Impact of Terrorism on Pakistan and India's Hotel and Tourism Industry
Planes crash, bombs explode, and buildings collapse; These images are what come to the minds' of innocent bystanders when they think of "terrorism," the tabooed word in today's world. According to Title 22 of the U.S. Code, terrorism can be defined as "politically motivated violence perpetrated in a clandestine manner against non-combatants" (Ruby 9). Experts on terrorism believe that these acts vary in their level of danger based on who commits them. In interpreting the act of terrorism, legal, moral, or behavioral perspectives are taken into consideration (Ruby 9). Ever since the September 11th episode and the destruction of the twin towers, terrorism has become an increasingly predominant threat to humanity and its future. This event has marked the occurrence of on-going threats that have consistently affected major industries worldwide, most especially the Hotel and Tourism industry of third world countries like Pakistan and India. More importantly due to terrorism the global perception of India and Pakistan as safe tourist destinations has quickly changed for the worse.
Although neighboring in Southeast Asia, the countries of Pakistan and India have constantly been at war with each other. Their tension began since the late 1980s due to their conceptions of statehood and the territory of Kashmir, a mountainous region located in the Northwest corner of the Indian subcontinent. Originally born as an Indian territory, Kashmir struggled, especially due to the fact that it was portioned to Pakistan. Today, both Pakistan and India share borders in Kashmir, which has played a role in causing disputes between them to some degree. Battling in these political and territorial conflicts have led to destruction of the Indo-Pakistani relationship, which has always been "stubbornly antagonistic" (Kapur 966). Even worse, their persistent anger towards each other has affected the security of the hotel and tourism industries as well as the people, the land they live on and has ultimately sparked the initiation of several terrorist activities.
The purpose of this literature review is to provide an overview of existing research on terrorism to find out whether or not terrorist attacks have had a threat on the hotel and tourism industries of Pakistan and India. By using numerous scholarly works, peer reviewed research studies, trade publications, and journal articles, this review will be constructed in such a way so that a chronological pattern of the terrorist activities will be demonstrated and the damaging effects will be further explored. For many years, the hospitality and tourism industry has been a large contributor to the developing economies in these regions as a large percentage of both the countries' revenues have been generated from this industry.
However, due to recent terrorist attacks that have made headline news, there has been a decline in the hotel and tourism industry of these third world countries. It is unfortunate that instead of growing with hotel trends, the hotels in Pakistan and India have moved backwards in generating revenue and expanding their services. This literature review will clarify the existing research that has been done on recent terrorist activities that have impacted the hotels in Pakistan and India and how these attacks have worsened India and Pakistan's overall relationship and economies, leading to a prominent downfall in their Hotel and Tourism sectors.
2. Brief Overview of Indo-Pakistani Relations
The existing research on Terrorism and its impact on the Hotel and Tourism industries of Pakistan and India can only be comprehended by closely scrutinizing the turbulent history these neighboring countries share. In the Law journal for foreign affairs, K. Shankar Bajpai has written an article on "Untangling India and Pakistan" which introduces us to their relations. Bajpai highlights their vicious affairs, as they have been a result of the complications that arose after Pakistan's birth, when it was partitioned from India in 1947. Due to this fact, tensions between these neighboring countries can be attributed to historical events from decades ago, which have erupted too often in violence.
The territorial dispute over Kashmir is one of the dimensions of the rivalry that encompasses the relationship between the countries. For over fifty years, Pakistan has used "terrorism as its instrument of choice in trying to pry Kashmir out of Indian hands" (Bajpai). Fighting in at least three wars over their share of the region has been due to an "unfinished business of partition" that is defined as "Kashmir". Therefore such historic, events, choices, and global changes that have been made overtime by both India and Pakistan have threatened an "enduring rivalry" (Kapur) between these countries that still occurs to this day.
The geo-politics between the two regions contains the "seeds of a nuclear holocaust" (Bajpai). Today, for this reason, Pakistan and India are the primary sources of some of the world's most violent terrorist groups. It has been researched that the majority of Pakistan's troops are concentrated on its eastern border with India, known as Kashmir. Because Pakistan claims the majority of the land's border, it has supported the terrorist activities of several terrorist groups that operate there, such as the Taliban and Al Qaeda. Historic wars and tensions between the regions have distracted the Pakistani government from facing these Islamist extremists that have been situated in their region. India also has its own internal terrorism problem and has encouraged various terrorist groups to operate in nearby states (Bajpai).
Given this background on terrorists, hotels and tourist attractions have recently been targeted in these countries such as Islamabad's Marriot and Mumbai's Taj Palace. With terrorism affecting each of their industries, Indian Prime Minister Manmohan Singh and Pakistani Prime Minister Yousaf Raza Gilani have come to an agreement that "terrorism, not each others country, is the main threat to each nation, and they will continue fighting it" (Bajpai).
