Long-dominated by the luxurious Sheraton Hotel, Addis Ababa is seeing a huge expansion in its hotel stock currently, with at least 1,250 mid-market to upscale new rooms actually under construction, and a further 800 to 1,000 in the planning stages.  The Sheraton, and the other branded hotel, the somewhat aged Hilton, are likely to be joined by Holiday Inn, Radisson, Marriott, Ibis, Novotel and Four Points in the very near future.

Driving this boom is a rapid emergence from Ethiopia’s dark years, and particularly greater confidence in the economy on the part of the large and successful Ethiopian Diaspora.  Addis Ababa is one of Africa’s primary administrative centres, the home of the African Union and the United Nations’ Economic Commission for Africa.  Ethiopia is an attractive country from an investor’s point of view, with its population of 77 million providing an inexpensive, well-educated and trainable labour force.  It is strategically located at the crossroads between Africa, the Middle East and Asia.

Agriculture is one of the country’s most promising resources.  The potential exists for self-sufficiency in grains and for export development in livestock, vegetables and fruits.  Agriculture employs 80 per cent of the work force, and accounts for half of Ethiopia’s GDP and 60 per cent of its exports.  Even though most production is at a subsistence level, large parts of commodity exports are provided by the small agricultural cash crop sector. Many other economic activities depend on agriculture, including marketing, processing and exportation.

Ethiopia’s economic growth averaged 8.6 per cent (source: OECD) between 2004 and 2006, driven by agriculture as well as expansion in industry and services. Other sources report economic growth of 10 per cent for the past two years.  The World bank is forecasting 9 per cent annual GDP growth to 2010.

Business and conference demand accounts for some 75 per cent of the total demand for hotel accommodation in Addis Ababa and, unlike many African cities which rely almost entirely on the commercial market, the city enjoys a high level of demand from the leisure sector, approximately 16 per cent of total demand.

Ethiopia is shaking off its negative images, and having some success in the specialist leisure market, particularly travellers looking for a unique combination of adventure, history, natural wonder and religion.  Addis Ababa boasts several historic sites, such as St Georges Cathedral and the Menelik Mausoleum, but it is in the north and the south of the country that the main attractions lie, including the Northern Circuit, taking in such wonders as the sunken churches at Lalibela, and the Rift Valley to the

south, a birding paradise.  With the increase in tourists coming through Addis Ababa, local entrepreneurs such as Tadiwos Belete of Boston Partners, and Sheikh Al Amoudi of Midroc are investing in eco lodges around the country, tapping into their own resources as well as the Diaspora.

In addition to demand from business and other visitors to the country itself, Addis Ababa’s new airport is attracting increasing numbers of transit passengers, with Ethiopian Airlines having one of the best hubs in Africa.  Troubles in neighbouring Kenya, and increasing crime at Johannesburg airport, have heightened the appeal of Addis Ababa as a transit hub.  This activity generates considerable demand for hotel accommodation, and Ethiopian Airlines, in partnership with Chinese investors, is planning a new hotel at the airport to accommodate that demand.

Passenger traffic at the airport grew at an average of around 20 per cent in the last three years (2004 to 2006, latest data available), and by 120 per cent since 2000; growth is forecast to be 13 per cent into the near future – Ethiopian Airlines will be the first in Africa to fly the new state-of-the-art Boeing Dreamliner.

For the country as a whole, international arrivals increased by 29 per cent in 2006 to almost 300,000, again more than double the 2000 figure.  Preliminary estimates for 2007 are for a significant further increase, due to the celebrations for Ethiopia’s Millennium.

Occupancies in Addis Ababa averaged around 80 per cent in 2007 and, with demand growth forecasts of 8 to 10 per cent annually, much of the future supply should be able to be absorbed without a problem.  As is so often found in markets such as this, the internationally-branded hotels will achieve higher occupancies and rates than the locally managed ones, with the exception of the small boutique hotels that find their special market niche.  The State-owned Ghion chain of hotels has been the subject of privatisation rumours for many years, and it is hoped that the government’s reluctance to do a deal to date will be overcome as more competition enters the market.

