<![CDATA[This study develops and tests an integrated model explaining how external environmental conditions are converted into smart and sustainable tourism outcomes through Artificial Intelligence (AI) adoption in South Sulawesi, Indonesia. Using the PESTEL framework, the study examines political, economic, social, technological, environmental, and legal conditions as macro-environmental forces that shape AI adoption in destination management. Unlike studies that treat PESTEL factors mainly as contextual descriptors or assume their direct influence on tourism performance, this research positions AI as a socio-technical translation mechanism that turns external readiness and pressure into operational destination capabilities. A mixed-methods approach was applied by combining Structural Equation Modeling with qualitative insights from interviews and focus group discussions involving 200 stakeholders from government, industry, academia, business associations, and local tourism communities across Bira Beach, Bantimurung, Takabonerate, and Toraja. The results show that PESTEL factors significantly influence AI adoption, while their direct effect on smart and sustainable tourism is not significant. AI adoption has a significant positive effect on smart and sustainable tourism and mediates the relationship between PESTEL factors and tourism outcomes. These findings suggest that favorable external conditions are necessary but insufficient; sustainable destination transformation requires AI-enabled capabilities for data-driven decisions, visitor-flow management, service personalization, environmental monitoring, and community-inclusive digital participation. The South Sulawesi setting contributes additional theoretical insight because it represents an emerging destination region with strong cultural and ecological assets but uneven infrastructure, digital literacy, and institutional readiness. The study contributes to tourism and technology literature by extending PESTEL from a diagnostic framework into an antecedent of AI-enabled destination capability and by explaining AI as a mediator linking macro-environmental forces with smart, inclusive, and sustainable tourism development.]]>
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