Modelling and forecasting the demand for Hong Kong tourism

Abstract

The main objectives of this paper are to identify the factors which contribute to the demand for Hong Kong tourism with the aid of econometric models and to generate forecasts of international tourism arrivals to Hong Kong for the period 2001-2008. The general-to-specific modelling approach is followed to model and forecast the demand for Hong Kong tourism by residents from the 16 major origin countries/regions and the empirical results reveal that the most important factors that determine the demand for Hong Kong tourism are the costs of tourism in Hong Kong, the economic condition (measured by the income level) in the origin countries/regions, the costs of tourism in the competing destinations and the 'word of mouth' effect. The demand elasticities and forecasts of tourism arrivals obtained from the demand models form the basis of policy formulations for the tourism industry in Hong Kong.