Predicting Quarterly Hong Kong Tourism Demand Growth Rates, Directional Changes and Turning Points with Composite Leading Indicators

Nada Kulendran and Kevin K.F. Wong
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Nada Kulendran: School of Economics and Finance and Centre for Hospitality and Tourism, Faculty of Business and Law, Victoria University, PO Box 14428, MCMC Melbourne, Victoria 8001, Australia
Kevin K.F. Wong: School of Hotel and Tourism Management, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

Tourism Economics, 2009, vol. 15, issue 2, 307-322

Abstract: This study predicts numerical demand growth rates, directional changes and turning points in the growth rate using the single input leading indicator model and assesses its forecasting performance with the ARIMA model and the no-change model. To assess the forecasting performance from the March quarter of 2004 to the December quarter of 2006, models are fitted to the growth rates of Hong Kong inbound tourism demand from selected tourism markets (Australia, Japan, the UK and the USA). Composite leading indicators for the single input leading indicator model are constructed from selected national leading and lagged indicators. To avoid false signals in turning points, a method is specified to identify the correct turning points in tourism demand growth rates. The prediction performance of these models is then examined, based on the mean absolute percentage error, directional change error and turning point error. A statistical procedure is considered to determine whether the actual and predicted directional changes and turning points are independent or associated.

Keywords: tourism forecasting; growth rate cycle; composite leading indicator; error magnitude measure; turning point error; directional change error (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:15:y:2009:i:2:p:307-322

DOI: 10.5367/000000009788254340

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