3. Terror Strikes the Hotel Industry of Pakistan
Pakistan's seemingly "intractable poverty and lawlessness create fertile ground for Islamist extremists" (Qamar 1) to target major landmarks and attack industrial sectors such as hotel and tourism. Terrorist threats have weakened the welfare of the nation and have resulted in Pakistan's public opinion to turn against these extremists. "More than 80 percent of their people view the Taliban and Al Qaeda terrorist groups as threats to their country" (Qamar 1).
The major hotels in the Hotel and Tourism Industry of Pakistan today are Marriot, Pearl Continental, Sheraton and the Holiday Inn hotel chains. There has always been a potential for tourism in Pakistan, as the region has no shortage of cultural tourist attractions. However, due to prevailing security issues in Pakistan, the industry has been deeply affected.
The backdrop of the global recession and persisting poor laws and situations in Pakistan have also resulted in a steep drop of the revenue growth in the industry by 45 percent (Qamar 1). The immediate cause has been that the terrorist incidents have heavily shaken the hotel industry in Pakistan. This is especially true due to what has occurred after the most recent blast at Pakistan's Marriot Hotel in its capital city, Islamabad. and the Pearl Continental in Peshawar.
Attack on Islamabad's Marriot Hotel
On September 20th, 2008, Islamabad's strictly guarded Marriot Hotel exploded due to a massive suicide truck bomb. It was reported that the truck exploded about sixty feet from the hotel and that the bomb left a crater that was about 30 feet deep in front of the hotel building, killing at least 53 innocent people and injuring hundreds. While the rescuers carried a stream of blood-soaked bodies, dozens were pronounced dead inside the hotel that was still burning hours after the blast, devastating most of the five-story hotel. Mohammad Ali, an emergency-service official at the blast, reported that the fire had eaten the entire building. Stephen Graham reported that targeting an American hotel chain like Marriot has been one of the largest terrorist attacks ever in Pakistan. To continue, he stated that these attacks took place at a time when Pakistan was suffering "over a wave of cross-border strikes on militant bases by U.S forces in Afghanistan" (Graham). Officials were warned that these cross-border raids could fuel violent extremism although there had been no claim of responsibility for the blast.
The interior ministry head of Pakistan, Rehman Malik, reported that the newly elected prime minister of Pakistan, Asif Ali Zardari and other Pakistani leaders and military chiefs were to have dinner at the leading hotel that evening. However, due to terrorist threats, the venue was changed last minute, saving the lives of the entire leadership. Instead, the bombing killed the Czech ambassador and two US defense department employees, six British citizens including a child and 270 other people.
Aftermath of the Attack on Islamabad's Hotel Chain
Stephen Graham has explained that despite the repeated terrorist attacks on Marriot, the hotel had once been a "favorite to foreigners" as well as Pakistani politicians and businessmen to stay and socialize in the capital city. Kim Barker wrote the article "Marriot bombing shatters sense of sanctuary in Islamabad" in the Chicago Tribune that before the terrorist attack, as much as any luxury hotel in Southeast Asia, Marriot in Islamabad was home for almost every foreigner in the capital city. After the "brazen suicide attack," (Barker) the country as a whole has become a much sadder place. Barker also claims that a lot of the foreign residents in Islamabad are most likely to give up their settlements and escape to a safer place. Families and friend of those killed in the attack, many of those who even worked at the hotel will have to suffer from the unbearable loss and grief. Barker has also stated that the government of Pakistan will have to convince the world that it can fight terrorism as the country "slowly slips in the abyss" (Barker).
Although there have been larger suicide attacks and bomb explosions resulting in a higher death toll in Pakistan, the Marriot attack has indeed suffered through the "heart of the capital" as it was one of the very few places where "Foreigners found an oasis, Businessmen held meeting, Pakistani families brought their children" (Barker). The kind of war zone Afghanistan and Iraq have been in, Barker explains with the capital city of Pakistan having "carefully groomed boulevards and sleepy nightlife" (Barker) was far from being affected. Although the hotel was attacked twice before by militant bombing, "shattering the place or idea of sanctuary," foreigners still escaped there as a last resort. The explosion has destroyed the one of the favorite spots for these foreigners as well as the Pakistan elite.
Marriot Hotel still remained solid even after a famous Italian restaurant a few miles away from the hotel was bombed, security fears lead to other restaurants around it to close. The five story hotel was not as luxurious as the capital's other five star hotel, the Serena, but Barker explains it was "reliable, sturdy and familiar" despite being "a bit run down, a bit grubby on the outside with its faded Soviet-style architecture." Stephen Graham has written that it was one of the very few places outside the diplomatic district where the U.S diplomats were allowed to socialize. This attack has been among the "deadliest terrorist strikes" ever in Pakistan and many in the country blame "Pakistan's role in the U.S war on terror for growth of domestic terrorism."
