Determinants of Demand for Foreign Tourism in Indonesia

Abstract

This study aims to analyse the determinants of foreign tourists coming to Indonesia. Tourism sector is important in Indonesian economy because it is one of potential sources of foreign exchange and promotes economic growth. Decrease in number of domestic tourists is not as important as foreign ones since the later can be a potential source of foreign exchange. Model of travel cost demand for tourism is estimated using panel data, consisting of 34 countries across the globe during 2002-2011. Data were compiled from Indonesian Statistical Agency and the World Bank database. The result shows that distance is a one of significant factors that reduces the number of foreign tourists coming to Indonesia. The richer and larger countries boost greater amount of tourists traveling to Indonesia. Bomb attack reduced the number of foreign tourists. Tourists from western and ASEAN countries were more likely to visit Indonesia than others. Last, the trend of foreign tourists increased after significant fall because of bomb attacks. Indonesian policy should provide a guarantee of safety to tourists in order to attract more arrivals. Increase in such visit will lead to increase in job creation and share of GDP, and eventually strengthen Indonesian economy.

The Effect of Tourism and Market Institutional Policies on Tourist Visits from ASEAN Countries

“…The use of tourism demand theory as an instrument in tourist behaviour analysis usually puts the output measurement or quick result as a dependent variable. Several variables used to measure the results of tourism service are: 1 International Tourist Arrivals (Brakke, 2005;Botti et al, 2006, Larson, 2008Kareem, 2008;Altin & Uysal, 2009;Padhan, 2011;Rochester, 2011;Asemota & Bala, 2012;Webb & Chotithamwattana, 2013;Athanasopoulos et al, 2013;Mamula, 2015;Mei, 2015;Sinaj, 2015;Amalia, 2015;Ulfa, 2016;Mariyono, 2017) 2 Average Length of Stay (Teresa & Amaral, 2000). 3 Visitor/Tourists Consumption Expenditure (Proença & Soukiazis, 2005;Song et al, 2008) The number of foreign tourists visits becomes the mostly used dependent variable compared to the length of stay and travel expenses.…”

“…Social proxy is also developed in a number of model as a form of turbulence and social phenomena that weaken and strengthen of tourism demand. In this case, some research showed some proxies, as the number of unemployment in US (Rochester, 2011), the crime rate used to measure the criminal cases in Africa continent (Kareem, 2008), and bomb attacks (Mariyono, 2017).…”

“…All studies place policies as dummy variables with various meanings. Mariyono (2017) utilized a dummy to explain the importance of providing policies that guarantee security for tourists. Chasapopoulos et al (2014) stated that Greek policy to become an Olympic event was not favorable for tourism.…”

“…It is useful to reduce the perspective disparity. Some national studies have examined the issue, but the studies have not been able to explicitly improve the effectiveness of these policies (Mariyono, 2017;Ulfa, 2017;Amalia, 2015). This study focuses on Indonesian tourist visits and the influencing factors.…”

Energy Goods Demand in Tabalong Regency: Almost-Ideal Demand System Approach

“…Sulistio, Wirabhuana, & Wiratama (2017) examined the demand for electricity in Indonesia using Dynamic Modelling method. Mariyono (2017) employed a Linear Functional Form Model to estimate the demand model for tourism in Indonesia. The similar research topic was conducted by Bhakti (2011) using the Linear-Approximation of Almost-Ideal Demand System (LA-AIDS).…”