Tourism, Travel and 9/11

Introduction

On September 11, 2001, a well planned and a devastating attack was directed to the United States of America. An Islamic extremist group called al Qaeda was responsible for these attacks. These attacks were a blow to the economic and the business fabric of the U.S., and as a result, of the world.

Despite the fact that the U.S. economy was slowing in the months prior to this incident, the consequences of the terrorist act tipped the economy further into depression. The tourism and the travel industry were among the severely affected by September 11, but the industries are recovering.

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Background information about the disaster

The terrorist attacks which took place on September 11, 2001, usually referred to as the 9/11 attacks, were a sequence of attacks in which suicide bombers driven by religious fundamentalism and the hatred for the U.S., targeted the country’s citizens. That day, nineteen terrorists linked to the al Qaeda terrorist organization hijacked four commercial planes and every team was composed of an experienced pilot.

The pilots of two of these airlines headed them for the Twin Towers in New York. The third airline was directed towards to the Pentagon while the fourth one was crashed into a field in Pennsylvania. Because of this disaster, 2973 individuals lost their lives and no one knows the whereabouts of twenty-four individuals until today.

Economic effects arising from 9/11

Major economic effects were felt after the 9/11 suicide attacks. The initial shock made the worldwide stock markets to drop significantly. The opening of the New York Stock did was hindered after the first attack, and activities for the day were postponed after the second attack.

The stock exchanged remained closed for a week. The London Stock Exchange and others were also closed. Gold prices, oil prices, and oil prices all spiked upwards. The Federal Reserve increased its lending to financial institutions in the U.S. to undertake uncleared credit payments.

Other sectors of the economy such as the insurance, agriculture, small businesses, and airlines were also affected. The insurance industry was severely affected following September 11 attacks. This is because of the huge costs involved and the unexpected change of events. The high number of deaths and extensive damage to infrastructure resulted in a massive infrastructure/casualty claim in history. The loss was approximated to be $40 billion.

Consequently, shares of most insurance companies reduced by over ten percent. Prior to 9/11, the agricultural sector was starting to pick up from years of low returns. However, in the aftermath of 9/11, the sector experienced major losses due to delayed deliveries into both the domestic and the international market.

The revenues of the agricultural sector are largely dependent on the quantity of exports made and the cost of inputs such as fuel and fertilizer. The changing geopolitical situations in the aftermath of the suicide attacks significantly affected the U.S. agricultural sector.

The September 11 catastrophe devastated up to 18,000 businesses, a significant number being small businesses, which were situated in and around World Trade Center. In the aftermath of the incident, government actions, for example, closure of airports, and consumer reactions, for example, reduced travelling worsened the condition of the vulnerable small businesses. Small businesses have insufficient cash reserves and are especially vulnerable to shocks and losses as opposed to large companies.

Effects of 9/11 on tourism and travel industry

The use of civilian airplanes as assault vehicles to cause destruction on the U.S. has no precedent in the history of the airline industry. That is why their use shook the confidence of many individuals regarding air travel (Harris, para.1; Reuters). An increasing number of visitors started to avoid popular tourist destinations as most of them became too frightened to travel.

Many tourists became cautious of busy places like theme parks and big cities. Following the attacks, a large number of travelers took swift action to cancel their flights while others made up their minds to postpone big trips. The September 11 affected the tourism and the airline industry in the U.S. and around the world as people became too frightened to board an airplane and travel (Cole, 54; Shackley, 120).

The tourism industry in Britain, for example, was affected since travelers did not want to go to the country for fears that it was the next terrorists’ target. Hotel bookings in Britain recorded a sharp drop in attendance and the visits to the country’s local attractions reduced significantly. This is because individuals usually do not want to travel to places where can be targeted by terrorist.

The demand by travelers for hotel rooms and a number of other travel-related services plummeted considerably. Many travel agencies had to deal with situations when the supply far exceeded the demand. For instance, the aviation industry had to tackle the issue of many empty seats on its flights by lowering both the price and the supply of their product. Therefore, the industry strategized to lower the price that passengers pay per ticket and reduce the number of air travels.

