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Impact of Social Instability on Tourism Industry (Regional Case Study)

Dr. Muhammad Imran1, Dr. Muhammad Kaleeem2, Anas Baryal3

Abstract
Social Instability and threats to national security are documented to have
impact on tourism demand. This research focuses on the impact of terrorist activities
on the hotel industry of Swat4 during the period of 2006 to 2010. The proposed model
based on two different points in time to terrorist attacks. This study uses panel data in
order to estimate the impact of Social Instability on hotel industry of Swat. Results
show that terrorist activities have negatively affected the Swat’ hotel industry as
observed form the cases of Mingora and Fizzagat. The attacks caused a shock to
tourist’s utility and a change in the image profile of the region. Moreover, it is found
that while some places experienced a strongly negative impact in their image and
attractiveness, others were upgraded as a consequence of terror events. But surprising
results are obtained that after social stability in 2010 the business level of hotel
industry rose by many fold. JEL classification: J21, J28, O18, L83

Key words: Social stability; rural development; hotel industries; tourism