Open AccessDeterminants of Tourism Demand in Indonesia: A Panel Data Analysis
Author(s) -
Muryani Muryani,
Mia Fauzia Permatasari,
Miguel Angel Esquivias
Publication year - 2020
Publication title -
tourism analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.56
H-Index - 36
eISSN - 1943-3999
pISSN - 1083-5423
DOI - 10.3727/108354220x15758301241666
Subject(s) - tourism , accommodation , panel data , per capita income , per capita , economics , government (linguistics) , relative price , business , value (mathematics) , economic impact analysis , monetary economics , geography , econometrics , population , linguistics , philosophy , demography , archaeology , neuroscience , machine learning , sociology , computer science , biology , microeconomics
By 2014 Indonesia registered 11.6 million inbound foreign tourists, 135% higher than the year 2000. Since then, government policies to promote tourism flourished. This article investigates the determinants of inbound tourism from the top nine mayor tourist origin countries into Indonesia covering the period of 2000 to 2014. This research employs a dynamic panel dataset to estimate the impact of per capita real income, relative prices, accommodation capacity, distance, and public infrastructure investment on international tourism demand in Indonesia, capturing demand- and supply-side effects. The results show that per capita income of tourists, relative price, and available rooms have a positive effect on tourism expenditure in Indonesia, while distance has a negative effect. Dummy variables capture large negative shocks in tourism arising from two terrorist attacks in 2002 and 2005, as well as from the global financial crisis in 2008. Income plays a positive but low impact on tourism demand compared to other nations. The positive effect of prices suggests an advantage of Indonesia in competitive tourism prices. Nevertheless, low prices also denote low value in tourism services. The substantial impact of accommodation may indicate that significant effects of tourism are allocated in lodging, minimizing the impact on other sectors.