Forecasting Tourist Arrivals and Supply and Demand Gap Analysis for Hotel Sector in Addis Ababa, Ethiopia

Abstract

This paper aims to forecast the long term behavior of tourist arrivals and analyze the gap between supply and demand for the hotel/accommodation sector of the city of Addis Ababa. It also intends to provide vital information in regards to the sparse knowledge in the subject of forecasting tourist arrivals in Ethiopia. The research is largely conducted based on the secondary data obtained from the Ministry of Culture and Tourism (MOCT) in the tenth edition of the Policy, Planning, Evaluation and Monitoring Directorate’s bulletin publication on Tourism Statistics (2009-2012),(MOCT, 2013). Theoretical assessments of the requirement of a forecasting process and a critical analysis of available forecasting methods have been carried out to fit the profile of long term tourist arrivals. Based on the assessments and analysis, the Box-Jenkins process was selected. Furthermore, the gap analysis is done using the Funneling Technique. The method has also determined that the annual tourist arrivals for the country in the year 2015 will be 798,157 and for the year of 2020, it is expected to be 1,130,971 and finally in 2025, the annual tourist arrivals are expected to climb to 1,463,743. The use of the Funneling Technique in combination with the Stepped Function Intervention Model establishes a different case scenario (positive, negative and starched intervention) which has then been studied to foresee the relationship between supply and demand of the accommodation sector under different circumstances.Keywords: Forecasting, tourist arrival, X-12-ARIMA, Supply, demand.