Stability of Inbound Tourism Demand Models for Indonesia and Malaysia: The Pre-and Postformation of Tourism Development Organizations

Abstract

The purpose of this study was to examine the stability of inbound tourism demand models for Indonesia and Malaysia as a function of increasing government intervention in tourism. Specifically, it investigated the differences in the estimated model parameters before and after formation of tourism development organizations at each destination. The major determinants included in the demand model were income, price, and time trend. The Wald test was applied to examine the possibility of a structural change in the tourism demand between the pre-and postorganization formation periods. The results support the hypothesis, thus important marketing implications for the tourism industries in Indonesia and Malaysia were discussed.

The determinants of inbound tourism demand in Malaysia: another visit with non-stationary panel data approach

“…This is consistent with the prevailing economic theory and also with findings of past studies (e.g. Choyakh, 2008;Kim & Song, 1998;Lee, 1996;Narayan, 2004;Ouerfelli, 2008;Salleh et al, 2010;Serra, Correia, & Rodrigues, 2014;Surugiu, Leitão, & Surugiu, 2011;Tan et al, 2002). In addition, this study shows that the tourism can be considered as a luxury item, given that the income elasticity is greater than unity.…”

“…This is consistent with the theory of consumer behaviour and that of earlier studies (e.g. Kadir et al, 2008;Narayan, 2004;Salleh et al, 2008;Seetanah et al, 2010;Surugiu et al, 2011;Tan et al, 2002;Witt & Martin, 1987). The coefficient of lnP MAL,t reveals that by holding other factors constant, a 10% increase in the price of tourism in Malaysia would result in a 6.5% decline in per capita tourist arrivals from these 12 major tourism markets.…”

“…Kadir et al, 2008;Kadir & Karim, 2009;Ooi et al, 2013;Salleh et al, 2007;Tan et al, 2002) highlighted that the impact of own price of tourism on demand tends to be negative and statistically significant at the conventional levels of 1, 5, and 10%. However, Arsad and Johor (2010) and Kusni et al (2013) found a significant positive relationship between own price of tourism and tourism demand in Malaysia, while the impact of price of tourism in other destinations on demand for tourism is found to be positive and statistically significant.…”

“…In fact, many other studies also used per capita tourist arrivals (e.g. Fernandes & Karnik, 2010;Garín-Muñoz, 2006;Tan et al, 2002). Additionally, some key explanatory variables such as income, CO 2 emissions, and crime rate are also calculated in per capita terms.…”

“…Some studies (e.g. Habibi et al, 2009;Hanafiah & Harun, 2010;Kadir et al, 2008;Kadir, Nayan, & Abdullah, 2013;Salleh et al, 2008Salleh et al, , 2007Tan, McCahon, & Miller, 2002) found that income has a significant positive impact on tourism demand in Malaysia. However, Kusni, Kadir, and Nayan (2013) and Ooi, Hooy, and Som (2013) discovered that income does not explain tourism demand in Malaysia.…”