An ARDL Approach: How Robust Is Guatemala's International Tourism Demand?

Abstract

An autoregressive distributed lag (ARDL) bounds testing to cointegration was used to test the robustness of Guatemala's tourism demand from Canada, Costa Rica, El Salvador, Honduras, Mexico, Nicaragua, Panama, and the US. A robustness check was conducted on income, price, and travel cost variables. The magnitudes of the estimated income elasticity values differ from 1.41 (Panama) to 4.86 (Nicaragua). It is a greater luxury for Canada, Costa Rica, Mexico, Nicaragua, and the US than tourists from El Salvador, Honduras, and Panama. In the long run, a 1% steady growth in income in Canada and El Salvador would lead to an increase in tourist arrivals by 4.33% and 3.28%, respectively, ceteris paribus. Similar results, except for El Salvador and Panama, were found for the price and the cost of travel variables. This findings on the price and cost variables imply that its statistical significance does not depend on the measures used. The results are robust to the inclusion of a composite price or separated price, and exchange rate, price of oil or price of diesel, and related independent variables in the regression. These results can assist in policy formulation and management, strategic marketing, product development, and tourism planning.