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Cycles of war, terror, and peace: determinants and management of crisis and recovery of the Israeli tourism industry.

Since 1967, Israel has witnessed a growing demand by the international tourism market for its unique mix of tourist attractions. Consequently, over the years, tourism has become Israel's leading exporting service industry, ameliorating the country's acute balance of payments and unemployment problems. Nevertheless, the shape of this long-term trend cannot be characterized by steady growth, as a result of several wars and acts of terrorism.

In between periods of security unrest, and especially since the Middle East peace talks began in 1991, Israel has witnessed an increase in international tourist arrivals. The performance of the Israeli tourism industry during these relaxed periods proves that Israel has the potential to become a leading tourist destination in the Middle East. But are peace and geopolitical stability the only prerequisites for ensuring long-term success of previously disrupted tourism industries? Or perhaps achieving such a goal is attainable only on the basis of carefully implemented crisis management policies. As yet, these questions have not been systematically examined and no study has appeared with integrated policy recommendations and crisis management guidelines.

Hence, using the example of the Israeli tourism industry, the aim of this article is to

1. characterize the determinants of the destructive mechanism involving periods of decline and recovery of Israel's tourism industry,

2. critically evaluate the response and effectiveness of policies and measures taken by both the Israeli government and the private sector, and

3. based on the Israeli experience, develop guidelines on how governments and the private sector should manage tourism crises and tourism recovery.

THEORETICAL FRAMEWORK

Steps to put the issue of tourism and security on research and policy-making agendas have been taken, since the mid-1980s, as a result of the terror activity that affected Western Europe and some Mediterranean countries (D'Amore and Anuza 1986; Reeves 1987; Ryan 1991). The global tourism consequences of the 1991 Gulf War have initiated further academic discussions on this issue (Hollier 1991; Ryan 1993; Mansfeld 1996). In 1995 an international conference on tourism, safety, and security was held in Ostersund, Sweden. There, for the first time, the relationship between tourism and security and safety was discussed academically on an international basis. The World Tourism Organization (WTO) has also shown an interest and commitment to the problem of safety and security. In 1996 it published a safety and security guide for tourism decision makers but failed to address the issue of terrorism and wars and their devastating effects on the tourism industry (WTO 1996). The first attempt to incorporate both theoretical and applied aspects of such interrelations based on worldwide case studies was made by Pizam and Mansfeld (1996) in an edited volume Tourism, Crime and International Security Issues. This volume concluded that controlling a tourism crisis in the wake of security situations could be successful only if a comprehensive crisis management approach is implemented.

Several assumptions intensify the need to adopt such an approach. Many researchers have pointed out first the intense economic ramifications of wars and terrorism on the tourism industry of a given host country. They all seem to agree that long periods of decline and stagnation in tourist arrivals (as in Croatia or the northern occupied part of Cyprus), as well as frequent cycles of decline and recovery (as has happened in Israel, Egypt, Turkey, or Northern Ireland), cause detrimental economic impact (Enders and Sandler 1991; Enders, Sandler, and Parise 1992; Mansfeld 1994; Hall and O'Sullivan 1996; Sonmez and Graefe 1995; U.S. Department of State 1995, 1996; Aziz 1995; Wahab 1996).

Second, existing and newly emerging tourist destinations that represent unique and highly attractive tourist products are more likely to experience a rapid recovery from such crises. Examples of such relatively fast recovery and/or rapid development of tourism as a reactivating economic measure have been noted in Israel, Egypt, the Republic of Cyprus, Turkey, Albania, Jordan, and Mozambique. These short recovery periods can be explained by the growing generating markets' demand for (1) existing yet highly attractive destinations and (2) new and as yet "unexplored" destinations. This pressure has become so strong that tour operators and tourists alike were, with little hesitation, willing to replace their destination image from insecure to secure once the situation had calmed down (Malinovski, Backman, and Allen 1995; Weber and Vrdoljak-Salamon 1995; Hall and O' Sullivan 1996; O'Neill and Fitz 1996; Mansfeld and Kliot 1996).