TOURISM AND HOTEL STATISTICS

International Traffic Movements at Bole

(Arrivals and Departures)

2000 2001 2002 2003 2004 2005 2006
Passengers 1,037,976 1,096,605 1,237,858 1,314,740 1,573,330 1,869,930 2,287,544
Growth (%) - 5.6 12.8 6.2 19.6 18.8 22.3
Source: Ethiopian Airports Enterprise

Addis Ababa

Ethiopian Airlines Scheduled Passenger Movements

Year Domestic International Ethiopian Total Bole International Total* Ethiopian Share (%)
2003/04 231,797 918,067 1,149,864 1,314,740 87.5
2004/05 253,037 1,186,754 1,439,791 1,573,330 91.5
2005/06 257,844 1,392,409 1,650,253 1,869,930 72.2
2006/07 257,282 1,730,932 1,988,214 2,287,544 86.9
Source: Ethiopian Airlines HQ/Ethiopian Airports Enterprise

* Calendar years 2004 to 2006

Addis Ababa

Transit Passenger Trends 2002  2006

2004 2005 2006
January 6,235 9,122 9,514
February 4,024 6,093 5,399
March 4,188 4,201 6,272
April 5,762 6,119 6,920
May 6,432 5,934 6,956
June 6,184 8,022 7,780
July 7,608 11,505 9,857
August 7,672 11,053 10,278
September 7,145 6,678 9,951
October 5,545 6,959 8,281
November 5,691 7,092 7,721
December 6,052 11,252 10,591
Total 72,538 94,030 99,520
Daily Average 198.7 257.6 272.6
Source: Ethiopian Airlines
Ethiopia

International Tourist Arrivals and Receipts

  Arrivals Growth (%) Receipts (US$m) Growth (%)
2000 135,954 - 62.8 -
2001 148.438 9.2 69.8 11.1
2002 156,327 5.3 73.5 5.3
2003 179,910 15.1 84.6 15.1
2004 184,078 2.3 107.7 27.3
2005 227,389 23.5 128.0 28.1
2006 290,458 27.7 138.9 8.5
Sources: Ministry of Culture and Tourism

Addis Ababa Tourism Commission

It should be noted, however, that tourism statistics in many countries, including Ethiopia, are open to question, due to the methodologies of collection.  It is likely that the data for 2002 and 2003 have been estimated, as evidenced by the same growth figures for arrivals and receipts in 2002 and 2003.  However, the general trend in arrivals is extremely positive, and matches the data gathered at the airport.  The data show significant increases from 2004 which coincides with the opening of the new Bole Airport Terminal. The Ethiopian Diaspora has also increased its traffic back to the country, as the country improves and is more conducive for inward investment.

Ethiopia

Monthly arrivals 2005-2006, Bole International Airport

Month 2005 2006 % change
January 15,029 26,360 75.3
February 13,419 21,185 57.8
March 15,070 21,984 45.8
April 18,992 24,062 26.6
May 14,602 25,105 71.9
June 20,619 26,102 26.5
July 21,354 27,770 30
August 22,039 25,765 16.9
September 25,537 25,005 -2.08
October 25,484 24,700 -3.07
November 16,513 22,515 36.3
December 18,740 19,995 6.6
Total 227,398 290,458 27.7
Source: Min Culture and Tourism

The diagram below shows data for purpose of visit in 2006, based on statistics provided by the Addis Ababa Tourism Commission:

 

Region of origin data of visitors to Ethiopia for 2006 are as follows:

Ethiopia

Region of Origin, 2006

Continent Arrivals %
Africa 89,923 30.9
Europe 76,466 26.3
North America 61,353 21.1
Middle East 30,556 10.5
Asia 28,033 9.6
Oceania 4,127 1.4
Total 290,248 100
Source: Addis Ababa Tourism Commission
Ethiopia

Inbound Tourists by Country of Residence

Country 2003 2004 2005 2006 Change

2003-2006

USA 26,399 28,112 32,282 43,610 65.2%
UK 8,919 10,627 11,254 16,076 80.2%
China 3,318 4,172 7,649 10,445 214.8%
Kenya 7,481 7,217 9,277 8,690 16.2%
Saudi Arabia 10,503 9,778 5,382 8,463 -19.4%
Italy 6,505 7,696 7,983 8,386 28.9%
India 4,276 4,616 7,125 7,975 86.5%
Germany 5,611 6,256 6,731 7,428 32.4%
Canada 5,013 5,169 8,396 7,349 46.6%
France 4,380 4,501 5,800 6,649 51.8%
Nigeria 3,850 3,415 5,524 6,513 69.2%
Sweden 3,153 3,336 4,342 6,337 101.0%
Israel 2,965 3,874 5,291 5,556 87.4%
Source: Min Culture and Tourism

A 2006 World Bank study of how to grow the tourism industry in Ethiopia highlighted a current lack of private investment and government dominance in the accommodation sector resulting in a lack of high quality accommodation and services. that study provided the following data.

