Skyrocketing_1

Skyrocketing

Holiday Bazaar Organizing Fees Push Companies to Look for Alternative Venues

Ethiopian holidays are often a time when Addis Ababa’s Exhibition Centre sees much activity. The Centre often hosts large bazaars in which vendors showcase their products and other items in an attempt to promote and sell their goods. In recent years, the price of organizing such events has skyrocketed – up to ETB12.6 million for a single holiday, which is significantly up from around ETB2 million in previous years. The increased costs for such events are attributed to the large influx of companies bidding to organise such events. Five years ago, around 10 companies used to bid to organise holiday bazaars; now that number has grown to 250. Equally, the fee vendors and pay has grown for more than tenfold. Industry insiders say that the growing demand for space at these bazaars warrants the price increase, while business owners say that the increased prices are taking a toll on companies looking to showcase their goods. EBR’s Fasika Tadesse spoke with both sides to understand the debate and offers this report.

As Ethiopia’s most prominent holidays approach, Addis Ababa’s major venue, Exhibition Centre, which is under the ownership of the Exhibition Centre and Market Development Enterprise (ECMDE), becomes busy with the hustle and bustle of visitors and exhibitors. These major holidays, which are comprised of Ethiopian New Year, Gena (Christmas), and Fasika (Easter), keep the Exhibition Centre busy with thousands of visitors and exhibitors, unlike other similar events that take place there.
Established in 1983 as a state-owned enterprise, the Exhibition Centre was managed by the Addis Ababa City Administration until 2005, at which time the Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA) took control of the venue.
In addition to holiday celebrations, the Centre is used for hosting international, general and specialized fairs. But its holiday bazaars are different from other events, since an organizer of a given exhibition is selected through a tender process, while the other fairs are organized through negotiations.
In the past, very few companies used to participate in the auctions that were put forward during holidays. Recently, however, the number of companies that take part in the auction and the bidding price has shown significant growth.
For example, in the 2010/11 fiscal year, for the New Year’s bazaar, ETB2.3 million was the winning offer put forward to organise the event, while ETB1.8 million and ETB1.5 million were the highest prices offered for Easter and Charismas bazaars, respectively, that same year.
This trend has grown by leaps and bounds. For the current fiscal year, the winning bids for the upcoming New Year, Christmas and Easter holiday bazaars rose to ETB9.2 million, ETB12.6 million and ETB9.6 million, respectively.
The price escalation for organizing holiday bazaars is due to the fact that many companies consider bazaars and exhibitions major promotion mechanisms for their products and services, according to Ayalew Zegeye, a former president of the AACCSA and the Addis Africa International Convention and Exhibition Centre (AAICEC), a company that is establishing a new high-class exhibition and convention centre in Addis Ababa.
A market assessment conducted by the AAICEC supports this argument. The data demonstrates that the number of exhibitors that participate in the holiday bazaars has been increasing tenfold every year since 2010/11.
Those involved in the business, however, have their own explanation for why the prices of winning bids have increased exponentially in recent years. “The main reason for the [rapid increase] of the bidding price is the unavailability of technical evaluation during the bidding process, so the price is inflated unreasonably.” says Zewge Jemaneh, general manager of Century Promotion Service PLC, which organised a total of 55 bazaars, 24 of which were holiday bazaars, since its establishment in 1998.
“According to our assessment, the bidding price for organising holiday bazaars is increasing by 30Pct every year, which is threatening the existence of prominent companies in the business, Zewge told EBR”
Tamrat Admasu, general manger of the enterprise, disagrees with Zewge’s assessment. “Ten years ago, [only ten] event organisers used to participate in auctions, but now [that figure] has reached 250. This shows that the price increase is happening because businesspeople are discovering the potential of organising holiday exhibitions [at the Exhibition Centre]. In addition, the number of visitors is increasing.”
Data obtained from the Exhibition Centre shows that holiday bazaars usually stay for 15 days, averaging 21,000 visitors a day with an entrance fee of ETB10 to ETB30.
The organizers used to charge exhibitors around ETB30 per square meter per day 15 years ago. That figure increased to ETB100 to ETB120 five years ago. But this price currently stands at ETB250 to ETB300 per square meter for one day. Organizers demand ETB75 to ETB80 outside the pavilions for those who use tents and ETB65 to ETB70 outside the pavilions for those who do not use tents per square meter for one day. Additionally, more than ten companies are involved in holiday bazaars as sponsors, each paying ETB60,000 to ETB100,000.
