A report produced for

the European Travel Commission

by Inzights & Silverbullet Research

Brussels, February 2021

HANDBOOK ON TOURISM FORECASTING METHODOLOGIES – 2021

HANDBOOK ON TOURISM FORECASTING METHODOLOGIES – 2021
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1.1 THE RELEVANCE OF FORECASTING

1.2 WHAT TO FORECAST – AND WHY

VARIABLES

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DISTINCTIONS AND IMPLICATIONS OF LONG- AND SHORT-TERM FORECASTING

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STRUCTURE FOR THE BASIC DESCRIPTION OF FORECASTING METHODS AND INTRODUCTION OF THE
CASE DATA SET

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2.1 TOURISM FORECASTING WITH CASUAL MODELS

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2.1.1 SIMPLE LINEAR REGRESSION

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH SIMPLE LINEAR REGRESSION

STEP 1: FORECASTING BED NIGHTS IN COPENHAGEN IN 2019 WITH SIMPLE LINEAR REGRESSION

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STEP 2: FORECASTING BED NIGHTS IN COPENHAGEN IN 2019 WITH TWO-RAPAMETER CURVE FITTING

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STEP 3: FORECASTING BED NIGHTS IN COPENHAGEN IN 2019 WITH A MODIFIED SIMPLE LINEAR REGRESSION
USING ONLY OBSERVATIONS SINCE 2010

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2.1.2 MULTIPLE LINEAR REGRESSION

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH MULTIPLE LINEAR REGRESSION

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2.1.3 STRUCTURAL ECONOMETRIC METHODS

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2.1.4 ADVANTAGES AND DISADVANTAGESOF THE LINEAR REGRESSION MODEL

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STEP-BY-STEP GUIDE – LINEAR REGRESSION

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SUGGESTIONS FOR FURTHER READING

BIBLIOGRAPHY

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2.2 TOURISM FORECASTING WITH EXTRAPOLATIVE METHODS

2.2.1 NO-CHANGE METHODS AND SIMPLE MOVING AVERAGE (SMA)

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH NAÏVE MODELS AND SMA

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STEP-BY-STEP GUIDE – SIMPLE MOVING AVERAGE

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2.2.2 SIMPLE EXPONENTIAL SMOOTHING (SES)

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH SES

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STEP-BY-STEP GUIDE – SIMPLE EXPONENTIAL SMOOTHING

2.2.3 DOUBLE EXPONENTIAL SMOOTHING (DES)

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH HES

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STEP-BY-STEP GUIDE – DOUBLE EXPONENTIAL SMOOTHING

2.2.4 AUTOREGRESSIVE MOVING AVERAGE (ARMA), ARIMA AND SARIMA MODELS

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CASE EXAMPLE: FORECASTING BED NIGHTS WITH SARIMA

STEP-BY-STEP GUIDE

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STEP 1: EXPLORATIVE DATA ANALYSIS

STEP 2: IDENTIFICATION OF THE MOST SUITABLE SARIMA MODEL TYPE

𝑥𝑥1|1 𝑥𝑥2|1 𝑥𝑥𝑘𝑘|1

𝑥𝑥1|2 𝑥𝑥2|2 ⋯ 𝑥𝑥𝑘𝑘|2
𝑋𝑋𝑡𝑡 = ൮ ⋮ ⋱ ⋮ ൲
•
𝑥𝑥1|𝑛𝑛 𝑥𝑥2|𝑛𝑛 ⋯ 𝑥𝑥𝑘𝑘|𝑛𝑛 •

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STEP 3: ESTIMATING THE PARAMETERS FOR THE CHOSEN MODEL

(1 + Φ1 )𝐵𝐵12𝑌𝑌𝑡𝑡 = ((1 + 𝜃𝜃1 𝐵𝐵)(1 + Θ1 𝐵𝐵12 + Θ2 𝐵𝐵 24 ))𝜀𝜀𝑡𝑡

⇕
𝑌𝑌𝑡𝑡 = ((1 − Φ1 𝐵𝐵12 )−1 (1 + 𝜃𝜃1 𝐵𝐵) (1 + Θ1 𝐵𝐵12 + Θ2 𝐵𝐵 24 ))𝜀𝜀𝑡𝑡

𝑌𝑌𝑡𝑡 = ((1 − (−0.4377)𝐵𝐵12 )−1 (1 − 0.5342𝐵𝐵)(1 − 0.0235𝐵𝐵12 − 0.3143𝐵𝐵 24 ))𝜀𝜀𝑡𝑡

⇕
12 )−1 (1
𝑌𝑌𝑡𝑡 ((1 + 0.4377𝐵𝐵 − 0.5342𝐵𝐵)(1 − 0.0235𝐵𝐵12 − 0.3143𝐵𝐵 24 ))𝜀𝜀𝑡𝑡

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STEP 4: MAKE FORECASTS

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STEP-BY-STEP GUIDE – SARIMA/ARIMA MODELLING

