Boom in services

[abesha]

At Your Service Ethiopian Style

by Melaku Sahlu
Thursday, 18 March 2010

In the 2008 fiscal year, Ethiopia’s service sector crept ever closer to agriculture and could surpass it this year for the first time ever. Elevated levels of government spending which have spawned numerous support businesses in various areas are part of what’s contributing to this but so is Ethiopia’s burgeoning hospitality sector comprised of hotels, restaurants, travel and health related industries. The growth of the hotel subsector in the capital is the most prominent trend with more than 15 major hotels opened in the last 2 years alone. The next 2 will see at least as many more headlined by the Accor Group’s 2 hotels off Meskel Flower Road, a Marriott close by and Kenenisa Bekele’s first venture in the city with the hotel that will most likely bear his own name.



Accommodations

In 1991, virtually every notable hotel in the country was government owned. The Ras and Ghion Hotel chains stretching across the country were the destinations of choice in a limited number of locales with minimal private sector activity filling the considerable gap. The Hilton Addis was the only major exception although it to was (and still is) under 75% government ownership. With the advent of liberalization after the 1991 change of government, development of this sub-sector was uncertain at first and it was not until the late 1990s that a raft of new hotels headlined by the 5 Star Sheraton Addis but also including other notable establishments such as Atlas and Desalegn Hotels, came into existence. Occupancy rates increased slowly at first but then began to skyrocket with attendant price increases that soon came to rival rates in more developed countries. The higher prices did not seem to deter guests however and by 2003, it was clear that the pressure for more standardized rooms was not to abate anytime soon. Room rates kept up their dramatic increases – Ghion Hotel had rates of only 135 ETB for a double room in 1999 but now stands at close to 600 ETB for the same room; an increase of close to 400% in about 10 years.




There are distinct classes of lodgings within the sector with the so called tourist class hotels mostly comprised of those achieving 3-5 stars from the Ministry of Tourism and Culture. There are currently 42 such hotels in Addis registered with the Ministry representing a total of 2792 rooms and 3868 beds. 12 of these hotels (just under 30%) opened their doors within the last 24 months. Out of this subset, The Intercontinental has been awarded a coveted 5 star rating while Harmony Hotel is the only independent hotel that is linked to international reservation systems. More new hotels are on the way at a rate that could exceed even that of the recent surge with international brands like the Marriott) seeking a foothold in what is clearly being perceived as a market with still more room for growth. By way of comparison, Kenya’s coastal tourist areas alone hold close to 200 hotels with as many as 32,000 beds compared to a total of 4498 beds in Addis. Although sometimes subject to seasonal slowdowns, occupancy rates of more than 90% are common in Ethiopia’s 5 star hotels and have continued to be high even amongst the rest though recently falling a bit to the 70-80% range .




Outside of Addis, some areas have also seen rapid growth. Elevated levels of development activity, better road networks to various locales and higher weekend tourism rates are some of the factors driving growth in these areas. Haile Gebreselassie’s resort and conference center in Awassa is a good example and if occupancy rates at Tadele Enjory’s hotel in that town are anything to go by, it looks to have great prospects for success as well. Overall, Oromia region has the most number of hotels at 111 followed by the Amhara and Southern regions at 70 and 62 respectively.


Demand Drivers

To the casual observer, it might seem odd that there is suddenly enough demand to sustain such a torrid growth rate in supply but Addis, as the so called political capital of Africa, has almost always been woefully short of the accommodations and other facilities that hospitality calls for, to live up to its billing. Driving the skyrocketing demand for quality rooms in the city isn’t just Addis’ status as the so called political capital of Africa. The new conference center at UNECA is certainly doing its share of attracting a seemingly endless parade of international conferences but so is Bole International Airport’s growing status as a regional hub and EAL’s rapid expansion of services centered here. Transit passengers now make up significant portions of the guests at many hotels. Leisure tourism is not yet a big part of the equation given the anemic state of Ethiopia’s tourism sector at the moment but given its projected growth in the next few years, it will only add to the pressurefor more beds in the capital and beyond in the near term. The country’s continued economic growth is also drawing an increasing number of business travelers in the form of current or prospective investors as well as consultants servicing both private and public sectors. It is yet another metric which is expected to move upwards in the near future.


