Does Arima support the usage of categorical variable? Some ways to get it working can be using one-hot encoding to represent categorical variables, but I am not sure how good it is.
One-hot encoding is the way. For ARIMA models, no other configuration is possible. Whether it is good or not, it depends on the quality of your data, your variable choice, and a correct model specification. Unfortuntately, we can't say a priori whether the result is going to be good or bad.