J01497
Asia Pacific Journal of Tourism Research
ISSN: 1094-1665 (Print) 1741-6507 (Online) Journal homepage: http://www.tandfonline.com/loi/rapt20
Tourism destination decisions: the impact of risk
aversion and prior experience
Albert Nugraha, Hamin Hamin & Greg Elliott
To cite this article: Albert Nugraha, Hamin Hamin & Greg Elliott (2016) Tourism destination
decisions: the impact of risk aversion and prior experience, Asia Pacific Journal of Tourism
Research, 21:12, 1274-1284, DOI: 10.1080/10941665.2016.1141225
To link to this article: http://dx.doi.org/10.1080/10941665.2016.1141225
View supplementary material
Published online: 12 Apr 2016.
Submit your article to this journal
Article views: 233
View related articles
View Crossmark data
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=rapt20
Download by: [Albert Nugraha]
Date: 08 February 2017, At: 17:03
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH, 2016
VOL. 21, NO. 12, 1274–1284
http://dx.doi.org/10.1080/10941665.2016.1141225
Tourism destination decisions: the impact of risk aversion and prior
experience
Albert Nugraha†, Hamin Hamin‡ and Greg Elliott
Department of Marketing and Management, Faculty of Business and Economics, Macquarie University, Sydney, North Ryde,
New South Wales, Australia
ABSTRACT
KEYWORDS
This study broadly explores the impact of risk aversion on tourists’ destination decisions
and, in particular, explores for differences in individuals’ leisure and medical tourism
destination decisions. The results of this study indicate that risk aversion significantly
distinguishes tourists’ destination decisions in both leisure and medical tourism in
Indonesia, but not in Singapore. All risk-averse groups are less likely to visit Indonesia
than Singapore for leisure and medical purposes. By contrast, all risk-averse groups are
likely to visit Singapore for leisure purposes, although they remain unlikely to travel to
Singapore for medical tourism. In addition, the study found that the impact of prior
experience on the likelihood that the two risk-averse groups will travel to Indonesia
and Singapore for leisure was significant. Conversely, the effects of prior experience
on medical tourism generally do not significantly differ between the two countries.
Analysis of variance; risk
aversion; prior experience;
leisure tourism; medical
tourism
Introduction
This study explores tourism in two contexts: leisure and
medical tourism. In the tourism literature, the overwhelming majority of studies has focused on leisure
tourism (see Towner, 1995). In fact, few or no comparative studies have been conducted involving leisure
tourism and other tourism settings, such as medical
tourism. The justification for comparing these two
tourism services is mainly that they can be regarded as
exemplars of different categories in the typology of
experience-credence services (Darby & Karni, 1973;
Nelson, 1970). Although leisure and medical tourism
share the same historical origins (Altin, Singal, & Kara,
2011), this study is based on the premise that both
leisure and medical tourism differ in their risk levels.
Medical tourism is considered as being riskier than
general leisure tourism, given that it involves additional
risk elements, such as having post-operative infections in
the country of destination, returning to the home
country following surgery, and having potential malpractice issues after surgery (Crooks, Kingsbury, Snyder,
& Johnston, 2010).
The present study aims to contribute to tourism
research by undertaking a comparison of destination
decisions based on consumers’ risk aversion and
prior experience profiles in the service settings of
leisure and medical tourism. To date, such a comparison has not been undertaken in the tourism literature.
Prior experience is, self-evidently, a potential predictor
of tourists’ attitudes towards risk and of tourists’
associated behaviour (Reichel, Fuchs, & Uriely, 2007)
and it can negate the influence of risk factors in consumer decisions (March, 1996). As a result, people
are likely to modify their tendencies (i.e. risk aversion)
towards the same choice based on their prior experience. Thus, although tourists may be similar in the
degree of their risk aversion, consumers may nonetheless differ in their tourism choices based on prior
experience. The effects of risk aversion and prior
CONTACT Albert Nugraha
albert.nugraha@mq.edu.au
This article makes reference to supplementary material available on the publisher’s website at http://dx.doi.org/10.1080/10941665.2016.
1141225
†
Present address: Department of Management, Faculty of Economics and Business, Satya Wacana Christian University, Salatiga, Indonesia
‡
Present addresses: Faculty of Business and Economics, Krida Wacana Christian University, Jakarta, Indonesia; Faculty of Business and Economics,
Gadjah Mada University, Bulaksumur, Daerah Istimewa Yogyakarta, Indonesia
© 2016 Asia Pacific Tourism Association
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
experience are likely to be independent although conceptually linked.
Against this background, exploring the differential
and combined effects of risk aversion and prior experience across different respondent groups is potentially
worthwhile. Tourism marketers can utilize the findings
from the present study for market segmentation, in
customizing marketing communications and in communicating the tourism experience. In particular, the
marketers may determine whether they need to
develop distinct marketing programs for both leisure
and medical tourism services, and for experienced
and inexperienced travellers. The tourism sector (in
particular, the global medical tourism sector) has enormous potential for economic development. The sector
has been estimated to generate revenue of up to $60
billion, with a 20% annual market growth rate
(Banerjee, Nath, Dey, & Eto, 2015).
Literature review
Within the tourism literature, a number of studies have
explored differences in tourists’ attitudes and behaviours concerning visiting a destination country for
different travel purposes. For instance, previous
studies compared tourist behaviours based on
whether the tourists travelled on a honeymoon or
for pleasure (Mok & Iverson, 2000), to visit friends or
relatives (Feng & Page, 2000), to go on a holiday, to
go on a business trip, to attend a convention/conference, for employment reasons, or for educational purposes (Collins & Tisdell, 2002). However, these studies
did not consider the issue of the risk properties that
are associated with the purchase of a tourism service.
