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Asia Pacific Journal of Tourism Research

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Tourism destination decisions: the impact of riskaversion and prior experience

Albert Nugraha, Hamin Hamin & Greg Elliott

To cite this article: Albert Nugraha, Hamin Hamin & Greg Elliott (2016) Tourism destinationdecisions: the impact of risk aversion and prior experience, Asia Pacific Journal of TourismResearch, 21:12, 1274-1284, DOI: 10.1080/10941665.2016.1141225

To link to this article: http://dx.doi.org/10.1080/10941665.2016.1141225

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Tourism destination decisions: the impact of risk aversion and priorexperienceAlbert 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

ABSTRACTThis study broadly explores the impact of risk aversion on tourists’ destination decisionsand, in particular, explores for differences in individuals’ leisure and medical tourismdestination decisions. The results of this study indicate that risk aversion significantlydistinguishes tourists’ destination decisions in both leisure and medical tourism inIndonesia, but not in Singapore. All risk-averse groups are less likely to visit Indonesiathan Singapore for leisure and medical purposes. By contrast, all risk-averse groups arelikely to visit Singapore for leisure purposes, although they remain unlikely to travel toSingapore for medical tourism. In addition, the study found that the impact of priorexperience on the likelihood that the two risk-averse groups will travel to Indonesiaand Singapore for leisure was significant. Conversely, the effects of prior experienceon medical tourism generally do not significantly differ between the two countries.

KEYWORDSAnalysis of variance; riskaversion; prior experience;leisure tourism; medicaltourism

Introduction

This study explores tourism in two contexts: leisure andmedical tourism. In the tourism literature, the over-whelming majority of studies has focused on leisuretourism (see Towner, 1995). In fact, few or no compara-tive studies have been conducted involving leisuretourism and other tourism settings, such as medicaltourism. The justification for comparing these twotourism services is mainly that they can be regarded asexemplars of different categories in the typology ofexperience-credence services (Darby & Karni, 1973;Nelson, 1970). Although leisure and medical tourismshare the same historical origins (Altin, Singal, & Kara,2011), this study is based on the premise that bothleisure and medical tourism differ in their risk levels.Medical tourism is considered as being riskier thangeneral leisure tourism, given that it involves additionalrisk elements, suchashavingpost-operative infections inthe country of destination, returning to the home

country following surgery, and having potential mal-practice issues after surgery (Crooks, Kingsbury, Snyder,& Johnston, 2010).

The present study aims to contribute to tourismresearch by undertaking a comparison of destinationdecisions based on consumers’ risk aversion andprior experience profiles in the service settings ofleisure and medical tourism. To date, such a compari-son has not been undertaken in the tourism literature.Prior experience is, self-evidently, a potential predictorof tourists’ attitudes towards risk and of tourists’associated behaviour (Reichel, Fuchs, & Uriely, 2007)and it can negate the influence of risk factors in con-sumer decisions (March, 1996). As a result, peopleare likely to modify their tendencies (i.e. risk aversion)towards the same choice based on their prior experi-ence. Thus, although tourists may be similar in thedegree of their risk aversion, consumers may nonethe-less differ in their tourism choices based on priorexperience. The effects of risk aversion and prior

© 2016 Asia Pacific Tourism Association

CONTACT Albert Nugraha albert.nugraha@mq.edu.auThis 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

ASIA PACIFIC JOURNAL OF TOURISM RESEARCH, 2016VOL. 21, NO. 12, 1274–1284http://dx.doi.org/10.1080/10941665.2016.1141225

experience are likely to be independent although con-ceptually linked.

Against this background, exploring the differentialand combined effects of risk aversion and prior experi-ence across different respondent groups is potentiallyworthwhile. Tourism marketers can utilize the findingsfrom the present study for market segmentation, incustomizing marketing communications and in com-municating the tourism experience. In particular, themarketers may determine whether they need todevelop distinct marketing programs for both leisureand medical tourism services, and for experiencedand inexperienced travellers. The tourism sector (inparticular, the global medical tourism sector) has enor-mous potential for economic development. The sectorhas been estimated to generate revenue of up to $60billion, with a 20% annual market growth rate(Banerjee, Nath, Dey, & Eto, 2015).