Third, one of the main problems facing destinations that were hit by tourism crises resulting from security turmoil is the evolving negative image. Because tourists do not tend to thoroughly check the reality behind conveyed images, these images become highly biased and distorted. In some cases, as in Montenegro during the disintegration of the former Yugoslavia or in Cyprus during the 1991 Gulf War, even regions and countries that were not part of the conflict were assigned negative images. This spillover effect is damaging the tourism industry and must be dealt with as part of the crisis management process (Sonmez and Graefe 1995; Hall and O'Sullivan 1996; O'Neill and Fitz 1996).

Fourth, the anatomy of a tourism crisis in the wake of security situations is shaped by four main determinant categories:

1. Nature of the security situation

2. Characteristics of potential travelers

3. The characteristics of the affected tourism system

4. The kind of crisis-management measures taken by the affected destination

Each category is composed of various determinants that act as impact filters. As the effects of the security situation percolate through these filters, a given type of crisis emerges.

The impact of security events on a given destination is both unpredictable and highly differential. Its dynamics and outcomes may change over time as the security situation evolves. Therefore, it will be impossible to provide one course of action to deal with each type of security event. However, using the Israeli case, this article provides an analysis of the most crucial security events that have left their imprint on the Israeli tourism industry. This analysis will then be used to formulate guidelines and possible courses of action needed to control the effect of uncertainty and tourism cycles.

THE ISRAELI CASE

As previously indicated, since 1967 Israel has witnessed a fluctuating growth of its international tourism arrivals. These fluctuations reflected on the overall performance of the Israeli tourism sector.

As seen in Figure 1, six major cycles of tourism decline and recovery have occurred in Israel since 1967. Each cycle was a result of different security situations in terms of their nature, duration, severity, and geographical location. Consequently, the impact on the decline and the recovery of the tourism sector has also been variable (Mansfeld 1993). The analysis of such a wide array of causes and effects can thus serve as a useful lesson when further guidelines of crisis management will be discussed.

The "Six Day War" Cycle

The Six Day War in 1967 changed the face of the Israeli tourism industry and propelled it into a new era. As a result of this war, Israel has occupied territories, which included various important tourist attractions in East Jerusalem, the Sea of Galilee, the West Bank, the Dead Sea, and the Sinai shore of the Red Sea. This war coincided with a new boom in world tourism, thanks to the jet plane, which has become the preferred mass transit carrier of international tourism. The introduction of additional Israeli tourist attractions on one hand and the transportation revolution on the other acted together in bringing about a remarkable growth (56.4%) of the inbound tourist flow as early as 1 calendar year after the war had ended [ILLUSTRATION FOR FIGURE 1 OMITTED].

The expansion of Israeli tourist space, the decline in travel cost, the positive and safe image of Israel as a destination, and the lack of real competition among Near East destination countries all led to a growing demand by the international market to visit Israel. Thus, Israeli tourism expanded its infrastructure and capacity euphorically, believing that another crisis would not occur. This naive approach was accompanied by a lack of trend and market analysis of international tourism demand to Israel. Both the government and the private sector believed that visiting friends and relatives (VFR) demand based on the Jewish segment would be growing steadily and that in view of this increasing demand, there was no need to make significant investments in marketing campaigns. As tourism was perceived more as a stimulator for Jewish immigration than an economic benefit, the government was reluctant to allocate adequate budgets for the maintenance of the postwar success of the country's tourism industry. This euphoric and nonprofessional approach taken by all parties :involved in the Israeli tourism sector proved to be at fault when the Yom Kippur War crisis began.

The "Yom Kippur" Cycle

The 1973 Yom Kippur War between Israel, Egypt, and Syria and the following war of attrition between Israel and Syria, which lasted 9 months, caused the first traumatic tourism cycle. The political and economic ramifications of the 1973 war spilled far beyond the boundaries of the Middle East. In fact, this war triggered the first world oil crisis, which caused a sharp rise in oil prices and, hence, the cost of international travel. Consequently, global tourism suffered a major recession. For Israeli tourism, this recession meant 3 years of consecutive decline in tourists' arrivals [ILLUSTRATION FOR FIGURE 1 OMITTED].

