An Econometric Model Forecasting Egypt's Aggregate International Tourism Demand and Revenues

Abstract

Egypt is one of the most important tourist destinations worldwide; it receives millions of visitors every year. Consequently, tourism forecasting and planning are vital in maintaining and managing this flow of visitors. Hence, it is imperative for policymakers in both the public and private tourism sectors in Egypt to examine tourist arrival patterns, and to generate forecasts for the industry. The objective of this paper is to forecast the performance of the tourism industry in Egypt until the year 2017. The main factors affecting such performance are the deficiency in exploiting human capital efficiently, ineffective marketing campaigns, and lack of strategies to enhance Egypt's image. This study examines the aggregate tourism demand function for Egypt using the time series data for the period 1982–2006. An Auto Regressive Moving Average (ARMA) model is applied as an efficient tool to forecast the future values of dependent variables (international tourism arrivals and revenues); and its relationship with the above-mentioned independent ones, until the year 2017.