Attack on Pearl Continental in Peshawar
The June 9th suicide attack blasted the Pearl Continental Hotel in the northwestern city of Peshawar, Pakistan. Jeremy Page, a South Asian correspondent reported that this suicide bombing has been the seventh deadly attack in capital city of N.W.F.P, Peshawar and Islamic militants have been suspected due to revenge for a military offensive against the Taliban. The city's police chief reported that militants drove through "bomb-laden vehicle" through the Pearl Continental Hotel, shooting the security guards before colliding their truck into the building and exploding themselves as a suicide attempt. The blast led to fire in the four story hotel, leaving a deep crater outside the building, injuring more than 70 people and killing over 12. This attack "echoed the suicide bombing on the luxury Marriot hotel in the capital City, last year killing more than 70 people then." (Page, 37) Zahid Hussain writes in "The Wall Street Journal" that the death toll could rise higher in Pakistan as many hotel guests remained trapped in the rubble and some bodies may be buried in the debris (Page, 37).
After-effects of the Attack on Peshawar's Five Star Hotel Chains
Saddurdin Hashwani, Chairman of Pakistan Service Limited, announced that he vows to re-build the Pearl Continental Hotel after its recent attack. He has agreed that the country is facing a "war-like situation" and will have to drive out the extremists and terrorists out of Pakistan for its survival. He also claimed that he would not be seeking compensation from the government and to safeguard Pakistan's reputation at an international level he will willingly re-build the Pearl Continental within two months just has he built the Marriot Hotel within three months after the September 20th attack. Hashwani has also reported on B.B.C that foreigners and visitors will be given "foolproof security" at our hotels in Pakistan but the government as its responsibility will have to maintain security outside. He also said the "No one would visit Pakistan if such situations continue" therefore the government should not take security issues lightly as such incidents are clearly "blocking investments" in Pakistan, causing a negative imbalance on the country's economic activity (Hashwani).
Security Issue for Pakistan's Hotels
Security threats present a serious consideration for executives in the Hotel Industry in Pakistan. Fred Burton has explored the issues that surround these threats in the overall securities of the Hotel and Hospitality industry. Burton's research views hotels as targets, through the eyes of terrorists. "Islamists view hotels as places of vice" (Burton, 27), as men and women gather freely, drink alcohol, and commit acts that are against the Islamic religion.
The recent hotel bombings have shown that terrorist groups in Pakistan have continuously been targeting five star hotel chains for the simple reason of attacking Westerners and other foreign travelers that stay at these properties. As a result of the terrorist attacks, Pakistan's government has heightened its security measures, particularly in the major cities of Islamabad, Peshawar, Karachi and Lahore, in order to ensure the health and welfare of its people.
Taking pre-emptive security measures is emerging as a "corporate legal imperative and failure to do so opens companies up the possibility of damaging litigation" (Burton, 27). Burton adds that traditional security measures such as security cameras and improved training of guards are a danger for the industry. Thus, hotel owners should call for the use of more proactive security measures that are more physical and less cultural. Such security measure includes baggage screening, key checks, and identifying "stand off areas" that may bother guests at first but turn out as an advantage for them soon or later (Burton, 27).
Security analyst Hassan Askari has argued that Pakistan's hotel management has not taken security threats in its cities seriously. The result has only been a higher death toll for Pakistan. The aftermath of the recent attack on Peshawar's Pearl Continental hotel was a result of this reason. Askari has commented that in comparison to other upscale hotels in Pakistan, security at the Pearl Continental has been proven to be "extremely poor" (Voice of America News).
The Lost Paradise of Swat, N.W.F.P
Swat, in the North West Frontier Province (NWFP) also considered "Pakistan's Switzerland" (Ht Syndication) was once a great attraction for foreign and domestic tourists. Today, the city is facing a sporadic curfew as it is in the "grip of violence with militants demanding implementation of Islamic laws in the country." Swat, the lost paradise of Pakistan, had once had "more than 5,000 people linked to the hotel industry." Syndication also reports that more than fifty restaurants in the city have been closed down. However, due to lack of tourism in the city today, these people are now jobless.
Kuwait News Agency (KUNA) reports how terrorism has badly struck Pakistan's tourism industry and resulted in a "loss worth USD 400 million" (Kuna). N.W.F.P Minister for Tourism, Syed Aqil Shah has said that militancy has affected the tourism sector the most and the industry is suffering a loss of USD 50 million annually. (Kuna) He also argued that Pakistan has "matchless tourist resorts but due to extremism and militancy, tourists are not visiting the country" (Shah). Pakistan's N.W.F.P and northern Kashmir regions, which were once "hotspots" for tourists, have also been severely hit by terrorism for the same reasons, such as extremism and militancy.
Potential for Tourism in Sindh, Pakistan Affected
Pakistan's province Sindh, has unlimited potential for growth in its tourism sector. From the Shrines of Sufi saints to ancient ruins of Mohenjo-Daro; from the vast expanse of the Thar desert to the mountains of Khirtar; from the largest fort in the world at Ranikot to the tombs of Makli, the placid waters of Keenjhar and Kalengkar; Sindh has been overall blessed with it cultural heritage sites.
