The Determinants of Foreign Tourism Demand to Indonesia: Gravity Model Approach

: This study aims to analyse determinants of foreign tourists demand to visit Indonesia. As one of potential sources of foreign exchange, tourism sector in Indonesia become necessary to foster the Indonesian’s economic growth. Declining in number of local tourist is not as matter as foreign tourist since it has a potential source of foreign exchange. Gravity model of travel cost for foreign tourism is estimated using panel data consisting of eight countries during 2009-2016. Data are obtained from Statistics Indonesia (BPS) and the World Bank data. The results show that, GDP per capita of both domestic and foreigners also population are significant factors that increase foreign tourists demand. One of a significant factor that lower the number of foreign tourist visiting Indonesia is the distance from the origin country foreigner travelled from. In addition, the appreciation of Indonesia (domestic) exchange rate against $US also decrease foreign tourism demand. This research suggests that, Indonesian policy should provide a guarantee of airline access for tourists in order to attract more visitors. Thus, the increasing in such foreigners to visit Indonesia will lead to expanding in job creation and the increasing share of GDP which finally strengthen the Indonesian economy.