What is Autoregressive (AR) Models

The hotel industry is capital-intensive with high operating leverage in providing accommodations. Examining final costs play very important role in determining of overcapacity and undercapacity. Turkey's experiencing growth in tourism and has remarkable increases in accommodation. This situation possesses great importance for the capital groups investing in this area. How these groups and local tradesman implement a strategy on capacity management is the main question. Single period inventory model is used at the analysis phase and several interests are examined on this topic. Future Room demand is estimated by ARIMA and in estimating cost of undersupply earnings before taxes is used per room night sold. Combining the derived cost ratio with the future room demand and probability distribution estimated from the ARIMA method, the optimal hotel room capacity can be determined. The purpose of the study is to examine hotel room supply and demand for optimal capacity in Turkey.