Sindh Tourism Minister Shazia Marri reports in the Business Recorder, that Pakistan has been "unable to tap the unlimited potential and blessings" of its tourism industry mainly due to factors such as "terrorism and intermittent dictatorial assaults on democracy". Today, all sectors of tourism have been adversely affected, "given Pakistan's checkered history and opposition to democratic governments". As a result tourist flow generating into the country has further decreased due the challenges arising in the "wake of the war on terror" (Marri). Business Recorder also reports how Pakistan earns only "$250 million or 0.02 percent of world's tourism industry that generates over $900 billion annually". Marri has explained how the tourism sector has remained an "unfamiliar territory for Pakistan", as it was unable to claim to more than 0.02 percent of the revenue (Business Recorder).
Decline in Pakistan's Hotel and Tourism Industry
Headlines break news in The Nation on "Terrorism Badly Affects Hotel, Tourism Industry". Sikhandar Shaheen reports how Pakistan's hotel industry in particular has witnessed a rapid decline ever since the Marriot blast in the capital city. Road side stalls; five star hotels; small rental rooms; elite guest halls; be it any of these segments, the overall hotel industry is bearing the brunt of the deadly blast (Shaheen,1). Hotel owners have stated that it will take a great amount of time for the industry to step back to its normal stage. The manager of a hotel at Sitara Market in Islamabad that it would take a while for everything to get settled and people to calm down as they are scared reluctant to stay at hotels. Local and foreigners are threatened to leave, withdrawing their money from bank accounts and foreign organizations operating in the country are forcing their staff to leave the country immediately as well. A hotel official in Rawalpindi claims that under these prevailing security conditions he does not see a ray of hope for Pakistan's existing hotel industry to flourish. (Shaheen 1) As a result of this, the tourism industry of Pakistan is declining and has to face the consequences. He remarks in "such circumstances, "who would prefer to visit Pakistan"? ( Shaheen, 1).
According to the General Manager of a leading five star hotel in Islamabad, most of the profit for these leading hotels is generated from foreign tourists, diplomats and executives of multinational companies. He has stated that "the top brass of several multinational companies have either left Pakistan or would leave soon," (Shaheen, 1) along with the dignitaries and the families of the diplomats of American embassies are too in the process of leaving the country. He also added how this has been a "big blow to our businesses, as currently tourism is dead in Pakistan." (Shaheen,1) If UN officials who have been the repeated guests of these five star hotels, are directed to leave Pakistan who else will willingly risk their lives and stay there. HT Syndication has reported through the Indo-Asian News Service that as far as foreign tourists are concerned the overall tourism industry of Pakistan has finished.
As a result hundreds of hotels booking made for foreigners coming into Pakistan have been cancelled and no new bookings have been made since the September 20th Marriot Blast. An official of the Pakistan Tourism Development Corporation (PTCD) has said "there are hardly any bookings at our hotels from tourists, the only bookings we are receiving are from businessmen or others on short visits." Previously, PTDC would get online bookings via Pakistan's missions abroad but as a result of terrorist tourists are "no longer interesting in coming to the country" (Ht Syndication).
Ht Syndication reports how the capital city is witnessing intense security, with people and vehicles being thoroughly searched at entry points. "The administration might also block of the 11 entry points to Islamabad, to make the city more secure." Representatives of the hotel industry have also lamented that whenever these strict security methods are implemented and conditions start settling down, other terrorist activities occur that continuously impose a threat to businesses. A hotel owner also said that eventually people had started visiting these hotels and staying there however, a recent terrorist attack in Quetta had yet again prevented them to do so. People in Islamabad are so scared and reluctant to even leave their homes after these repeated blasts that they have to face. Therefore, "whenever a terrorist act might take place, it has a direct impact in the capital" (Shaheen,1).
Alternatives to Safeguard the Hotel and Tourism Industry in Pakistan
Sikhandar Shaheen also gives a whole new perspective in his article by examining the alternative methods that are being taken to prevent Pakistan's hotel and tourism sector from deteriorating completely. He argues that in comparison to the luxury hotels operating in Pakistan, the guesthouses are performing much better but they too have unfortunately witnessed a failure due to these terrorist attacks. Shaheen mentions a guesthouse owner in Islamabad who has said that the guesthouses in residential area, unlike hotels, operate without undertaking extensive publicity. As a result "guest houses are comparatively safer since they operate on mellow profile", encouraging foreigners and locals to stay there more these days (Shaheen 2).
