Hospitality and Hotels Ranking in Ethiopia

Back in the days of the emperors, Addis Ababa was able to host the first ever Etege Taitu Hotel, named after Empress Taitu, the wife of Emperor Menelik II. It opened doors some 116 years ago. The establishment of Taitu Hotel gave the capital a new face.

A face of hospitality at least for the royal circle. Members of royal family and ranking inner circles of the emperor were hesitant to give it a try, because it was not a regal thing to do at that time; to have a meal inside a place called hotel. As some literatures proclaim they even discarded it all together. 

Little by little, the inner circles of the royal society started to become accustomed to the concept of wining and dinning at an establishment called hotels. From then on to now, the hospitality business came to serve many including travelers across the world. Yet, fifty years later, Ethiopia sticks with only three hotels which could be named for their international presence. The 47-year-old Addis Ababa Hilton was built by Emperor Haileselassie I. Some 15 years ago, followed Sheraton Addis, which bears one of the luxury brands of Starwood Hotels and Resort Worldwide. Radisson Blu came up with the brands of Carlson Rezidor Hotel Group as only the third hotel Ethiopia has ever registered in the name of international brands. 

But right this time, the hospitality industry seems to be picking up trying to catch up with at least the neighboring nations which amasses billions of dollars from the tourism and hospitality sectors annually.

There are a number of factors which had deterred the growth of hospitality industry in Ethiopia. Before, 1991 Ethiopia was struggling to be in the list of the hospitality sector. The famous 13 months of sunshine slogan which still serves in promoting Ethiopia was launched during the time of Emperor Haialesellaise I. Behind branding and cultivating the tourism sector, one bold figure is to be mentioned. Habtesellaise Tafesse was a minister of tourism back in imperial days. It was that time which gave opportunities for many local as well as international brands like the Hilton to come into the play until the Derg seized power. Before the military took over the government, Bekele Mola Hotels, Ghion Imperial Hotel, Wabi Shebelle Hotel, Ras Hotel, Ethiopia Hotel, Omedad Hotel and the likes were mushrooming in the capital and regional cities.

The private sector was forced to hibernate throughout the 17 years of military rule. Most private sector holdings were nationalized; one best example to be cited from the hotel business was Omedad Hotel. It was built and operated by private owners before being nationalized. These sorts of measures and the maximum capital ceiling placed on the private sector made it difficult to own and operate hotels in the country at that time. Half a million was the limit set for investors by the socialist government. 

Currently, the total number of hotels both privately owned and those belonging to the Government in Ethiopia is around 426. According the Ministry of Culture and Tourism, these and those of “unclassified hotels” are estimated to have some 19,000 rooms in 2011. To have a recent data on the real number of hotels in the country is a hugely challenging task. However, some researchers dare to project that the number of hotels grow by 20 percent based on the 2009 figures. The assumption works out that the total number of hotels probably reaches some 500 or so in 2014.

Out of which, 93 hotels with a little over 5,000 rooms, fall under the star-rated standards of the ministry. These are hotels which are dubbed to be holding a two to five stars showing their standard and status in the internationally recognized language. However, the standards set for star rating was introduced long before the country was introduced to the luxury standards such as Sheraton Addis. Before Radisson Blu, came into the face of Ethiopia’s hospitality business, the government considered some 17 hotels which meet the international standards in the capital, which means they fall into the standard of two stars and beyond.

According to officials of the ministry, the hotel rating system will be introduced in the industry soon. Previously, the ministry had attempted to bring in a new grading system which was aimed at delineating star-rated hotels in the country. But that was boldly rejected by the industry players and property owners. Following the opposition, three years ago, the ministry came up with similar attempts. It was challenged by the local hotel operators once again. But, not only them, ministry's contacted the World Tourism Organization (UNWTO) and presented the guidelines which it attempted to implement. UNWTO experts, however, did what the hotel operators had done and rejected it. The experts discarded the guidelines set out by the government. Instead, they tried to develop a new form of guidelines and that still is on the making, Tadesse Endaylalu, tourism licensing services directorate director at the ministry told The Reporter.  

But the absences of regulation on grading, some industry players were seen manipulating the industry. Across the city, to the layman’s understanding, many hotels give themselves star ratings perhaps for other commercial purposes. When they found out that the hotel business is the ideal one to venture on, easily labels the building with hotel flags and start rates. These usually are those hotels mostly complained by lack of accommodating parkings, public areas or swimming pools. 

In his exclusive interview with The Reporter, Neway Berhanu, managing director of Calibra Hospitality Consultancy and Business Plc (a company which has facilitated the contacts recently to develop six internationally branded hotels here), said that most of the hotel owners and developers previously were not convinced by the idea of hiring hotel expertise and consultant. Involvement of experts in the hotel business means more global brands and faces becoming interested in the industry.

