The Economic Impact of Terrorist Incidents on the Italian Hospitality Industry

Abstract

Acts of terror are intended to incite fear and intimidation, which makes tourism particularly susceptible to attacks. Because the hospitality industry serves as a useful barometer of the indirect impact of attacks, we examine the impact of terrorist incidents on lodging-use rates in Italy between 1995 and 1997. We make use of data on domestic as well as international terrorism at the city level to explore more localized implications of terrorist incidents. We find that lodgings used by foreign visitors are the most sensitive to terrorist attacks and that the incidents have the largest impact during the year of the attack.