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.