For Ethiopia, tourism sits at the core of the economy, acting as an engine for job creation and economic growth. In support of this, the growing hotel construction promoted visitation, maximizing encouraging interest in both business and leisure travel.
To capture the demand of new and regular travellers, the country implemented tourism strategy and erected major infrastructures aspiring to be one of the top ten destinations in Africa. Recognizing infrastructure as a catalyst for tourism and lodging development, Ethiopia continues to capture the attention of the global hotel developers. In recent years, Addis Ababa emerged as a key target market for international hotel investors. Operators has affirmed the country as a hotspot for development.
Ranking eight of the top ten countries for chain hotel developments in pipeline with 1,326 rooms, Ethiopia has only four brand hotels – Hilton, Sheraton, Golden Tulip Addis and Radisson Blu. This puts the country ahead of Eritrea, Somalia and Djibouti which have no brand hotels under pipeline.
So far Marriott, Crowne Plaza Addis, Wyndham Hotel Group, Ramada Addis Hotel, Pullman Addis Hotel and Best Western International are among the major developments under construction. The upcoming African Hotel Investment Forum for September is also expected to bring more hotel investments for Ethiopia.
The few existing international hotels service charge made Addis Ababa the most expensive in Africa says hospitality research firm STR Global. The average rate for a hotel room in the first six months of 2015 in Addis Ababa was over $231 for a night. This expensive price tag is followed by $215.75 for a room in Lagos, $144.76 in Nairobi, $122.30 in Cape Town, $105.73 in Casablanca, $103.54 in Cairo, $72.90 in Johannesburg and $70.70 in Sharm El Sheikh.
The international hotels in Addis Ababa mostly host delegates in African Union and the United Nations Economic Commission for Africa. Conferences at these international organizations have increased the demand for brand hotels bringing a huge chunk of foreign currency to the country.
Although licensed hotels in operation remained low, the industry created direct economic impact. Its contribution to GDP was 4.2% in 2013 and it has rose to 4.5% in 2014. The figure is predicted to rise by 5 % in ten years with many international hotels commencing operation.
Currently, approximately 30 substantial hotel groups operate in Africa, representing more than 60 brands according to Ernst & Young Global Hospitality insights 2014. From a geographic standpoint, approximately 47% of existing hotel rooms are in sub-Saharan Africa. Although popular destinations tourism destinations on Africa’s Northern coast, most notably Morocco and Egypt, have long existed as vacation spots development activity in sub-Saharan Africa leads the continent. In 2013, the development pipeline in sub-Saharan Africa increased by 23% over the previous year, with about 80 hotels in various stages of development offering significant opportunity for hotel development.
Ethiopia’s nine UNESCO registered sights and landscape, which features rich natural, historical resources and diverse landscapes unique to the region, positions the hotel market to capture both business and leisure demand. Places across the region have specifically cited travel and tourism as a key pillar for economic growth. Hotel owners refocused investment in their portfolios to maximize growth in franchise hotels and luxuries facilities. Significant improvements in hotel development seized global investor’s attention.
The hotel industry will continue to boom due to the increasing group of conference guests and tourists, by offering targeted products, services, amenities and designs that cater to both luxurious and budget preferences said Estelle Verdier, Managing Director of Jovago.com in East and Southern Africa. As both leisure and business travel increases, Ethiopia must continue to effectively implement tourism strategy, as well as invest to improve accessibility of public transportation available to tourists she added.
Undoubtedly opportunities in developing hotel markets will continue to attract the attention of major lodging players, prompting an increase in international expansion through both acquisition and development.