He also confirms that since business activity is "not as bullish" as it used to be in the past, owners of smaller hotels can no longer afford to compete with the current decline in the Hotel Industry. This is forcing them to switch over from hotel management and invest in other businesses. Today, most of these hotel owners are focusing on the Food and Beverage aspect of the Hospitality industry as it offers them more opportunities in Pakistan's weak economy. They are investing in the restaurant business as the food industry in comparison to hotels has more potential for success under the present circumstances. This transition had led them to convert their residential hotel properties into restaurants for fine dinning to avoid any further losses. Ishaq Abassi, another hotel owner has claimed that their team is expanding food and beverage within their guesthouse by arranging for restaurant facilities. Abassi had also arranged barbeque facilities outside his hotel to attract more guests (Shaheen, 2).
Poor Law, Order Situation Harming Tourism in Pakistan
An official of a leading hotel in Pakistan also demonstrated that hotels especially in the capital city have witnessed a "shortfall of customers from 40 percent to 60 percent" after the September 20th blast. Tourism Secretary Dr. Qaisar has reported in the Pakistan Newswire that poor law and order situation had been a result of a decline in the tourism sector in Pakistan. Tourists have begun excluding Pakistan from their travel agendas after the news of deteriorating law and order. Therefore, improvements in law and order seem to be the only remedy for the current situation. Dr. Qaisar also lashed at the World Tourism Organization (WTO) for wrongful advice given to tourists to avoid visiting Pakistan under the extreme terrorism activities taking place in the country. Pakistan's "environment is tourism friendly" and such advice are only harmful to the country's economy (Pakistan Newswire). Shaheen has confirmed that "foolproof security arrangements" are being taken and it is duty of the government to "curb the growing terrorism to boom the hotel and tourism industry" (Shaheen, 2).
4. Terror Strikes the Hotel Industry in India
Besides for Pakistan, India's Hospitality Industry has also been hit hard due to terrorism. Unfortunately, both countries have been under siege by terrorist activities and are no strangers to terrorism. Due to their rivalry constantly had to bear the brunt of being at the forefront of major terror attacks around the globe. Manav Thadani in his article "Terror Strikes: The Indian Hotel Industry's 9/11" has discussed the overall impact of recent terrorist attacks on two landmark hotels, a hospital, railway station, a famous restaurant and a residential building and four other locations that were attacked as well. The hotels that recently witnessed the "ghastly attacks of terrorism"(Thadani) were the Taj Mahal Palace, Taj Mahal Towers, the interconnected Trident and the Oberoi Hotel. All of these are located in South Mumbai, India, and are "busy hubs of international visitation" (Thadani).
As a result, Thadani adds that the Indian Hospitality Industry, which has already been shaken due to the global financial meltdown, has been under further distress due to Terrorism. Gary Stoller has also stated the same fact in USA Today that the recession and terrorism have both been a "cloud on tourism" in India. He also said that India's 9/11 and weak economy is a cloud, bringing tourism concerns and warnings in the Hotel and Tourism Industry.
Indian Hotel Industry's 9/11
The Tata owned Indian Hotel Company Limited (IHCL) that operates under the brand name of Taj owns the India's most famous hotels in Mumbai, Taj Mahal Palace and Tower. It opened about 105 years ago and was used as a hospital during the First World War. Jeremy Page reports in The Times (London) that this hotel was one of the nation's most culturally known landmarks, "an iconic building that encapsulated both the pomp and grandeur of the British Raj and the enduring vibrancy of India's film and financial capital" (Page). After terrorists brought down this "symbol of Indian splendor" on November 26th, 2008 killing 171 people and wounding more than 230 people, the country experienced what felt like India's 9/11. Page adds that Today, what used to be a living tribute to Mumbai's "cosmopolitan ethos and dynamic spirit" stands as a "monument to Indian terrorism." The attack lasted 60 hours with six explosions being reported at the Taj and one at the Oberoi Trident Hotel, which are also in close proximity to the Taj Mahal Palace. Manav Thadani and other HVS hoteliers estimated that both these hotels were operating on full occupancy levels with approximately 2500 guests and employees at these properties on the night of the first attack. The terrorists stormed the hotels with AK 47s, assault rifles, machine guns, grenades, killing innocent people "breaking India's backbone of economic growth," and damaging the Indian financial capital (Thadani).
The attacks were also said to depict terrorists in India as deliberately targeting Westerners as the terrorists attacked the hotel saying they were specifically targeting British and American business travelers and tourists (Stoller). Thadani also argued that if the death toll in India has risen up, it is time for India to be pro-active, "poorly planned and inefficiently executed national security measures" will not improve the situation any better. Moreover, since this is India's 9/11, Thadani concludes that "the usual political rhetoric about weighing the consequences of his attack and taking appropriate action" will not be acceptable and nor will it do justice to the many innocent lives that have been taken away.
Heightened Security Measures in Mumbai
Mumbai's November 2008 attack has represented a "new threat to Indian security, namely an increased incidence of home-grown terrorism" (Economist Intelligence Unit). The U.S State Department announced that there are "heightened security concerns" in India and travelers have been advised to "maintain a high level of vigilance" (Shah). Since the attack took place in the premium location of South Mumbai at the five star hotel premises, critical sectors of the hospitality industry such as hotels, tourism and airlines are making their security a whole lot stricter (Shah).
