IS VIETNAM'S TOURISM DEMAND MODEL COMPATIBLE WITH THE EXTENDED GRAVITY MODEL?

Abstract

The purpose of this study is to use an extended gravity model to examine the factors that influence the demand for tourism from origin nations to Vietnam. Data from eleven major marketplaces were gathered for the study between 2005 and 2020. The research employs stepwise regression techniques to choose variables and testing procedures to identify the most suitable model among Ordinary Least Squares (OLS), Random Effects Model (REM), Fixed Effects Model (FEM), and Feasible Generalized Least Squares (FGLS) models. The gravity model comprises variables associated with geographic features, tourism supply capacity, demand attributes, and interconnected variables. Surprisingly, geographical distance holds no statistical significance in the international tourist demand model based on the gravity model, a phenomenon bolstered by globalization. Conversely, the emerging investment factor in restaurants and hotels emerges as the most pivotal determinant influencing tourism demand. Hence, the tourism sector must devise nation-specific policies that target key influencing factors and actively appeal to potential source markets to attract visitors.