A Tale of One City: How Conferences in Africa’s Diplomatic Capital Bring Boom for Hospitality Industry, Hope for the Youth

“At first I really regretted that I was going to school here and not in one of the major universities in the nation like my peers. However, I now realize there are huge opportunities in the hotel business and it is easy to get a job,” says Liyualem.

Liyualem’s optimism seems to be justified as the hospitality sector is growing rapidly. Fifty-Four major hotel projects are in the pipe line in Addis Abeba, according to the Tourism Services Competence and Accreditation Directorate at the Ministry of Culture and Tourism (MCT). With a total initial capital of over ETB 890 million, upon completion, these facilities will create jobs for more than 22 thousand Addis Abebans. In addition there are 69 more hotels being constructed in different regions of the country, according to the same source. It seems like who is who of Ethiopian business is rushing to join the sector.

One of these projects is the African Union Grand Hotel: an 11 storey building under construction right next to the African Union (AU). The facility that is built on 130 thousand sqm of area is being constructed by MIDROC Ethiopia, the giant business enterprise owned by the billionaire Mohammed Ali Al Moudi (Sheik). The hotel should be completed by the end of 2013 and will consume a total capital of USD 200 million.

There are about 475 international standard hotels in the country, out of which 110 are in the capital, according to MCT. This number is expected to increase by 50 pct by 2020. Close to 20 thousand rooms and 25 thousand beds, approved by MCT to host tourists, are available nationwide.

Ethiopia’s history regarding modern hotel service began during the reign of Emperor Menilik, with the inaugural of Itegue Taytu’s Hotel which opened its doors in 1906. During the reign of Emperor Haile Silassie I, Ghion and Wabi Shebele hotels joined the industry. Imperial, Ibex, Extreme and Plaza hotels came to the scene during the time of the Derg regime. With the market liberalization after 1991, many business people began showing an interest in the sector. Since 1992, the Ethiopian Investment Agency (EIA) has given licenses to about 4,300 hotels and restaurants, most of which are based in Oromiya regional state and Addis Abeba.

“The turning point in the development of the hospitality sector started some years back when the country started to designate itself as the major conference destination in the continent, and its economy started to be more integrated with the outside world, mainly with China,” says Getahun Yewondatir, owner and manager of Element Hospitality Management and Consultancy.

Chuan Hui International Hotel, a 58 storey building to be constructed around Meskel Square, will be the tallest building in Africa, according to local media. The ETB 2.4 billion hotel is to be constructed by Guagdong Chuanhui Group which also owns a cement plant at Modjo.

“The hotel business boom is really amazing. I wouldn’t say the tourism sector in general is the main reason for this though,” says Getahun.

“It is rather more plausible to attribute it to the growing conferences and summits being held in the city,” he contends.

It seems it is harvest time for hotels in the city. Addis Abeba hosted eight major international meetings in 2011 and ranks sixth in the list of African cities as a conference destination following Cape Town, Nairobi, Cairo, Marrakech and Johannesburg, according to the 2011 index of International Congress and Convention Association (ICCA).

The city is the seat of more than 112 embassies, consulates, United Nations (UN) and other agencies, the African Union and The United Nations Economic Commission for Africa (UNECA). It was the host for the 22nd World Economic Forum in May, 2012, which was attended by 700 participants from 70 countries. Addis Abeba has also hosted a diverse array of conferences with participants numbering in the tens of thousands. These developments show the growing interest that international organizations and initiatives are showing in the city.

“Conference tourism is poised to gain greater significance due to the development of several top hotels in Addis Abeba,” said Michele Noblet, president of Hospitality Management Holdings (HMH), during his three day visit to Ethiopia this year. Mr. Noblet was here to explore opportunities for expansion of the group he represents, HMH, the umbrella of four international hotels which is headquartered in Dubai.

Aster Solomon, who runs Information System Service (ISS), a company that provides geospatial services, is a business woman behind one of the many hotel projects in the capital. This project, which is in the finishing stage, is established with an initial capital of ETB 100 million. Located around Edna Mall, the four star hotel will have 80 rooms when it starts operation in September, 2013.