Indian tourism minister, Ambika Soni announced that India will no longer be defensive and let the terrorists win. Instead, the Incredible India Tourism campaign will be refined to show visitors that say they want to return to India. The campaign will say that "India is like a continent, and an attack in Mumbai does not make the whole country unsafe." She also added that security will have to be more visible as there should be " no problem in being frisked- it means you are safe" (Lakshmi, 12).
Security experts have also examined that five star hotels in India such as the Taj and Oberoi are still not well equipped to guard the hotel properties and deter terrorist groups with automatic weapons from entering these hotels. Since the attacks, there have also been news warnings of possible airborne attacks on major airports in India. Several Indian companies are making "security preparedness" their new topic in weekly meetings and foreign clients are also insisting that companies make sure their facilities undertake thorough searches, screen employees and vendors and have more safety drills. Chief executive officer of India's largest technology firm in Mumbai has added that any disruption in "security preparedness" especially in the hospitality industry is likely to "paralyze the intellectual capital that is destroyed in our industry" (Lakshmi, 12).
Decline in India's Hotel & Tourism Sector
The recent terror attacks at the Taj Palace in Mumbai and Oberoi Hotel captured world media attention and shook the Indian Hotel and Tourism Industry. The most obvious impact of these terror activities led to a severe decline in occupancy levels and average daily rates in Mumbai resulting in negative impacts in other parts of the country especially leisure tourist destinations like Goa, Kerala, Rajasthan. An immediate aftermath of the attacks resulted in an over 14 percent decline of shares of Indian hotels, which run the Taj chain and EIH, owner of the Oberoi chain.
The airline industry was also deeply affected as shares of India's largest domestic airline, Jet Airways, fell by over seven percent, while shares of its second largest airline, Kingfisher Airlines also dropped by 10 percent (Thadani). Reshesh Shah reports in the ICICI Direct that two weeks after the Taj Mahal attack the Indian hotel industry has seen major cancelations in room bookings by a large number of foreign tourists. Shah has reported that the average occupancy levels have dropped from 65%- 58%, and average rooms rate have subsequently led to a decline of 15-20% since the terrorist attack.
Shah also concluded that although Mumbai has been known as the business hub of India, business travelers would visit the country on a much lower scale. Although, business conferences are being called off as business travelers are cancelling their trips, it has been predicted that leisure destinations are likely to be effected more than business destinations (Shah). Keyur Joshi, co-founder of India's largest Web site, MakeMyTrip.com, has said that India needs to stimulate its domestic travel market as 25 percent of online bookings on his web site have been cancelled (Laskshmi 12).
As a result of this terror, a sudden shortage of room supplies of about 1,450 rooms from a total of 2,238 has been created in hotel room segments in South Mumbai. Jared Blank, CEO of an Indian Travel Newsletter reports that the Indian Association of Tour Operators has expected a 10%-15% drop in tourist arrivals. India receives most of its tourist inflows from the UK and US. Unfortunately, citizens of these countries as well as Canada, and Netherlands have been issued travel advisory notes, warning them against travel to India. While the State departments of these countries have only advised their citizens to avoid travel, the Australian Department of Foreign Affairs and Trade has advised its citizens to "stay away" and "reconsider" any need to travel to India.
Furthermore, the growth of foreign tourists was expected due to a sharp decline of India's currency, the rupee against most foreign currencies. However, the global financial crisis and continuous terrorist activities have brought the entire "tourism industry growth under a cloud." Laila Rach, dean of the Tisch Center for Hospitality, Tourism and Sports Management at New York University has remarked in USA Today that a "staggering economy could well trump terrorism fears among American travelers." It was reported that travel from the USA to India increased by 10% in 2006, with fewer than 1 million Americans visitors in 2007. Blank concludes how the economic meltdown "crippled Indian tourism" when hotel occupancy rates sharply declined from 2007- 2008.
The Observer (England) has stated that India is currently "counting the cost of global terrorism." The Mumbai hotel attacks "spell disaster for tourism" as these terrorist attacks have been a blow to an economy that is already suffering from it's own problems. Investors concerns have been heightened as a result of these on-going attacks. The UK is one of the top three investors in India but in 2008 it was examined that international funds from the UK were not flowing into the country, contributing to the 56 percent decline in the Bombay Stock Exchange Index. (The Oberserve)
Rama Lakshmi has reported in The Washington Post that these terror attacks on Mumbai's Five Star luxury hotel chains have had a major impact on some of the leading businesses in India. Industry leaders have begun fearing that these terror activities will deter investments and negatively affect growth in the economy. Leaders of India's biggest software and technology companies feel that terrorism in India's business hub has shattered Investors confidence. Leaders feel vulnerable for being the "soft targets for terrorists" (Lakshmi 12) and demand that the Indian government provides them with protection and support to safeguard their properties.
