Taxes, Terrorism and Tourism: A Global Model of Situational Choice

This research studies the effects of taxes and significant terrorism events on tourism markets in the United States and Europe. Data from Las Vegas, Nevada and Mallorca, Spain are used for comparative purposes. Key events in this research are 9/11, the Madrid train bombings, and tax policy change. ARIMA models with interventions are used to empirically test for significant interventions in the time series studied. The research links situational theory and the consumer choice approach to present a heuristic that governments and tourism operators can use to help predict and mitigate the impact of taxes and terrorism on their respective entities. The research will show that terrorist events impact tourism domestically but not internationally. The research will also show that tax policy can have a more significant impact on tourism than terrorist events.