Addis Ababa

Tourist Expenditure and Foreign Exchange Receipts

Purpose of Visit Numbers of Visitors Average Length of Stay Average Spend per Day US$ Average Spend Per Visit US$ Total Spend per Sector US$
Business 46,008 4.4 days 113.89 501.12 23,055,529
Vacation 63,246 8.6 days 123.56 1,062.66 67,208,994
Conference 16,385 2.8 days 109.80 307.44 5,037,404
VFR* 21,738 17.9 days 33.89 606.63 13,186,923
Subtotal 147,377 108,488,850
Not Stated 30,469 803.29 24,475443
Totals 177,846 656.22 132,944,293
Source: World Bank

*Visiting Friends and Relatives.

These data should be regarded as indicative only – they are collected from the forms completed on hotel check-in. Some guests do not complete the forms at all, and we understand where the field for purpose of visit is not completed, the compilers of the statistics record it as ‘other’.

Addis Ababa

Existing Hotel Supply - Published Rates

(including breakfast, excluding  10% Service Charge and 15% VAT)

Hotels of Primary Relevance Tariffs US$
Rooms Single Double Executive Single Executive Double Suite Single Suite Double
Sheraton Addis 295 375 420 425 470 795 795
Hilton Addis Ababa* 350 195 210 220 235 265 265
Ghion Hotel 190 69 85 110 - - -
Hotels of  Secondary Relevance Tariffs US$
Rooms Single Double Executive Single Executive Double Suite Single Suite Double
Hotel De Leopol 74 48 68 162- 213- - -
Atlas Hotel 67 70 80 80 - 150 -
Axum Hotel 64 50-66 60-66 66-90 72-90- 102 -
Imperial Hotel 63 66 84 - - 114 -
Ambassador Suites 52 - - - - 86-111 -
Global Hotel 55 75 - 101 - 127- -
Queen of Sheba 45 71 - 88 - - -
Source: W Hospitality Group Research

*the Hilton includes breakfast only in its executive room and suite rates

Addis Ababa

Roomnight Demand and Market Mix

(2007)

Market Sector Roomnights Market Mix
Business 173,453 49.7%
Conference 93,098 26.7%
Aircrew 4,576 1.3%
Airport related 22,269 6.4%
Leisure 55,314 15.9%
Total Demand 348,710 100.0%
Addis Ababa

Future Hotel Projects

Projects Rooms Status Estimated Opening Date
Jupiter Hotel 40 Near completion Q2 - 2008
Zenebat 80 Under construction 2009
Debrea Damo 80 Under construction mid-2009
Intercontinental (SIMEX) 151 Work stopped 2010
Sunshine 250 Studies in progress 2010
Emerald 168 Work stopped 2010
Sheraton (Extension) 200 Studies in progress 2010
Jupiter Hotel 2 102 Under construction 2010
Ibis 140 Under construction mid-2010
Novotel 100 Under construction mid-2010
African Union 200 Work commenced mid-2010
CATIC 325 Studies in progress 2011
Kenenisa Bekele 75 Site identified 2011
Four Points 200 Site identified 2012
Total 2,111
Source: W Hospitality Group Research

There are just over 2,100 new hotel rooms planned or under construction in Addis Ababa,.  However, some of these projects have been on the drawing board for years and most were supposed to have been completed in anticipation of the Ethiopian Millennium celebrations in 2007 - which has come and gone.

It is evident from observation on the ground in Addis Ababa that commencement of construction does not necessarily mean that the hotel will be completed on time, if at all.  Only time will tell whether all of the above hotels will materialise.  It is logical to assume that hotels such as the Ibis and the Novotel will proceed to realisation within the planned timeframe, as the promoters have financial substance.  Whether the same can be said of the other hotels under construction, such as the Simex and Emerald, is unclear.  What is clear is that the promoters were, for whatever reason, unable to meet their planned realisation date, and that must cast doubt regarding the future of the projects.

 

 

 

 

Trevor Ward

W Hospitality Group, Lagos

trevor.ward@w-hospitalitygroup.com

Affiliated to

Plot 10, Ayo Babatunde Crescent, off Oniru Market Road, Lekki Phase 1, Lagos, Nigeria
+234 (01) 295 6236
info@w-hospitalitygroup.com

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