When interviewed, Kiran Mazumdar-Shaw, chief executive of Biocon, India's biotechnology company, has stated "attacks on the heart of our economy have been a wakeup-call for the business community in India". These attacks have damaged an economy that is already battling the global recession even more. In turn for the first time since 2002 Indian hotel and tourism industry that employs an average of 40 million people, has seen a drop in business of more than 2 percent. It was estimated that more than 5 million foreign tourists visited India before the siege of the hotels, bringing in more than $11 billion. However, after the attacks the industry that was predicted to grow by 20 percent in 2008 had been growing at a slow rate of only 12 to 14 percent (Lakshmi 12). Stratton, Director of India operations for control risks has reported that the Mumbai attacks have changed the "perceptions of Risk" but the risk factor in India has not changed from before. As a result, this too has been a factor that has contributed to the damaging effect on how foreign companies perceive India as a business destination.
An Overview of a Study on Foreign Tourists Perspective of India
Terrorism has been a major contributor in destroying India's image as a tourist destination. India's current image plays a crucial role for foreign travelers to avoid India in spite of visiting neighboring countries. As a result, India is regarded less highly that in deserves to be by the outside world. Although, there is a great deal of exiting literature on tourist's satisfaction or dissatisfaction, hardly any studies are done on this level in India. Recently, the Department of Tourism Management of India conducted a study known as " India's Image as a Tourist Destination-A Perspective of Foreign Tourists" by Manjula Chaudhary. The purpose of the study was to determine the varying attitudes of foreign tourists as well as assess whether or not these travelers actually perceive India as a country portraying "terrorism, mysticism, grinding poverty and corruption"(Chaudhary 293).
As a result of this study, it was discovered that in terms of its rich architectures and cultural heritages India is rated much higher than expected. Unfortunately, it was also observed that poor conditions such as "cheating, begging, unhygienic conditions, lack of safety dampen the spirits of tourists" (Chaudary 293) Each of these negative aspects deter tourists from traveling to India as their image of the country worsens. Tourist dissatisfaction levels are so strong that the study also stated that after India's hygiene factors are improved along with our motivators, India will only then be positioned a top tourist destination on the World Map.
India's image is fairly well established as the study shows India can strengthen its image as a cultural destination. Improvements in its poor infrastructure, guide services and safety conditions can certainly shape its image into a more positive one. It can do this by having a "well planned image promotion campaign" with necessary improvements in its weak areas.
Faith in Mumbai Hotel Industry Remains Unshaken
Many argue that it is less certain how quickly tourism will recover from India's 9/11. Manav Thadani speaks for his country and argues that nothing can "shake the foundation of a city as strong and resilient as Mumbai." Terrorist events should and will not change one's perception of Mumbai's future as a destination. After all, Mumbai is India's commercial capital and the strength and power of India's economy. Krishna Kumar, Vice Chairman of Indian Hotels, has reported that the "Taj Mahal Mumbai will be rebuilt- brick by brick, inch by inch" (Kumar).
Kumar also speaks on behalf of the Oberoi group, assuring that "their rich heritage in Indian hospitality will also leave no stone unturned to bring the Oberoi and Trident hotels back to their original glory." India looks forward to opening it's doors for hospitality again, as its strong faith in Mumbai remains firm and unshaken. Despite devastating terrorist attacks, it seems quite clear that Mumbai still seems positive and will move forward in developing its hotels and increasing tourism.
Tourism Joint Secretary Leena Nandan has reported at the Federation of Indian Chambers of Commerce and Industry (FICC) conference that the Indian Tourism sector grew 5.3 million arrivals in 2008 (Nandan). Nandan added that this was a major growth despite the global economic recession and Mumbai attacks the same year. When asked about the number of expected tourist arrivals in India by 2009, Nandan said, "By 2010, we expect the number to touch 10 million" (Nandan).
Research has also indicated that the Tourism Ministry of India is launching a new campaign following the Mumbai attacks. The ad will represent India's determination and will feature a tiger and Matama Gandhi's will be quoted, " let the winds from all over sweep into my room but I will not be swept off my feet" (Nandan). By taking such challenging initiatives, it is evident that India will continue to safeguard it tourism industry and remain determined to fight the terror that has cursed it.
5. Indo-Pakistani Relations Worsen After Mumbai's 9/11
India and Pakistan have both been facing several geographically separate security concerns. In the bloodstained aftermath of Mumbai's horror, research and evidence has blamed Pakistan for the attacks. Tension with Pakistan has increased sharply after India's accusations of Pakistan's involvement in the terrorist attack on Mumbai on November 26th, 2008 (The Economist).
