RIFT VALLEEY UNIVERSITY

CHIRO CAMPUS

COLLEGE OF BUSINESS AND ECONOMICS

A RESEARCH PAPER: ANALYSIS OF

TOURISM DEVELOPMENT, MANAGEMENT
GAMACHIS WOREDA

A RESEARCH PAPER: SUBMITTED IN PARTIAL

FULFILLMENT FOR THE REQUIREMENT OF BA
DEGREE IN BUSINESS MANAGEMENT

PREPARED BY:-

ADVISOR: - BADHASAA HUNDEE

Oct, 2020
Chiro, ETHIOPIA
TABLE OF CONTENTS
TABLE OFCONTENT

S
TABLE OF CONTENTS.......................................................................................................................i
ACKNOWLEDGEMENT....................................................................................................................iii
ABSTRACT.........................................................................................................................................iv
List of Abbreviations.............................................................................................................................v
CHAPTER ONE....................................................................................................................................1
1. INTRODUCTION............................................................................................................................1
1.1. Back Ground the Study...............................................................................................................1
1.2. Statement of the Problem............................................................................................................2
1.3. Objective of the study.................................................................................................................2
1.3.1. General objective.................................................................................................................2
1.3.2. Specific objective.................................................................................................................2
1.4. Scope of the study.......................................................................................................................3
1.5. Significance of the study.............................................................................................................3
CHAPTER TWO...................................................................................................................................4
2. LITERATURE REVIEW..................................................................................................................4
2.1. Definitions and Back Ground of Tourism...................................................................................4
2.2. Classification of tourism........................................................................................................5
2.3.1. Domestic Tourism................................................................................................................5
2.2.2. International tourism............................................................................................................5
CHAPTER THREE.............................................................................................................................8
3. METHODOLOGY...........................................................................................................................8
3.1. Description of the Study.............................................................................................................8
3.2. Methodology...............................................................................................................................8
3.2.1. Source of data......................................................................................................................8
3.2.2. Variables Considered in the study........................................................................................8
3.2.3. Method of Statistical Analysis.............................................................................................8
3.4 Preliminary Data Analysis in Time Series Analysis....................................................................9
3.4.1. Test of randomness..............................................................................................................9
3.4.2. Turning point test.................................................................................................................9
3.4.3. Stationary in Time Series...................................................................................................10
3.4.4. Examining stationary of time series data............................................................................10
3.3. Model Diagnostic......................................................................................................................12

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CHAPTER-4......................................................................................................................................15
4. RESULTS AND DISCUSSION....................................................................................................15
4.1 Time Series Analysis of descriptive Statistics: Tourism development and management in
Gamachis woreda............................................................................................................................15
4.2. Time series analysis for domestic and foreign tourists in Arba Minch from (2004-2011)........15
4.3. Analysis of Domestic Tourists in Gamachis from year 2004-2011 E.C....................................16
4.4 Time Series Analysis of foreign tourists in Arba Minch from Year 2004-2011 E.C..................17
4.5 Time Sires Analysis of tourism revenue in Arba Minch from the Year 2004-2011 E.C............17
4.5 Examining stationary of time series data...................................................................................18
4.5.1 Box-Jenkins Models and Identification Procedure..............................................................18
4.5.2 Model Diagnostic for Domestic Tourists............................................................................18
4.5.3 Model Diagnostic for Foreign tourists................................................................................19
4.6 Analysis of Trend Estimation for Domestic and Foreign Tourists.............................................19
4.6.1 Trend analysis for domestic tourist in Arba Minch from (2004-2011)................................19
4.6.2 Trend analysis for foreign tourists in Gamachis from (2004-2011)....................................20
CHAPTER FIVE...............................................................................................................................22
5. CONCLUSION AND RECOMMENDATION...........................................................................22
5.1 CONCLUSIONS.......................................................................................................................22
5.2 RECOMMENDATIONS...........................................................................................................22
Reference............................................................................................................................................23
Appendix............................................................................................................................................24

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ACKNOWLEDGEMENT
Firstly, I would like to almighty of my God help me from the beginning to the end of this
study. I deepest gratitude goes to my advisor Bedasa Hunde for this valuable advice,
suggestion and contractive comments on this paper at every draft without boring.I would like
to acknowledge of West Harangue Zone culture, tourism and Government communication
Affairs Department office for this project by supporting pertinent data.
Finally, I would like to thanks that provide me, especially my family and friends by materials
and ideas.

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ABSTRACT
This research paper is based on the number of tourists in West Hararghe Zone. The data is
collected fromWest Hararghe Zone culture, tourism and Government communication Affairs
Department office. The data includes the total number domestic and foreign tourists from
2004-2011. This paper is mainly focuses on the times series analysis of number tourists and
for the analysis the researcher used inferential statistics and the study were resulted that the
domestic and foreign number of tourists increase. The researcher tries to forecast for the next
few years that shows upward trend.By applying different time series technique, the researcher
should that,an increasing trend changes in number with time (year) in terms of domestic and
foreign tourists.

iv
List of Abbreviations
UNECA United Nations Economic Commission for Africa.
WTO World Tourism Organization.
OAU Organization for Africa Unity.
WB World Bank
MC Multi collinearity
ACA Autocorrelation
Dom.tst Domestic Tourists
For.tst Foreign Tourists
ACF Auto Correlation Function
PACF Partial Auto Correlation Function
MAD Means Absolute Deviation
MAPE Mean Absolute Percentage Error
MSD Mean Square Deviation

