Abstract
This study aims to analyze the determinants of foreign tourists visiting 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 2004-2013. 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. Bomb attack reduced the number of foreign tourists. Tourists from western and ASEAN countries were more likely to visit Indonesia than others. Indonesian policy should guarantee with security to tourists to attract more arrivals
Highlights
Tourism is one of important sectors in the economy
Bomb attacks have the culprit of such decline in the number of tourist arrivals
Indonesian policy should provide a guarantee of safety to foreign tourists in order to attract more tourists travelling to Indonesia
Summary
The sector is a powerful tool for national economic growth and has significantly generated employment. For the United Kingdom, Italy, Hong Kong and Singapore, the growth of the tourism industry contributes towards economic growth, while for the United States, Spain, Malaysia and China, the growth of the economy is the leading factor to tourism development. This is consistent to a study by Çağlayan et al (2012) showing that there is bidirectional causality, but this findings support the comprehensive conclusion about the relationship between tourism and economic growth
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