It took Israeli tourism 3 years to fully recover from this traumatic crisis. Yet again, this recovery was not a result of a carefully planned and well-integrated crisis-management operation. As a result of this conflict, Israel had to deal with complicated problems that hampered a fast recovery of its inbound tourist flows. First, its image as a strong country and a safe tourist destination was shattered. Airlines rescheduled their Middle East services because of the rising insurance costs to what was categorized by insurance companies as a high-risk region. High insurance and oil prices also transformed Israel into an unaffordable and thus uncompetitive destination. Israel faced an urgent need to both reactivate its collapsing economy and reorganize its damaged defense force. Hence, the government's ability to deal with the consequent tourism crisis was highly limited, disorganized, and assigned a relatively low priority. As a result, many employees in the tourism industry became redundant, in some areas hotels were temporarily closed, and many lost their faith in the long-term stability of Israeli tourism. The evolving poor business climate had also influenced the willingness of transnational companies to invest in Israel. One would have expected that such damage to the Israeli tourism industry would convince decision makers to adopt long-term crisis-management policies. Unfortunately, this first major tourism crisis as a result of a full-scale Middle East war did not yield such awareness or action. Instead, Israeli tourism continued to improvise and wait for the end of this crisis.

The "Galilee Peace Operation" Cycle

Unlike the first two tourism cycles, the Galilee Peace Operation cycle was a result of terrorism rather than full-scale war. The year 1981 marked a growth in the intensity and frequency of Palestine Liberation Organization (PLO) attacks against Israeli border settlements in the north and against Israeli interests worldwide. These terror activities and their close media coverage led to another tourism crisis. Because most of the hostile activities were confined to the Israeli border with Lebanon, the initial decline in tourist arrivals was minimal (3.3%) [ILLUSTRATION FOR FIGURE 1 OMITTED]. The Israeli reprisals that started as an antiterrorist-confined measure soon evolved into a full-scale military invasion of Southern Lebanon in an attempt to damage the PLO terrorism infrastructure and capabilities. The extent of this operation and the duration of the conflict led to a further decline in inbound tourist flows. Despite a 2-year decline, once again no contingency plans were available and crisis-management decisions were taken ad hoc. No real cooperation between the private and public sectors was recorded during and after this crisis. As in the past, only after being pressured by the private sector did the government agree to allocate a limited supplementary marketing budget. Lack of dynamic analysis of tourism behavior in Israel's inbound market segments on one hand and the urgent need to reverse the decline situation on the other rendered this campaign highly inefficient.

Moreover, to turn Israel into an attractive destination again, there was a need to substantially reduce the overall cost of the trip to Israel. While hoteliers were cooperative in this respect, El Al, the national airline, utterly refused to cooperate. It continuously rejected any efforts by the Ministry of Tourism to deregulate the Israeli airline services and to liberalize the operation of charter airlines flying into Israel. This protective policy helped El Al, in the short run but hampered fast recovery of the Israeli tourism following this crisis.

The "Double Cycle" of International and Domestic Terror

The second half of the 1980s was characterized by frequent terror activity that spilled over from the Middle East to Europe. This wave of terrorism sparked when in 1985 PLO terrorists killed and threw overboard an American tourist on an Italian cruise ship, the SS Achille Lauro. This event was followed by the hijacking of the Transworld Airlines (TWA) jet in 1985, the subsequent hostage crisis in Beirut, and the Libyan-backed terrorist attacks on American interests in Europe in 1986. Although sporadic terror activities involving the PLO and Israel did take place in 1985-1986, these were overshadowed in this cycle by the terrorist activities outside Israel. Thus, the impact on tourism was global rather than local. Europe was declared a dangerous travel destination and Americans were strongly advised by the State Department to avoid it following the American bombing of Tripoli. As Israel managed to stay in the background of these events, in 1987 a major recovery of Israeli tourism took place, but not for long. Toward the end of 1987, the second half of this double cycle crisis began. It involved an uprising of the Palestinians living in the occupied territories against the ongoing occupation by Israel.