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 CHAPTER ONE
1. INTRODUCTION
1.1.Back Ground the Study
Tourism industry is widely known as non- smoking industry. It is one of the major service
giving industry in the world, tourism industry is mainly focus on comforting gusts how
traveled away from their living for suture on paid business according to Jawry ( 1994-28-29),
many people believe that tourism is a service industry that tools after visitors when they are
way from home some restricted the definition of tourism by number of rules away from home
over height stay in paid accommodations, or travel for the purpose of pleasure of suture
something the travel and tourism should not even be referred to as industry.
There are many definitions for tourism but it can be consider as travel and stay of non-
residence or visitor. According to WTO (2012) tourism comprises the activities of persons
traveling to a staying in place outside their usual environment for not more than one
consecutive year for leisure business and other purpose not related to the exercise of activities
remunerated from within the place visited. Tourism is different from travel thought all travel
is not tourism displacement is the major component for the exercise of tourism using and
types of tourism.
Tourism is the fastest growing industry in the world increasing countries and regions are
turning to tourism as available option for economic development. Tourism has pivotal part in
all development efforts. This regards tourism industry has made a significant contribution to
world economy by generating foreign currency earnings, job creation activate and investment
opportunities (Coccess, (1995)). Today, tourism porridges the main income of many least
developed countries which organized themselves in to such a manner that derive the
maximum benefit from the industry.
Although many of us have been "tourists" at some point in our lives, defining what tourism
actually is can be difficult. Tourism is the activities of persons traveling to and staying in
places outside their usual environment for not more than one consecutive year for leisure,
business or other purposes.Tourism is a dynamic and competitive industry that requires the
ability to constantly adapt to customers' changing needs and desires, as the customer’s
satisfaction, safety and enjoyment are particularly the focus of tourism businesses.
International conference tourism is on the rise in Ethiopia due the presence of many
international organizations such as the headquarters of the Organization for African Unity
(OAU) and the United Nations Economic Commission for Africa (UNECA,(2012)) in Addis

1
Ababa. The capital city, being a business centre and a conference venue, is host to annual
conferences for UN branches, pan-African business organizations and special interest groups
that have been attracting a growing number of delegates to the country each year.
Conference tourism has great potential to grow and is poised to gain greater significance due
to the development several top hotels in Addis Ababa to meet the demand. The government
has been taking measures to expand hotel facilities into other parts of the country and also
plans to set up an office responsible for conference tourism in the near future (WTO,2007)).
1.2. Statement of the Problem
Tourism industry has become the significant economic sector as playing a big role in creating
job and employment opportunities source of foreign currency earning maintaining ecology
and environment serve as form exchange culture and technology. This research also shows
the tendency of tourists flows to be concentrated in to the relatively short period of time year
of long periods of the year.
The researcher would try to study the factors (challenges) of tourism industry and the trend
analysis of tourism industry in Gamachis woreda west Harangue zone. Therefore, this study
has been motivated to address the identified research gaps by answering the following
research questions:-
1. What are the problems towards developing tourism industry?
2. What is the economic impact of tourism industry in Gamachis West Harangue Zone?
1.3. Objective of the study
1.3.1. General objective
The general objective of this study was to examine the trend of tourism industry in Gamachis
West Hararghe Zone by using time series method.
1.3.2. Specific objective
The specific objectives are-
1. To investigate in which time (year) does the flow of tourist increase.
2. To determine whether the trends and patterns of foreign and domestic tourists are
identical or not.
3. To compare whether there is the change in the industry in the past 10 or 20 years.
4. To provide relevant recommendations for policy makers and suggest directions for
future studies.

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1.4. Scope of the study
The study has limited to tourism development, management and promotion care tourism
industry process in Gamachis woreda West Hararghe Zone. This research tries to see the
growth of tourism industry management and development based on the number of domestic
and foreign tourists.
1.5. Significance of the study
The outcome of this paper might help to understand the past behavior of tourism industry
planning of the future operation and for evaluating the current accomplishment of tourism
industry in different time. It is also important to give the way for the researcher who wants to
Gamachis woreda West Hararghe zone. Make further study for comparing the development
of tourism industry.

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 CHAPTER TWO
2. LITERATURE REVIEW
2.1. Definitionsand Back Ground of Tourism
Tourism is defined as the sum of phenomena and relationship arising from travel and stays of
non-residents. It isas far as they do not lead to permanent residence and are not connected
with any earning activity. This indicates that tourism is a movement of people outside their
place of residence for a limited period. Tourism is a more specific than seizure and focuses
on the idea of trips or extrusion away from the normal place of residence involving at least
one overnight stay treasure may be on integral part of daily routines. But tourism occurs in
specially disagree blocks of time people become tourists when they peace their home for a
significant period of time and spent in relaxation or differently from normal routines
(Hajway, 1994)).
Tourism has emerged, as a major industry is one of the most remarkable changes to have
taken place in economic activities in the years since World War II It is a suitable and
complex service industry governed by the laws of supply and demand. It exhibits strong
seasonality of demand in most areas and can be affected by relatively in predictable changes
in consumer preferences. In addition to being influencing by political events. Despite this,
tourism has been more stable than many other sectors. The past 30 years has seen the rapid
and continuous growth both the number of tourists and tourism receipts have increased
significantly throughout the world developments in the transport sector especially in air
transport have significance improved access to tourism destinations. Although, these some
developments have created their own environmental problem. The quality of the environment
or some particular feature of thisis frequently the primary attraction for tourists. This can
head to consider able pressure on the environment that attracted tourists in the first place and
in particular on the local environment when tourists are staying (Maitland,1997).
Income from tourism can also assist in the development and improvement of facilities for
permanent residents as well as for tourists. Miscellaneous visits includes tourism for reasons
such as study health religion, shopping and to attend sporting events. This forms a small
proportion of overall tourism demand but destinations they can be quite important. For
example, visits for religious reasons are dominant in the case of Vatican City. Seasonality
refers to the tendency tourists flows to be concentrated to relatively short periods of the year.
(Nijkamp, 1995).

