Abstract
India experienced terror attack on its financial and entertainment capital Mumbai on 26 November 2008. There were 12 coordinated shooting and bombing attacks which lasted four days, killing 164 and injuring several hundred (Press Information Bureau, 2008, HM announces measured to enhance security, New Delhi: Ministry of Home Affairs, GOI.). The attack was largely targeted towards international tourists visiting Mumbai at the hotels like Oberoi Trident, The Taj Mahal Palace and Tower and Leopard Café. The objective of this article is to study the impact of the 26/11 terror attack on the arrival of international tourists in India. Very few studies in the literature have examined the impact of terrorist attacks on the tourism industry. (For more recent work see Arana & Leon, 2008, Annals of Tourism Research, 35, 299–315; Raza & Jawaid, 2013, Economic Modelling, 33, 65–70.) Our article tries to add evidence to this growing literature. Further in analyzing tourist demand, several researchers (see Song et al., 2012 for a review) have studied the relationship between tourism and economic growth. While studies have found unidirectional relationship between international tourism and economic growth (e.g., Balaguer & Cantavella-Jorda, 2002; Oh, 2005), there are others who find evidence supporting bidirectional relationship (e.g., Dritsakis, 2004; Kim & Chen, 2006, Tourism Management, 27, 925–933). In our study, we assume a bidirectional relationship between foreign tourists arriving in India and its economic condition. In the present study, we analyze the impact of 26/11 terror attack at Mumbai on the international tourist arrival in India. The analysis is done using the vector autoregression (VAR) model, where the foreign tourists arriving in India is a function of economic condition prevailing in the country, captured here by real gross domestic product of India and the terror attack dummy variable. Our results indicate that post 26/11 there has been a significant decline in the number of foreign tourists arriving in India. We further analyze the disaggregated airport level data, where similar significant negative impact were found for Mumbai and Delhi airports.