Effect of Demand Volume on Forecasting Accuracy

Abstract

The forecasting of international tourist arrivals is normally done on a per country basis. The volume of tourist flow varies widely among countries, largely depending on their population size but also on their openness to tourism. This paper uses data for Austria, China (PRC), Canada, the Cook Islands, Cyprus, Japan, the Maldives, Malta, New Zealand, Singapore, Slovenia and Thailand over a quarterly estimation period from 1995 to 1999 to forecast ahead for 2000 to 2002. In addition, the total arrivals to Japan from 24 different countries of origin are also examined with the same estimation and forecast periods. The topic explored is whether it is possible to examine the structure of the time-series data to determine why particular forecasting is more or less accurate. As a starting point, forecasts are obtained from larger data volumes relative to smaller volumes. The forecasting comparison uses the short-term time series methods of the basic structural model and the Holt–Winters model, with a comparison for base accuracy against the naïve model. The results show in the forecasting comparison that the volume of flow and volatility and seasonality do not directly influence the accuracy of the forecast.