Developmental impacts and continuing opportunities

Many of the newer hotels employ anywhere from 50 to a few hundred employees directly. But the greater impact of their recent influx can be found in the numerous businesses that play a supporting role, chief amongst them being the supply of food and non-food items that hotels require. The supply of quality fruits and vegetables in the capital has never been very strong to start with and the hospitality sector as a whole (inclusive of the numerous higher end restaurants that have opened up in recent years) has put significant pressure on it. Along with dairy products and poultry, the difficulty of procuring sufficient quantities to sustain their needs is one of the challenges of operating a major hotel in Ethiopia. Indeed many of them purchase their produce from local supermarkets due to the dearth of direct suppliers with the adequate capacity. The result is an expensive and uncertain supply chain that significant effort must be spent on managing. There are a small but growing number of investors engaged in horticulture production although most of them appear to be targeting external markets. Still, there appears to be an upward trend in the supply of good quality produce as a result. Whether this improvement can catch up and indeed keep up with the constantly escalating demand is still an open question representing one of the clear cut investment opportunities that the hospitality sector can take some credit in giving rise to.


Another area where local capacity has a clear opportunity to step in and capitalize on is the supply of non-food items to hotels as well as restaurants. One sub-category is commonly referred to as crockery, cookery, cutlery and glassware. There currently appears to be no domestic producer that can supply such items of sufficient quality to meet a tourist class hotel’s needs. This means such hotels have to use precious foreign currency to import these items. Similar issues exist in the supply of items such as bed sheets, towels, soap and other standard hotel necessities. For the businesses (existing or new) that can fill this supply gap, the market size is considerable already and only looks set for much further growth in the future.

Of course the increasing number of visitors also mean additional opportunities for other segments of the hospitality sector such as car rental services, restaurants and entertainment. The latter two in particular have been pushing forward to try and keep up with not just visiting customers but an increasing segment of the domestic population that can afford their services.


Dining & Entertainment

Addis (and most other cities/towns that we can think of in Ethiopia) has never had a problem with a shortage of cafes although the standards of these establishments has gone up significantly in certain segments of the market. High class restaurants inside purpose built spaces are popping up here and there with Avanti – the upscale Italian restaurant close to Bole Airport being one of the newer headliners and Café Bon (reviewed in this issue’s Lifestyle section) another. More often than not, new entrants have little trouble drumming up a lot of business, partly because they are new but also because Addis Ababans seems to have an insatiable appetite for spending time in restaurants, cafes and bars that manages to sustain a seemingly endless number of them. In some areas, the sheer density of such establishments is quite astonishing. On Meskel Flower Road – a 3 kilometer strip between Bole and Debre Zeit Roads – there are no less than 68 restaurants, bars and cafes crowding the street and seemingly all coexisting in fiscal bliss. A reason behind these large numbers could be what many believe are very high margins that the proprietors of these places extract courtesy of a seemingly price insensitive consumer base and multiple opportunities to hike their prices. Especially in the recent past, the average restaurant bill seems to be climbing at a higher rate than prices for common goods and services. It certainly doesn’t help that close to 20% of what consumers pay on such bills is composed of VAT (15%) and a recent trend in which many establishments are adding a 5% service charge before VAT in accordance with recent instructions to this effect from tax collection agencies.

Entertainment is a big part of the hospitality scene here and perhaps even one of the reasons that Addis is considered one of the great destinations to work in or visit on the continent. For more on this sub-sector, please visit our website where previous articles pertaining to this topic are archived.

As you drive past the Bisrate Gabriel Church in the Old Airport area of Addis, the megastructure of the Laphto fitness, entertainment and shopping complex is one of the more striking architectural pieces you will find in the city. It is one of the latest and the grandest of facilities in Addis that have fitness & health at the heart of their existence. Laphto has much more than that housing a sizable shopping area not to mention a bowling alley, dual purpose auditoriums (cinema and conferencing facilities), spa and nightclub as well as several eateries. It is not the only new health and fitness facility around either – Maxview in Gerji boasts impressive facilities as well. Coming in a city where such concepts were completely foreign just 20 years ago, the presence of numerous such establishments is further proof that Ethiopia’s hospitality sector has undergone dramatic transformation in just a short period. For even more proof, one can consider Boston Day Spa – possibly the crown jewel of such places here and one that did a lot to advance the cause of spas overall with dozens now open all over the city. Biogenic Spa was one of the first to open here though and originally started out providing skin care and other related services in 1995. It now offers a full complement of spa services and sees so much promise in the business, that it is set to open another outlet inside the Laphto.