“We at ISS have lots of partners abroad. And I noticed the growing demand and the shortage in supply of hospitality sector whenever we have to receive and accommodate our partners,” says Aster.

The same reason is echoed by Roman Kifle, general manager of Panorama Hotel. The hotel has requested 1407m2 of land, form the city administration, adjacent to its current facility around Megenegna planning to erect a 12 storey building.

“We needed to expand as we needed additional facilities: dining halls; meeting halls; recreational centers and all others,” says Roman. The increment in demand, as the general manager puts it is- “due to the growing number of international and continental conferences hosted here in Addis Abeba.”

“More than 90 pct of the bookings during the peak season, which runs during October through March, are made through online booking. Few requests come via email and phone requests,” says Assefa Gebeyehu, one of the growing number of consultants in the hospitality industry. Occupancy rate of hotels in the city during the peak season reaches more than 85 pct. Yet it could decrease to 55 and 45 pct in the off-season, according to him.

Hotels and restaurants in the country account for 2.5 pct of all permanent employment, according to Authority for Research and Conservation of Cultural Heritage. In Addis Abeba, the hospitality sector accounts for 18.1 pct of all employments, states a 2011 data from Central Statistics Agency (CSA). The industry’s share of employment from the overall working population is even higher in Amhara region when compared to others. The hospitality sector provides the livelihood for 19.5 pct of the work force in the region, according to the same source.

Yet all this bloom is not without a down side. Poor service delivery caused by lack of skilled professionals is one of the main challenges facing this growing sector, as echoed by industry observers.” The country needs to improve its services and train its work force,” Michel said.

In Addis Abeba only 6.5pct of the work force in the sector has the appropriate academic credentials above level 3, according to Addis Abeba Culture and Tourism Bureau. The industry does not seem to be supplied with sufficient amount of competent professionals. And there is a visible gap in this regard.

Operating under the supervision of MCT, CTTI is one of the 90 training centers nationwide trying to address this issue. Founded in 1969 the institution was able to graduate 600 students in 2012.

Students can join the institution from either grade 10 or 12 to attend a six month to two year training in levels 1 through 5. The first three levels are basic courses, whereas level 4 courses are for supervisors and the last level is a managerial training. The increasing number of students and what the market is demanding justifies the ETB 40 million expansion the institution is undertaking.

Tiresome procedures and discouragingly long red tape in accessing land and credit is also another challenge the industry faces. These issues take the blame for many projects dragging their feet during establishment.

“Accessing the capital we needed from the banks is one of the main reasons that slowed the realization of our project,” said Aster. Identification and implementation of tax privileges has recently become another point of contention.

What seems to be a serious challenge to the hospitality industry in general, however, is the country’s inability to tap into its massive tourism potential. “The current development is insignificant when we compare it to the rest of Africa,” says Getahun. Endowed with 9 World Heritage cites registered by UNESCO, Ethiopia was visited by 523, 438 tourists in 2011, according to the information from MCT. About 20 pct of these visitors came in for a business or conference trip, rather than site seeing. In 2011/12, 49, 685 conference participants have contributed more than USD 39 million to the economy.

Of course, comparing Ethiopia’s income from the sector to that of Kenya, a country which was visited by more than 1 million tourists, while having only 4 world heritage sites, or with that of Egypt that entertains more than 12 million tourists, in the same period with 7 world heritage sites, paints a clear picture.

All being said, the hospitality industry can be one of the sectors that will define the future economic dynamics of the country. This vast country is endowed with many tourist wonders, yet a concerted effort must be employed to realize this huge potential and get from the sector what is long overdue. But, for now, as the hotel business flourishes in limited urban areas of the country, especially in the capital, there seems to be enough reason for prospective employees of the booming hotel industry to be hopeful and for Liyualem joining CTTI rather than the universities, as she wished for, may be a blessing in disguise.