Citation:

Sarah Bahiyah, Banatul Hayati "Determinants of International Tourist Arrivals to Indonesia and the Impact of the COVID-19 Pandemic: An Augmented Gravity Model Approach" International Research Journal of Economics and Management Studies, Vol. 5, No. 9, pp. 111-118, 2026. Crossref. https://doi.org/10.56472/25835238/IRJEMS-V5I9P112

Abstract:

International tourist arrivals to Indonesia declined sharply during the COVID-19 pandemic, underscoring the need to understand the factors shaping international tourism flows. This study examines the determinants of international tourist arrivals to Indonesia using an augmented gravity model, drawing on panel data from ten major origin countries (Malaysia, Singapore, China, Japan, South Korea, India, Australia, the United Kingdom, France, and the United States) over 2015–2024. The conventional gravity framework is extended with population, exchange rate, institutional quality, direct-flight availability, and a COVID-19 pandemic dummy. Estimation uses Poisson Pseudo-Maximum Likelihood (PPML) to address heteroskedasticity and zero-valued observations, with pooled ordinary least squares (OLS) as a robustness check. Results show that geographic distance and the pandemic have significant negative effects on tourist arrivals, while exchange rate and direct-flight availability have significant positive effects. Institutional quality also has a significant negative effect, consistent with a substitution effect between domestic and outbound tourism in origin countries. Origin-country GDP per capita, Indonesia’s GDP per capita, and population are statistically insignificant, likely reflecting limited variation among the ten high-volume origin markets. These findings indicate that connectivity and real travel costs matter more than economic size in shaping tourism flows to Indonesia, suggesting that policy should prioritize expanding direct flight access and monitoring exchange rate competitiveness.

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Keywords:

COVID-19 Pandemic, Direct Flights, Indonesia, Institutional Quality, Poisson Pseudo-Maximum Likelihood, Tourism Demand.