Shahshi Tharoor has reported that the "geopolitical reverberations of the carnage is beginning to resonate" between the regions. Most of the terrorists came across the Arabian Sea from Pakistan to "wreak mayhem" on Mumbai (Tharoor). The increasing frequency of terrorist attacks on India's hotel and tourism industry in recent years has repeatedly been traced back to Pakistan.
"Whether the Pakistani military is orchestrating the violence or merely shielding its perpetrators, tensions with India are rising dangerously" (Tharoor). The newly elected President of Pakistan, Asif Ali Zardari has shown signs of wanting to move away from this history of hatred and hostility. To keep up to his view, he accepted the request of the Indian Prime Minister Manmohan Singh, to send the head of Pakistan's military intelligence agency, I.S.I to India to assist the Indian authorities in their investigation. Unfortunately, the ISI has not been keep on cooperating with an investigation into the attack.
However, the Mumbai attacks have indicated many trademarks of the extremist groups based in Pakistan, specially the Lashkar-e-Taiba, which in the past has benefited from the assistance of the I.S.I (Tharoor). To India's defense, US Secretary of State, Hilary Rodham Clinton, has stated in the Times of India that both India and the U.S have experienced extreme terrorist attacks. Therefore, "we should intensify our defense and law enforcement cooperation... and encourage Pakistan, as that nation confronts the challenge of violent extremism"(Tharoor).
Instead, Pakistan has denied any connection to the Mumbai attacks and to support this President Asif Ali Zardari has stated that Pakistan "will cooperate with India in exposing and apprehending with culprits and masterminds" behind the blasts. The Pakistani government has rarely been so inclined to pursue peace with India. "Their meticulous planning, coordination and precision" (Tharoor) imply what no ordinary militant group is capable of. India's Prime Minister has said that the consequences for Pakistan are bound to be very severe if it turns out that Mumbai attacks were planning and directed from Pakistani. He also added that "India would be likely to find sympathy and practical support from the countries of these other victims" and "our neighbors" would have to bear the costs. What is left of this threat is India that "seethes with impotent rage" and Pakistan that "belligerently assets its innocence" (Tharoor).
Given all this information on terrorism in the Hotel and Tourism Industry of Pakistan and India provided from journals, newspapers, and law publications, it is evident that there is no "Mecca for tourism" in these third-world countries. It is highly likely that the terrorism in Pakistan and India plays a part in destroying an image of Mecca for them. For example, recent terrorist activities, such as the attacks on five star hotel chains like the Marriot, Pearl Continental, Taj Palace and others, have resulted in a severe decline in the tourism and safety of Pakistan and India alike.
The death toll in Pakistan and India has increased gradually per day, as more and more innocent lives are being taken away in the midst of these terrorist activities. Security of these countries' own citizens is also being threatened, causing several foreign travelers to fear threatening their own lives by traveling to these countries. Unfortunately for them, they are unable to appreciate the beauty and culture of these countries as well as the unlimited potential of tourism they have to offer.
In terms of the existing research, the opinions of some experts contradicted each other. This contradiction lies in the questionable future of the Hotel and Tourism sectors of Pakistan and India. While faith in India remains unshaken, despite terror that has explosively struck its hotel industry, the statistics in research reveal that India expects to receive a sharp increase in its tourist arrivals. As a result, India is hopeful and sees growth in its travel and tourism industry. For Pakistan, however, it was hard to find detailed and worthy statistics such as these that report the number foreign tourists expected in the future. Due to this limiting fact, there is a gap in the existing research.
When researching terrorisms' effect on the Hotel and Tourism Industries of India and Pakistan, it is quite crucial to provide a brief overview of the deep and enduring rivalry between the countries. Their conflict has resulted in then War on Terror and has encouraged terrorist activities that have proved to be a threat for their industries and overall economies. Thus, news headlines and journal articles have proved that the political turmoil between Pakistan and India still exists and continues to worsen their relationship. When researching the aftermath of Mumbai' s 9/11 attack, it was investigated and proven that the militancy and extremist groups of Pakistan were accused for being involved in the Mumbai attack. As a result, these terrorist attacks convey the complexity of the Indo-Pakistani conflict that seems to be unbearable and never ending.
When reviewing the literature embedded on this topic, it is highly apparent that Pakistan and India are very unstable countries due to their poor political and social state. Everyday, security worsens, which puts a harmful toll on the lives of several innocent bystanders. Their fears of danger have affected the way they perceive their once peaceful and lively countries. Their fears match those of foreign tourists, who are unlikely to step foot in Pakistan and India due to the sole reason of them being highly dangerous. As a result, the countries' once booming and stable tourism industries have seen more pitfalls and less profit. The only glue in this situation between Pakistan and India is their beautiful culture and heritage, which has created several traditions that live on by the day. Therefore, if the dispute between Pakistan and India is resolved and the battle regarding terrorism is over, the ties would be strengthened and the once vibrant and flourishing hospitality and tourism industries in these countries would be revitalized and have the energy to regain their image, especially in the eyes of foreign tourists.
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