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Abstract

This article proposes a macroeconomic-oriented method to forecast hotel room demand in Switzerland for the period stretching from the third quarter of 1974 to the fourth quarter of 2013. The method increases accuracy by weighting characteristics of the inbound tourists’ economies for their relative contribution. It adopts the VECM technique, which produces reliable forecasts in both the short and long run without making ex ante assumptions regarding the causality of the explanatory variables. The results indicate that the method outperforms alternative forecasting methods in both the short and long run. The analysis shows that in the short run hotel room demand depends on income in visiting countries but not on the real GDP of Switzerland while in the long run demand depends on the real exchange rate and the real GDP of Switzerland.

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