Literature review

Within the tourism literature, a number of studies haveexplored differences in tourists’ attitudes and beha-viours concerning visiting a destination country fordifferent travel purposes. For instance, previousstudies compared tourist behaviours based onwhether the tourists travelled on a honeymoon orfor pleasure (Mok & Iverson, 2000), to visit friends orrelatives (Feng & Page, 2000), to go on a holiday, togo on a business trip, to attend a convention/confer-ence, for employment reasons, or for educational pur-poses (Collins & Tisdell, 2002). However, these studiesdid not consider the issue of the risk properties thatare associated with the purchase of a tourism service.

In general, purchasing a tourism service can beregarded as an inherently risky decision (Sirakaya &Woodside, 2005). The importance of risk factors inthe tourism industry around the world encouragedYang and Nair (2014) to review 46 selected articleson risks and perceived risks in tourism, which arebroken down into four main themes: the concept ofrisk, safety, and security; the trends in research intorisk in tourism; the definition and antecedents of per-ceived risk; and risk as a positive element. In particular,Yang and Nair (2014) highlight the overlap amongdefinitions of risk, safety, and security in tourism.Some scholars distinguish these three concepts (Hall,Timothy, & Duval, 2004). Another scholar positionedsecurity and safety as elements in the measurementof risk (Fuchs & Reichel, 2006). Tourism securityrelates to human-induced issues such as crime,

terrorism, and national security (Hall et al., 2004),while tourism safety relates to non-human inducedissues such as health, physical factors, and natural dis-asters (Floyd, Gibson, Pennington-Gray, & Thapa,2004). The nature of tourism security has evolvedand includes issues such as health, social, and environ-mental aspects (Floyd et al., 2004).

Following from the recognition of the centralimportance of risk, the question arises as to thelikely differential effects of risk properties based ontravel purposes. In particular, the continuum of riskproperties that are associated with different purposesof travel might result in different tourism serviceevaluations and decisions. For instance, travelling toa country of destination for leisure purposes seemslikely to be less risky than travelling to the samecountry for medical treatment (see Johnston, Crooks,Snyder, & Kingsbury, 2010). This assumption is consist-ent with the proposed service typology of Mitra, Reiss,and Capella (1999), who classify types of service basedon the extent of prior knowledge and perceived risks.Following their typology, the current study positionsleisure tourism as an “experience” service andmedical tourism as a “credence” service.

Leisure and medical tourism

Leisure and medical tourism can be located in the fra-mework of the service typology proposed by Mitraet 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 con-sumers are confident in their judgment of the serviceonly after an actual purchase and consumption, suchas in the case of hotels, restaurants, and hair salons(Ostrom & Iacobucci, 1995). In contrast, a credenceservice is a service for which consumers lack confi-dence in their judgment of the service, even aftertheir own purchase and consumption. For instance,it is frequently difficult for the patient to judge thesuccess or quality of chemotherapy treatment or inva-sive surgery, even after the procedure is completed.

Experience and credence services are positionedalong a continuum based on the availability of infor-mation and knowledge prior to purchase and con-sumption. This continuum represents varying levelsof uncertainty that, in turn, lead to varying levels ofperceived risk (Mitra et al., 1999). It is relatively easyfor visitors to a country of destination for leisure

ASIA PACIFIC JOURNAL OF TOURISM RESEARCH 1275

tourism (i.e. experience service) to access relevantattribute information such as the standard of accom-modations and tourist facilities, foods, destinationattractions, and gifts. It is even easier for visitors toevaluate the leisure tourism during, and after, theexperience. By contrast, it is likely to be more difficultto access relevant, comprehensive, and trustworthyinformation concerning travelling to a country of des-tination for medical treatment (i.e. credence service)because medical tourists are likely to evaluate theservice experience based on the outcome of themedical treatment (i.e. success rate of the medical pro-cedure). Furthermore, additional risk elements areassociated with medical tourism services, such ashaving post-operative infections in the country of des-tination, returning to the home country followingsurgery, and having potential malpractice issuesafter surgery (Crooks et al., 2010). Even in theabsence of post-operative complications, it may stillbe difficult to evaluate aspects such as the quality ofthe surgeon’s work or the effectiveness of thesurgery. Such issues position medical tourism as sig-nificantly riskier than leisure tourism.