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2.2. Classification of tourism
The tourism sector is based on mainly the mobility of the people who are instructed in
exploring and admiring unique natural social, cultural, historical characteristics of a usual
residence (other country). According to world tourism, organization tourism by its nature can
be divided in to two. These are:-
I. Domestic tourism
II. International tourism
2.3.1.Domestic Tourism
Domestic tourism is a movement of residents of the given country outside their normal
declines to other area as only with in a country people who are keen to know the natural or
manmade attraction historical heritage and artifacts of different regions make travel within
their own country. Through domestic tourism does not bring new money to economy and has
no significance on balance of payment it creates a market for tourism related businesses. In
domestic tourism, visitors do not face for language and currency problems. According to
WTO recommendation on tourism statistics by (Madrid,(1993)) for statistical purpose the
ting in a country who travels to a place with in the country outside his/ her usual environment
for a period not exceeding 12 months and whose main purpose of visit is other than the
exercise of an activity remunerated from within the place visited.
2.2.2. International tourism
International visitor for statistical purpose, the term international visitor describes any person
visiting a country other than that in which she/ he has her/ his usual place of residence but
outside his/ her Saul environment for period not exceeding 12 months (Sinha, 2003).
According to Sinha finding, destination of supply of tourism demonstrates a complex patter
across the world because it is located in diverse environments and in differing economic and
social contexts. The tourist destination however defined geographically, provides convenient
focus for the examination of the tourists movement its impact and significance. In deed the
destination brings together all aspects of tourism demand, transportation, supply and
marketing in a useful frame work most destinations, supply and marketing in a useful frame
work most destinations comprise a core of the following component attractions :-
 Access ( local transport, transport terminals)
 Amenities (accommodation, food and Berge out lets entertainment, retailing
and other services
 Ancillary services in the form of local organization

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2.2.2.1. Economic Issues
There are many hidden costs to conventional tourism and they can have unfavorable
economic effects on the host community. Often rich countries are better suited to profit from
tourism than poor ones. Although the least developed countries have the most urgent need for
income, employment and general rise of the standard of living by means of tourism, they are
often the least capable to realize these benefits, Among the reasons for this are large-scale
transfer of tourism revenues out of the host country, exclusion of local businesses and
products(Frichtling,1994).
2.2.2.2. Socio-Cultural Issues
Sustainable tourism has the potential to improve the preservation and transmission of cultural
and historical tradition. Contributing to the conservations and sustainable management of
natural resource can bring usually the chance to protect local heritage or to revitalize native
cultures, for instance by regenerating cultural arts and crafts. In some case tourism, also help
to raise local awareness connecting the financial values of natural and cultural sites. It can
stimulate a feeling of pride in local and natural heritage and interest in its conservations.
More broadly, the involvement of local communities in sustainable tourism development and
operation seems to be important condition for the sustainable use and conservation of the
biodiversity (WTO, 2007).
2.2.2.3. Economic Dependence on Tourism
Many countries have embraced tourism as the single most important way to boost their
economy. This has made them very vulnerable to anything that negatively affects the local
tourism industry (for example terrorist scares, Military conflict and impacts of natural
disasters) have a devastating effect on overall economic climate (WTO, 2011).
2.2.2.4. Community Attitude issues
Communities based on tourism enable tourists discover local habitats and wild life, and
celebrates and respect traditional cultures, ritual and wisdom. The community will be aware
of the commercial and social value placed on their natural and cultural heritage through
tourism and this will foster community based on conservation of resources (Williams,(1994)).
2.2.2.5 Service Issues
All WTO members emphasize the importance of tourism, especially in terms of its
contribution to employment and generating foreign exchange. Typically one the most
dynamic sectors, tourism-related services are labor-intensive, with numerous links to other
major segments of the economy. Tourism and travel –related services include services
provided by hotel and restaurants (including catering), travel agencies and tour operator
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services, tourists guide services and other related services. One of the most crucial aspects of
international tourism is the cross-border movement of consumers. This permits even
unskilled workers in remote areas to become services exporters. For instance by selling craft
items, performing in cultural shows, or working in tourism lodge (WTO, 2006).
2.2.2.6. Taxes Issues
Tourism taxes have become an increasingly trend pick for elected officials hoping to rise
additional revenue to increases in government spending. However, hiking already high taxes
on car rentals, hotels, airline flights and other tourism necessities bring on a slew of
problems. Policy maker should know better than to place additional burdens on struggling
industries during recession. Unfortunately, too many politicians see these taxes as an easily
way to tap additional revenues term non-voting visitors and avoid back lash from their own
constituents. But such taxes hikes have series consequences for residents, even in locations
that do not have a vibrant tourism industry (Gagoetal, 2009).