In general, purchasing a tourism service can be
regarded as an inherently risky decision (Sirakaya &
Woodside, 2005). The importance of risk factors in
the tourism industry around the world encouraged
Yang and Nair (2014) to review 46 selected articles
on risks and perceived risks in tourism, which are
broken down into four main themes: the concept of
risk, safety, and security; the trends in research into
risk in tourism; the definition and antecedents of perceived risk; and risk as a positive element. In particular,
Yang and Nair (2014) highlight the overlap among
definitions of risk, safety, and security in tourism.
Some scholars distinguish these three concepts (Hall,
Timothy, & Duval, 2004). Another scholar positioned
security and safety as elements in the measurement
of risk (Fuchs & Reichel, 2006). Tourism security
relates to human-induced issues such as crime,
1275
terrorism, and national security (Hall et al., 2004),
while tourism safety relates to non-human induced
issues such as health, physical factors, and natural disasters (Floyd, Gibson, Pennington-Gray, & Thapa,
2004). The nature of tourism security has evolved
and includes issues such as health, social, and environmental aspects (Floyd et al., 2004).
Following from the recognition of the central
importance of risk, the question arises as to the
likely differential effects of risk properties based on
travel purposes. In particular, the continuum of risk
properties that are associated with different purposes
of travel might result in different tourism service
evaluations and decisions. For instance, travelling to
a country of destination for leisure purposes seems
likely to be less risky than travelling to the same
country for medical treatment (see Johnston, Crooks,
Snyder, & Kingsbury, 2010). This assumption is consistent with the proposed service typology of Mitra, Reiss,
and Capella (1999), who classify types of service based
on the extent of prior knowledge and perceived risks.
Following their typology, the current study positions
leisure tourism as an “experience” service and
medical tourism as a “credence” service.
Leisure and medical tourism
Leisure and medical tourism can be located in the framework of the service typology proposed by Mitra
et al. (1999), which was developed from Nelson
(1974) and Darby and Karni (1973). In particular,
leisure tourism is positioned as an “experience”
service and medical tourism as a “credence” service.
An experience service is a service type for which consumers are confident in their judgment of the service
only after an actual purchase and consumption, such
as in the case of hotels, restaurants, and hair salons
(Ostrom & Iacobucci, 1995). In contrast, a credence
service is a service for which consumers lack confidence in their judgment of the service, even after
their own purchase and consumption. For instance,
it is frequently difficult for the patient to judge the
success or quality of chemotherapy treatment or invasive surgery, even after the procedure is completed.
Experience and credence services are positioned
along a continuum based on the availability of information and knowledge prior to purchase and consumption. This continuum represents varying levels
of uncertainty that, in turn, lead to varying levels of
perceived risk (Mitra et al., 1999). It is relatively easy
for visitors to a country of destination for leisure
1276
A. NUGRAHA ET AL.
tourism (i.e. experience service) to access relevant
attribute information such as the standard of accommodations and tourist facilities, foods, destination
attractions, and gifts. It is even easier for visitors to
evaluate the leisure tourism during, and after, the
experience. By contrast, it is likely to be more difficult
to access relevant, comprehensive, and trustworthy
information concerning travelling to a country of destination for medical treatment (i.e. credence service)
because medical tourists are likely to evaluate the
service experience based on the outcome of the
medical treatment (i.e. success rate of the medical procedure). Furthermore, additional risk elements are
associated with medical tourism services, such as
having post-operative infections in the country of destination, returning to the home country following
surgery, and having potential malpractice issues
after surgery (Crooks et al., 2010). Even in the
absence of post-operative complications, it may still
be difficult to evaluate aspects such as the quality of
the surgeon’s work or the effectiveness of the
surgery. Such issues position medical tourism as significantly riskier than leisure tourism.
Despite the fact that tourism purchasing is considered a risky decision, tourists will still choose to
travel overseas with different travel motivations
between leisure and medical tourism. For instance,
tourists are likely to be motivated to travel overseas
for leisure purposes to seek novelty and self-esteem;
enhance their egos or to socialize, rest, and relax
(Jang, Bai, Hu, & Wu, 2009); as well as to seek pleasure/fantasy or knowledge about culture (Jönsson &
Devonish, 2008). Meanwhile, tourists are more likely
to visit a country of destination for medical purposes
to save money for health-care expenditures (Heung,
Kucukusta, & Song, 2010); to avoid long wait-times,
or to access procedures which are not available or
that are illegal in their home countries (Crooks,
Turner, Snyder, Johnston, & Kingsbury, 2011); and/or
to obtain permanent residential status or seek reputable health providers (Ye, Qiu, & Yuen, 2011).
The role of risk attitudes in destination
decisions
Risk aversion is a major construct that can apply when
considering consumers’ decision-making and rational
choices (March, 1996). This construct has been discussed in many tourism studies (Lepp & Gibson,
2008; Reichel et al., 2007) and is a recognized predictor
of destination decisions (Ryan, 1995). Risk aversion is
defined as “an individual’s degree of negative attitude
towards risk arising from outcome uncertainty”
(Mandrik & Bao, 2005, p. 533). The basic principle is
that a “risk-averse” group tends to prefer a less-risky
choice and that a “risk-taker” group is willing to
make a riskier choice for the same expected value
(e.g. visiting a high-risk country destination). Purchasing a tourism service is a risky decision (Sirakaya &
Woodside, 2005), particularly when the destination
country is perceived to be risky due to associations
with war, terrorism, or corruption (Lovelock, 2004).
By applying this principle, Hypothesis 1 is formulated
as follows:
Hypothesis 1: Risk-takers are more likely to visit a country
of destination than risk-averse.