Despite the fact that tourism purchasing is con-sidered a risky decision, tourists will still choose totravel overseas with different travel motivationsbetween leisure and medical tourism. For instance,tourists are likely to be motivated to travel overseasfor 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 plea-sure/fantasy or knowledge about culture (Jönsson &Devonish, 2008). Meanwhile, tourists are more likelyto visit a country of destination for medical purposesto save money for health-care expenditures (Heung,Kucukusta, & Song, 2010); to avoid long wait-times,or to access procedures which are not available orthat are illegal in their home countries (Crooks,Turner, Snyder, Johnston, & Kingsbury, 2011); and/orto obtain permanent residential status or seek repu-table health providers (Ye, Qiu, & Yuen, 2011).

The role of risk attitudes in destinationdecisions

Risk aversion is a major construct that can apply whenconsidering consumers’ decision-making and rationalchoices (March, 1996). This construct has been dis-cussed in many tourism studies (Lepp & Gibson,2008; Reichel et al., 2007) and is a recognized predictorof destination decisions (Ryan, 1995). Risk aversion is

defined as “an individual’s degree of negative attitudetowards risk arising from outcome uncertainty”(Mandrik & Bao, 2005, p. 533). The basic principle isthat a “risk-averse” group tends to prefer a less-riskychoice and that a “risk-taker” group is willing tomake a riskier choice for the same expected value(e.g. visiting a high-risk country destination). Purchas-ing a tourism service is a risky decision (Sirakaya &Woodside, 2005), particularly when the destinationcountry is perceived to be risky due to associationswith war, terrorism, or corruption (Lovelock, 2004).By applying this principle, Hypothesis 1 is formulatedas follows:

Hypothesis 1: Risk-takers are more likely to visit a countryof destination than risk-averse.

Risk aversion might differ based on the context ofthe tourism. Leisure tourism can be regarded as an“experience” service because tourists are likely to bemore confident in judging the quality of a servicewhen they have had direct experience (e.g. priorvisit experience). By contrast, medical tourism can beregarded as a “credence” service based on theassumption that tourists are more likely to have diffi-culties in evaluating the service outcome, even follow-ing the service experience. This claim is based on theassumption that visitors are likely to be less confidentin evaluating the success of a medical procedure (e.g.surgery) that is conducted by a health provider in acountry of destination even after they have returnedto their home country. These additional risk propertiesimply that medical tourism is riskier than leisuretourism. Following the principle of risk aversion andthe experience – credence service typology, Hypoth-esis 2 is proposed as follows:

Hypothesis 2: The likelihood that both “risk-taker” and“risk-averse” groups will visit a destination country ishigher for leisure than for medical tourism.

The role of prior experience in risk attitudes

Prior experience is an important predictor of behav-iour (Bentler & Speckart, 1981) and an important vari-able for increasing the predictability of consumers’attitudes on behaviour (San Martin, Collado, &Rodriguez del Bosque, 2012). A lack of knowledgeabout tourism destinations and a lack of knowledgeregarding future conditions are two main sources ofrisk in tourism (Williams & Baláž, 2013). Given thatprior experience is a facet of consumer knowledge(Brucks, 1985), the extent of one’s prior experience

1276 A. NUGRAHA ET AL.

may distinguish the level of risk perception, which, inturn, may significantly distinguish between destina-tion decisions.

Consumers may apply prior experience as a tool toreduce uncertainty in the purchase of high-involve-ment products or services (Smith & Swinyard, 1982).Slovic et al. in Sitkin and Pablo (1992) argue thatprior experience increases the extent of confidencein risk-associated behaviours. Prior experience hasbeen studied extensively in tourism studies (Ma,Gao, Scott, & Ding, 2013; Park & Jang, 2014). Althoughthese studies have provided mixed results, priorexperience is considered to be an important variablein understanding and predicting tourists’ behaviour.

