Forecasting International Tourist Flows to a Small Island: The Case of Saipan

Abstract

Sustainable tourism, unlike conventional tourism, explicitly strives to maintain economic, environmental, and social sustainability in tourist destinations. Saipan, the capital and the largest island of the chain of Pacific islands known as the Commonwealth of the Northern Mariana Islands (CNMI), is a tropical destination that heavily relies on the tourist industry as a source of income. When analyzing the trends of tourist arrivals from the top three countries that account for the majority of tourist arrivals in Saipan-China, Japan, and Korea-the necessity to implement sustainable tourism in Saipan becomes clear. This article forecasts tourism demand, which is one of the main factors in determining sustainable tourism on a small island. Analyzing both long-term and cyclical trends in tourist arrivals assists budget-constrained policymakers and related organizations in implementing sustainable tourism. Therefore, forecasting accuracy is essential in tourism policy and planning. The tourist arrival data obtained from Marianas Visitors Authority’s official Japanese website are made into a time series for Chinese, Japanese, and Korean visitor data from 2006 to 2016. Given the various time-series forecasting models, we employ simple but powerful forecasting techniques, such as ARIMA and ETS to control for the possible seasonality and trend in our tourism data. Using these forecast methods, the tourist arrival data is used to predict the future trends of tourist arrivals in Saipan for the next twelve months. The performance of our forecasting model in this study is evaluated based on the five measures of accuracy, as measured by comparison with actual tourism flows: mean error, mean absolute scaled error, mean percentage error, mean absolute error, and mean absolute percentage error. A comparison of the two popular forecast techniques in this study shows that the ETS model statistically outperforms the ARIMA model in terms of various measures of accuracy. A practical implication of this finding is that the ETS approach should be used when forecasting tourism demand for small islands. We predict the visitor arrivals from China, Japan, and Korea to Saipan by using the better model. The estimated 80% and 95% intervals for the number of tourist arrivals by the ETS model are presented in this study. The upper (lower) bound is the maximum (minimum) value of the estimated tourist arrivals. We find strong evidence that the tourist arrival trend for Korean visitors to Saipan will increase in the short run; although, the Chinese and Japanese tourist arrival trends seems to be stable, except for Japanese tourist arrivals in August. Nonetheless, with such an intense demand for Saipan’s natural resources, sustainable island tourism becomes necessary. Our estimated result is useful to practitioners in the sense that they are able to prepare for carrying capacities and the means of destination management on Saipan. Proper management for maintaining the island environmentally, economically, and socially requires the preservation of indigenous culture, local quality of life, natural resources, and economic stability while accommodating the demands of arriving tourists. It is crucial to preserve the assets of Saipan in order to maintain and improve its economy. Thus, our time series modeling for forecasting the number of visitors becomes necessary to develop overall economic, environmental, and social sustainability in the island. An interesting addition to implementing sustainable tourism in Saipan is the idea of maintaining a “cap” on the number of incoming tourists visiting the island. Perhaps, with more research on Saipan’s environment, specifically an estimate of how much of the island’s resources tourists exhaust and how much the island can withstand the aforementioned, this “cap” could be practical to prevent perpetual damage to Saipan’s biodiversity, resources, culture, and economy. Along with this idea, knowing the minimum number of tourists needed to sustain Saipan’s necessities is valuable.