“We made an ETB60 to ETB70 price [increase] per square meter on the exhibitors to compensate the money we [spent] is organising in the auction [to organize the event],” says Adonic Worku, managing director of Habesha Weekly Promotion PLC, a company that will organize the upcoming 21-day New Year Bazaar. Habesha won the bid for around ETB9.2 million and hopes to make a profit. The company claims to have spent ETB15 million for the bazaar and is expecting 400 exhibitors and 500,000 visitors. If the plan materializes, the company could get a gross revenue of ETB25 million.
“Everyone prefers to win the bid with the smallest price in order to maximise profit, but that can’t happen, as the price is increasing because of the stiff competition, so we changed our marketing strategy, which enables us to attract a lot of visitors. [We also] made a little price adjustment on the entrance and rent fees.” Adonic added.
But such a strategy is sometimes unfavourable for those interested in exhibiting at these bazaars. “The effect goes directly to the exhibitors and visitors,” argues Zewge. “Exhibitors were paying ETB30 per square meter 10 years ago but now they pay ETB250 to ETB300 per square meter a day.”
The experience of Fafa Foods, a producer of powder milk and baby foods, demonstrates the extra financial burden exhibitors have had to endure in recent years. Fafa was paying ETB14,000 for the nine square meter space they used a few years ago. But the rent increased gradually over the years; finally, last Easter, the company paid ETB24,000 for their exhibition space, according to Hagos Tadesse, sales supervisor of the company. “Now it is better to advertise by ourselves…the price increment should be considered by the organizers,” he says.
But according to Tamrat, the price increase is healthy and the management of the Centre does not have any problem with this reality, as it is a state-owned enterprise with profit motives. During 2013/14 fiscal year, the Centre managed to earn a net profit of ETB19 million. The following year, it managed to earn a profit of ETB24 million and plans a net profit of ETB38 million during the current fiscal year.
With these profits, managers of the Centre say that they are planning to upgrade its facilities. “The Centre is old, so its … services and facilities [have deteriorated]. The City Administration is planning to make changes to the Centre [through] maintenance and the expansion projects, which are expected to commence soon.” says Tamrat. He refrained from disclosing further details, as the plan is a work-in-progress at the moment.
The scarcity and quality event organizing venues has encouraged the AACCSA and the Addis Ababa City Administration to work on the establishment a bigger and world-class venue to hold large bazaars. The City Administration contributed ETB36 million for the development of the centre, which was legally registered on November 13, 2012 as Addis Africa International Convention and Exhibition Center (AAICEC). The project site is located in Yeka Sub-City, along the Megenagna-Ayat Boulevard. Although construction of the venue was planned to begin by September 2014, after floating shares worth ETB300 million, it has not yet started.
“We could not start the project according to the plan because we didn’t sell [all] the shares we floated to the public,” said Ayalew. “But as the interest of businesspeople to invest in the new exhibition centre is increasing, we are… finalising [the sale of] the shares we floated [gradually].”
According to the revised plan of the company, the construction will commence by the second half of the current fiscal year and will be finalised within two years.
In order to speed up the project, the city administration pledged ETB150 million for the commencement of the project. The Mayor’s office has also expressed its readiness to increase its share of the project in case the private sector fails to buy the shares floated.
The construction of the convention centre will be conducted in three phases, with the total investment amounting to two billion birr. It will be constructed on 11 hectares of land. The first phase includes the construction of the exhibition hall, outdoor exhibition space, multipurpose hall, conference hall, offices, shops, café, restaurant and amphitheatre. Three conference halls are included in the second phase, while the last phase includes the construction of a playground and hotel. The centre will have 24,000sqm build up indoor space and 3,000sqm outdoor space.
But until the AAICEC construction and the existing centre’s expansion are finalised, some event organisers, such as Century, are looking to find alternatives. They’re hoping to organise the next Christmas and Easter Bazaars at Jan Meda, a large field that hosts the Ethiopian Epiphany festival. EBR


3rd Year • August 16 – September 15 2015 • No. 30

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