Forecasting Tourism Demand with Composite Indicator Approach for Fiji

Abstract

This study attempts to scrutinize the fluctuations of the Fijian tourism market and forecast the early warning signals of tourism market vulnerability using the tourism composite indicator (TCI). The data employed on a monthly basis from 2000M01 to 2017M12 and the indicator construction steps were adopted from the ideology of the National Bureau of Economic Research (NBER). A parsimonious macroeconomic and non-economic fundamental determinant are included for the construction of TCI. Subsequently, the procedure then employed the seasonal adjustment using Census X-12, Christiano-Fitzgerald filtering approach, and Bry-Boschan dating algorithm. Empirical evidence highlighted the signalling attributes against Fijian tourism demand with an average lead time of 2.75 months and around 54 percent of directional accuracy rate, which is significant at 5 percent significance level. Thus, the non-parametric technique can forecast the tourism market outlook and the constructed TCI can provide information content from a macroeconomic perspective for policymakers, tourism market players and investors.