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Undertaking research on the economics of tourism remains a significant component of the work of tourism scholars and is often at the forefront of national and international policy deliberations. Two of the projects described below represent recent examples of international research collaboration intended to advance understanding of forecasting visitor numbers. The third illustrates wider interest in the economics of tourism.
The Approach
Forecasting visitor numbers
Covid-19 disrupted international tourism worldwide, subsequently presenting forecasters with a challenging conundrum. In this competition, we predict international arrivals for 20 destinations in two phases: (i) Ex post forecasts pre-Covid; (ii) Ex-ante forecasts during and after the pandemic up to the end of 2021.
Our results show that univariate combined with cross-sectional hierarchical forecasting techniques (THieF-ETS) outperform multivariate models pre-Covid. Scenarios were developed based on judgemental adjustment of the THieF-ETS baseline forecasts. Analysts provided a regional view on the most likely path to normal, based on country-specific regulations, macroeconomic conditions, seasonal factors and vaccine development. Results show an average recovery of 58% compared to 2019 tourist arrivals in the 20 destinations under the medium scenario; severe is 34% and mild 80%.
The effect of economic uncertainty
This paper investigates the effects of economic and political uncertainties on tourism demand using the World Uncertainty Index (WUI). This index is more a sophisticated and reliable measure of global uncertainty than previous indices used by the literature. The findings show that uncertainty shocks affect travel for business, holidays and visiting friends / relatives purposes negatively. It is statistically significant for a duration of stay of one week to less than one month in Australia. This effect dissipates for longer stays. This study provides insightful information to destinations on how consumers adjust their behaviour during periods of political and economic uncertainty.
Expenditure patterns of tourists
The aim of this paper is to analyse factors that affect the expenditure patterns of British travellers. It is the first study that focuses solely on this market. Using an original questionnaire, data is collected and a sample of 1,178 is retained. To obtain robust estimates, the data is analysed using quantile regression technique. The study shows that income, length of stay, employment status and types of accommodation used are important factors affecting per diem expenditure. The study contributes to the literature by investigating an additional dimension of demand determinant by analysing the effect of variables related to the home country. Transfer cost in the UK is found to be significant in determining total tourism expenditure abroad.
Professor Neelu Seetaram is an economist specialising in the study of the tourism and airline industries. She publishes in world leading journals and serves on the editorial boards of prestigious journals such as the Journal of Research and Tourism Economics.
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