Importance of Forecasting in Tourism

Definition of Forecasting

Forecasting is the process of making predictions of the future based on past and present data. The importance of Forecasting in Tourism will be discussed later in the post.

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Forecasting means future prediction.

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 Forecasting refers to the practice of predicting what will happen in the future by taking into consideration events in the past and present.

Different Methods of Forecasting

Basically forecasting could be of various duration such as,

1. Short term- Seasonal.
2. Medium term – Annual.
3. Long term – More than 2 – 5 years.

There are other factors which we can forecast in Tourism. Let’s discuss them one by one

1. Surveys
2. Time-Series
3. Correlation
4. Market Tests
5. Judgmental

1. Surveys: can be conducted by Government organizations, or small private firms. These are very helpful in finding out the preferences of tourist and their impressions about various tourism services.
2. Time-series: By using historical data and sorting it on time basis, highs and lows of seasons can be better understood, especially tourism industry which is highly seasonal can benefit from such details
3. Correlation: Tourist flows to certain variable factors such as per-capita incomes     
4. Market tests: Understand demand in the market and the products of competitors
5. Judgment: It is based on experience.

FACTORS WHICH INFLUENCE TOURISM

1. Politics and legal environment: is one important factor that affects the movements of tourist flows. Political conditions, the type of government and travel regulations (like visa, foreign exchange etc.) effect the free movement of travelers

• Social and safety factors: are directly related to mental and physical security of the tourists. These factors also affect the trends of tourist flows. For example the flow of tourists to the Kashmir valley has gone done where as Himachal Pradesh has picked up.

• Geographical and climatic factors: decide the seasonality of flows, such as tourist flow from areas of hot plains will go to hill stations in summer or tourists from colder countries will escape to sunny beach resorts during winter etc.

• Accessibility and accommodation: are the two basics of tourism. Any change in these affects the tourist traffic tremendously. The change in frequency of transport services or beginning of any new services is bound to affect tourist traffic along with the distance and time of travel

• Economic Environment: also affects the trends of tourist flow – particularly from the tourist generating regions. Also the exchange rate between two currencies can alter the cost of holidays thus a holiday package may become cheaper or more expensive which also affects the tourist traffic.

• New developments in industry: such as setting up of a new attraction say an amusement park or any other theme park will definitely bring in more tourists. Opening of new destinations like “Sun City” in South Africa has lured lot of traffic from India.

Importance of Forecasting in Tourism

1. Helps in Planning & Making New Policies
2. Future Demand
3. Better Customer satisfaction 
4. Get Ahead of Competitors
5. Better sales
6. Minimizes Risk
7. Optimum use of Resources