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 CHAPTER THREE
3. METHODOLOGY
3.1. Description of the Study
This study is conducted in Gamachis West Hararghe zone. Gamachis West Hararghezone is located
in the Eastern part of Ethiopia, 343 km away from the capital city of Addis Ababa. In Gamachis West
Hararghe zone there are many nations and nationality lives together and also speak different language
such as Amharic, Oromia, etc. It is one of the elevation zone in SNNPR .The average temperature is
30◦c, the annual rain fall is 575mm situated in Great Rift Valley. The general elevation of the zone is
ranges from 600-3300 meters above sea level.
3.2. Methodology
3.2.1. Source of data
This study is useful to identify the major challengers of tourism in the study area. Secondary data is
used as source of data for the study; the researcher has this data from Culture tourism and
Government Communication Affairs Department office in GamachisWest Hararghe zone. This data
consists of foreign and domestic tourists.
3.2.2. Variables Considered in the study
The proposed variables under this study were time,tourismrevenue, domestic tourist and foreign
tourist.
I. Response variable:-
 Tourism revenue: - Tourism revenue is a dynamic and competitive industry that
requires the ability to constantly adapt to customers’ profit, changing needs and
desires, as the customer’s satisfaction, safety and enjoyment are particularly the
focus of tourism businesses.
 Domestic tourist:-is persons who travels and movement of residents of the given
country outside their normal declines to other area as only with in a country.
 Foreign tourist:- is persons who travels and movement of residents of the given
country outside their normal declines to other country.
II. Explanatory variables:-
 Time:-is the only assessing the time series changes (dynamics) of tourists with
in time.
3.2.3. Methodof Statistical Analysis
According to stated objectives, the most appropriate methods of data analysis is time series analysis
design, which helps to generate evidences from inferential time series analysis. The researcher would
try to reply the research questions from output.

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3.3. Model Diagnostic
Outlier
Outliers are data that have the maximum value or most minimum value. It can strongly affect
the mean and standard deviation of a variable. It may occur
1. Measurement or observation error
2. Recording error
3. The data value might be a legitimate value that occurred by chance (Blumane,
1998).
4. Missing value
If only a few niare different reasonable procedure is estimate the missing value by taking the
average of observation that is available in that cell. The estimated value treated just like
actual value. The only modification is reducing error degree of freedom by the number of
missing observation (box, 1994)
Multicollinearity
Multicollinearity is the perfect or in prefect relationship between the explanatory variable. In
Multicollinearity there is no a statistical problem, but data problem (Madaala, 1977).
Diagnosis of MC
It compares the actual situation with an ideal situation. By this method we compare each
explanatory variable separation.
Variance inflation factor (VIF)
VIF (bk) =1/(1−R 2k )=z
Rule of thumb
Z= [1, 10]→free from multicollinearity
There have been several solutions to the multicollinearity
i. Ridge regression
ii. Principal component regression
iii. Dropping variables
Autocorrelation
Most economic data consist of time series and there is very often a correlation in the error
corresponding to successive time periods this is the problem of AC
Diagnostics of AC
i. Graphical method:-plot the residuals against time.
ii. Durbin Watson Test:- consider the first order autoregressive process

9
 iii. BreuschGodfrety (BG):-the most general test of AC because it allows for higher
order autoregressive schemes.
3.3.1.Statistical Model
It deals with the method of inferring or draws a conclusion about characteristic of the
population based on the result of the sample for this study we use time series analysis to
make conclusion based on the value we get.
Time series analysis
It deals with as a set of observation made sequentially the time. The special future of time
series that data ordered with aspect to time and successive objection assume to be dependent,
which facilitates to give reliable forecast. For our paper we use trend and seasonal
component.
Trend component: - it is the long term upward or down ward movement of a series due to
different factors that affect the mean of the series.
Trend Analysis
In order to measure trend the researcher would try to eliminate seasonal, cyclical, and
irregular component from the time series data. Trend analysis fits general model to time
series data and provides forecasts.
Linear, Quadratic, Exponential and Other trend &its estimation
This trend were applies when the trend show a constant change by one direction. It also use
for short period data.
yt =b0+b1t+εt
Where; bo is the intercept
b1 is the slope
εt is a random error
Response variable tourism Predict variable tourists. For this paper the researcher would use
linear estimation and nonlinear, such as quadratic and exponential although our data is not a
long period.
3.4 Preliminary Data Analysis in Time Series Analysis
3.4.1. Test of randomness
The objective is to identify weather there is any systematic component in the time series data
or the data are dependent. Then we concentrate up on the null hypothesis assume that the data
are independent and identically distributed. The most common tests of randomness are-