These events, known as the Intifada, were brought by worldwide news television to the homes of potential travelers to Israel in Europe and North America. The extent of the exposure, yet again, reversed the recovery trend. One would have expected that when tourism hit record lows, both the public and private sectors would join together during the early stages of the crisis and make every effort to minimize the damage and increase tourist arrivals once things calmed down. Unfortunately, this was not the case. It took a year into the Intifada until all the parties joined together to formulate their demands toward the government and draw contingency plans. Again, these delayed reactions were not based on an organized crisis-management approach and on lessons learned from similar earlier events. Thus, the accumulative decline of both the 1985-1986 events outside Israel and of the 1988 Intifada was a reduction of 35.3%.

The "Gulf War" Cycle

The immediate consequences of the i 990-1991 Gulf War on Israeli tourism were highly damaging, despite the fact that Israel's involvement in this conflict was totally passive. The 6 months of tension in the Middle East were enough to forestall tourism in this region. Thus, already in 1990, Israel lost 5.9% of its inbound tourist flow. During the first half of 1991, as a result of Iraqi missile attacks on Israel, this tourism crisis gained momentum causing an additional decline of 15.7% in tourist arrivals. Despite the overall decline of 21.6% in 1990-1991, this cycle ended with a 48.2% recovery trend in 1992.

Yet again, during this cycle, Israeli tourism was rescued, but not because of any integrated crisis-management policies. The recovery trend in this cycle was a result of the U.S. initiative in 1991 that brought the major antagonists involved in the Arab-Israeli conflict to peace talks in Madrid. Although at that time peace between Israel and the entire Arab world was still not within immediate reach, the Madrid event marked the start of a new era in Israeli and Middle Eastern tourism. Just by attending the various peace talks, the atmosphere in the entire region has changed dramatically. Recovery and prosperity of the tourism industry in Israel had turned it into a major economic force. The tourism product was upgraded and diversified, with a new infrastructure and superstructure being built. The government, together with local and foreign investment companies, transformed the industry into a leading export sector. However, neither the government nor the industry has learned from past experiences. The euphoric approach prevailed, and planning or preparation for the next crisis was not undertaken.

The "Terrorized Peace" Cycle

The peace process in the Middle East resulted in a constant growth in the number of international arrivals in Israel between 1992 and 1995. In 1995, tourist arrivals reached a record of more than 2.5 million visitors. Future prospects looked even better, until a series of terrorist attacks by Palestinians opposing the peace process struck at the heart of Israeli towns, damaging the tourism industry again. Furthermore, the controversy inside Israel about how much land for peace should be given up as part of the peace process led to the tragic assassination of Prime Minister Rabin. For the first time, potential travelers viewed Israel as an unsafe destination because of internal political conflicts as well. The Palestinian suicide bombings in Tel Aviv, the internal political violence within Israel, and the subsequent victory of the hard-line Likud Party caused a decline of 17% in tourist arrivals in 1996.

Again all parties involved in the Israeli tourism industry were slow in reacting to the coming crisis. Eventually, the private sector decided to act and organized all inbound tourism service providers into one task force body whose goal was to convince the government to allocate an additional budget for ad hoc marketing campaigns. Finally, after 18 months from the start of the crisis, the Ministry of Tourism decided to join forces with the private sector and allocated $28 million toward a marketing campaign to reactivate tourist flows to Israel.

This crisis was different in one respect from its predecessors. It seems that for the first time, the government understood the relationship between tourism and security situations. Today, Israeli public decision makers realize that without peace and stability even during important events such as the celebrations of Israel's 50th anniversary and Jesus Christ's 2000-year birthday, tourists will not come.

To summarize this section, following are the main features of the impacts of the six major tourism cycles on Israeli tourism:

* The decline and recovery cycles resulted in growing uncertainty and disbelief among many proprietors and employees in this sector.

* For many years, the Israeli government has felt reluctant to allocate adequate investment funds to this sector because of its high vulnerability.

* Once a decline in tourism arrivals was replaced by a recovery trend, the crisis was regarded as over and neither the government nor the private sector planned for the next possible crisis cycle.

* The tourist business climate in Israel had faced frequent upward and downward trends forcing the government to maintain long-term and highly generous incentive packages to both domestic and international corporations.

