Forecasting tourist arrivals to the Bahamas using error correction models

Jacky S Charles, University of Texas at El Paso


Tourism is the major domestic export for many countries in the Caribbean region. Given this, the variables which influence tourism demand in this region, as well as accurate forecasts, can assist policy makers in their planning efforts and growth strategies. This study utilizes error correction models (ECMs) to analyze tourism demand in the Bahamas. This is the first empirical attempt to estimate ECMs for tourism demand in the Caribbean region. Findings suggest that income and habit persistence/word of mouth advertising are the primary determinants of tourism demand in the Bahamas, while the cost of travel is generally insignificant. To assess model reliability, the forecasts of the ECMs are compared to random walk and random walk with drift benchmarks. The study finds that while the ECMs provide fairly reliable forecasts, their performances are not superior to those of the benchmarks. ^ Keywords: tourism, error correction models, forecasts, random walk, random walk with drift, Bahamas^

Subject Area

Economics, General|Recreation

Recommended Citation

Charles, Jacky S, "Forecasting tourist arrivals to the Bahamas using error correction models" (2010). ETD Collection for University of Texas, El Paso. AAI1477777.