Prior experience and risk aversion may have impor-tant independent effects, although their interactiveeffects are less predictable. For example, prior experi-ence might reinforce the extent to which risk aversioninfluences a destination decision. A favourable priorexperience results in a more positive reinforcementof destination decisions, and, logically, would alsolead to lowered perceptions of risk. Therefore, thecombination of “risk taker and experience” shouldlead to the highest likelihood of visiting a country ofdestination. By contrast, the combination of “risk-averse and no experience” should result in thelowest likelihood that an individual would visit acountry of destination. An unfavourable prior experi-ence would result in negative evaluation andreinforcement in making a destination decision.These two effects follow the principles of the expec-tation-disconfirmation theory (Oliver, 1980), in whichprior experience may lead to either positive or nega-tive evaluative judgments regarding a product orservice, such as a tourism destination. These judg-ments, in turn, increase or decrease the likelihood ofa subsequent destination decision.

Although they are interrelated, risk aversion andprior experience stem from different theoretical expla-nations regarding individual choices (March, 1996). Theformer construct, risk aversion, is derived from theoriesof rational choice. By contrast, the latter construct, priorexperience, derives from theories of experiential learn-ing. However, combining these two perspectives(March, 1996), and following the principles of theexpectation-disconfirmation theory and learning fromexperience, Hypothesis 3 can be expressed as follows:

Hypothesis 3: Destination decisions of “risk-taker” and“risk-averse” consumers differ with respect to prior visitexperiences.

Perceived risk is considered as an element of desti-nation image (Lepp, Gibson, & Lane, 2011), which indi-cates that risk is likely to escalate when tourists visit acountry of destination with an unfavourable image.Country image is argued to influence the risk evalu-ation of products (Liefeld, 1993), in that productsfrom less-developed countries are perceived to beriskier than products from more developed countries(Laroche, Papadopoulos, Heslop, & Mourali, 2005).Therefore, this study also examines whether riskattitudes and prior experience exhibit a consistentpattern of influence across different country images.

Method

To test the research hypotheses, a sample surveywas conducted using an online self-report survey inFebruary 2013. The respondents were recruitedthrough a national consumer panel, in which a pro-vider of online access panels administered responsesfrom general respondents who were 18 years andabove (see Table 2). Australian respondents acrossstates were asked their opinions and intentions tovisit Indonesia or Singapore for leisure and medicalpurposes. These countries were chosen becausethey differ in terms of tourism competitiveness andattractiveness, but are located in the same region(i.e. Southeast Asia). The 2015 Travel & Tourism Com-petitiveness Report reported that Indonesia wasranked 50th, whereas Singapore is among theleading countries in tourism, ranked 11th in theworld in the same report (World Economic Forum,2015).

Indonesian inbound tourism in 2013 contributed to9.3% of international tourist arrivals in the SoutheastAsia market, whereas Singapore tourism generated12.6% of that same market share (UNWTO, 2015). Inaddition, Indonesian inbound tourism in the sameyear accounted for revenues of 9.5% of the SoutheastAsia market, whereas Singapore contributed to 21.4%(UNWTO, 2013). In terms of the medical tourism infra-structure, Indonesia has 16 internationally accreditedhospitals, whereas Singapore has 10 internationallyaccredited hospitals (Joint Commission International,2015).

The current study provides empirical evidence thatSingapore is perceived as having a better countryimage than Indonesia, as shown in Table 1. In thecontext of the tourism industry, Indonesia is consideredamong high-risk country destinations (Lovelock, 2004);conversely, Singapore is considered a low-risk

ASIA PACIFIC JOURNAL OF TOURISM RESEARCH 1277

destination (Enright &Newton, 2004). Various incidents– such as the Bali bombings (Hitchcock & Darma Putra,2005); aeroplane crashes (Henderson, 2009) and theAceh tsunami (Sharpley, 2005) – have contributed todepicting Indonesia as a risky destination.

The questionnaire included items from previousstudies, with some necessary modifications. The ques-tionnaires consisted of five items of risk aversion(Mandrik & Bao, 2005); one binomial item of priorexperience (Lam & Hsu, 2004); three items of consu-mer 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 appliedfor the response items of risk aversion and destinationdecisions. Country image was measured using five-point Likert scale.

Subsequently, the data were analysed using t-testsand analysis of variance (ANOVA) to examine thedifferences in destination decisions for leisure andmedical tourism in Indonesia and Singapore. Thefirst stage of analysis used a t-test to examine thedifferences in destination decisions based on a risk

aversion measurement. The subsequent analysisextended the comparison of destination decisions byadding prior experience. The results are shown intwo matrices that represent destination decisionsregarding leisure and medical tourism for both Indo-nesia and Singapore as destination countries. Thematrices form four cells that indicate the followingfour respondent categories: “risk taker and experi-enced”, “risk-averse and experienced”, “risk-averseand non-experienced”, and “risk taker and non-experienced”.

