Muslim Countries and Tourist Arrivals to Indonesia: A Gravity Model Approach

Abstract

Recently, tourism industry has begun to draw attention of researchers as it became one of the biggest contributors to the country’s wealth in terms of services. According to the latest data from The World Tourism Organization (UNWTO), revenues from international tourism in the world were roughly half a billion dollars. Of the many studies that have been conducted about tourist arrivals in specific regions, only a few have discussed the motivation to travel based on the culture and the way of life of the tourists. This is important considering that tourism service providers need to understand the culture of the tourists in order to provide their needs. About a quarter of the world's population is Muslim, and their religion governs their way of life. These people constitute a significant market share for the tourism industry, so it is important to understand their tourism patterns. As a country with the largest Muslim population, Indonesia is ranked at top six beautiful countries in the world. Despite its beauty, Indonesia's position as the largest Muslim country potentially affects the decision of tourists from other Muslim countries to come. It is because religion is thought to be the main carrier and exposition of cultural similarity. Using a gravity model framework for bilateral tourism flows, this study seeks to estimate the effect of Muslim country on the number of inbound tourists in Indonesia. Our data set includes a panel of 33 countries of origin for the period 2001-2017. We use pooled least squares, fixed effect and random effect models for our estimations. Our results show the negative effect of Muslim country, implying that the number of inbound tourists to Indonesia from Muslim countries is smaller than those from non-Muslim countries. This finding indicates that Indonesia has not been able to attract Muslim tourists to visit. In line with the gravity model approach, most of the Muslim countries are geographically far from Indonesia, and this hampers the number of inbound tourists. Also, many Muslim countries have low level of per capita income, and among few Muslim countries with high per capita income typically have small population. Therefore, it is not religion similarity that matters in determining tourist arrivals from Muslim countries in Indonesia but rather on the economic capacity and travelling time.