IP: 5.10.31.210 On: Fri, 03 Apr 2020 23:47:15 Delivered by Ingenta Article(s) and/or figure(s) cannot be used for resale. Please use proper citation format when citing this article including the DOI, publisher reference, volume number and page location. Tourism Analysis, Vol. 25, pp. 77–89 1083-5423/20 $60.00 + .00 Printed in the USA. All rights reserved. DOI: https://doi.org/10.3727/108354220X15758301241666 Copyright Ó 2020 Cognizant, LLC. E-ISSN 1943-3999 www.cognizantcommunication.com 77 Address correspondence to Muryani, Faculty of Economics and Business, Universitas Airlangga. Jl. Airlangga No.4 - 6, Surabaya, East Java, 60115, Indonesia. E-mail: muryani@feb.unair.ac.id sector has reattracted the attention of Indonesian policymakers to launch tourism as a key sector to stimulate economic growth, create employment, increase foreign exchange income, encourage other supporting industries, and promote the natu- ral beauty and culture of Indonesia, among others. The national government set an ambitious target of reaching 20 million international tourists by 2019, doubling the contribution of tourism to GDP to 8%, Introduction In the last decades, tourism developed into one of the most dynamic and rapid growth sectors of the world. From 2000 to 2014, Indonesia also expe- rienced vast expansion of foreign tourist arrivals from 5.06 million to nearly 9.43 million travelers. Besides, tourism revenues doubled to more than US$11 billion. The rapid growth of the tourism DETERMINANTS OF TOURISM DEMAND IN INDONESIA: A PANEL DATA ANALYSIS MURYANI, MIA FAUZIA PERMATASARI, AND MIGUEL ANGEL ESQUIVIAS Faculty of Economics and Business, Universitas Airlangga, Surabaya, Indonesia By 2014 Indonesia registered 11.6 million inbound foreign tourists, 135% higher than the year 2000. Since then, government policies to promote tourism flourished. This article investigates the deter- minants of inbound tourism from the top nine mayor tourist origin countries into Indonesia covering the period of 2000 to 2014. This research employs a dynamic panel dataset to estimate the impact of per capita real income, relative prices, accommodation capacity, distance, and public infrastruc- ture investment on international tourism demand in Indonesia, capturing demand- and supply-side effects. The results show that per capita income of tourists, relative price, and available rooms have a positive effect on tourism expenditure in Indonesia, while distance has a negative effect. Dummy variables capture large negative shocks in tourism arising from two terrorist attacks in 2002 and 2005, as well as from the global financial crisis in 2008. Income plays a positive but low impact on tourism demand compared to other nations. The positive effect of prices suggests an advantage of Indonesia in competitive tourism prices. Nevertheless, low prices also denote low value in tourism services. The substantial impact of accommodation may indicate that significant effects of tourism are allocated in lodging, minimizing the impact on other sectors. Key words: Tourism demand; Inbound tourism; Dynamic panel model; Indonesia