Dissecting the Economics of Tourism and Its Influencing Variables—Facts on the National Capital City (IKN)

Abstract

The field of tourism economics has consistently attracted big attention from scholars across various countries. Tourism is inherently linked to economic aspects. Concurrently, Indonesia has relocated its Ibu Kota Negara/National Capital City, now named “IKN”, from Jakarta to East Kalimantan. In addition to extensive public infrastructure development, the Indonesian government is also working to revitalize the tourism sector in IKN. To assess the economic feasibility of this sector, an in-depth study is necessary. This research aims to examine labor absorption, tourist visits, and economic growth as indicators of successful tourism economic performance. It also analyzes the variables that influence these indicators, including (1) wages, (2) occupancy rates, (3) room rates, (4) food and beverage facilities, (5) inflation, (6) hotel and lodging taxes, (7) restaurant and eating-house taxes, and (8) investment. The regression testing method employs Ordinary Least Squares (OLS). According to the data analyzed from 2013 to 2024, the authors identified three main points: First, tourist visits and inflation have positive and significant impacts on labor absorption. Second, labor absorption, wages, occupancy rates, economic growth, and investment positively and significantly influence tourist visits. Third, tourist visits, room rates, food and beverage facilities, and inflation have positive and significant effects on economic growth. The implications of this research can be enlightening for regulators and future initiatives. This is particularly important for guiding further empirical investigations and policy planning aimed at accelerating economic development in the tourism sector.