Risk aversion might differ based on the context of
the tourism. Leisure tourism can be regarded as an
“experience” service because tourists are likely to be
more confident in judging the quality of a service
when they have had direct experience (e.g. prior
visit experience). By contrast, medical tourism can be
regarded as a “credence” service based on the
assumption that tourists are more likely to have difficulties in evaluating the service outcome, even following the service experience. This claim is based on the
assumption that visitors are likely to be less confident
in evaluating the success of a medical procedure (e.g.
surgery) that is conducted by a health provider in a
country of destination even after they have returned
to their home country. These additional risk properties
imply that medical tourism is riskier than leisure
tourism. Following the principle of risk aversion and
the experience – credence service typology, Hypothesis 2 is proposed as follows:
Hypothesis 2: The likelihood that both “risk-taker” and
“risk-averse” groups will visit a destination country is
higher for leisure than for medical tourism.
The role of prior experience in risk attitudes
Prior experience is an important predictor of behaviour (Bentler & Speckart, 1981) and an important variable for increasing the predictability of consumers’
attitudes on behaviour (San Martin, Collado, &
Rodriguez del Bosque, 2012). A lack of knowledge
about tourism destinations and a lack of knowledge
regarding future conditions are two main sources of
risk in tourism (Williams & Baláž, 2013). Given that
prior experience is a facet of consumer knowledge
(Brucks, 1985), the extent of one’s prior experience
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
may distinguish the level of risk perception, which, in
turn, may significantly distinguish between destination decisions.
Consumers may apply prior experience as a tool to
reduce uncertainty in the purchase of high-involvement products or services (Smith & Swinyard, 1982).
Slovic et al. in Sitkin and Pablo (1992) argue that
prior experience increases the extent of confidence
in risk-associated behaviours. Prior experience has
been studied extensively in tourism studies (Ma,
Gao, Scott, & Ding, 2013; Park & Jang, 2014). Although
these studies have provided mixed results, prior
experience is considered to be an important variable
in understanding and predicting tourists’ behaviour.
Prior experience and risk aversion may have important independent effects, although their interactive
effects are less predictable. For example, prior experience might reinforce the extent to which risk aversion
influences a destination decision. A favourable prior
experience results in a more positive reinforcement
of destination decisions, and, logically, would also
lead to lowered perceptions of risk. Therefore, the
combination of “risk taker and experience” should
lead to the highest likelihood of visiting a country of
destination. By contrast, the combination of “riskaverse and no experience” should result in the
lowest likelihood that an individual would visit a
country of destination. An unfavourable prior experience would result in negative evaluation and
reinforcement in making a destination decision.
These two effects follow the principles of the expectation-disconfirmation theory (Oliver, 1980), in which
prior experience may lead to either positive or negative evaluative judgments regarding a product or
service, such as a tourism destination. These judgments, in turn, increase or decrease the likelihood of
a subsequent destination decision.
Although they are interrelated, risk aversion and
prior experience stem from different theoretical explanations regarding individual choices (March, 1996). The
former construct, risk aversion, is derived from theories
of rational choice. By contrast, the latter construct, prior
experience, derives from theories of experiential learning. However, combining these two perspectives
(March, 1996), and following the principles of the
expectation-disconfirmation theory and learning from
experience, Hypothesis 3 can be expressed as follows:
Hypothesis 3: Destination decisions of “risk-taker” and
“risk-averse” consumers differ with respect to prior visit
experiences.
1277
Perceived risk is considered as an element of destination image (Lepp, Gibson, & Lane, 2011), which indicates that risk is likely to escalate when tourists visit a
country of destination with an unfavourable image.
Country image is argued to influence the risk evaluation of products (Liefeld, 1993), in that products
from less-developed countries are perceived to be
riskier than products from more developed countries
(Laroche, Papadopoulos, Heslop, & Mourali, 2005).
Therefore, this study also examines whether risk
attitudes and prior experience exhibit a consistent
pattern of influence across different country images.
Method
To test the research hypotheses, a sample survey
was conducted using an online self-report survey in
February 2013. The respondents were recruited
through a national consumer panel, in which a provider of online access panels administered responses
from general respondents who were 18 years and
above (see Table 2). Australian respondents across
states were asked their opinions and intentions to
visit Indonesia or Singapore for leisure and medical
purposes. These countries were chosen because
they differ in terms of tourism competitiveness and
attractiveness, but are located in the same region
(i.e. Southeast Asia). The 2015 Travel & Tourism Competitiveness Report reported that Indonesia was
ranked 50th, whereas Singapore is among the
leading countries in tourism, ranked 11th in the
world in the same report (World Economic Forum,
2015).
Indonesian inbound tourism in 2013 contributed to
9.3% of international tourist arrivals in the Southeast
Asia market, whereas Singapore tourism generated
12.6% of that same market share (UNWTO, 2015). In
addition, Indonesian inbound tourism in the same
year accounted for revenues of 9.5% of the Southeast
Asia market, whereas Singapore contributed to 21.4%
(UNWTO, 2013). In terms of the medical tourism infrastructure, Indonesia has 16 internationally accredited
hospitals, whereas Singapore has 10 internationally
accredited hospitals (Joint Commission International,
2015).
The current study provides empirical evidence that
Singapore is perceived as having a better country
image than Indonesia, as shown in Table 1. In the
context of the tourism industry, Indonesia is considered
among high-risk country destinations (Lovelock, 2004);
conversely, Singapore is considered a low-risk
1278
A. NUGRAHA ET AL.
destination (Enright & Newton, 2004). Various incidents
– such as the Bali bombings (Hitchcock & Darma Putra,
2005); aeroplane crashes (Henderson, 2009) and the
Aceh tsunami (Sharpley, 2005) – have contributed to
depicting Indonesia as a risky destination.
The questionnaire included items from previous
studies, with some necessary modifications. The questionnaires consisted of five items of risk aversion
(Mandrik & Bao, 2005); one binomial item of prior
experience (Lam & Hsu, 2004); three items of consumer tourism decisions (Hanzaee & Khosrozadeh,
2011); and five items of country image (Martínez &
Alvarez, 2010). A Likert scale that ranged from 1 =
strongly disagree to 5 = strongly agree was applied
for the response items of risk aversion and destination
decisions. Country image was measured using fivepoint Likert scale.
