‘Estimating tomorrow’s tourist arrivals’: forecasting the demand for China’s tourism using the general-to-specific approach

Abstract

Accurate forecast of inbound tourism demand is vital for the tourism industry as well as government economic policy and decision making. This article sought to identify the factors which influence the demand for China’s tourism with the aid of econometric models and to generate forecasts of international tourist arrivals to China from five major long-haul source markets. Using the general-to-specific modelling approach, the demand for tourism in China by the residents of Australia, Canada, Germany, the United Kingdom and the United States of America is modelled and forecasted. The empirical results indicate that the ‘word of mouth effect’, income levels in the origin country, the costs of tourism in both China and competing destinations are the crucial factors that determine the demand for China’s tourism by residents of the five origin countries. The forecasts show sluggish growth in tourist arrivals for most of the Western source markets. Findings hold implications for policy formulations.