Forecasting Foreign Tourists in Thailand by Economic Condition for Tourism Index

Abstract

Tourism sector in Thailand has been promoted as a key sector to create economic expansion since the early of 2010s. The increasing in demand for tourism in Thailand induces a significant final demand in tourism related sectors. In order to prepare for the growing in tourism sector, the number of visitors should be forecasted. This paper set up a new composite index called economic condition for tourism (ECT) index. This index summarizes the information of the macroeconomic variables which effect the demand for tourism in Thailand. The methods of composite index are implemented. There three weighted average methods that were used: simple average, variance decomposition and factor important. Then, the ECT index can be used as a leading indicator for number of foreign tourists. The ECT index also act as the important factor forecast the number of foreign tourists. Tourism price in Thailand, tourism price in AEC and crime rate are the most important economic factor to determine the ECT index and for the forecasting the number of foreign tourists. The results emphasis that to support the tourism promoting, price stability policy and crime reducing policy should be considered.

Keywords: Tourists, Leading Indicator, Transfer Function