2001 (9/11)
• Coalition Invasion of Afghanistan October, 2001
• First Bali bombings October, 2002
• Perfect Storm2nd Gulf War and SARS Spring, 2003
• Madrid train bombings March, 2004
• Indian Ocean Tsunami December, 2004
• London Bombings July, 2005
• The Evil Sisters Aug.-Sept, 2005
• Second Bali bombings October, 2005

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Summary

• Examine the behavior of both international and
  domestic tourism flows since 9/11
• Argue that the typical industry definition of
  recovery is incomplete
• Suggest that U.S. visitor have substituted
  domestic travel for international travel
• At the same time, international visitors appear
  to be substituting other destinations for travel
  to the U.S.
• These effects are demonstrated for the case of
  travel to Hawaii
• End with possible explanations and policy
  prescriptions

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Schematic representation of tourism downturn and
recovery
Number of Tourist Arrivals
Historical Trend
Recovery
Losses associated with the shock
Pre-shock level of tourism
Return to pre-shock level
Catch-up
External Shock Leads to Contraction
Time
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Terrorism, Other Incidents, and Tourist Arrivals
in U.S.
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Table 1. Domestic and Foreign Travel in the U.S.
2000-2004
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Table 2. Domestic and Foreign Travel Spending in
the US 2000-04
Note Real expenditures were calculated using the
travel price index developed by the Travel
Industry Association of America. Source Spending
data from the TIA (2005).
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Table 3. Direct Tourism Related Sales and Tourism
Employment in the US 2000-04
Sources Direct sales and employment data from
Bureau of Economic Analysis (2005) travel price
index used to deflate direct sales obtained from
the Travel Industry Association of America (TIA)
CPI-U obtained from the Bureau of Labor
Statistics (2005).
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Total U.S. Overseas Departures
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Travelers Substitute

• U.S. share of total international arrivals has
  fallen to a low 5.9 percent (from 9.4 in 92).
• U.S. residents have curtailed overseas travel.
• It appears that Americans are choosing domestic
  destinations in lieu of foreign travel.
• Hawaii offers a clear example benefiting from a
  surge in domestic trips despite the persistent
  weakness in international visitors.

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Hawaii Share of Total U.S. Departures
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Terrorism, Other Incidents, and International
Tourist Arrivals in Hawaii
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Terrorism, Other Incidents, and U.S. Tourist
Arrivals in Hawaii
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Where Would We Be w/o 9/11

• Using Historical Trend Lines is clearly
  unsatisfying
• Consider model based predictions of no 9/11 path
• Make use of model developed using data from
  19801-20012
• Compare out of sample dynamic forecasts with
  actual paths

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Hawaii Tourism Model
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U.S. Visitors to Hawaii Actual vs Forecast
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Japanese Visitors to Hawaii Actual vs Forecast
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Hawaii Visitor ArrivalsActual and Predicted
Growth
Subjectively Adjusted Forecasts from Nov.
2001 2001 -3.9 -15.0 2002 2.5
0.2 2003 5.5 11.7
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Forecasting Post 911
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Explanations Policy Conclusions

• Ease of travel to the U.S. and the hospitality of
  the country to foreign visitors.
• Foreign countries have eased their inbound travel
  restrictions in order to promote international
  travel to their countries
• Schengen Visa enables foreign visitors from
  non-EU countries to obtain a single visa for
  travel to all EU countries.
• Several ASEAN countries now allow visa free entry
  for each others nationals
• Policy and Prediction
• U.S. Travel policy must find a balance between
  security needs and increasing the transactions
  costs foreign tourists face
• The next U.S. recession will be even more
  damaging to U.S. tourism