Ruhuna Journal of Management and Finance Volume 1 Number 1 - January 2014 ISSN 2235-9222 R M F J 1 Time Series Behaviour of Burgeoning International Tourist Arrivals in Sri Lanka: The post-war experience Nisantha Kurukulasooriya and Erandathie Lelwala Nisantha Kurukulasooriya * and Erandathie Lelwala † *University of Ruhuna, Sri Lanka. nisantha.ajith@gmail.com † University of Ruhuna, Sri Lanka Abstract This research provides a comprehensive study of time series behavior of the post- war international tourist arrivals. The empirical study is carried out based on out- bound tourist arrivals from all origins that create a demand for tourism in Sri Lanka. The time span is covers from July 2009 to June 2013. In the modeling ex- ercise, classical time series decomposition approach is employed. Mann-Kendall test evidenced for existing linear trend while Kruskal-Wallis tests conirmed the seasonality in tourism. Thus, linear trend component and seasonal luctuations are the two prominent components whereas multiplicative model is comparatively the most accurate model in forecasting. Tourism sector is booming after the war in Sri Lanka with an approximate increase of 1200 tourists per month. Seasonal- ity accounts for over 85 percent of seasonal variation in arrivals and the seasonal pattern which prevailed within the war period has considerably changed to a new behaviour. According to the Gini coeficient, seasonality reached to an equilibrium after the war and hence June, July and October are tourism months. Since the seasonality is a prominent component in international tourist arrivals, the results of the study recommend necessary arrangements to minimize the negative impact of seasonality in arrivals in respective months. Therefore, different categories of travellers should be focused in low demand periods to alleviate negative impact of seasonality. Keywords: forecasting; seasonality; time series decomposition; tourist arrivals 1. Introduction Over the past six decades, world tourism has developed with continued expansion and diversiication, becoming one of the largest and fastest-growing economic sectors in the world. It has been creating a positive growth for national economies for both developed and developing countries. In the same way, international tourism continued to grow in 2011, despite the global economy with increasing uncertainty, political changes in the Middle East and North Africa and natural disasters around the world. International tourist arrivals reached a record of 982 million with an increase of 4.6 percent in 2010, while receipts grew by 3.8 percent to US$ 1.03 billion (United Nations World Tourism Organization, 2011, p.7). Asia and the Paciic and Europe were the best performers in 2011. Tourism is an important sector in most developing economies as well. It is a major