Subsequently, the data were analysed using t-tests
and analysis of variance (ANOVA) to examine the
differences in destination decisions for leisure and
medical tourism in Indonesia and Singapore. The
first stage of analysis used a t-test to examine the
differences in destination decisions based on a risk
Table 1. Country image comparison between Indonesia and
Singapore.
Mean score
No.
1
2
3
4
5
Country image
Indonesia
Singapore
p-Value
Economic development
Political stability
Social conditions
Quality of products
Quality of tourism services
1.96
1.96
1.89
2.35
2.62
3.07
2.82
2.67
2.93
3.20
.000
.000
.000
.000
0.000
aversion measurement. The subsequent analysis
extended the comparison of destination decisions by
adding prior experience. The results are shown in
two matrices that represent destination decisions
regarding leisure and medical tourism for both Indonesia and Singapore as destination countries. The
matrices form four cells that indicate the following
four respondent categories: “risk taker and experienced”, “risk-averse and experienced”, “risk-averse
and non-experienced”, and “risk taker and nonexperienced”.
Findings
Respondents’ characteristics
This study involved a sample of Australian respondents who completed self-report surveys through a
national online consumer panel. The study included
two respondent groups that evaluated leisure and
medical tourism in Indonesia and Singapore. The
first group consisted of 511 respondents who evaluated tourism services in Indonesia, and the second
group included 513 respondents who evaluated
tourism services in Singapore. A total of 1,024 respondents completed the survey in February 2013. Table 2
shows that the highest proportion of the sample for
both groups was female, was in the 57–69 age
group, had completed a high school education, and
had an income from $20,000 to $40,000 categories.
The respondents in both groups fell mostly in the category of “risk-averse with no experience”. The
Table 2. Socio-demographic profiles of respondents.
No
1
Variable
Gender
2
Age
3
Education
4
Income
5
Risk aversion
Category
Male
Female
18–30
31–43
44–56
57–69
>70
Primary school
High school or equivalent
Vocational college
Bachelor’s degree
Master’s degree or above
Under $20,000
$20,000 to less than $40,000
$40,000 to less than $60,000
$60,000 to less than $80,000
$80,000 to less than $100,000
$100,000 and over
Risk takers
Risk aversive
Indonesia
202
309
68
98
133
155
57
5
183
153
138
32
63
114
94
88
50
102
243
268
%
37.2
62.8
10.9
19.1
27.5
34.1
8.4
1.0
34.7
33.9
20.9
9.6
10.1
25.1
19.7
15.0
13.8
16.2
47.6
52.4
Singapore
191
322
56
98
141
175
43
5
178
174
107
49
52
129
101
77
71
83
229
284
%
39.5
60.5
13.3
19.2
26.0
30.3
11.2
1.0
35.8
29.9
27.0
6.3
12.3
22.3
18.4
17.2
9.8
20.0
44.6
55.4
Sig.
.450
.335
.064
.128
.350
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
equivalence of sample proportions based on demographic profiles was tested through the use of the
Chi-square test. The results indicate that all sample
proportions between the two groups are not significantly different (see Table 2).
1279
Singapore. There are significant differences between
travel decisions to Singapore for leisure and medical
purposes. Both risk-taker and risk-averse groups are
more likely to visit Singapore for leisure than for
medical purposes. The findings, therefore, support
Hypothesis 2 (Table 4).
Test 1: risk attitudes comparison
The purpose of Test 1 is to examine the differential
effects of risk attitudes on destination decisions. In
addition, the differential effects of the service type
(i.e. leisure (“search”) and medical (“credence”)) on
destination decisions were examined for each riskseeking behaviour category. At this stage, a t-test
analysis was applied for the leisure and medical
tourism categories.
Test 2: risk attitudes vis-à-vis prior experience
matrix
Test 2 extends the findings of Test 1. In this section,
ANOVAs were applied to “risk-averse” and “risk
taker” consumers. The results are presented in
Figures 1 and 2 for tourism in Indonesia and Singapore, respectively.
Indonesian tourism context
Differential effects of risk attitudes
This section presents the differences in destination
decisions based on the risk aversion categories (i.e.
risk-taker and risk-averse) for two types of services,
leisure and medical tourism. The differences were
tested using independent samples and a t-test analysis. Table 1 shows significant differences between the
risk-taker and risk-averse groups in regard to travel
decisions to Indonesia for both leisure and medical
purposes. Although the respondents were less likely
to visit Indonesia, the risk-averse group expressed a
significantly higher reluctance than the risk-taker
group to visit Indonesia for both leisure and medical
purposes. By contrast, no significant differences were
found between the risk-taker and risk-averse groups
regarding travel decisions to Singapore for both
leisure and medical purposes. However, regardless of
their levels of risk aversion, respondents are generally
more likely to visit Singapore for leisure than for
medical purposes. These results, therefore, generally
support Hypothesis 1, particularly in terms of Indonesian tourism (Table 3).
Differential effects of a tourism service
The following results reveal the differences for each
risk aversion group when evaluating leisure and
medical tourism. Table 2 shows that each risk-averse
group is reluctant to visit Indonesia for both purposes.
However, the results clearly indicate significant differences between destination decisions concerning
leisure and medical tourism in Indonesia. All riskaverse groups are more reluctant to visit Indonesia
for medical than for leisure purposes. A similar result
is shown in the context of tourism services in
Figure 1 indicates that the “risk-taker and experienced” group is the most likely to visit Indonesia for
leisure purposes (3.67). Conversely, the “risk-averse
and non-experienced” group is the least likely to
visit Indonesia for leisure purposes (2.09). Regardless
of the extent of risk aversion, the respondents are
more likely to visit Indonesia for leisure purposes as
long as they are in the “experienced” group (>3).