Findings

Respondents’ characteristics

This study involved a sample of Australian respon-dents who completed self-report surveys through anational online consumer panel. The study includedtwo respondent groups that evaluated leisure andmedical tourism in Indonesia and Singapore. Thefirst group consisted of 511 respondents who evalu-ated tourism services in Indonesia, and the secondgroup included 513 respondents who evaluatedtourism services in Singapore. A total of 1,024 respon-dents completed the survey in February 2013. Table 2shows that the highest proportion of the sample forboth groups was female, was in the 57–69 agegroup, had completed a high school education, andhad an income from $20,000 to $40,000 categories.The respondents in both groups fell mostly in the cat-egory of “risk-averse with no experience”. The

Table 2. Socio-demographic profiles of respondents.

No Variable Category Indonesia % Singapore % Sig.

1 Gender Male 202 37.2 191 39.5 .450Female 309 62.8 322 60.5

2 Age 18–30 68 10.9 56 13.3 .33531–43 98 19.1 98 19.244–56 133 27.5 141 26.057–69 155 34.1 175 30.3>70 57 8.4 43 11.2

3 Education Primary school 5 1.0 5 1.0 .064High school or equivalent 183 34.7 178 35.8Vocational college 153 33.9 174 29.9Bachelor’s degree 138 20.9 107 27.0Master’s degree or above 32 9.6 49 6.3

4 Income Under $20,000 63 10.1 52 12.3 .128$20,000 to less than $40,000 114 25.1 129 22.3$40,000 to less than $60,000 94 19.7 101 18.4$60,000 to less than $80,000 88 15.0 77 17.2$80,000 to less than $100,000 50 13.8 71 9.8$100,000 and over 102 16.2 83 20.0

5 Risk aversion Risk takers 243 47.6 229 44.6 .350Risk aversive 268 52.4 284 55.4

Table 1. Country image comparison between Indonesia andSingapore.

No. Country image

Mean score

Indonesia Singapore p-Value

1 Economic development 1.96 3.07 .0002 Political stability 1.96 2.82 .0003 Social conditions 1.89 2.67 .0004 Quality of products 2.35 2.93 .0005 Quality of tourism services 2.62 3.20 0.000

1278 A. NUGRAHA ET AL.

equivalence of sample proportions based on demo-graphic profiles was tested through the use of theChi-square test. The results indicate that all sampleproportions between the two groups are not signifi-cantly different (see Table 2).

Test 1: risk attitudes comparison

The purpose of Test 1 is to examine the differentialeffects of risk attitudes on destination decisions. Inaddition, the differential effects of the service type(i.e. leisure (“search”) and medical (“credence”)) ondestination decisions were examined for each risk-seeking behaviour category. At this stage, a t-testanalysis was applied for the leisure and medicaltourism categories.

Differential effects of risk attitudesThis section presents the differences in destinationdecisions based on the risk aversion categories (i.e.risk-taker and risk-averse) for two types of services,leisure and medical tourism. The differences weretested using independent samples and a t-test analy-sis. Table 1 shows significant differences between therisk-taker and risk-averse groups in regard to traveldecisions to Indonesia for both leisure and medicalpurposes. Although the respondents were less likelyto visit Indonesia, the risk-averse group expressed asignificantly higher reluctance than the risk-takergroup to visit Indonesia for both leisure and medicalpurposes. By contrast, no significant differences werefound between the risk-taker and risk-averse groupsregarding travel decisions to Singapore for bothleisure and medical purposes. However, regardless oftheir levels of risk aversion, respondents are generallymore likely to visit Singapore for leisure than formedical purposes. These results, therefore, generallysupport Hypothesis 1, particularly in terms of Indone-sian tourism (Table 3).

