Analysis of the Competitiveness of Indonesia Tourism Price Compared to the Competitors (Demand Elasticity Approach)

Abstract

This study applies Almost Ideal Demand System models to examine Indonesia's competitiveness as a tourist destination compared to two main competitor countries. The model was used to estimate the sensitivity of tourism demand from seven tourist-main market countries to price changes, the tourists' total budget and global economic crisis. The model estimated result meets the assumptions of the demand theory: homogeneity and symmetry. The elasticity price shows that Indonesia is more competitive than Thailand among Australian and American tourists; while Indonesia is more competitive than Malaysia among American tourists. The research result also shows that the tourism price is the main determinant affecting the allocation of tourist expenditure in the three destinations.

Multicollinearity in Tourism Demand Model : Evidence from Indonesia

“…Thailand is a complementary country to Indonesia. This result is in line with previous research conducted by Utami et al (2016). Foreign tourists, especially those from Asia Pacific (Malaysia, Singapore, Australia, Japan, and the Philippines) visit Thailand and Indonesia the most compared to other countries in Southeast Asia (see Table 6 in appendix), so the results of this study are following the reality (Asean Statistics, 2020).…”

“…This study also proves that an increase in the exchange rate (depreciation against the country of origin or USD) can increase tourism demand in Indonesia. The results of this study are following the theory and previous research conducted by Utami et al (2016). Tourist sensitivity is indeed inelastic, but the opposite is true when compared to models that use relative prices.…”

“…The results of this study are in line with Choyakh (2008); F. ; Ouerfelli (2008), namely the negative effect of substitution prices means that Indonesian tourist destinations are considered complementary to Thai tourist destinations. Empirical research for the Indonesian case study shows that Japanese tourists visiting Thailand view Indonesia as a complementary country (Utami et al, 2016).…”

Pengaruh Pariwisata terhadap Pertumbuhan Ekonomi di Indonesia

“…Semakin naik nilai tukar apresiasi sebesar 1%, maka menyebabkan jumlah kunjungan wisatawan mancanegara menurun sebesar 0,933616%. Menurut (Utami, Hartono, & Awirya, 2016), ketika mata uang negara tujuan mengalami apresiasi, nilai tukar mata uang negara asal wisatawan mancanegara terhadap negara tujuan akan melemah, sehingga harga akan meningkat. Hal tersebut akan berakibat pada menurunnya daya beli wisatawan dan mengurangi jumlah kunjungan wisatawan mancanegara.…”

Factors influencing the Middle East tourist travelling to Malaysia: The quantile estimates

“…The findings indicate that tourism demand has been influenced by tourism prices level. Utami et al (2016) also compared Indonesia's tourism prices with Malaysia and Thailand, as these are the competing markets to some extent, using the almost ideal demand system (AIDS) model (Androniceanu, 2017). The authors concluded that the main factor influencing tourist expenditures in all three countries is tourism prices.…”