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 ̂𝒕𝒕+𝒉𝒉|𝒕𝒕 = 𝓵𝓵𝒕𝒕 + 𝒉𝒉𝒃𝒃𝒕𝒕 + 𝒔𝒔𝒕𝒕+𝒉𝒉−𝒎𝒎(𝒌𝒌+𝟏𝟏) 
𝒚𝒚
𝓵𝓵𝒕𝒕 = 𝜶𝜶(𝒚𝒚𝒕𝒕 − 𝒔𝒔𝒕𝒕−𝒎𝒎 ) + (𝟏𝟏 − 𝜶𝜶)(𝓵𝓵𝒕𝒕−𝟏𝟏 + 𝒃𝒃𝒕𝒕−𝟏𝟏 )
𝒃𝒃𝒕𝒕 = 𝜷𝜷∗ (𝓵𝓵𝒕𝒕 − 𝓵𝓵𝒕𝒕−𝟏𝟏 ) + (𝟏𝟏 − 𝜷𝜷∗ )𝒃𝒃𝒕𝒕−𝟏𝟏
𝒔𝒔𝒕𝒕 = 𝜸𝜸(𝒚𝒚𝒕𝒕 − 𝓵𝓵𝒕𝒕−𝟏𝟏 − 𝒃𝒃𝒕𝒕−𝟏𝟏 ) + (𝟏𝟏 − 𝜸𝜸)𝒔𝒔𝒕𝒕−𝒎𝒎

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DISCUSSION OF RESULTS

2.2.5 ADVANTAGES AND DISADVANTAGES OF EXTRAPOLATIVE FORECASTING METHODS

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SUGGESTIONS FOR FURTHER READING

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2.3 TOURISM FORECASTING WITH ARTIFICIAL INTELLIGENCE AND HYBRID MODELS

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2.3.1 ARTICIFIAL INTELLIGENCE FUNDAMENTALS

SUPERVISED MACHINE LEARNING

ϵ
ϵ
ϵ

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UNSUPERVISED MACHINE LEARNING

BLACK BOX IS A CHALLENGE

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AI METHODOLOGY IS EVOLVING

2.3.2 A BRIEF OVERVIEW OF METHODS AND TERMINOLOGY IN ARTIFICIAL INTELLIGENCE

ARTIFICIAL NEUTRAL NETWORKS (ANN)

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SUPPORT VECTOR MACHINES (SVM)

DEEP LEARNING

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EXTREME LEARNING MACHINE (ELM)

MULTILAYER PERCEPTRON REGRESSION (MLP)

FUZZY TIME SERIES

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A GREY SYSTEM

SWARM INTELLIGENCE

SOFT INTELLIGENCE

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HYBRID MODELS

2.3.3 EXAMPLES OF APPLICATION OF AI IN TOURISM FORECASTING

CASE A: USING ARTIFICIAL INTELLIGENCE TO FORECAST HOTEL CAPACITY IN COPENHAGEN

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 10.000.000
Predicted
9.000.000
8.000.000
7.000.000
6.000.000
5.000.000
4.000.000
2019
3.000.000
1990 1995 2000 2005 2010 2015

Actual Predicted

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CASE B: FORECASTING TOURISM IN GREESE USING NEUTRAL NETWORKS

CASE C: MULTIVARIATE FORECASTING MODEL FOR TOURISM IN THE LISBON AREA

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CASE D: PARTICLE SWARM OPTIMISATION SVR FOR TOURISTS TO TAIWAN

CASE E: HYBRID DEEP LEARNING ON TOURISTS IN SINGAPORE

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 ff
ff

CASE F: USING BIG DATA TO PREDICT TOURIST ARRIVALS IN BEIJING AND VIENNA

2.3.4 ADVANTAGES AND DISADVANTAGES OF AI MODELS

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STEP-BY-STEP GUIDE – CHOOSING AN AI MODEL FOR TOURISM FORECASTING

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SUGGESTIONS FOR FURTHER READING

BIBLIOGRAPHY

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2.4 QUALITATIVE METHODS

2.4.1 JURY OF EXECUTIVE OPINION

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STEP-BY-STEP GUIDE – JURY OF EXECUTIVE OPINION

2.4.2 THE DELPHI METHOD

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STEP-BY-STEP GUIDE – THE DELPHI METHOD

2.4.3 SCENARIO PLANNING

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SCENARIOS ARE SYSTEMATIC IMAGES OF THE FUTURE

SCENARIOS PROVIDE EQUALLY PLAUSIBLE VISIONS OF THE FUTURE

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PROCESS FOR DEVELOPING SCENARIOS

STEP-BY-STEP GUIDE – PROCESS FOR DEVELOPING SCENARIOS

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PARTICIPATORY METHODS IN SCENARIO BUILDING

2.4.4 SURVEY-BASED RESEARCH USING A QUALITATIVE AND QUANTITATIVE APPROACH

QUALITATIVE SURVEYS

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QUANTITATIVE SURVEYS

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•
•
•

PREPARATION STEP 1 – PURPOSE

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PREPARATION STEP 2 – HORIZON

PREPARATION STEP 3 – DATA

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PREPARATION STEP 4 – RESOURCES

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SELECTING A FORECASTING METHODOLOGY

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3.1 SOFTWARE INTRODUCTION

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MICROSOFT EXCEL

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SPSS

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STATA

‐ ‐

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SAS

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SAS JMP

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EVIEWS

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PYTHON

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COMPARISON OF FORECASTING SOFTWARE TOOLS

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4.1 PRACTICAL CONSIDERATIONS WHEN APPLYING FORECAST MODEL(S)

CLEARLY DETERMINE WHAT TO FORECAST – AND WHY

CHOICE OF FORECASTING MODEL(S)

STEP-BY-STEP GUIDE – CHOICE OF FORECASTING MODEL(S)

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4.2 SEVEN GOOD HABITS WHEN WORKING WITH ORGANISATIONAL FORECASTING

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FIGURES

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TABLES

BOXES

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