Multicollinearity in Tourism Demand Model : Evidence from Indonesia

The demand for tourism in Indonesia continues to increase every year but cannot reach thepredetermined target. Studies on have been done a lot, especially Indonesia.The selection of the dependent variable is not problematic and acceptable,however, independent still unclear. This study aims provide anappropriate Indonesian model analyze determinants demandin Indonesia. estimation technique used static panel regression. results this studyprove that there multicollinearity when exchange rate relativeprice are combined into one model, showing relative price good proxies representingtourism price, substitution main inIndonesia. policy implications recommended monitoring economicgrowth origin countries most tourists visiting Indonesia, improving qual ity ofIndonesian tourism, developing Wonderful program.