Posted December 3, 2015
By Hans Mathias Moeller
Yesterday we posted part 1 of a follow up to our blog and white paper, “Security Threat Assessment: Egypt Economic Development Conference and Sinai Peninsula,” published in March 2015. In today’s post, we continue our discussion of security in Egypt and why terrorists targeted Sharm el-Sheikh to disrupt the region’s tourism and hospitality revenue, as well as why the tourism and hospitality industries are attractive targets in general.
As a result of the recent downing of the Russian airliner out of Sharm el-Sheikh, Egypt, there has been much coverage in the media around security in that region. Britain, France, Ireland, and Russia have suspended flights to Sharm el-Sheikh and have continued to evacuate their nationals from the region. These actions alone have limited the number of tourists staying or planning to visit Sharm el-Sheikh in the immediate near term.
Negative media coverage, persistent speculations of terrorism, Sinai Peninsula travel advisories, and concerns about the Egyptian government’s inability to protect tourists all act as deterrents for vacationers. Tourists weigh the costs and benefits of a destination. When they choose a safer location, it’s called the displacement effect. Regions that have been attacked or fall under threat of attack are perceived as risky and will likely be avoided for safer destinations.
A reduction in tourism can lead to a loss in revenues for airlines, hotels, shopping malls, restaurants, bars, car rentals, and other vendors that are dependent on this sector, as well as layoffs and lost revenue for governments. The government also has to pay for countermeasures to restore public confidence, instead of investing those resources elsewhere.
Looking Ahead: Attacks on Tourism, Hospitality Targets Likely to Increase
Terrorists have much to gain from a strategic and ideological standpoint by targeting the tourism and hospitality industries, so it’s no surprise that terrorists have continued targeting them for decades.
More than 400 attacks have occurred against the tourism and hospitality sector since the beginning of the 1970s. The aviation industry, including airports and airliners, has experienced more than 1,300 terrorist related incidents since then. Attacks have been cyclical, and the number of attacks against the tourism and hospitality sector increased at the end of the 1970s and the mid-1990s, with another increase in the past three years.
The downing of the Russian airliner resulted in an immediate response by Egyptian authorities in an effort to restore confidence and deter future incidents. However, as the Egyptian government hardens one target, terrorists simply shift to more accessible targets with a higher success rate. The Sinai-based terrorist group may attempt to circumvent countermeasures and continue targeting the commercial aviation industry, or will seek out other softer targets.
Hotels may be the most attractive targets for terrorists after the aviation industry. They are easily accessible and vulnerable, as they generally employ lower security barriers to maintain comfort levels and to avoid spreading fear among guests. From a cost perspective, hotels are an easy target because of these lower security measures, as well as the potential they provide for mass casualties, particularly during holiday or busy seasons, or during specific events either hosted at the hotel or when hotel rooms are in high demand.
Luxury and large, well-known hotels are also targeted because they tend to have a large congregation of foreign guests, many of which are from countries that terrorists following a Salafist ideology deem to be their enemies. These attacks also guarantee global media attention that terrorists seek, in particular, if it is an iconic hotel brand or if hotel guests are taken hostage. This was the case during the attacks against the Taj Mahal Palace in Mumbai, India in 2008 and the Radisson Blu Hotel in Bamako, Mali in November.
The long term damage to the hospitality and tourism industries due to terrorism is ultimately determined depending on whether a terrorist group will continue attacking that specific tourist destination. If the attack is a one-off event, the incident will eventually fade from the public memory and tourism will rebound with help from government incentives. If terrorists continue with random attacks against a destination, it will eventually lead to a tourism crisis as the image of the destination becomes tainted. If this happens, foreign investors will likely withdraw from the region and invest in safer locations where the risks to their investments are lower. This can in turn lead to reduced economic prospects for many people in the area, thus intensifying the cycle of poverty, radicalism, and terrorism in these regions.
Contact us for more information on deep-dive assessments performed by our Special Investigations Unit.