* Due to frequent hostilities that have stemmed from the Arab-Israeli conflict, Israel's high-risk tourism image has prevailed. The straggle to reverse this image has been extremely frustrating, involving simultaneous confrontation between government agencies, tourism operators, and the media.

* High labor turnover and employment in the tourism industry has paved the way for untrained and unqualified employees in an industry that is highly dependent on quality of service and customer satisfaction.

* Relatively large sums of money have been invested in ineffective marketing campaigns that were based on faulty segmentation assumptions.

* Long-term regional and national planning became rap-idly obsolete because of unrealistic forecasts.

* Dealing with tourism crises has always been based on ad hoc efforts to "put out the fire" instead of on the implementation of long-term crisis management strategies.

In the case of Israeli tourism, crisis management has never been fully adopted and implemented before tourism crises occurred. On the basis of the lesson learned from the six crisis cycles illustrated above, this article will conclude by proposing integrated crisis-management recommendations to effectively deal with such situations.

CONCLUSIONS: TOWARD AN INTEGRATED APPROACH TO CRISIS MANAGEMENT IN AFFECTED TOURIST DESTINATIONS

Although tourism security crises are never identical, there are various conclusions to be learned from the Israeli case, which could be implemented in other destinations. These conclusions are presented here in the form of principles and operative guidelines on how such destinations should cope with cycles of violence and tourism.

Principle 1: crisis management must be treated as a process rather than a one-shot operation. This process involves two types of countermeasures in terms of timing. One type involves measures taken all along the crisis cycle [ILLUSTRATION FOR FIGURE 2 OMITTED]. The other type involves measures that are taken during the early crisis period, in the midst of a crisis, and during the postcrisis period. As seen in Figure 2, there is a certain overlap of measures in terms of timing, as will be elaborated below.

Principle 2: monitoring of past and current trends is a prerequisite for successful future crisis-management measures. Without the availability of data on tourist inbound flows to an affected destination, crisis management will not yield the expected results. Updated data are needed to evaluate the pattern and the volume of the crisis in each stage, and to formulate possible solutions based on similar crisis scenarios in the past. In this respect, one of the most important decisions to be taken is when to start various preventive and reactivation measures. This decision can be handled better if one measures this optimal timing question on the basis of past experiences. Such data can be disaggregated by market segments and countries of origin to refine the information and facilitate better decision making. It should be pointed out that efficient monitoring of travel trends and tourists' behavior along the crisis cycle is conditioned by the constant flow of accurate data, which can help determine the volume of each crisis, stage by stage. For example, during the first crisis stage, broken-down data on the cancellation and booking patterns of segments of the market must be available. This will enable better tailor-made solutions for each market segment. Consequently, the special budget allocated for such purposes will be more effectively spent.

Principle 3: tourism crisis management should be based on integrated and well-coordinated cooperation of all parties involved. Cooperation and integration of all the activities aimed at reducing the damage and at reactivating the inbound tourist flows has a few distinct advantages as follows:

* Integration and cooperation assures full exploitation of economies of scale in dealing with crisis situations. Thus, marketing efforts, for example, can be consolidated to save money and to be more effective.

* In times of crisis and especially after the security event is over, the rehabilitation of the damaged image of an affected destination must be based on common and widely accepted messages. Lack of cooperation in this respect might lead to conflicting information on the improved level of safety and security. This will result in an adverse effect as it will increase tourists' confusion and uncertainty.

* Cooperation and integration of all the operations involved in dealing with such crises will also enable better monitoring and assessment of the measures taken.

* Integrated crisis management unites interest groups under one roof. Thus, various components of the tourism sector will stop fighting each other in their struggle to gain more government support during all the tourism crisis stages.

* And finally, an integrated crisis management approach suggests to tour operators in the generating markets and to foreign investors that the affected country wants to restore a positive business climate as quickly as possible.

To ensure effective coordination and integration of crisis-management procedures, an independent organizational entity that has a full representation of all parties involved must be structured. It should be properly budgeted by both the private and the public sectors and be in continuous operation. In times of recovery and peace, it will prepare contingency plans for the next potential crises. In times of turmoil, it will coordinate between all parties involved to assure minimal damage and the shortest tourism crisis period.