Cutting back on supply and price meant that the aviation industry required less labor. The Air Transport Association (ATA) estimates that the airline industry lost $1.4 billion in returns when commercial flights were cancelled for four days after the attacks due to security reasons.

As a result, the industry had to lay off a good number of its employees (Eaton, para 12; Bonham et al.). During the first one hundred days after 9/11, 273,000 jobs were lost and one year later, over 359,000 employees were dismissed from their positions throughout the United States.

A number of airline and tourism companies made their workers redundant offered them vacations without proper payments. This is the outcome of the airline and tourism industries not making any profits after the terrorist attacks (Loose, para.1; Homan).

There was thirty percent reduction in holiday bookings and flight consolidators had to deal with sixty percent reduction in bookings. For example, the British Airways laid off 7,000 staff members and reduced the provision of its services by ten percent. Out of these number, 5,300 employees who were serving as cabin crew or support staff members were dismissed from their positions.

With a reduced amount of disposable income, the laid-off employees were obliged to cut down on their spending. The demand for other products and services were also reduced. This trend set off similar spirals in other industries. Alternatively, the workers who were not dismissed were frightened of being dismissed, so they too cut down on their expenses.

The aviation industry lowered the demand for the different products they required. For instance, the demand for in-flight meals and airline equipment drastically reduced. Thus, the poor performance of the aviation industry affected other related industries in the sector.

For example, the company Rolls Royce that produces engines for airplanes axed a number of its employees after 9/11 because many airlines were not introducing new airplanes into their fleet.After 9/11, the various travel markets were affected in varying degrees (Sharpley, 20). To begin with, the number of tourists coming to the United States reduced by more than five million in 2001, and expenditure reduced by up to $ 10 billion.

Generally, in the short term international trips were impaired more than domestic trips as most people restricted movements to and from the U.S. Many people started to prefer short-haul travel destinations to long-haul travel destinations because of security reasons. People kept off from travelling to and from terrorism prone areas such as the Middle East and some parts of Asia.

The tragedy also had consequences on the different travel segments. The business travel and meeting markets experienced instant distractions. This is because the months of September and October are usually the high seasons for such trips.

Tourist hotels that mainly depend on fly-in customers were mostly affected in direct comparison to hotels that depend on drive-in customers. International leisure travel drastically reduced especially among senior citizens who are more susceptible to terrorist threats. “Ridiculously high” cancellations of bookings were made during the months of September and October following the attacks.

Domestic leisure travel during the end-year vacation was affected to a smaller extent as more people opted for shorter destinations. Leisure trips to local and nearby “winter sun” destinations and ski destinations were not severely affected since they are regarded as less prone to terrorist attacks.

On the other hand, the nature of tourism since the terrorist attacks has transformed in a number of subtle but considerable ways. As an example, people transformed their liking for food. Many Americans went back to the “comfort foods” and desired home-style feel-good dishes. This can be attributed to the unwillingness of most Americans to fly outside the country. Many people started to drive to neighboring cities instead of flying overseas.

The road to recovery

After being severely affected by 9/11, the travel and the tourism industries are on the road to recovery. Based on past experiences, the industries adopted belt-tightening measures to drive them through the extremely adverse situation they were facing. In as much as the laying-off of employees was meant to cut airline operating costs, a number of them adopted winning strategies, for example, differentiating their products from the competition and embracing eDistribution techniques.

Many airline and tourism industries strived to stand out from the competition by having both unique products and prices in the market. They achieved this by re-assessing their distribution links, focusing on non-GDS distribution, offering unique products and innovative products, focusing on drive-in traffic, and working with travel agents.

In embracing eDistribution, tourism and travel industries were able to save costs, penetrate new markets, and attract a wide variety of customers. This strategy uses the Web applications and the internet as the major channels for distribution.

The industries have practiced eDistribution by having online booking services for their customers, offering hotel packages, supporting affiliate programs, and allowing hotel consolidators to distribute their inventories. On a positive note, the U.S. flourishes on adversities. The country is composed of positive thinkers and forward-looking people who are ready to find solution to problems (Starkov, para.11).