Although the “non-experienced” groups are unlikely
to visit Indonesia for leisure (
ISSN: 1094-1665 (Print) 1741-6507 (Online) Journal homepage: http://www.tandfonline.com/loi/rapt20
Tourism destination decisions: the impact of risk
aversion and prior experience
Albert Nugraha, Hamin Hamin & Greg Elliott
To cite this article: Albert Nugraha, Hamin Hamin & Greg Elliott (2016) Tourism destination
decisions: the impact of risk aversion and prior experience, Asia Pacific Journal of Tourism
Research, 21:12, 1274-1284, DOI: 10.1080/10941665.2016.1141225
To link to this article: http://dx.doi.org/10.1080/10941665.2016.1141225
View supplementary material
Published online: 12 Apr 2016.
Submit your article to this journal
Article views: 233
View related articles
View Crossmark data
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=rapt20
Download by: [Albert Nugraha]
Date: 08 February 2017, At: 17:03
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH, 2016
VOL. 21, NO. 12, 1274–1284
http://dx.doi.org/10.1080/10941665.2016.1141225
Tourism destination decisions: the impact of risk aversion and prior
experience
Albert Nugraha†, Hamin Hamin‡ and Greg Elliott
Department of Marketing and Management, Faculty of Business and Economics, Macquarie University, Sydney, North Ryde,
New South Wales, Australia
ABSTRACT
KEYWORDS
This study broadly explores the impact of risk aversion on tourists’ destination decisions
and, in particular, explores for differences in individuals’ leisure and medical tourism
destination decisions. The results of this study indicate that risk aversion significantly
distinguishes tourists’ destination decisions in both leisure and medical tourism in
Indonesia, but not in Singapore. All risk-averse groups are less likely to visit Indonesia
than Singapore for leisure and medical purposes. By contrast, all risk-averse groups are
likely to visit Singapore for leisure purposes, although they remain unlikely to travel to
Singapore for medical tourism. In addition, the study found that the impact of prior
experience on the likelihood that the two risk-averse groups will travel to Indonesia
and Singapore for leisure was significant. Conversely, the effects of prior experience
on medical tourism generally do not significantly differ between the two countries.
Analysis of variance; risk
aversion; prior experience;
leisure tourism; medical
tourism
Introduction
This study explores tourism in two contexts: leisure and
medical tourism. In the tourism literature, the overwhelming majority of studies has focused on leisure
tourism (see Towner, 1995). In fact, few or no comparative studies have been conducted involving leisure
tourism and other tourism settings, such as medical
tourism. The justification for comparing these two
tourism services is mainly that they can be regarded as
exemplars of different categories in the typology of
experience-credence services (Darby & Karni, 1973;
Nelson, 1970). Although leisure and medical tourism
share the same historical origins (Altin, Singal, & Kara,
2011), this study is based on the premise that both
leisure and medical tourism differ in their risk levels.
Medical tourism is considered as being riskier than
general leisure tourism, given that it involves additional
risk elements, such as having post-operative infections in
the country of destination, returning to the home
country following surgery, and having potential malpractice issues after surgery (Crooks, Kingsbury, Snyder,
& Johnston, 2010).
The present study aims to contribute to tourism
research by undertaking a comparison of destination
decisions based on consumers’ risk aversion and
prior experience profiles in the service settings of
leisure and medical tourism. To date, such a comparison has not been undertaken in the tourism literature.
Prior experience is, self-evidently, a potential predictor
of tourists’ attitudes towards risk and of tourists’
associated behaviour (Reichel, Fuchs, & Uriely, 2007)
and it can negate the influence of risk factors in consumer decisions (March, 1996). As a result, people
are likely to modify their tendencies (i.e. risk aversion)
towards the same choice based on their prior experience. Thus, although tourists may be similar in the
degree of their risk aversion, consumers may nonetheless differ in their tourism choices based on prior
experience. The effects of risk aversion and prior
CONTACT Albert Nugraha
albert.nugraha@mq.edu.au
This article makes reference to supplementary material available on the publisher’s website at http://dx.doi.org/10.1080/10941665.2016.
1141225
†
Present address: Department of Management, Faculty of Economics and Business, Satya Wacana Christian University, Salatiga, Indonesia
‡
Present addresses: Faculty of Business and Economics, Krida Wacana Christian University, Jakarta, Indonesia; Faculty of Business and Economics,
Gadjah Mada University, Bulaksumur, Daerah Istimewa Yogyakarta, Indonesia
© 2016 Asia Pacific Tourism Association
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
experience are likely to be independent although conceptually linked.
Against this background, exploring the differential
and combined effects of risk aversion and prior experience across different respondent groups is potentially
worthwhile. Tourism marketers can utilize the findings
from the present study for market segmentation, in
customizing marketing communications and in communicating the tourism experience. In particular, the
marketers may determine whether they need to
develop distinct marketing programs for both leisure
and medical tourism services, and for experienced
and inexperienced travellers. The tourism sector (in
particular, the global medical tourism sector) has enormous potential for economic development. The sector
has been estimated to generate revenue of up to $60
billion, with a 20% annual market growth rate
(Banerjee, Nath, Dey, & Eto, 2015).
Literature review
Within the tourism literature, a number of studies have
explored differences in tourists’ attitudes and behaviours concerning visiting a destination country for
different travel purposes. For instance, previous
studies compared tourist behaviours based on
whether the tourists travelled on a honeymoon or
for pleasure (Mok & Iverson, 2000), to visit friends or
relatives (Feng & Page, 2000), to go on a holiday, to
go on a business trip, to attend a convention/conference, for employment reasons, or for educational purposes (Collins & Tisdell, 2002). However, these studies
did not consider the issue of the risk properties that
are associated with the purchase of a tourism service.