Principle 4: the domestic market (if it exists) must be used as a short-, medium-, and long-term balancing mechanism. This principle can be applied only if the domestic market has enough purchasing power to generate sufficient tourism demand for domestic tourism. If such potential exists, as in the Israeli case, it can be effectively used to fill the temporary gap caused by a reduction in international tourism demand. The Israeli tourism industry has been highly effective in this sense. Whenever unexpected security events deterred international tourists from visiting the country, hoteliers reduced their rates and filled the gap with domestic tourists.

Principle 5: marketing activities should be dynamic, constantly innovative yet sensitive to various crisis scenarios. Marketing of tourism products in security-sensitive destinations is one of the most challenging tasks to assure a long-term operation of the tourist sectors. To achieve success in such situations, marketing should be based on the following principles:

* Market segments should be very carefully and multidimensionally analyzed before making any marketing decisions.

* To develop an efficient marketing strategy as part of a crisis management model, researchers need to examine travel trends before, during, and after a given security situation.

* Messages regarding security and safety must be spelled out in a realistic manner.

* Lessons learned from past marketing campaigns in similar circumstances must be implemented.

* In the midst of a given severe and ongoing security situation, all marketing campaigns aimed at international tourism must be stopped. It is a waste of resources and credibility to continue such campaigns while in every home in the generating countries live pictures of war, devastation, and hostility are exposed on the TV screens.

* Marketing must position past conflicts as future or current tourism attractions if their imprint on the local landscape makes it interesting enough for tourists to visit. Such a policy has proved to be very successful in Israel and in other countries (e.g., Cyprus, Germany, France)

Principle 6: long-term planning and investment decisions at national, regional, and local levels must be sensitive to tourism crises. In practical terms, this necessitates the following:

* The planning and the development of a tourism infra- and superstructure must be sensitive to the location where cycles of hostility and security situations take place. If such considerations are ignored, resources invested in tourism development will not be cost-effective.

* The government should provide investors with financial incentive packages that are based on an understanding that a high probability of security cycles means also a high probability of financial losses.

* The planning process must be incremental and dynamic. It should never be based on unattainable long-term goals. Alternatively, it should calibrate its initial planning assumption and objectives according to the nature of security situations and on their effect on the tourism industry.

Principle 7: an affected receiving country should maintain a constant flow of comprehensive information at the level of security and safety as a travel destination. These data also need to be available at all times through communications channels accessible by the generating markets (newspapers, special TV travel programs, the Internet, travel magazines, etc.). Such information will ensure the following:

* The reliability of this destination and its image as one that is not only interested in money but also in the quality of its tourism product.

* It will also ensure that potential travelers will not avoid the country altogether but only the troubled regions.

Principle 8: countries affected by tourism cycles as a result of security situations must cooperate with each other to ensure flow of expertise and knowledge on the effectiveness of crisis-management measures. This includes cooperation on the following:

* Improved marketing during and after a security situation has taken place

* Exchange of know-how on monitoring crisis situations

* Exchange of expertise on policy making regarding planning and development of tourism facilities in security-sensitive destinations

* Exchange of expertise on the preparation and the efficient operation of contingency plans to restore a positive business climate, while efforts are made to reactivate the tourism sector

* Exchange of information on how to preserve temporarily obsolete tourism infrastructure and manpower resources in times of crisis

If the above lessons could be implemented in the future, there is a good chance that the economic and social damage involved in tourism crises in the wake of security situations would be substantially reduced. However, one must bear in mind that while the damage involved in tourism cycles can be diminished by proper crisis-management tools, it cannot be eliminated altogether. To achieve full elimination of damaging tourism cycles, peace and stability must prevail. If security situations and political decisions were solely in the hands of the tourism industry, tourism cycles as a result of violence would never have taken place.

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Yoel Mansfeld is a senior lecturer in the Department of Geography and head of the Center for Tourism, Pilgrimage and Recreation Research at the University of Haifa in Israel.
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Title Annotation:Special Issue on War, Terrorism, Tourism: Times of Crisis and Recovery
Author:Mansfeld, Yoel
Publication:Journal of Travel Research
Date:Aug 1, 1999
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