Improved tourism demand forecasting with CIR# model: a case study of disrupted data patterns in Italy

What is it about?

This study aims to predict overnight stays in Italy at tourist accommodation facilities through a nonlinear, single factor, stochastic model called CIR#. The contribution of this study is twofold: in terms of forecast accuracy and in terms of parsimony (both from the perspective of the data and the complexity of the modeling), especially when a regular pattern in the time series is disrupted. This study shows that the CIR# not only performs better than the considered baseline models but also has a much lower error than other additional models or approaches reported in the literature.

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Why is it important?

Traditional tourism demand forecasting models may face challenges when massive amounts of search intensity indices are adopted as tourism demand indicators. In addition, given the importance of accurate forecasts, many studies have proposed novel hybrid models or used various combinations of methods. Thus, although there are clear benefits in adopting more complex approaches, the risk is that of dealing with unwieldy models. To demonstrate how this approach can be fruitfully extended to tourism, the accuracy of the CIR# is tested by using standard metrics such as root mean squared errors, mean absolute errors, mean absolute percentage error or average relative mean squared error.

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