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What makes Ethiopia the favourite for hotel investors

As Africa grows to be the most sought destination for investments attracting the global investment giants; Ethiopia has started to catch up in attracting international investors particularly in its hotel and industry sectors. One of the country’s appeal is the untapped several investment sectors and Ethiopia’s geographical nearness and over a 100 Ethiopian airlines flight networks with other African countries; which creates easier access to the continent.  

Recently, Ethiopia started to heavily invest on tourism industry increasing its number of visitors who put a large demand on the hotel market. On the other hand, the presence of non-governmental organizations and the international organizations including the African Union and the United Nations corporate meetings have increased the demand for hotel rooms. The growing hotel business is largely domestic investment driven. However, the number is growing with more international star brands joining the market.

 The recent branded market entrants are the Marriott Executive Apartments and the Golden Tulip Addis Ababa and Ramada. This growing interest is due to the increased business travellers and diplomatic missions who has potential demand for four and five star chain hotels. The capital city Addis Ababa the world’s third largest concentration of embassies and organizations has been the favourite destination. However, international chain hotels are now erecting luxurious facilities in regional towns such as at the lake town Hawassa.  

New hotel supply in Ethiopia is increasingly branded with expected growth of 46% by 2020 according to Jones Lang LaSalle Incorporated (JLL) Addis Ababa Hotel Market Outlook. Growing GDP figures and increasing corporate entry is driving hotel demand in the business and conference segment, as the JLL outlook points out. The aid and diplomatic missions continue to provide the majority of the market demand in Addis Ababa, while the growing middle income earning public is expected to be the long term sustainable customers. Currently the capital city has a standardized supply of 31 hotels at a total of 3,130 rooms, giving an average number of 100 rooms per hotel. Internationally branded supply is very low, with handful of new investments from AccorHotels, Starwood, Royal Tulip Plaza, Mercure, Ibis, Rezidor, Pullman, Novotel, Marriott, Hilton and Louvre. Nevertheless the growing interests from investor’s show that the Ethiopian new hotel investment is predominantly will be dominated by branded hotels.

On the other hand, the strongest performing Ethiopian airlines beside erecting the giant four star hotel near to its compound; its supporting the Ethiopian hotel and tourism industry flying to over a 100 destinations creating market not only for Ethiopia but for the rest of Africa as well. The economic growth is also reported to increase the demand by more than 8% annually. At the moment the market demand remained unfulfilled according to research carried out by the Awash International Bank, the projected unsatisfied demand for hotel nights in Ethiopia will rise to over 3 million in the coming four years if new hotels are not built to meet the growing demand. AccorHotels become the major chain hotel investor in Ethiopia investing in three more banded hotels in addition to the 330-room Pullman and 156-room Novotel it started before Jumia Travel learnt.

Ethiopia is busy attracting more international branded hotels to increase the number from just six with 990 rooms to catch up with Tanzania’s 35 and Nigeria’s 28 internationally branded hotels which are currently operational. Ethiopia is coming from far behind even compared to new hotels under pipeline while Nigeria has 40 hotels with 6,614 rooms and Morocco has 29 hotels under pipeline with 4,828 rooms according to W Hospitality Group. Indeed the best is yet to come for Ethiopian hospitality industry with more internationally branded hotels joining the massively untapped market with ever growing demand from business travellers, diplomatic missions and the growing middle class society who tend to afford a stay in the luxuries facilities particularly on special occasions such as honeymoons.  
By Eden Sahle. She can be reached at eden.sahle@jumia.com
What makes Ethiopia the favourite for hotel investors What makes Ethiopia the favourite for hotel investors Reviewed by IFEDAYO AKINWALERE on 3:45:00 pm Rating: 5