In general, purchasing a tourism service can be
regarded as an inherently risky decision (Sirakaya &
Woodside, 2005). The importance of risk factors in
the tourism industry around the world encouraged
Yang and Nair (2014) to review 46 selected articles
on risks and perceived risks in tourism, which are
broken down into four main themes: the concept of
risk, safety, and security; the trends in research into
risk in tourism; the definition and antecedents of perceived risk; and risk as a positive element. In particular,
Yang and Nair (2014) highlight the overlap among
definitions of risk, safety, and security in tourism.
Some scholars distinguish these three concepts (Hall,
Timothy, & Duval, 2004). Another scholar positioned
security and safety as elements in the measurement
of risk (Fuchs & Reichel, 2006). Tourism security
relates to human-induced issues such as crime,
1275
terrorism, and national security (Hall et al., 2004),
while tourism safety relates to non-human induced
issues such as health, physical factors, and natural disasters (Floyd, Gibson, Pennington-Gray, & Thapa,
2004). The nature of tourism security has evolved
and includes issues such as health, social, and environmental aspects (Floyd et al., 2004).
Following from the recognition of the central
importance of risk, the question arises as to the
likely differential effects of risk properties based on
travel purposes. In particular, the continuum of risk
properties that are associated with different purposes
of travel might result in different tourism service
evaluations and decisions. For instance, travelling to
a country of destination for leisure purposes seems
likely to be less risky than travelling to the same
country for medical treatment (see Johnston, Crooks,
Snyder, & Kingsbury, 2010). This assumption is consistent with the proposed service typology of Mitra, Reiss,
and Capella (1999), who classify types of service based
on the extent of prior knowledge and perceived risks.
Following their typology, the current study positions
leisure tourism as an “experience” service and
medical tourism as a “credence” service.
Leisure and medical tourism
Leisure and medical tourism can be located in the framework of the service typology proposed by Mitra
et al. (1999), which was developed from Nelson
(1974) and Darby and Karni (1973). In particular,
leisure tourism is positioned as an “experience”
service and medical tourism as a “credence” service.
An experience service is a service type for which consumers are confident in their judgment of the service
only after an actual purchase and consumption, such
as in the case of hotels, restaurants, and hair salons
(Ostrom & Iacobucci, 1995). In contrast, a credence
service is a service for which consumers lack confidence in their judgment of the service, even after
their own purchase and consumption. For instance,
it is frequently difficult for the patient to judge the
success or quality of chemotherapy treatment or invasive surgery, even after the procedure is completed.
Experience and credence services are positioned
along a continuum based on the availability of information and knowledge prior to purchase and consumption. This continuum represents varying levels
of uncertainty that, in turn, lead to varying levels of
perceived risk (Mitra et al., 1999). It is relatively easy
for visitors to a country of destination for leisure
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A. NUGRAHA ET AL.
tourism (i.e. experience service) to access relevant
attribute information such as the standard of accommodations and tourist facilities, foods, destination
attractions, and gifts. It is even easier for visitors to
evaluate the leisure tourism during, and after, the
experience. By contrast, it is likely to be more difficult
to access relevant, comprehensive, and trustworthy
information concerning travelling to a country of destination for medical treatment (i.e. credence service)
because medical tourists are likely to evaluate the
service experience based on the outcome of the
medical treatment (i.e. success rate of the medical procedure). Furthermore, additional risk elements are
associated with medical tourism services, such as
having post-operative infections in the country of destination, returning to the home country following
surgery, and having potential malpractice issues
after surgery (Crooks et al., 2010). Even in the
absence of post-operative complications, it may still
be difficult to evaluate aspects such as the quality of
the surgeon’s work or the effectiveness of the
surgery. Such issues position medical tourism as significantly riskier than leisure tourism.
Despite the fact that tourism purchasing is considered a risky decision, tourists will still choose to
travel overseas with different travel motivations
between leisure and medical tourism. For instance,
tourists are likely to be motivated to travel overseas
for leisure purposes to seek novelty and self-esteem;
enhance their egos or to socialize, rest, and relax
(Jang, Bai, Hu, & Wu, 2009); as well as to seek pleasure/fantasy or knowledge about culture (Jönsson &
Devonish, 2008). Meanwhile, tourists are more likely
to visit a country of destination for medical purposes
to save money for health-care expenditures (Heung,
Kucukusta, & Song, 2010); to avoid long wait-times,
or to access procedures which are not available or
that are illegal in their home countries (Crooks,
Turner, Snyder, Johnston, & Kingsbury, 2011); and/or
to obtain permanent residential status or seek reputable health providers (Ye, Qiu, & Yuen, 2011).
The role of risk attitudes in destination
decisions
Risk aversion is a major construct that can apply when
considering consumers’ decision-making and rational
choices (March, 1996). This construct has been discussed in many tourism studies (Lepp & Gibson,
2008; Reichel et al., 2007) and is a recognized predictor
of destination decisions (Ryan, 1995). Risk aversion is
defined as “an individual’s degree of negative attitude
towards risk arising from outcome uncertainty”
(Mandrik & Bao, 2005, p. 533). The basic principle is
that a “risk-averse” group tends to prefer a less-risky
choice and that a “risk-taker” group is willing to
make a riskier choice for the same expected value
(e.g. visiting a high-risk country destination). Purchasing a tourism service is a risky decision (Sirakaya &
Woodside, 2005), particularly when the destination
country is perceived to be risky due to associations
with war, terrorism, or corruption (Lovelock, 2004).
By applying this principle, Hypothesis 1 is formulated
as follows:
Hypothesis 1: Risk-takers are more likely to visit a country
of destination than risk-averse.
Risk aversion might differ based on the context of
the tourism. Leisure tourism can be regarded as an
“experience” service because tourists are likely to be
more confident in judging the quality of a service
when they have had direct experience (e.g. prior
visit experience). By contrast, medical tourism can be
regarded as a “credence” service based on the
assumption that tourists are more likely to have difficulties in evaluating the service outcome, even following the service experience. This claim is based on the
assumption that visitors are likely to be less confident
in evaluating the success of a medical procedure (e.g.
surgery) that is conducted by a health provider in a
country of destination even after they have returned
to their home country. These additional risk properties
imply that medical tourism is riskier than leisure
tourism. Following the principle of risk aversion and
the experience – credence service typology, Hypothesis 2 is proposed as follows:
Hypothesis 2: The likelihood that both “risk-taker” and
“risk-averse” groups will visit a destination country is
higher for leisure than for medical tourism.