Differential effects of a tourism serviceThe following results reveal the differences for eachrisk aversion group when evaluating leisure andmedical tourism. Table 2 shows that each risk-aversegroup is reluctant to visit Indonesia for both purposes.However, the results clearly indicate significant differ-ences between destination decisions concerningleisure and medical tourism in Indonesia. All risk-averse groups are more reluctant to visit Indonesiafor medical than for leisure purposes. A similar resultis shown in the context of tourism services in

Singapore. There are significant differences betweentravel decisions to Singapore for leisure and medicalpurposes. Both risk-taker and risk-averse groups aremore likely to visit Singapore for leisure than formedical purposes. The findings, therefore, supportHypothesis 2 (Table 4).

Test 2: risk attitudes vis-à-vis prior experiencematrix

Test 2 extends the findings of Test 1. In this section,ANOVAs were applied to “risk-averse” and “risktaker” consumers. The results are presented inFigures 1 and 2 for tourism in Indonesia and Singa-pore, respectively.

Indonesian tourism contextFigure 1 indicates that the “risk-taker and experi-enced” group is the most likely to visit Indonesia forleisure purposes (3.67). Conversely, the “risk-averseand non-experienced” group is the least likely tovisit Indonesia for leisure purposes (2.09). Regardlessof the extent of risk aversion, the respondents aremore likely to visit Indonesia for leisure purposes aslong as they are in the “experienced” group (>3).Although the “non-experienced” groups are unlikelyto visit Indonesia for leisure (<3), their decisionsdiffer based on their level of risk aversion. The “risk-averse and non-experienced” group is more reluctantthan the “risk-taker and non-experienced” group tovisit Indonesia for leisure.

A different result is shown in the context of medicaltourism in Indonesia. In general, the extent of riskaversion and prior experience does not significantlydistinguish destination decisions among sub-groups,except for the “non-experienced” groups. In addition,all sub-groups are unlikely to visit Indonesia formedical purposes, regardless of the level of their riskaversion and prior experience (<3). Overall, the find-ings in the context of Indonesian tourism, as shownin Figure 1, support Hypothesis 3, particularly withrespect to leisure tourism.

Singapore tourism contextThe findings for Singapore tourism support Hypothesis3, particularly with respect to leisure tourism. Figure 2shows that respondents are most likely to visit Singa-pore for leisure purposes if they are in the “experi-enced” group (3.47–3.66). The “risk-averse and non-experienced” group expresses the lowest likelihoodto visit Singapore for leisure purposes (2.84). Although

ASIA PACIFIC JOURNAL OF TOURISM RESEARCH 1279

the “risk-taker and non-experienced” group is likely tovisit Singapore for leisure (>3), the decision is signifi-cantly different from the “risk-taker and experienced”group decision and not significantly different fromthe decision of the “risk-averse and non-experienced”group. In the Singapore leisure tourism setting, riskaversion does not distinguish between destinationdecisions across sub-groups regardless of their priorexperience. By contrast, evidence shows that priorexperience distinguishes between consumer decisionsacross sub-groups for all levels of risk attitudes.

A similar result for the relevance of risk aversionand prior experience is shown in the Singaporemedical tourism context in that the level of risk aver-sion does not significantly distinguish the destinationdecisions in any prior experience situation. Further-more, prior experience distinguishes the destinationdecisions between the “risk-averse” sub-groups butnot the “risk-taker” sub-groups. Overall, all sub-groups are unlikely to visit Singapore for medical pur-poses regardless of their level of experience and riskaversion (<3). This situation is similar to the Indonesiamedical tourism results, in which all the sub-groupshave a low likelihood of travelling for medical pur-poses. However, destination decisions regarding Sin-gapore medical tourism differ among “risk-averse”groups, whereas the decisions concerning Indonesiamedical tourism are different among “non-experi-enced” groups.

Discussion

The findings in Table 1 reveal that destinationdecisions based on the profile of risk-seeking behav-iour for tourism services provide mixed results withrespect to the two destination countries. In thecontext of leisure and medical tourism in Indonesia,it is clear that risk-seeking behaviour significantlydifferentiates respondent behaviours. “Risk-averse”respondents are less likely to travel to Indonesia

(i.e. high-risk country) for both leisure and medicalpurposes than “risk-taker” respondents. Surprisingly,there is no difference across the “risk-taker” and“risk-averse” groups in terms of visiting Singaporeeither for leisure or medical purposes. These mixedresults lead to the possibility that there might beother potential moderating variables that contributeto this inconsistency. One plausible explanation isthat the image of the destination country is a contribu-tor and suggests that the images of Indonesia andSingapore differ significantly.

