Abstract
Numerous studies have shown that terrorist attacks at a tourist destination reduce the level of inbound tourism and encourage tourists to travel to neighbouring destinations. However, few studies have examined how terrorist attacks influence the substitution effect between different forms of tourism within the destinations at which the attacks take place, such as the substitution between wine (rural) tourism and urban tourism. This two-staged study examines the effects of terrorist attacks on international tourist flows to France. A gravity model is first estimated to assess the effect of terrorist attacks on the total inbound tourism demand. A system of equations model is then estimated to assess the substitution effects between the seven major wine tourism regions and the urban areas in which the attacks occur. The results demonstrate that terrorist attacks have a negative effect on the inbound tourist flows to France and that wine tourism serves as a substitute for urban tourism following terrorist attacks.