The role of prior experience in risk attitudes
Prior experience is an important predictor of behaviour (Bentler & Speckart, 1981) and an important variable for increasing the predictability of consumers’
attitudes on behaviour (San Martin, Collado, &
Rodriguez del Bosque, 2012). A lack of knowledge
about tourism destinations and a lack of knowledge
regarding future conditions are two main sources of
risk in tourism (Williams & Baláž, 2013). Given that
prior experience is a facet of consumer knowledge
(Brucks, 1985), the extent of one’s prior experience
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
may distinguish the level of risk perception, which, in
turn, may significantly distinguish between destination decisions.
Consumers may apply prior experience as a tool to
reduce uncertainty in the purchase of high-involvement products or services (Smith & Swinyard, 1982).
Slovic et al. in Sitkin and Pablo (1992) argue that
prior experience increases the extent of confidence
in risk-associated behaviours. Prior experience has
been studied extensively in tourism studies (Ma,
Gao, Scott, & Ding, 2013; Park & Jang, 2014). Although
these studies have provided mixed results, prior
experience is considered to be an important variable
in understanding and predicting tourists’ behaviour.
Prior experience and risk aversion may have important independent effects, although their interactive
effects are less predictable. For example, prior experience might reinforce the extent to which risk aversion
influences a destination decision. A favourable prior
experience results in a more positive reinforcement
of destination decisions, and, logically, would also
lead to lowered perceptions of risk. Therefore, the
combination of “risk taker and experience” should
lead to the highest likelihood of visiting a country of
destination. By contrast, the combination of “riskaverse and no experience” should result in the
lowest likelihood that an individual would visit a
country of destination. An unfavourable prior experience would result in negative evaluation and
reinforcement in making a destination decision.
These two effects follow the principles of the expectation-disconfirmation theory (Oliver, 1980), in which
prior experience may lead to either positive or negative evaluative judgments regarding a product or
service, such as a tourism destination. These judgments, in turn, increase or decrease the likelihood of
a subsequent destination decision.
Although they are interrelated, risk aversion and
prior experience stem from different theoretical explanations regarding individual choices (March, 1996). The
former construct, risk aversion, is derived from theories
of rational choice. By contrast, the latter construct, prior
experience, derives from theories of experiential learning. However, combining these two perspectives
(March, 1996), and following the principles of the
expectation-disconfirmation theory and learning from
experience, Hypothesis 3 can be expressed as follows:
Hypothesis 3: Destination decisions of “risk-taker” and
“risk-averse” consumers differ with respect to prior visit
experiences.
1277
Perceived risk is considered as an element of destination image (Lepp, Gibson, & Lane, 2011), which indicates that risk is likely to escalate when tourists visit a
country of destination with an unfavourable image.
Country image is argued to influence the risk evaluation of products (Liefeld, 1993), in that products
from less-developed countries are perceived to be
riskier than products from more developed countries
(Laroche, Papadopoulos, Heslop, & Mourali, 2005).
Therefore, this study also examines whether risk
attitudes and prior experience exhibit a consistent
pattern of influence across different country images.
Method
To test the research hypotheses, a sample survey
was conducted using an online self-report survey in
February 2013. The respondents were recruited
through a national consumer panel, in which a provider of online access panels administered responses
from general respondents who were 18 years and
above (see Table 2). Australian respondents across
states were asked their opinions and intentions to
visit Indonesia or Singapore for leisure and medical
purposes. These countries were chosen because
they differ in terms of tourism competitiveness and
attractiveness, but are located in the same region
(i.e. Southeast Asia). The 2015 Travel & Tourism Competitiveness Report reported that Indonesia was
ranked 50th, whereas Singapore is among the
leading countries in tourism, ranked 11th in the
world in the same report (World Economic Forum,
2015).
Indonesian inbound tourism in 2013 contributed to
9.3% of international tourist arrivals in the Southeast
Asia market, whereas Singapore tourism generated
12.6% of that same market share (UNWTO, 2015). In
addition, Indonesian inbound tourism in the same
year accounted for revenues of 9.5% of the Southeast
Asia market, whereas Singapore contributed to 21.4%
(UNWTO, 2013). In terms of the medical tourism infrastructure, Indonesia has 16 internationally accredited
hospitals, whereas Singapore has 10 internationally
accredited hospitals (Joint Commission International,
2015).
The current study provides empirical evidence that
Singapore is perceived as having a better country
image than Indonesia, as shown in Table 1. In the
context of the tourism industry, Indonesia is considered
among high-risk country destinations (Lovelock, 2004);
conversely, Singapore is considered a low-risk
1278
A. NUGRAHA ET AL.
destination (Enright & Newton, 2004). Various incidents
– such as the Bali bombings (Hitchcock & Darma Putra,
2005); aeroplane crashes (Henderson, 2009) and the
Aceh tsunami (Sharpley, 2005) – have contributed to
depicting Indonesia as a risky destination.
The questionnaire included items from previous
studies, with some necessary modifications. The questionnaires consisted of five items of risk aversion
(Mandrik & Bao, 2005); one binomial item of prior
experience (Lam & Hsu, 2004); three items of consumer tourism decisions (Hanzaee & Khosrozadeh,
2011); and five items of country image (Martínez &
Alvarez, 2010). A Likert scale that ranged from 1 =
strongly disagree to 5 = strongly agree was applied
for the response items of risk aversion and destination
decisions. Country image was measured using fivepoint Likert scale.
