A Hidden Markov Model of Dynamic Travel Destination Choice

Abstract

Consumers involve a number of marketing settings so that the behavior is not stationary but subject to change according to the external variables, and thus marketing researchers need to deal with the dynamics in consumer behavior. However, previous studies on travel destination choice mainly rely on experimental approaches without considering such dynamics. This research models the dynamics of travelers’ destination choice behavior using a hidden Markov model. Our proposed model captures the structure of latent states of a traveler that affects his or her destination choice. We expect that this research provides managerial implications by helping managers to understand their customers and send more effective promotional messages to the right customers with the right products at the right timing.