Tourism Demand Forecasting and Its Requirements for Statistics
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1 Tourism Demand Forecasting and Its Requirements for Statistics Prof. Haiyan Song School of Hotel and Tourism Management The Hong Kong Polytechnic University Why… • Accurate forecasts of tourism demand are essential for efficient planning by tourism- related businesses • Prediction of long-term demand for tourism related infrastructure often forms an important part of investment project appraisal • Accurate forecasts of demand in the tourism sector of the economy will help destination governments in formulating and implementing appropriate medium-long term tourism strategies
Transcript of Tourism Demand Forecasting and Its Requirements for Statistics
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Tourism Demand Forecasting and Its Requirements for
Statistics
Prof. Haiyan SongSchool of Hotel and Tourism Management
The Hong Kong Polytechnic University
Why…• Accurate forecasts of tourism demand are
essential for efficient planning by tourism-related businesses
• Prediction of long-term demand for tourism related infrastructure often forms an important part of investment project appraisal
• Accurate forecasts of demand in the tourism sector of the economy will help destination governments in formulating and implementing appropriate medium-long term tourism strategies
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Why…
• organizations have tended to become more complex and so have their environments
• organizations have moved towards more systematic decision making that involves explicit justification for individual actions
Who…• Tourism marketers
– Set marketing goals– Explore potential markets
• Tourism managers– Determine operational requirements– Study project feasibility
• Tourism planners and public agencies– Predict the economic, social/cultural and
environmental consequences– Ensure adequate capacity and infrastructure
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How…
• We are going to focus on causal quantitative forecasting.
• This involves estimating the relationship between international tourism demand and each of influencing factors.
• Use estimated relationship in conjunction with forecasts of influencing factors to generate international tourism demand forecasts.
• Econometric models can be used to identify size of effects that changes in influencing factors have on tourism demand.
• May therefore be used for ‘what if’ forecasting where consequences of possible changes in influencing factors can be assessed.
How…
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Model and Statistical Requirements
Y = f (X1, X2, X3 …..)Y = aX1 + bX2 + cX3…..
Y is tourism demandX1, X2, X3….. are the explanatory variables
(influencing factors)a, b, c, ….. are parameters or elasticities if the
variables are measured in logarithmEvaluate signs of parameter estimates to see if theoretically meaningful.Incorrect sign = theoretically implausible
POPULATION
origin country
direction of influence +
Variable Measurement
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INCOME
origin country -personal disposable income - holidays
- VFRGDP/GNP – business tourism
direction of influence +
Variable Measurement
PRICE
2 elements - cost of travel to destination- cost of living for tourists in
destinationcost of travel - air fare
- petrolcost of living - specific for tourists
- consumer price index proxy- exchange rates
direction of influence – (+)
Variable Measurement
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SUBSTITUTE PRICES
holidays - very importantVFR - less important but may substitute
holiday business - not importantsubstitute travel costs } weighted averagessubstitute living costs } based on market shares
direction of influence +
Variable Measurement
PROMOTIONAL ACTIVITY
NTO promotional expenditure- destination specific- media advertising- public relations
problems- impact distributed over time- effectiveness may vary across media
direction of influence +
Variable Measurement
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ONE-OFF EVENTS
Impact can be allowed for by using DUMMYVARIABLES
warterrorist activity/threatsforeign currency restrictionshealth scares, etc.direction of influence –
Olympic GamesExpo, etc.direction of influence +
Variable Measurement
Tourism Demand Forecasting System (TDFS) for Hong Kong
• The main aim of the TDFS for Hong Kong is to provide forecasts based on economic theory that postulates the relationship between the demand for Hong Kong tourism and its influencing factors.
• The specific forecasting outputs of the system include quarterly forecasts of:– tourist arrivals by source markets up to 10-years-ahead– tourist expenditures by source market up to 10-years-ahead– demand for hotel rooms by source markets and by room types
up to 5-years-ahead– tourist expenditure on accommodation, retail products,
restaurant meals and transportation by source markets up to 5-years-ahead
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Tourism Demand Forecasting System (TDFS) for Hong Kong
• The TDFS will provide a useful source of information for the following stakeholders:– Government offices responsible for tourism
policymaking and implementation– Business executives in the travel, hotel, catering,
retail and other tourism-related sectors– Planning and marketing agencies/departments of the
various tourism sectors in Hong Kong – Consultancy firms focusing on tourism – Education and research establishments focusing on
tourism
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www.tourismforecasting.net
