Elsevier

Tourism Management

Volume 24, Issue 4, August 2003, Pages 475-487
Tourism Management

Events in Indonesia: exploring the limits to formal tourism trends forecasting methods in complex crisis situations1

https://doi.org/10.1016/S0261-5177(02)00115-2Get rights and content

Abstract

The desire to know the future is as old as humanity. For the tourism industry the demand for accurate foretelling of the future course of events is a task that consumes considerable energy and is of great significance to investors. This paper examines the issue of forecasting by comparing forecasts of inbound tourism made prior to the political and economic crises that engulfed Indonesia from 1997 onwards with actual arrival figures. The paper finds that current methods of forecasting are not able to cope with unexpected crises and other disasters and that alternative methods need to be examined including scenarios, political risk and application of chaos theory. The paper outlines a framework for classifying shocks according to a scale of severity, probability, type of event, level of certainty and suggested forecasting tools for each scale of shock.

Introduction

International tourism flows are subject to disruption by a range of events that may occur in the destination itself, in competing destinations, origin markets, or they may be remote from either. The consequences may be either mild and relatively short term or have catastrophic impacts on existing industry systems. Major disruptions, also referred to as shocks, are felt in both origin and destination areas, affect both the public and private sectors and disrupt the travel plans of intending travelers. In recent years major disruptions that have affected international tourism flows include the Gulf War, the Asian financial crisis (Office of National Tourism, 1998) and more recently, the September 11, 2001 terrorist attack on the US. Commenting on disruptions suffered by the tourism industry, which he classified as either crises or disasters, Faulkner (2001, p.136) noted that “relatively little systematic research has been carried out on disaster phenomena in tourism, the impacts of such events on the tourism industry and the responses of industry and relevant government agencies to cope with these impacts”. Further, Faulkner stated that because of disruptions of this nature research is required to assist the tourism industry to recover from events that are usually not forecastable. In contrast, during normal or tranquil times forecasting has proved to be a useful planning tool and predictions of future tourism activity and is widely used by governments and the industry (Uysal & Crompton, 1985; Chu, 1998; Witt and Song, 2001). Forecasting generally uses a range of analytical techniques based on recent and current tourist flows between origin markets and destinations as well as a range of economic factors to predict future trends. However, the difficulty of predicting future economic activity, particularly in times of uncertainty, is an issue that has long bedeviled forecasters.

This paper is concerned with various events that have the potential to disrupt established flows, resulting in subsequent tourist activity which is very different from the trends forecast in either overall level of activity, the pattern of flows, or both. The paper explores strategies that may be employed to improve the effectiveness of forecasting in circumstances where there are few pre-existing indicators of factors that may adversely affect national tourism flows at some point in the future. Recent events in Indonesia are used as a case study to build this discussion. The paper develops a conceptual framework that synthesises the issues identified but does not attempt to develop a detailed alternative forecasting model; its purpose is to suggest a direction that may offer an alternative to supplement current forecasting methods.

Section snippets

A critique of forecasting techniques

Calantone, Benedetto, and Bofanic, (1987) distinguished between four forms of forecasting. Exploratory forecasting extrapolates past trends using regression and similar techniques and is based on assumptions about relationships between variables. Normative forecasting incorporates discussion of the methods needed to attain a desired future outcome. Integrative forecasting relies on a variety of methods to determine the underlying relationships amongst a variety of forecasts, integrating these

Factors that may influence tourism flows

Throughout recorded human history it has proved impossible to predict the future, although many have tried. Faulkner (2001), for example, cites the importance of oracles in classical Greece and noted their failures. What is known of the future is that there are a number of circumstances that may exert influence on the course of events in following years. Events that disrupt the tourism industry can be divided into three groups:

Role of government in the unexpected

There has been limited discussion about the mechanisms that may be used to assist tourism cope with the certainty of the unexpected, and a general criticism of the literature relating to tourism forecasting is that limited attention has been given to the impact of unforseen political and economic crises on policy development. Friedman (1999) suggested that the vulnerability of individual countries to shocks has increased exponentially as a consequence of the increase in inter-locking systems

Case study—Indonesia

During the 10 year period 1987–1997, Indonesia achieved a 475 per cent increase in inbound tourism with arrivals climbing from 1,060,000 to 5,036,000. A significant feature of the growth during this period was a shift from traditional European, US and Australian markets to intra-regional travel from Asia, a result of the high and sustained growth of Asian economies. WTO (1994) had estimated that the growth rate throughout the 1990s would average between 13 and 15 per cent per annum, a target

Modelling disruptions to tourism

A model of the factors influencing tourism flows between an origin and a specific destination was proposed by Laws (1995). The direction, frequency and intensity of tourist flows are the cumulative outcome of several influences either creating push conditions in the origin, or pulling visitors towards the destination. The approach is similar to Dann (1977), who explains that push factors are those that provide the impetus for individuals to travel, raising the question of where to go. According

Disruptions and forecasting the future

History has consistently demonstrated a propensity to move beyond the expected with unexpected shocks that disrupt the smooth and ordered unfolding of human affairs. Shocks must now be regarded as an integral feature of the tourism system and while unforecastable in the short term should be factored into long-term expectations. In these circumstances the unfolding of the future as a function of past relationships ceases, and a new dynamic occurs imposing a new set of relationships between the

A risk forecasting approach

From the research conducted for this paper it is apparent that there are unresolved difficulties faced by forecasters. While the future will never be able to be predicted with a reasonable degree of certainty, except perhaps for the inevitability of taxes and eventual mortality, a sense of how current factors and tensions might influence the future may offer forecasters a window to the future. The need for forecasting is apparent given the long gestation periods of capital-intensive tourism

Conclusion

The task faced by forecasters is enormous and made more difficult by deficiencies in current techniques. The problem of forecasting can be demonstrated by the following example. A forecaster, asked to develop travel projections between 1910 and 1920, would have recognised some political tensions in the Balkans but would not have been able to forecast the effect of the First World War. The forecasting problem illustrated by this example remains unresolved in the present era.

Understanding the

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    1

    This paper is one of the last in which Bill Faulkner was involved before his untimely death in early 2002. Despite the illness from which he never recovered, Bill continued to advise us as this paper progressed. We wish to acknowledge the profound influence of Bill's insights into key tourism issues and emerging tourism theory, and to pay tribute to the pleasure of working with him.

    Deceased.

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