Practical Tourism Forecasting :

the Example of Asia Pacific

Stephen F. WittEmeritus Professor (Tourism Forecasting)

My Background

• Mathematics• Mathematical statistics• Economics• Econometrics• PhD – econometric study of UK outbound

tourism demand

Academic Research – Books & Journal Papers

• Econometric modelling of international tourism demand

• Assessment of accuracy of different forecasting methods within tourism context, i.e. which methods work best under what circumstances (time horizon, data frequency, ….)

Application of Academic Research Results

• Take results from academic research on tourism forecasting and apply to practical tourism forecasting situations

• Various consultancy studies for companies and destinations NTOs

• Ongoing annual publication of tourism forecasts for Pacific Asia Travel Association (PATA)

Asia Pacific Tourism Forecasts

• Lindsay W. Turner, Victoria University, Melbourne

• Stephen F. Witt, University of Surrey• Publisher: PATA, Bangkok

• Initial publisher Travel and Tourism Intelligence, London ( part of Corporate Intelligence Group)

• Asia Pacific Tourism Forecasts 2000-2004, published in 2000

• Subsequently switched to PATA, publishing with them every year since 2001

• Asia Pacific Tourism Forecasts 2012-2014, published in 2012

• 40 Asia Pacific destinations• Forecasts by country of origin• 1,400 forecast series• International arrivals forecast to grow

5% to Asia Pacific to reach ½ billion by 2014

6% to Asia

3% to North America

2% to Pacific

MethodologyModel Selection•Time series models estimated from data series and give mathematical projection of seasonal, cyclical and trend components

BSM (basic structural model)•Add dummy variables where appropriate to allow for political instability, terrorist activity, natural disasters (cyclones, tsunamis), financial crises, health threats (SARS, H1N1) or other events expected to influence time series

BSM + interventions

• Add economic variables: decision to keep/remove variable based on correct sign according to economic theory and statistical significance

CSM (causal structural model)• Within sample 8 quarters forecasting accuracy

testing• If results not good try another method such as

ECM (error correction model) or TVP

(time varying parameter) model

Forecast Adjustment•Forecasts generated by quantitative process assessed by experts (PATA, NTOs …) as to likely inaccuracies given any unmeasured factors the experts consider may raise or lower numbers•Quantitative model derived forecasts are adjusted to take expert to opinion into account

Economic Variables•Income (per capita PDI or GDP)•Destination price (destination CPI divided by origin CPI adjusted by origin – destination exchange rate)•Air fare index

International Tourist Arrivals to Asia Pacific Markets

Total North America

Top 10 Forecast Asia Pacific Destinations 2014

8

THAILANDForecast Arrivals 2012 -2014

Top 5 Departures Forecasts from Asia Pacific Main Markets

Australia to 2010 2014 10-14 AAGR (%)

New Zealand 1,119,879 1,140,341 0.45

USA 904,247 1,315,646 9.83

Singapore 880,486 1,212,202 8.32

Thailand 698,046 1,073,993 11.37

China 661,300 846,983 6.38

China to

Hong Kong 22,684,388 35,234,973 11.64

Macau 13,229,058 22,522,091 14.23

Korea (ROK) 1,875,157 2,837,241 10.91

Chinese Taipei 1,630,735 1,907,627 4.00

Japan 1,412,875 1,169,074 -4.62

Hong Kong to 2010 2014 10-14 AAGR (%)

China 79,321,900 83,882,428 1.41

Macau 7,466,139 7,804,562 1.11

Chinese Taipei 794,362 827,945 1.04

Japan 508,691 320,314 -10.92

Singapore 387,552 700,047 15.93

India to

Singapore 828,903 1,006,682 4.98

Thailand 760,371 1,360,007 15.65

Malaysia 690,849 1,044,250 10.88

USA 650,935 712,318 2.28

China 549,300 738,151 7.67

Japan to 2010 2014 10-14 AAGR (%)

USA 3,386,076 3,492,110 0.77

China 3,731,200 3,836,004 0.69

Korea (ROK) 3,023,009 3,437,596 3.27

Hong Kong 1,316,618 1,304,567 -0.23

Chinese Taipei 1,080,153 1,478,854 8.17

Korea (ROK) to

China 4,076,400 4,647,324 3.33

Japan 2,439,816 2,444,697 0.05

USA 1,107,518 1,320,614 4.50

Hong Kong 891,024 1,356,713 11.08

Thailand 805,445 1,473,092 16.29

USA to 2010 2014 10-14 AAGR (%)

Mexico 17,967,691 19,241,765 1.73

Canada 11,746,366 12,413,968 1.39

China 2,009,600 2,351,911 4.01

Hong Kong 1,171,419 1,267,315 1.99

India 915,579 1,256,142 8.23

Tourist Arrivals from SA to Asia Pacific Destinations

North America 2010 2014 10-14 AAGR (%)

Mexico 4,861 6,436 7.3

USA 80,174 97,311 5.0

Northeast Asia

Chinese Taipei 4,066 4,613 3.2

Hong Kong 77,658 91,490 4.2

Korea (ROK) 9,633 11,235 3.9

Macau 4,624 6,663 9.6

South Asia

Bhutan 70 122 14.9

India 55,688 69,293 5.6

Maldives 3,157 5,111 12.8

Pakistan 5,846 11,391 14.3

Sri Lanka 1,415 2,768 18.3

Southeast Asia 2010 2014 10-14 AAGR (%)

Indonesia 12,691 16,919 7.5

Malaysia 26,395 30,677 3.8

Philippines 2,774 4,024 9.8

Singapore 32,428 37,398 3.6

Thailand 57,100 90,672 12.3

Pacific

Australia 62,170 69,705 2.9

New Zealand 17,401 25,886 10.4