IMPACTS AND IMPLICATIONS OF A PANDEMIC ON TOURISM DEMAND IN INDONESIA
IMPACTS AND IMPLICATIONS OF A PANDEMIC ON TOURISM DEMAND IN INDONESIA

Summary/Abstract: This paper estimates the economic losses inIndonesia's tourism sector due to the COVID-19pandemic using an Autoregressive Integrated MovingAverage Model (SARIMA). Additionally, an autoregressivedistributed lag model (ARDL) is employed to estimate thedemand for tourism in Indonesia from the six largestinbound tourist countries, from 1989 to 2019. The resultspredict a decrease of nearly 16.65 million tourists and apotential loss of US$19.07 billion from January 2020-March 2021. Income per capita, relative prices, andsubstitution prices significantly impact the demand fromoverseas travelers for tourism opportunities in Indonesia.Tourism in Indonesia is considered as a luxury with acompetitive price. The country could capitalize on the highwillingness to pay of foreign tourists, strong incomeelasticity, and a positive perception of Chinese tourists.Complementary tourism promotion policies fromneighboring countries could help to attract more Chinesevisitors. Inbound tourism from India may experience thelargest negative impact from COVID-19 due to the largeincome elasticity, negative price elasticity, and a possiblesubstitution in destinations amid changes in prices.Tourists from Singapore and Australia may soon revisit asthey see Indonesia as an inexpensive destination. Japanmay revisit depending on whether tourism prices inIndonesia remain competitive or not. Policy makers mayinvestigate non-price policies as price-oriented ones willnot be very effective.

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