Subsequently, the data were analysed using t-tests
and analysis of variance (ANOVA) to examine the
differences in destination decisions for leisure and
medical tourism in Indonesia and Singapore. The
first stage of analysis used a t-test to examine the
differences in destination decisions based on a risk
Table 1. Country image comparison between Indonesia and
Singapore.
Mean score
No.
1
2
3
4
5
Country image
Indonesia
Singapore
p-Value
Economic development
Political stability
Social conditions
Quality of products
Quality of tourism services
1.96
1.96
1.89
2.35
2.62
3.07
2.82
2.67
2.93
3.20
.000
.000
.000
.000
0.000
aversion measurement. The subsequent analysis
extended the comparison of destination decisions by
adding prior experience. The results are shown in
two matrices that represent destination decisions
regarding leisure and medical tourism for both Indonesia and Singapore as destination countries. The
matrices form four cells that indicate the following
four respondent categories: “risk taker and experienced”, “risk-averse and experienced”, “risk-averse
and non-experienced”, and “risk taker and nonexperienced”.
Findings
Respondents’ characteristics
This study involved a sample of Australian respondents who completed self-report surveys through a
national online consumer panel. The study included
two respondent groups that evaluated leisure and
medical tourism in Indonesia and Singapore. The
first group consisted of 511 respondents who evaluated tourism services in Indonesia, and the second
group included 513 respondents who evaluated
tourism services in Singapore. A total of 1,024 respondents completed the survey in February 2013. Table 2
shows that the highest proportion of the sample for
both groups was female, was in the 57–69 age
group, had completed a high school education, and
had an income from $20,000 to $40,000 categories.
The respondents in both groups fell mostly in the category of “risk-averse with no experience”. The
Table 2. Socio-demographic profiles of respondents.
No
1
Variable
Gender
2
Age
3
Education
4
Income
5
Risk aversion
Category
Male
Female
18–30
31–43
44–56
57–69
>70
Primary school
High school or equivalent
Vocational college
Bachelor’s degree
Master’s degree or above
Under $20,000
$20,000 to less than $40,000
$40,000 to less than $60,000
$60,000 to less than $80,000
$80,000 to less than $100,000
$100,000 and over
Risk takers
Risk aversive
Indonesia
202
309
68
98
133
155
57
5
183
153
138
32
63
114
94
88
50
102
243
268
%
37.2
62.8
10.9
19.1
27.5
34.1
8.4
1.0
34.7
33.9
20.9
9.6
10.1
25.1
19.7
15.0
13.8
16.2
47.6
52.4
Singapore
191
322
56
98
141
175
43
5
178
174
107
49
52
129
101
77
71
83
229
284
%
39.5
60.5
13.3
19.2
26.0
30.3
11.2
1.0
35.8
29.9
27.0
6.3
12.3
22.3
18.4
17.2
9.8
20.0
44.6
55.4
Sig.
.450
.335
.064
.128
.350
ASIA PACIFIC JOURNAL OF TOURISM RESEARCH
equivalence of sample proportions based on demographic profiles was tested through the use of the
Chi-square test. The results indicate that all sample
proportions between the two groups are not significantly different (see Table 2).
1279
Singapore. There are significant differences between
travel decisions to Singapore for leisure and medical
purposes. Both risk-taker and risk-averse groups are
more likely to visit Singapore for leisure than for
medical purposes. The findings, therefore, support
Hypothesis 2 (Table 4).
Test 1: risk attitudes comparison
The purpose of Test 1 is to examine the differential
effects of risk attitudes on destination decisions. In
addition, the differential effects of the service type
(i.e. leisure (“search”) and medical (“credence”)) on
destination decisions were examined for each riskseeking behaviour category. At this stage, a t-test
analysis was applied for the leisure and medical
tourism categories.
Test 2: risk attitudes vis-à-vis prior experience
matrix
Test 2 extends the findings of Test 1. In this section,
ANOVAs were applied to “risk-averse” and “risk
taker” consumers. The results are presented in
Figures 1 and 2 for tourism in Indonesia and Singapore, respectively.
Indonesian tourism context
Differential effects of risk attitudes
This section presents the differences in destination
decisions based on the risk aversion categories (i.e.
risk-taker and risk-averse) for two types of services,
leisure and medical tourism. The differences were
tested using independent samples and a t-test analysis. Table 1 shows significant differences between the
risk-taker and risk-averse groups in regard to travel
decisions to Indonesia for both leisure and medical
purposes. Although the respondents were less likely
to visit Indonesia, the risk-averse group expressed a
significantly higher reluctance than the risk-taker
group to visit Indonesia for both leisure and medical
purposes. By contrast, no significant differences were
found between the risk-taker and risk-averse groups
regarding travel decisions to Singapore for both
leisure and medical purposes. However, regardless of
their levels of risk aversion, respondents are generally
more likely to visit Singapore for leisure than for
medical purposes. These results, therefore, generally
support Hypothesis 1, particularly in terms of Indonesian tourism (Table 3).
Differential effects of a tourism service
The following results reveal the differences for each
risk aversion group when evaluating leisure and
medical tourism. Table 2 shows that each risk-averse
group is reluctant to visit Indonesia for both purposes.
However, the results clearly indicate significant differences between destination decisions concerning
leisure and medical tourism in Indonesia. All riskaverse groups are more reluctant to visit Indonesia
for medical than for leisure purposes. A similar result
is shown in the context of tourism services in
Figure 1 indicates that the “risk-taker and experienced” group is the most likely to visit Indonesia for
leisure purposes (3.67). Conversely, the “risk-averse
and non-experienced” group is the least likely to
visit Indonesia for leisure purposes (2.09). Regardless
of the extent of risk aversion, the respondents are
more likely to visit Indonesia for leisure purposes as
long as they are in the “experienced” group (>3).
Although the “non-experienced” groups are unlikely
to visit Indonesia for leisure (