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International Handbook on the Economics of Tourism

Edited by Larry Dwyer and Peter Forsyth

This highly accessible and comprehensive Handbook presents a cutting edge discussion of the state of tourism economics and its likely directions in future research. Leading researchers in the field explore a wide range of topics including: demand and forecasting, supply, transport, taxation and infrastructure, evaluation and application for policy-making. Each chapter includes a discussion of its relevance and importance to the tourism economics literature, an overview of its main contributions and themes, a critical evaluation of existing literature and an outline of issues for further conceptual and applied research.
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Chapter 3: Tourism Demand Forecasting

Haiyan Song and Lindsay Turner


Haiyan Song and Lindsay Turner Introduction Tourism researchers and practitioners are interested in tourism demand forecasting for the following reasons. First, tourism demand is the foundation on which all tourism-related business decisions ultimately rest. Companies such as airlines, tour operators, hotels, cruise ship lines, and recreation facility providers are interested in the demand for their products by tourists. The success of many businesses depends largely or totally on the state of tourism demand, and ultimate management failure is quite often due to the failure to meet market demand. Because of the key role of demand as a determinant of business profitability, estimates of expected future demand constitute a very important element in all planning activities. It is clear that accurate forecasts of tourism demand are essential for efficient planning by tourism-related businesses, particularly given the perishable nature of the tourism product. Second, tourism investment, especially investment in destination infrastructures, such as airports, highways and rail links, requires long-term financial commitments and the sunk costs can be very high if the investment projects fail to fulfil their design capacities. Therefore, the prediction of long-term demand for tourism-related infrastructure often forms an important part of project appraisal. Third, government macroeconomic policies largely depend on the relative importance of individual sectors within a destination. Hence, accurate forecasts of demand in the tourism sector of the economy will help destination governments in formulating and implementing appropriate medium- to long-term tourism strategies. Tourism forecasts may be generated by either quantitative or qualitative...

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