Ethiopia - Ad­dis Ababa

Tourism Tattler - - BUSINESS & FINANCE - For de­tailed anal­y­sis visit­ket/africa/Ethiopia_-_Ad­dis­_Ababa

With a “dou­ble-digit” GDP growth that is now some­thing of an of­fi­cial mantra, Ethiopia has be­come the fastest grow­ing econ­omy in the con­ti­nent and is com­monly re­ferred to as “the cap­i­tal of Africa” for its po­lit­i­cal, diplo­matic and com­mer­cial sig­nif­i­cance.

The in­creas­ing num­ber of in­bound tourists along with the new sup­ply of of­fices in the mar­ket en­hances a sig­nif­i­cant demand for in­ter­na­tional standard ho­tels, which re­mains for the most un­sat­is­fied. In 2015, 1 mil­lion trav­el­ers could not find ac­com­mo­da­tion up to their stan­dards in the city and there will be 3 mil­lion in 2020 if new ho­tels are not built, ac­cord­ing to Awash In­ter­na­tional Bank. In ad­di­tion, the large diplo­matic com­mu­nity and the po­lit­i­cal ac­tiv­ity in Ad­dis Ababa will push MICE ac­tiv­ity up sig­nif­i­cantly.

Ad­dis Ababa con­cen­trates 80% of the Ethiopian's ho­tel sup­ply much of which is out­dated and of poor qual­ity. How­ever, the strong eco­nomic fun­da­men­tals along with the im­prove­ment of the in­fra­struc­ture at­tract an in­creas­ing num­ber of in­ter­na­tional ho­tel groups which will ac­count for 46% of the new sup­ply in the next few years.

Oc­cu­pancy and rates have been steady in re­cent years. Ad­dis Ababa ex­pe­ri­enced oc­cu­pancy reg­u­larly up to 80% and the coun­try has the high­est room rate in the con­ti­nent, ac­cord­ing to a sur­vey car­ried out by STR Global in late 2015.

Ho­tels' val­ues in Ad­dis-Ababa have been con­sis­tent over re­cent years, ris­ing steadily. They were ap­prox­i­mately twice the value of the African Av­er­age in 2015. Given the ex­ist­ing level of un­sat­is­fied demand, the new sup­ply is not likely to af­fect the long term oc­cu­pancy, and the new branded ho­tel will push the av­er­age rate up, pos­i­tively im­pact­ing the RevPAR. There­fore, value should be sus­tain­able.

The sub­stan­tial amount of rooms com­ing into Ad­dis Ababa im­pacted the oc­cu­pancy and rate levels in the cap­i­tal in 2016. Whilst the demand grew by 8%, oc­cu­pancy grew by only 4 points and the av­er­age rate barely fol­lowed in­fla­tion. How­ever, val­ues reached a peak at US$356,000 per room, prov­ing the in­vestors' con­fi­dence and the po­ten­tial of the mar­ket to grow sig­nif­i­cantly.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.