Tourism demand forecasting models: Choice of appropriate variable to represent tourists' cost of living

Price is generally regarded as a major determinant of demand. Tourism has two price elements - the cost of travel to the destination and the cost of living for tourists in the destination. Previous studies where econometric forecasting models have been developed for international tourism demand usually take the consumer price index in a country to be a proxy for the cost of tourism in that country owing to lack of appropriate data. This article attempts to evaluate the performance of proxy variables compared with a specific tourists' cost of living variable within the context of tourism demand forecasting models.