10
Turning point test, Phase length test, Difference sign test and Rank test. However, from those
tests the researcher has been used the turning point test in our research only.
3.4.2. Turning point test
This test describes as the test against systematic oscillation.
 Turning point test defined as either a peak or a trough
 A peak is a value greater than its neighboring value
 A trough is a value less than its neighboring values.
Hypothesis:
1. Ho: Yt, t=1, 2… n independent identically distributed (test of random) variable H1: not
Ho. Where Yt =the observation at time t.
2. The level of significance (α=0.05)
3. Let p is the number of turning point for the set of observation
2
E (p) = 3 (n-2), where n is the number of observation
16 n−29
Var (p) = 90 Where p ~ N (E (p), var (p))
p−E( p)
4. Test of statistic, Z= √ var ( p ) ~N (0, 1)
5. Critical Value Zα∕2
6. Decision Rule, reject Ho, If │Zcal│> Zα∕2, that means the time series is
notindependently identically distributed.
If |Zcal|<Zα/2, accept Ho this indicates the time series independent identically
distributed.
3.4.3. Stationary in Time Series
Stationary means there is no growth (decline in the data) to form forecasting most of the
probability theory of time series is concerned and for these reason time series analyses often
lagged one to turn a non-stationary series into stationary.
To say a time series data Yt- stationary
 Means of Yt is constant for all time periods
 Variance Ytis constant for all time periods
 Covariance between Yt and Yt+i is constant for time series and for fixed I where
i=1, 2…k.
3.4.4. Examining stationary of time series data
Time series plot

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If a time series is plotted and there is no evidence of a change in a mean over time then we
say the series is stationary on the mean. If the plotted series shows no obvious change in the
variance time then we say the series is in the variance (constant variance).
ACF (Autocorrelation function)
The autocorrelation of stationary data drops to zero relatively quickly, while for non-
stationary data they are significantly different from zero for several and PACF will have a
large spike close to 1 at lag 1. A non-seasonal time series is stationary if the ACs is all zero
(indicating a random error) or if they differ from zero only for the first few lags. However,
for seasonal time series we are not only concerned with their behaviors at the early non-
sectional lags (lags less than L, where L is the number of seasons in a year). We are also
concerned with the seasonal lags (L, 2L, 3L…). Level of the ACF cuts off or dies down
rapidly at the early lags (usually lag L or lag 2L).
Differencing
Differencing is the process of changing a non-stationary time series into a stationary time
series. Regularly differencing is taking successive differences of the data. The method of
taking first difference of the data is simply to subtract the values of two adjacent observations
on time series. If the original data has n observations (Y1, Y2...Yn), the first differenced data
would be n-1 observations
Seasonal differencing is used to change a non-stationary time series to a stationary time
series. If the original series has n observations, the seasonally differenced data will have n-L
Box-Jenkins Models
There is a method designed to exploit such dependents which givens superior result. Among
such methods, the Box Jenkins approach is the one.Basic steps in the Box -Jenkins
procedures
The Identification Procedure
To apply Box- Jenkins methodology on a time series data, before any analysis, the data
should be checked for stationary. A stationary series is the one that does not contain trend i.e.
it fluctuates around a constant mean. For non-seasonal data, taking first or second differences
may result in a stationary time series while for seasonal data seasonal differencing is
required.
Studying of the ACC
The ACC measures the relationship or correlation a set of observation and a lagged set of
observation in time series. Given a time series Y 1, Y2…Yn, the ACC between Yt and

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Yt+k(denoted by ρk) measures the correlation between the pairs (Y 1,Y1+k), (Y2,Y2+k),…,(Yn-
k,Yn). The sample ACC (rk) an estimated of ρk is obtained by the formula

∑ (Y t −Ȳ )(Y t +k −Ȳ )

rk =
∑ (Y t −Ȳ )2
Where Yt= observed value of the time series
Y^ =mean of the time series
Yt+k=observed value of k periods apart
A non-seasonal time series is stationary of the AC’s are all zero (indicating random error) or
if they differ from zero only for the first few lags. The non-seasonal level of the ACF cuts off
or down rapidly at the early lags (usually lag L and 2L).
Note: - for monthly data L=12 and for quarterly data L=4.
To test whether or not the ACC is statistically equal to zero, we use the t-statistic.
Ho: ρk=0 (there is no autocorrelation)
HA: ρk≠0
Test of statistic (Bartlett’s Approximation Formula)

rk
t k= 1
S ∑ rk Where rk
≈ N (0, n
∑rj )
For testing at 95% confidence interval, we use t-critical value 2 for non-seasonal lags and
1.25 for seasonal lags as a rule of thumb. Therefore, if |t k|>2 (for non-seasonal lags) or |tk|
>1.25 (for seasonal lags), we reject the null hypothesis Ho: ρk=0 and concludes that the
autocorrelation are statistically significant or ACs are significantly different from zero.
Studying Partial autocorrelation coefficients
A PACC is the measure of the relationship between two variables when the effect of the
intervening variables has removed or held constant. The PACC (ρkk) is a measure of the
relationship between the time series variables Yt and Yt+k when the effect of the intervening
variables Yt+1, Yt+2…Yt+k-1 has been removed. This adjustment is made to see if the correlation
between Ytand Yt+kis due to the intervening variables or if indeed there is something else

causing the relationship.

