Abstract
This paper identifies the usefulness of available national indicators in forecasting tourist arrivals to Australia from the USA, Japan, the UK and New Zealand. Income, unemployment, forward exchange rate, money supply, price ratio, industrial production, imports and exports of the tourist's country of origin are potential leading indicators of the tourist arrival series. A composite indicator is developed to forecast tourist arrivals. Further, disaggregated data are analysed to determine whether there is likely to be any increase in accuracy if the travel data is divided by travel type. The main travel types analysed are ‘holiday’, ‘visiting friends and relatives’ (VFR) and ‘business’ as well as total flow. To establish the causality between the indicator and international tourist arrivals to Australia, the performance of the transfer function model incorporating the national indicator is compared with ARIMA forecasts.
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