The unfortunate events of 9/11 aroused a national psyche among the tourism and airline industries all over the country to work hard to overcome the devastating effects of the attacks. The industries demonstrated extraordinary resilience and determination in trouncing over the negative effects of the disaster. As a result of smart promotion strategies and appropriate price polices, the industries are now on the road to recovery.

Since September 11, sufficient resources have been allocated towards enhancing the security of the U.S. The Department of Homeland Security was created to achieve this goal. This re-arrangement of the structure of the U.S. government helped to alleviate some of the security concerns that passengers had before.

After the attacks, the airline and the tourism industries have come to grips with reality. The industries have implemented a number of recovery strategies over the years to ensure that they get back to their feet. The requirements and the expectations of individuals changed following the attacks. The industries have adopted major initiatives to meet the new standards of their customers. The security in and around airports, especially in the airplanes, have been enhanced.

The confidence of the passengers is slowing coming back due to the increased security at the airports advocated by the travel agencies. As an example, most airlines are now having police officers or some sort of security on board to prevent the re-occurrence of such a catastrophe witnessed on September 11. The cockpits of most aircrafts are nowadays made of strong materials and the entrances to the cockpits are not easily accessible to unauthorized persons.

In the August prior to September 11 attacks, the aviation industry was in its peak season. The industry recorded a very high number of passengers when close to sixty-five million passengers took to the air. After the suicide attacks, that number dropped significantly.

It took three years, until July 2004, to have the same number and eventually exceed the August 2001 levels. However, the number of available seats, which indicates the capacity of an industry, reached ninety-eight percent in July 2004 of its pre 9/11 levels. By July 2005, the number of people who had travelled by air was seventy-one million, surpassing the pre 9/11 levels

Conclusion

The long-term effects of these attacks are still difficult to know and may probably remain unknown until this act of violence is over. The buildings that were destroyed in New York can be rebuilt, even though it will take a long time, but the rebuilding of the confidence of the people regarding travelling by air can take even more time and this may not be achieved in some individuals.

In an important sense, September 11 indicates the culmination of an era, since it exposes that the U.S. is susceptible to terrorist attacks within its borders. One of the most relied upon means of transportation was used to wreak havoc in the U.S.

The net effects of these attacks have been overwhelming to both the tourism and the travel industry even with the support that the government has been giving them. However, the industries responded with unbelievable courage to recover from the impacts of catastrophe.

Works cited

Bonham, Carl, et al.”The impact of 9/11 and other terrible global events on tourism in the United States and Hawaii. The Journal of Travel Research 45.1 (2006): 99110. Print.

Cole, Stroma. Tourism, culture and development: hopes, dreams and realities in East Indonesia. Clevedon: Channel View Publishing, 2007. Print.

Eaton, Leslie. “Attack gave a devastating shove to the city’s teetering economy.” The New York Times. 8 Sept. 2002. Web. 10 March 2010.
http://www.nytimes.com/2002/09/08/nyregion/08ECON.html

Harris, Tom. “How recessions work.” Getstuffworks. 15 January 2002. Web. 10 March 2010. http://money.howstuffworks.com/recession7.htm

Homan, Anthony. “The impact of 9/11 on the persistence of financial return volatility of marine firms.” Eastern Economic Journal 35.1 (2009): 71-83. Print.

Loose, Cindy. Insta-CoGo: “Where have all the tourists gone?” The Washington post. 11 March 2008. Web. 10 March 2010.
http://voices.washingtonpost.com/travellog/2008/03/where_have_all_the_tourist_go.html

Reuters, Thomson. “Terrorism and Political violence.” Journal citations report 22.4 (2008): 23-34. Print.

Shackley, Myra. Atlas of travel and tourism development. Amsterdam: Butterworth-Heinemann, 2006. Print.

Sharpley, Richard. Travel and tourism. Thousand Oaks, California: Sage Publications, 2006. Print.

Starkov, Max. “Terrorism: Impact on travel and hospitality.” M–travel.com. Hospitality eBusiness Strategies. 19 Sept. 2001. Web. 10 March 2010.
http://www.mtravel.com/news/2001/09/terrorism_impac.html

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