The pattern of Partial autocorrelation coefficients enables to identify the orders for tentative
Box-Jenkins models. Thus, If the plot of autocorrelation coefficients is decay exponentially

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and contain damped oscillation, and the plot of partial autocorrelation coefficients has p-
spikes, our tentative model is autoregressive of order p.
AR(p): Zt=ß+Φ1Zt-1+Φ2Zt-2+...+ΦpZt-p
If the plot of autocorrelation coefficients has q-spikes, and the plot of partial autocorrelation
coefficients decay exponentially and contain damped oscillations, our model is moving
average of order q as shown below:
MA (q): Zt=µ-θ1et-1-θ2et-2-...-θpet-p+et.
If both autocorrelation coefficients and partial autocorrelation coefficients plots are decay
exponentially and contain damped oscillations, our model becomes ARMA (p, q) (mixed
model).
ARIMA (p, q): Zt=β+Φ1Zt-1+Φ2Zt-2+...+ΦpZt-p+et-θ1et-1-θ2et-2-...-θpet-p

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 CHAPTER-4
4. RESULTS AND DISCUSSION
4.1 Time Series Analysis of descriptive Statistics: Tourism development
and management in Gamachis Woreda.
From the descriptive statistics, we can see majority of tourist inter in the year 2012 that is
116812 and the least number of tourists flow in 1993 that is 10460.
From the True mean (TrMean) we can see the average value of domestic tourists is 35809
after eliminating 5% observations from last and first.We also observed the maximum number
of foreign tourists visited Gamachis woreda 52781during the year 2012 and the minimum
number of tourists are 1078 tourists. From the TrMean the average value of foreign tourists
after eliminating 5% observations from last and first are 15645. From the descriptive statistics
it can be seen, the number of tourists is lower or highly for domestic tourists as compared
with the foreign tourists.As we have seen the result, by comparing the distribution of tourists;
the numbers of domestic tourists are greater than foreign tourists.
Variable N Mean Median TrMean StDev SEMean Minim maxim Q1 Q3
um um
dom.tst 14 39785 28463 35809 29050 7764 10460 116812 19040 55007
for.tst 14 17257 13955 15645 14228 3802 1078 52781 5856 23970
Table 1: Descriptive Statistics for Domestic and Foreign Tourists
From the descriptive statistics the mean of domestic and foreign tourists are 39785 and 17257
respectively. We also observed that the dispersion of foreign tourists is higher compared to
domestic tourists.
4.2. Time series analysis for domestic and foreign tourists in Gamachis
woreda from (2004-2011)
It deals with as a set of observation made sequentially the time. The special future of time
series data ordered with aspect to time and successive data assume to be dependent, which
facilitates to give reliable forecast. In this paper the researcher use trend component.The
preliminary duty before analyzing time series data check whether the data has some time
series effects or not, for this analysis we employed a turning point test.
Test of randomness

15
The objective is to identify weather there is any systematic component in the time series data
or the data are dependent. Then we concentrate up on the null hypothesis assume that the data
are independent and identically distributed.
Hypothesis:
Ho: the series is randomVsH1: not Ho
p−E( p)
Test Statistics: Zcal = ~N(0,1) ,where p is the number of turning points that counting
S . d ( p)
variables for the set of observations
2(n−2) 2(14−2)
E(p) = = =8, for n=14,where n is number of observation for dom.tst and
3 3
for.tst.
16 n−29 16∗14−29
Var(p) = = =2.1666666667
90 90
Thus, we have mean equal to 8 and variance equal to 2.1666666667 for the two domestic and
foreign tourists.
Bycalculating the test statistic for domestic and foreign tourist, we have obtained the
following:
Zcal(dom.tst)= 2.03809
Zcal(for.tst)=-3.146154
Zcal(tou.reve) = 1.95
Zα /2= 1.96 (tabular value), where α is level of significant.
From the test statistics we can see that absolute value of Z cal for domestic, foreign and tourism
revenue are 2.03809, -3.146154 and 1.95 respectively which are greater than Zα /2=1.96 at
0.05 level of significant for the domestic and foreign tourist. Therefore, the series is not to be
observed as random data therefore, we can assume the data is time series.
4.3.Analysis of Domestic Touristsin Gamachis woreda from year (2004-
2011) E.C
Figure 4.3: indicates the number of domestic tourists from 2004-2011 E.C the plot contains
only trend component. From the figure it is shown that the flow of domestic tourists has been
increased year to year, but from 2004-2011 E.C for domestic tourists show constant trend and
somewhat increase after 2004. It is alreadyseen that in 1998 the number domestic tourists
substantially increased in each year by a substantial amount especially, 2005 E.C.

16
 Time Series Plot f or dom.tst

120000

100000

80000
dom.tst

60000

40000

20000

1 2 3 4 5 6 7 8 9 10 11 12 13 14
Time

Figure 4.3: Time series plot for domestic tourists.

Generally, this time series plot shows us that yearly fluctuation of the number of domestic
tourists changes the tourism with a general upward trend.
4.4Time Series Analysis of foreign touristsin Gamachis woreda from 2004-
2011 E.C
Figure 4.4: shows the number of foreign tourists from the year 2004-2011. As we have seen
from the plot the number of foreign tourists substantially decrease in 1995 butthe shift in
mainly observed during the year 1995-2002. After a sharp increase during 2004-2011 from
the plot, it is observed that the flow of tourists has declined for the year 2010 and the flow
again grows with some increment.From the plot (Figure 4.4), the number of domestic and
foreign tourists hassubstantially increased from the year 2004-2011. By assertion, this might
be because of some setup of Ethiopian millennium celebration.
4.5Time Sires Analysis of tourism revenue in Gamachis woreda from the
Year 2004-2011 E.C
From the timeseries plot below we can see the income of tourism has similar in the year,
2004-2011.C. However, the revenue of the tourism was highly increased after 2007 E.C.