The results shown in Table 2 reveal a consistentpattern in which a specific context significantly dis-tinguishes the respondents’ behaviour regardless ofthe respondents’ risk attitude. In the present study,the destination decisions regarding leisure andmedical tourism are significantly different for Singa-pore and Indonesia. The respondents are less likelyto visit Singapore for medical than for leisure pur-poses, regardless of whether they are “risk takers” or“risk averse”. These results are consistent with the cre-dence properties of medical tourism (Darby & Karni,1973). In this sense, a credence service is associatedwith a lack of pre-purchase knowledge and a higherperceived risk (Mitra et al., 1999). A medical tourismservice, as a credence service, is presumably associ-ated with limited prior purchase information and per-ceptions of high risk. Following this principle, thefindings indicate similar evidence in the context ofIndonesia. Both “risk-taker” and “risk-averse” peopleare generally reluctant to visit Indonesia for both pur-poses (<3). However, all the respondents are less likelyto visit Indonesia for medical than for leisure purposes.In this context, the destination country image may besignificant, as was found in the context of Singaporetourism services. In general, therefore, the resultsprovide general evidence that particular tourism des-tination countries may differentiate destinationdecisions regardless of whether the respondents are“risk takers” or “risk averse”.

Table 3. Mean differences of destination decisions regarding tourism services based on the risk aversion category.

Variable

Type of tourism service

Leisure

Sig.

Medical

Sig.Country of destination Risk taker Risk aversive Risk taker Risk aversive

Indonesia (n = 511)a 2.982 2.279 .000* 2.043 1.744 .001*Singapore (n = 513)b 3.224 3.149 .418 2.402 2.344 .523

Note: “Consumer decision” is a composite measure comprising the average score for the following variables: “to consider visiting a country”,“would visit a country”, and “would recommend to others to visit a country” for leisure and medical tourism.

aRisk taker = 243 (47.6%); risk aversive = 268 (52.4%).bRisk taker = 229 (44.6%); risk aversive = 284 (55.4%).*Significant.

1280 A. NUGRAHA ET AL.

A further breakdown is presented by dividingrespondents into sub-groups based on their risk aver-sion and prior experience. This study employedANOVAs to examine the differences in destinationdecisions across sub-groups. Figures 1 and 2 showthat the “risk-taker and experienced” and “risk-averseand non-experienced” groups lie at the two ends ofthe continuum of destination decisions. The “risk-taker and experienced” respondents have thehighest likelihood of visiting Indonesia and Singaporefor leisure, and the “risk-averse and non-experienced”respondents are the least likely to visit Indonesia andSingapore for the same purpose. These results demon-strate that the greatest combined effects of risk aver-sion and prior experience concerning destinationdecisions occur when they are at the same ends ofthe spectrum (i.e. high, high and low, low). However,prior experience generally contributes more to thecombined effects than risk aversion in leisure

tourism settings. All respondents are more likely totravel for leisure purposes as long as they are within“experienced” groups. This result demonstrates theimportance of prior experience in enhancing the like-lihood that an individual would travel to Indonesiaand Singapore for leisure purposes.

Notably, almost all of the mean scores of destina-tion decisions concerning medical tourism across thesub-groups are not significantly different. The excep-tions, displaying significant differences, were the“non-experienced” medical tourism groups for Indo-nesia and the “risk-averse” medical tourism groupsfor Singapore. In general, however, respondents inall groups are unlikely to visit Indonesia or Singaporefor medical purposes (<3). Risk aversion and priorexperience seem to be irrelevant in differentiatingtheir behaviour in regard to making decisions con-cerning medical tourism. Thus, the nature of a cre-dence service, which is perceived as more risky,

Table 4. Mean differences of destination decisions among risk-averse groups based on type of tourism service.

Variable

Risk aversion group

Risk taker

Sig.

Risk aversive

Sig.Country of destination Leisure Medical Leisure Medical

Indonesia (n = 511)a 2.982 2.043 .000* 2.279 1.744 .000*Singapore (n = 513)b 3.224 2.402 .000* 3.149 2.344 .000*

Note: “Consumer decision” is a composite measure comprising the average score for the following variables: “to consider visiting a country”,“would visit a country”, and “would recommend to others to visit a country”, for leisure and medical tourism.

aRisk taker = 243 (47.6%); risk aversive = 268 (52.4%).bRisk taker = 229 (44.6%); risk aversive = 284 (55.4%).*Significant.

