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The research aims to analyze the innovation trigger factor in the tourism industry sector. The research about innovation in the tourism industry rarely found until nowadays. The researcher tries to analyze the effect of intellectual capital to innovation, intellectual capital to potential absorptive capacity (PACAP), the effect of intellectual capital to realized absorptive capacity (RACAP), The effect of PACAP to innovation with moderated by the cultural intelligence, and the effect of RACAP to innovation with moderated by the cultural intelligence. The research used primary data with 54 respondents, CEO (Chief Executive Officer) that manage tourism travel in Batam City. Through the analysis of Structural Equation Model (SEM) with SmartPLS version 3.0 software, can be resulted, there are: 1) Intellectual Capital doesn’t affect directly to the innovation, but it must use RACAP; 2) Intellectual capital affect to PACAP and RACAP: and 3) the variable of cultural intelligence only has role as predictor variable in moderate the relation PACAP and RACAP to innovation. The result of this research will use as a reference for the tourism managers in developing their business. Keywords—intellectual capital, innovation, Potential absorptive capacity (PACAP), Realized absorptive capacity (RACAP), cultural intelligence

Empirical Testing of the Mediating Effect of Absorptive Capacity and Moderation of Cultural Intelligence on Intellectual Capital and Innovation Analysis on the Tourism Industry