Party Rental Business

Party Rental Business

Party rental companies are those that rent items like decorations, utensils and cookware to individuals who are planning events like weddings, funerals, and meetings. Although a relatively new concept in Ethiopia, data demonstrates that the presence of these companies is growing rapidly. According to data from the Addis Ababa Trade Bureau, 208 rental companies were issued to business licenses within the last four years, generating ETB373 million in investment capital. Despite the growth potential in the sector, industry insiders say that difficulties accessing investment capital is hindering their growth prospects. EBR’s Fasika Tadesse spoke with those involved in the sector to learn more about this nascent industry.

Nine years ago, Nedif Abduke faced a predicament. He needed materials for his sister’s wedding – including decorations and utensils for the reception – because his family didn’t have enough for the ceremony. His community idir (a local association that provides funds and items for its members during emergencies) also didn’t have the capacity to provide the necessary items for the festivities. After searching for alternatives, he eventually found a company that would rent him the goods for the ceremony.
Back then, Nedif only found one rental company and utilised all of the items that he needed for the wedding reception.
His experience witnessing a dearth of rental companies inspired him to develop his own. “The price we paid to rent the items was significantly expensive. I also realised that there were a few companies in the business, while the demand for the items was high, so finally I was attracted to join the business,” he told EBR.
It took him one year to study the market and to obtain all of the items that are required to start the business. After completing the preliminary work, he managed to open his company, Habib Kitchen Utensils Rental Services PLC. Initially, the company had the capacity to provide items for one medium-sized wedding. However, through time the company expanded its capacity and can now supply enough items for three large-sized weddings and similar ceremonies. Companies like Nedif’s rent items that are essential for receptions or parties. The items they rent include utensils that are used to cook and serve the meals, including cooking utensils, cutlery and glassware. Additionally, they offer items that are used to set-up a venue for a particular ceremony, including chairs, tables, canopies or tents, and decorations.
These rental enterprises offer similar services to idirs. An idir is a common and indigenous association established among neighbours or workers to raise funds for emergencies and ceremonies and provide items that are needed for the aforementioned situations.
However, these semiformal organisations aren’t always an option for those looking to host an event. This was the case for Seyoum Wondwossen, who came from Hawassa to Addis Ababa seven years ago and did not belong to an idir in the capital.
Seyoum needed to have a small wedding party in May 2015, in which he planned to host 60 people at his residence located at Summit Condominium. However, he could not find the items to prepare food and serve his guests during the wedding ceremony.
“I was [originally] intending to have a cocktail reception at a hotel, [but that] is a bit more expensive than having the ceremony at home,” Seyoum, who is a driver at a tour guide company, told EBR. “Finally, a friend advised me that renting items from companies that provide rental services is better.”
He went to Yoni Kitchen Utensils Rental PLC, which is located in CMC near the Civil Service University, and rented the items that were crucial to prepare a wedding ceremony at his residence. In total, he paid ETB2,000 to rent the items for three days.
“It was a big relief for me, as I was not familiar with companies that provide these services,” said Seyoum.
Even if it is a new trend for Seyoum, rental services have been in Addis Ababa for years but were less prevalent than they are now. The managers of Medhin Decor PLC, which was established 20 years ago, attest to this fact. The prominent decor company rents items for ceremonies with the capacity to provide items for events that have up to 15,000 guests at once.
Currently the company specialises in providing decor services for various ceremonious occasions, but when it was established 20 years ago its main service was renting items for weddings, according to Addis Dawit, manager for the Wedding Services Department at Medhin Decor.
“Five years ago the service was unpopular and there were only a few companies in the industry, which finally inspired me to establish my own rental company,” says Demena Mekonnen, owner of Kestedemena Digis Eka Kiray, which was established in 2003 and named by combining his daughter’s name, Keste, and his name. “But lately you can find many small- and large-sized rental companies everywhere.”
Data from the Addis Ababa Trade Bureau supports Demena’s assertion regarding the increasing number of entrants joining the party rental industry. According to the Bureau, during the past four years alone, 208 business licences were issued to companies that rent kitchen utensils and other items for ceremonies. These 208 business companies collectively registered a total investment capital of nearly ETB373 million.
The existing rental companies primarily provide services for weddings, inaugurations, birthday parties, meetings and conferences, funerals and graduation ceremonies. Often, the prices of the items are calculated separately for each occasion.
Items are usually rented for three days at a time; this allows the renters to take the items on the eve of the ceremony and return them to the rental company following the ceremony. According to industry insiders, the average price for all of the equipment that are needed for a medium-sized wedding is ETB5,000.
Demena says consumers are becoming increasingly familiar with party rental services, which have made them popular. “During wedding seasons our items are even booked ahead of the weddings and we always reject many orders that come later [in the season].”
Even if the business is blossoming, especially in major markets like Addis Ababa; it’s still largely seasonal, as they operate for five months out of the calendar year, according to industry insiders. The remaining months usually involve fasting for many Ethiopians who have a culture of avoiding ceremonies during religious fasting periods. According to Ethiopian Orthodox Church doctrine, there are roughly 180 fasting days out of the year that are obligatory for all Orthodox Christians. Additionally, Muslims have 30 mandatory fasting days per year.
“During these [fasting days], the business will be completely quiet, unless we can manage to get renters for meetings,” says Nedif. “So [in order to] attract people to come to us during the low seasons we make price discounts.”
In renting the items, some of the companies require a money deposit or property ownership documents along with the renter’s identification card (ID) issued by a woreda, while other companies require only work and woreda IDs.
“Twice we had people steal many items, as the renters came up with fake IDs,” recalls Demena.
Robbery isn’t the only issue facing these businesses. The inflating price of the items they purchase for rent is the primary challenge.
“As the items deteriorate through time we need to replace them with new ones to prevent our customers from going to other service providers. So to buy new items is becoming very challenging for us since the costs of these items are [becoming increasingly] expensive – sometimes by a two or threefold increase” said Demena.
The other challenge facing business owners is access to investment capital to purchase their own property for the construction of warehouses to store items. Business managers say these storage warehouses need to be large and safe, as many items need to be kept in a secure location to preserve their quality.
Renting these places is expensive for the businesses, especially since their peak season is typically less than half the calendar year. “It will be very challenging to pay rents, especially during the low season, when we rent items less frequently,” claims Nedif.
Despite the challenges, party rental companies seem to be an increasingly promising alternative for younger Ethiopians who may not be members of traditional associations like idirs. This is the case for Seyoum, who couldn’t afford to buy wedding items with his own finances. For him – and other similarly situated individuals – the growth prospects of these companies may make party planning a simpler endeavour. EBR

4th Year • December 16 2015 – January 15 2016 • No. 34

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