Modeling and Forecasting Monthly Tourism Arrivals to Aruba Since COVID-19 Pandemic

Olga Bespalova

No 2022/226, IMF Working Papers from International Monetary Fund

Abstract: This paper improves short-term forecasting models of monthly tourism arrivals by estimating and evaluating a time-series model with exogenous regressors (ARIMA-X) using a case of Aruba, a small open tourism-dependent economy. Given importance of the US market for Aruba, it investigates informational value of Google Searches originating in the USA, flight capacity utilization on the US air-carriers, and per capita demand of the US consumers, given the volatility index in stock markets (VIX). It yields several insights. First, flight capacity is the best variable to account for the travel restrictions during the pandemic. Second, US real personal consumption expenditure becomes a more significnat predictor than income as the former better captured impact of the COVID-19 restrictions on the consumers’ behavior, while income boosted by the pandemic fiscal support was not fully directed to spending. Third, intercept correction improves the model in the estimation period. Finally, the pandemic changed econometric relationships between the tourism arrivals and their main determinants, and accuracy of the forecast models. Going forward, the analysts should re-estimate the models. Out-of-sample forecasts with 5 percent confidence intervals are produced for 18 months ahead.

Keywords: Econometric Modeling; Forecasting; tourism; arrivals; tourist arrivals; Google Trends; flight capacity utiilization; load factor; time-series models; time-series econometrics; arima; Aruba; Covid-19; Pandemic; tourism arrival; arrivals to Aruba; Aruba tourism authority; time-series model; IMF working papers; consumption expenditure; Capacity utilization; Unemployment rate; Caribbean (search for similar items in EconPapers)
Pages: 38
Date: 2022-11-11
New Economics Papers: this item is included in nep-tur
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=525638 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2022/226

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().