17
 Time Series Plot f or tou.rev e

50000000

40000000

30000000
tou.reve

20000000

10000000

1 2 3 4 5 6 7 8 9 10 11 12 13 14
Time

Figure 4.5 Time series plot for tourism revenue

4.5 Examining stationary of time series data
4.5.1 Box-Jenkins Modelsand Identification Procedure
In this section, we predicted the future development, management and tourism industry for
domestic and foreign tourist in Gamachis woreda. Thus, by performing ARIMA primarily we
have autocorrelation in order to identify a likely model. Since the data was non-seasonal, we
have taken the autocorrelation of first difference of the series at lag one.
From the Figure 4.5 a: the ACF of domestic tourists shows small positive, with significant
spikes at lags 1, because absolute value of T is greater than 2 and others PACC are
insignificant that is the absolute value of T statistic is less than 2 for all lags but the
subsequent negative autocorrelations that lie off quickly. Thus, it is conclude that the pattern
is not typically an autoregressive process. From the figure 4.5.1 the 3-spike or MA (3) and
from PACC there is 1-spike or AR(1)for once difference data. Hence, the model is identified
to be ARIMA (1, 1, 3).
4.5.2 Model Diagnostic for Domestic Tourists
The Modified Ljung-Box chi-square statistic is used to test for absence of autocorrelation in
the residual from ARIMA(1, 1, 3) model for domestic tourists. From the result ofTable 4 it is
shown that the autocorrelations are statistically insignificant at 5% level of significance for
first 36 lags as p-values of chi-square test statistic for the given respective lags are greater
than 5% level of significance to test null hypothesis of autocorrelations are zero for first 36
lags are not rejected. Thus, the result is no autocorrelation in the residuals under the Q(k)-test
indicates that ARIMA was correctly specified and adequate.

Modified Box-Pierce (Ljung-Box) Chi-Square statistic

18
 Lag 12 24 36 48
Chi-Square 34.6 37.8 40.45 42.6
DF 10 21 32 43
P-Value 0.000 0.0029 0.0582 0.0426

Table 4.5.2: Modified Box-Piece chi-square statistic for domestic tourist

From Figure 4.5.2: the ACF of foreign tourists shows small positive, with insignificant
spikes for all lags, because of absolute value of test statistics is less than 2. However, the
subsequent negative autocorrelations that lies off quickly. Thus, the pattern is not typically an
autoregressive process and the model is ARIMA (1, 1, 4)
4.5.3 Model Diagnostic for Foreign tourists
Table 4.5.3: is ModifiedLjung-Box chi-square statistic usedto test for absence of
autocorrelation in the residual from ARIMA (1, 1,3) model for foreign tourists. The result
shows that the autocorrelations are statistically insignificant at 5% level of significance for
first 48 lags as p-values of chi-square test statistic for the given respective lags are greater
than 5% level of significance to test null hypothesis of autocorrelations are zero for first 48
lags are not rejected. Thus, the result is has no autocorrelation in the residuals under the Q(k)-
test indicates that ARIMA was correctly specified and adequate.
Modified Box-Pierce (Ljung-Box) Chi-Square statistic
Lag 12 24 36 48
Chi-Square 3.7 4.59 6.023 6.189
DF 10 21 32 43
P-Value 0.958 0.899 0.5075 0.095
Table4.5.3:Modified Box-pierce of chi-square statistic for foreign tourist
In thecase,the variance inflation factor is under control in close interval1and 10. Thus, there
is no multicollinearity from the model. The Wald test statistic for the series are greater than
chi-square tabulation value, thus the model is good (see Appendix 2 table 4.5.4, 4.5.5, 9 and
10).
4.6 Analysis of Trend Estimation for Domestic and Foreign Tourists
From this trend analysis, we have to choose appropriate model; Linear, Quadratic,
Exponential and S-curve in order to fit the model for the long-term tendency. Thus, under
this, we used the three measures of accuracy; MAPE, MAD and MSD for each of the
forecasting methods, then the smallest is prefer.

19
 4.6.1Trend analysis for domestic tourist in Gamachis woreda from (2004-2011)
From Table 7: the exponential growth trend model has the smallest measure of accuracy.
Thus, the smaller measure of accuracy value is the better fit of the trend model. Therefore, we
can provide the trend estimation by using exponential growth that fit under the assumption of
the series growth with geometric law in the form of equation Yt = x1(x2)t.
Accuracy measure
Model Equation MAPE MAD MSD
Linear Yt = -3597.64+5784.29*t 27 9678 239917905
Quadratic Yt =7189.56+1739.10*t+269.680*t**2 19.1973 8716 227490632
Exponential Yt =9542.98*(1.17315**t) 18 8605 225357048
S-curve Yt = (10**6)/-711326+85.1094*(0.876879**t-1)) 19 9411 281073955
Table 7: Output of accuracy measurement of domestic tourist in different models
The trend plot shows that the original data, the fitted trend line and the three values of
measure of accuracy. Generally, the trend of change in growth of domestic tourist show that
the domestic tourists were increasing with year. Thus the fitted trend equation;
Yt =9542.98*(1.17315**t)this model shows that:
1. The average numbers of domestic tourists are 9543 when the year is initially at 1991.
2. The number of domestic tourists has increased from the year 1991-2004 and it was
increase by a factor of 1.17315 power of the year(t). Therefore the trend pattern for
domestic tourist is as follows:

Fig. 4: The exponential trend analysis for domestic tourist

20
 4.6.2 Trend analysis for foreign tourists in Gamachis woreda from (2004-2011)
In Table 4.8: we can see that the number of foreign tourists is better fitted by S-curve(pearl-
Reed) trend model. Therefore, by using S-curve model we can predict the future trend of
foreign tourists. The fit of the trend under the assumption of this series in the form below:
Yt =(x+zct)-1.Thus, the trend plot of foreign tourists is follows:

Model Equation Accuracy measure

MAPE MAD MSD
Linear Yt = -2824.71+2677.54*t 93 5484 71463858
Quadratic Yt = 1791.80+969.153*t+114.039*t**2 78 4701 74 682935

Exponential Yt =3080.70*(1.19894**t) 71 5782 78931492

Table 8: the measure of accuracy for foreign tourists in different models

The trend plot shows the original data, the fitted trend line and the three values of measure of
accuracy. Generally, the trend of change in growth of foreign tourist show that the domestic
tourists were decreasing with time (year). Thus the fitted Trend equation is:
Yt=(10**6)/33.5610+1138.63*(0.539096**t-1)). This model is S-curve,therefore from the
below Figure, we can see that:
1. As we observe from the below Figure 5, the S-curve has a least value of measure of
accuracy, and then the S-curve is the appropriate for this series (observation).
2. By using S-curve model the number of foreign tourists has a decreasing in early stage
from 1991-2004.

21
Fig 5: S-curve(pearl-Reed) trend analysis for foreign tourist

CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATION
5.1 CONCLUSIONS
The objectives of this research is to investigate in which year the numbers of tourists are
increase, and to see the change of the industry from the year 1991-2004. From results and
discussions of the study, we conclude the following to the concerned bodies
 The total numbers of domestic tourists are increasing from the year 1991-2003.
 The total numbers of foreign tourists is lower whencompared with domestic tourists
from the year 1991-2003.
 The flow of domestic and foreign tourists has reached its maximum during the year
2000.
 Based on the forecasting value the total numbers of tourists are up to 20 years move
in different manner.
 Tourism industry has become the most important economic sector, whichplays a big
role on creation of job and employment opportunity, source of foreign currency
according to its revenue.

22
5.2 RECOMMENDATIONS
Based on the above conclusionwe recommended the concerned bodies of tourism the fact that
tourism is one of the industry sectors, it is essential to improve of the ways of living standards
of the societies, types of cultures new historical places, and the organization must undertake
the framework of policies. Mainly theresearcher recommends the following facts:
 The trends of foreign tourists are decrease domestically from time to time thus the
concerned bodies should increase their capacity of infrastructure and the standard hotels
in tourist distinctions.
 Tourists should get a better and comfortable service hence those who provide facilities
should improve the facilities to the modern requirements.
 The government should help investors by supporting their needs.
 Promotion and advertisement should taken as basic elements to increase the flow of
tourists in turn it will increase revenue from tourism therefore the culture and tourism
bureau should make favorable conditionto achieve it.
 Local administrative bodies, government and culture and tourism bureau should
encourage investors to invest their money to have better facilities.

23
Reference
Box, E.P., (1994), Time Series Analysis: Forecasting and Control, University Of Wisconsin
United States of America.
H. Coccess, P. Nijkamp (1995)): Sustainable Tourism Development.
Maitland.R.(1997)),Tourism Destination.
P.C Sinha,(2003) , Tourism,: Issues And Strategies
R.K. Malhora(2005), Economic Dimensions Of Tourism
Hamilton. J.D (1994). Time series analysis. Princeton University press, NJ.Cambridge
University press.
Harvey, A. (1997). Forecasting structural time series models and the Kalman Filter.
Winters, PR. (1960).Forecasting futures by exponentially weighting moving
average,Man. Sci, 6,324-342.

24
 RIFT VALLEY UNIVERSITY
Chiro Campus
Department Business Management
Questioner

 Analysis of Tourism Development, Business Management on the organizational

performance in case study of Gamachis Woreda.
Instruction for the respondents

 Circle the letter for the closed questions

 should be ethical for the data
M.B the questionnaire is used only for the academic purpose
Data__________________
Name of the society____________________
Name of the Respondent_________________
Directions: - please put “√ “against the box corresponding to your choice
1. Sex □ 2. Female 3.male
2. Educational level A. Illiterate □ B. can read and write □. c. Primary
level □ D. Secondary level □
3. Marital Status A. single □ B. Currently Married □ C. Divorced □
4. Do you feel that Analysis of Tourism Development, Management the fill need of the
society?
A. yes □ B. No □
5. Are you satisfied on Tourism Development, Management in your Town?
A. yes □ B. No □
6. Do you believe that Analysis of Tourism Development, Management promotes awareness
of society? A. yes □ B. No □
7. Do you believe that Analysis of Tourism Development, Management is applied effetely in
Gamachis Woreda? A. yes □ B. No □
8. Do you participate in Analysis of Tourism Development, Management?
1. Yes □ B. No □
9. How do you rate the degree of satisfaction towards socio –Economic benefit obtained from
Analysis of Tourism Development, Management?
A. yet satisfied B. satisfied C. unsure D. dissatisfied

25
10. What is your perception towards Analysis of Tourism Development, Management?
A. positive B. Negative
11. Do you have anything to say about your society?
12. What is your Tourism visiting area?
13. HOW is your Tourism Promotion in your area?
14. How to control your Tourism Development, Management?

26