Figure 1. Mean differences of destination decisions regarding Indonesian tourism services based on risk aversion and prior experience.

ASIA PACIFIC JOURNAL OF TOURISM RESEARCH 1281

presumably overpowers the willingness to take risks,even if respondents are “risk takers”. This conclusionsupports the notion that the influence of risk aversioncharacteristics might vary significantly, depending onthe context of the decision. Alternatively, the absolutemagnitude of the perceived risk of medical tourism inboth countries may “overpower” the differentialeffects of risk aversion.

Conclusion

In summary, risk aversion plays an important role indestination decisions for both leisure and medicaltourism. The “risk-taker” group is more likely to visitIndonesia and Singapore for leisure and medical pur-poses; however, there is no significant differencebetween the risk-averse groups in the Singaporecontext. This latter finding is consistent with the argu-ment that a more positive image of a destinationcountry leads the “risk-averse” group to be more con-fident in utilizing the cue as a summary of servicequality compared with when the image is more nega-tive, which is the case for Indonesian tourism. In thissense, a positive country image may “overpower”the influence of risk aversion.

A further breakdown based on the level of risk aver-sion and prior experience shows that the two variablesdistinguish destination decisions concerning leisuretourism in Indonesia and Singapore, except that riskaversion does not differentiate significantly in the

context of Singapore. In addition, the combination ofrisk aversion and prior experience are important vari-ables in contrasting destination decisions. Thus, “risk-taker and experienced” respondents express morefavourable destination evaluations than “risk-averseand non-experienced” respondents.

By contrast with the leisure tourism results, themean score comparisons of destination decisionsacross the four groups are generally not significantlydifferent in the case of medical tourism. As anexample of a credence service, it appears that allrespondents lack the necessary information to evalu-ate medical tourism and, in turn, lack confidence intheir evaluations. Therefore, regardless of being “risktakers” or “risk averse”, respondents presumably con-sider medical tourism to be a high-risk product thatrequires complex decision-making. Consequently, allgroups, regardless of prior tourism experience, areunlikely to visit Indonesia or Singapore for medicalpurposes.

This study has a number of limitations. It coversonly Australian respondents who evaluated leisureand medical tourism in Indonesia and Singapore.Thus, adding respondents from different countriesmight increase the robustness of the general con-clusions. In addition, further studies could comparedestination decisions for leisure and medical tourismin countries with a similar country image, such as Indo-nesia and India. Both countries are similar in terms oftourism competitiveness (World Economic Forum,

Figure 2. Mean differences of destination decisions regarding Singapore tourism services based on risk aversion and prior experience.

1282 A. NUGRAHA ET AL.

2015) and country risk (Euler Hermes, 2015). A furtherpossibility is to examine the differences in destinationdecisions in groups with the same risk and priorexperience profiles between different countries. Fur-thermore, this study applied general risk attitudesinstead of specific tourism risk perceptions as predic-tors of destination decisions. Future studies maycompare the predictability of general risk attitudesand risk perception towards specific destinations ontourism purchases.

From a managerial perspective, these resultsdemonstrate that experienced travellers make themost attractive targets for tourism promotion whilealso suggesting that it is worthwhile to provide anincentive for first-time visitors to a destinationcountry, given the importance of prior experience informing a better evaluation and higher likelihood ofvisiting a destination country in the future. In thiscontext, potential medical tourists are more likely tohave already visited as tourists. In addition, tourismoperators and marketers might develop “visitorloyalty programs” to reward those who make frequenttrips to a destination country. In this context, the Indo-nesian government encourages the “free visa” policy(Natahadibrata, 2015). Similarly, an incentive mightbe implemented through a service package thatincludes discounted prices for future trips to differentlocations in the country of destination. Such incentivesmay be particularly important for Indonesian tourism,as foreign tourists may only have knowledge of Baliand Jakarta and may have limited knowledge ofother tourism destinations in the country. The resultsalso indicate that medical tourism to Asia is likely toappeal to only a small minority of experienced andadventurous Australian tourists, at least for now.

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