An analysis of the international tourism demand in Spain

In this paper the external demand for Spanish tourist services is analysed within the framework of Structural Time Series Models. The estimated structural model includes as explanatory variables an income index, two price indexes (one with respect to client countries and another with respect to competitor countries), a stochastic trend, representing the changes in tourist tastes, and a stochastic seasonal component. The results show that both price indexes are the more relevant of the variables and determine tourist demand and that the contribution of the trend component has been decisive in the rapid rates of growth of the tourist sector during recent years. The forecasting performance of the estimated structural model compared well with the forecasting performance of two alternative dynamic models, the transfer function and error correction models.