The role of cultural distance in boosting international tourism arrivals in ASEAN: a gravity model

Abstract

Purpose This study aims to explore the role of cultural distance, economic integration, price competitiveness and substitution prices for tourism arrivals between 10 Southeast Asian (ASEAN) countries and 22 other origin countries from 2007 to 2019. Design/methodology/approach A panel-data gravity model is applied to estimate tourism demand in the ASEAN region. An index of cultural distance (time-variant) is introduced to examine the role of cultural differences across bilateral partners. Moreover, relative prices and substitution prices are introduced to the gravity equation to estimate price elasticities. Finally, this study tested whether the ASEAN free trade agreements (FTAs) encourage intraregional tourism arrivals. Two-panel regression approaches are used to test the model. Findings Cultural distance positively affects tourism inflows, boosting foreign arrivals. Income and price elasticities are important determinants in the demand model for ASEAN. A gain in price competitiveness versus alternative destinations can lead to substitution in destination choice. Meanwhile, geographic distance has a negative impact on arrivals, suggesting that connectivity and transportation are key in boosting tourism inflows in ASEAN. A decline in the disposable incomes of tourists caused by the COVID-19 pandemic may reduce tourism arrivals in the region. However, when currencies in ASEAN weaken, and consumer prices are lower than in other destinations, arrivals in ASEAN will be stimulated. FTAs have facilitated travel intra-ASEAN, which is an advantage over the extra-ASEAN sector. Practical implications Cultural heritage could be used in tourism promotion as ASEAN can attract tourists seeking novelty and new excitements. ASEAN countries could create complementary destinations and jointly promote cultural heritage to accelerate the region’s recovery. The depreciation of currencies in ASEAN and the gain in relative price competitiveness could attract more tourist visits, helping the region reestablish tourism activities in a postpandemic economy. Originality/value The model accounts for three key variables in the gravity approach: cultural distance in ASEAN tourism inflows, the effects of the ASEAN economic community on intraregional tourism, and relative and alternative price competitiveness. This study enriches the literature about tourism-demand approaches in modeling tourism arrivals.