According to a recent study made by the research officers of Awash International Bank, published in the journal of business management, there is a surge in demand for a single night rooms service.  In 2011 alone, the demand for rooms for a single night was a little over two million while the number of travelers was at half a million or so. Projections of the researcher suggests that by 2015, some three million guests will have to be accommodated for single night. However, the existing number of hotels annual capacity remains to be 1.7 million or so. Hence, unsatisfied demand of 1.25 million will still haunt the hospitality market in Ethiopia. 

The supply gap at this point gave property owners and the government to look for external big players. These brand operating companies actually do not come easy. They want to be more than sure that they can make money. But, they do have many requirements the country needs to address first. Making available properties which suit the standards are what they want to associate themselves with. 

Failure to host international brands means nothing but lesser travelers coming in to country. But Neway says at this point in time, the government is seriously considering the hospitality business. He justifies this by referring to the recent establishment of the tourism transformation council, chaired by Prime Minister Hailemariam Desalegn. 

With the absence of internationally branded hotels, it was daring for the government to set such a high target as three billion dollars by the end of 2015 form the tourism sector. During the same period, the number of travelers coming to Ethiopia is assumed to reach one million. However, the existing figures show that Ethiopia has landed close to 600 thousand visitors so far. Yet, the amount of hard currency secured was not far from USD 400 million. 

One reasons for such poor performance is the lack of tourist standard destinations and lack of hotels which meet the expectations of the visitors. The average stay is less than five days. On the other hand, the business travelers and conference attendees are increasingly frequenting the capital. Hence, Neway argues that star rating or grading is not an issue at this time. Rather, safety, hygiene and sanitation are the basics requiring consistent maintenance in the hospitality industry. To fulfill that, spatial limitations are battling the sector. Neway pointed out that lack of sufficient land made some global brand operators to withdraw deals. Lack of awareness of authorities about star rated hotels is also contributing to the matter. 

Days ago, the capital hosted the Africa Hotel Investment Forum (AHIF), an internationally recognized event, organized by the London-based Bench Events. During the three day event, local speakers and panelists have raised the challenges of hospitable infrastructure and land acquisitions. Some property owners made their point that the government was not availing finances to the sector. According to the research, the hospitality industry was able to access some 1.4 billion birr credit from the local banks in 2011. By contrast, the outstanding loan including the central bank’s deficit financing, grossed some 78 billion birr in the year in question. For instance, 7.3 billion birr was allocated for domestic trade. For agriculture 10.6 billion, for industry 20.6, for international trade 18 billion birr was provided. Government deficit financing amassed some 3.7 billion birr. The research team also noted that the hotel and tourism sector had been receiving an insignificant amount of finances. But for Neway, the absence of finance did not deter investors from taking part. Some 37 hotels had been given the green light and were licensed to go for developing the start rated hotels in the country.

It is to be recalled that during the event, six international brand operators have inked deals to fetch six more brand hotels in the capital. Yet, it will take one to three years for the brand hotels to materialize. However, the number of travelers coming to the country shows an increasing trend ensuring the domestic hospitality industry that there the pie is enough for everybody, Neway argues. 

The coming of brand hotels poses again a question of manpower availability. Individuals trained and tailored for the hospitality business are very scarce and the existing hotels scuffles one another to retain those. The inadequate supply is at the cross roads. Probably, two universities are currently producing graduates in the field of tourism and hospitality management. Short term trainings provided by institutes are set by the government.  

After all, as the big players of the industry say, it has been a journey of discovery coming here and seeking for opportunities. The country has been starting from the ground zero they say. For sure, the hospitality industry appears to one sector which can no be ignored both in job creation and hard currency generation. Yet, it is not in the lists of prioritized sectors as Esayas Bahre, president of the Development Bank of Ethiopia, confirms to The Reporter.

The future, however, seems to be brighter at least on account of Prime Minister Hailemariam's promise to support the sector. He called on big faces of the global businesses to come and invest. He promised his government will provide every requisite the brand operators are looking at. To the likes of Neway, it’s not a mere promise. He ascertains himself to that when he said he has learnt the PM was busy while meeting the executives of the upper ladder of the global hotel business. Why now? And why the international brands are coming to get the business going? No one gives precise and direct answers. The operators say that they cannot remain idle watching the country while there are many things going on.   

 This news was Originally posted on : The Reporter

Source:http://www.thereporterethiopia.com/index.php/in-depth/indepth-business-and-economy/item/2621-hospitality-business-in-the-making