Forecasting Middle-East tourism demand with Arima-Sarima modeling: the case of Malaysia

Abstract

The year 2009 had started on a higher expected note for Malaysia tourism. The government has launched several tourism attracting program to encourage international tourist arrivals to Malaysia for up-coming years. Therefore, this study attempts to forecast the Middle-East tourism demand for the period of January-December 2009. Basically, the literature on forecasting tourism demand is huge with various type of empirical analysis. Some of the researchers apply cross-sectional data, but most of forecasting tourism demand used pure time-series analytical models. One of the important time-series modeling used in forecasting tourism forecasting is ARIMA modeling. This study employs monthly time series of Middle-East tourist arrivals to Malaysia for the period 1995-2008 to forecast future Middle-East tourism demand for Malaysia. The forecasting performance based on ARIMA and seasonal ARIMA (P,D,Q) 12 models. Although the combined forecasts do not always perform the best outputs, almost both of the models used in this study has performed well and reduce the risk of forecasting failure. Finally, the findings of this study shows seasonality model has offered valuable insights and provide reliable forecasts of Middle-East tourism demand for Malaysia.