Overall, hospitality appears to be another sector that is definitively on the upswing. Its positive contribution to job creation and the development of adjacent sectors is something we can all appreciate although a greater focus by the business community to address emerging supply needs could help out even more by reducing its demand on the nation’s limited foreign currency reserves not to mention providing a much needed boost to the manufacturing sector in Ethiopia.

http://www.horizonethiopia.com/index...ian_Style.html

[yosef]

Chicago IT Company to Commence Call Centre in City

Ethiopian Airlines and Sheger Meter Taxi are first customers

Offshoring 2.0 Technology Services Plc, a local representative of eVentive LLC, a Chicago based consulting and outsourcing firm, is to launch a call centre in Addis Abeba after three weeks, an investment which required seven million dollars, a source disclosed anonymously.

Ethiopian Airlines and Sheger Meter Taxi have become the first subscribers of the service, according to the company source, although Ethiopian’s public relations office could not confirm this.

This call centre, a centralised office used for the purpose of receiving and transmitting a large volume of requests for information by telephone, is expected to operate 24 hours a day seven days a week, according to the sources.

http://www.addisfortune.com/Chicago%...0in%20City.htm

[abesha]

Marriott vs. Mariot: At A Courtroom Near You In 2010?

Business and Development
Written by Melaku Sahlu - Horizon Ethiopia Staff Writer
Wednesday, 24 March 2010

The Mariot Hotel off the Ring Road across from Bole Airport has long been the cause of chuckles to those who are familiar with the international chain from which the name is knocked off. Complete with the custom font that the 80 year old Marriott International Inc’s brand name and logo has been using for many decades. There are many international brand name knock offs in Ethiopia but this one was notable because of its prominent location and visibility not to mention the obvious misspelling, intentional or otherwise of the brand it was trying to emulate.

Chuckles aside, it didn’t seem like the crude imitation would cause much harm beyond the possible confusion of some guests from outside of the country that might have assumed they had checked into a real Marriott. But now that an actual Marriott is set to open in Addis within the coming year, it would seem like a conflict might emerge between the original and the imitator that should make for some interesting legal maneuvering within the context of Ethiopia’s heretofore limited respect for international brands as well as the currently ongoing WTO accession process.

Of course, given that Mariot doesn’t even appear to be a full service hotel anymore (the entire building has apparently been rented out to a group of Chinese residents), a quick and painless settlement of the whole thing could avoid a protracted spectacle although the precedent setting outcome would be interesting to observe. Although similar cases have been decided by Ethiopian courts before, it would be accurate to say none have been argued under the increased scrutiny that Ethiopia’s current attempts to work towards WTO accession are inviting. These days, Mariot is more of an apartment building for a group of Chinese contractors and doesn’t even list itself as a hotel anymore (according to the Ministry of Culture and Tourism). Meanwhile, the Marriott Executive Apartments is looking to open its doors sometime in 2010 in the Sunshine Construction owned building just off Meskel Square on Haile Gebreselassie Road. Upon being joined by 2 other internationally owned hotels being built by the Accor Group, it may quickly become the city block with the highest concentration of high quality hotel rooms in the city. A second Marriott (Courtyard) is set to follow in the next few years located in the Bole Medhanealem area.

For its part, Sunshine Construction indicates that it does not contemplate any legal action and points out that if any such action is forthcoming, it would be initiated by Marriott International.

The question of international branding is ostensibly the domain of the Ministry of Trade & Industry (MOTI) when it comes to enforcement. According to a source within the Ministry, holders of established international trademarks may petition MOTI to take action against a local company using the same trademark. However, the initial act of approving requests for trademarks is apparently handled by the Ethiopian Investment Authority which does not appear to do very stringent checking (if at all) of whether a trade name submitted to it is the same as or similar to an existing international brand to warrant denial of the request.

This results in a curious system that could approve a trademark initially but end up revoking it upon petition by an outside party for a trademark that was not previously registered in Ethiopia.

It is important to note that no system currently exists that allows the registration of a trademark such that it is universally honored. The WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) attempts to establish some uniformity between the various systems employed by its member countries but does not provide for a single, ‘international’ registration. In fact, the closest thing to such a registration globally is the Madrid System for the International Registration of Marks. 84 countries of the world are part of this compact administered under the auspices of the World Intellectual Property Organization.

The Madrid System does not actually provide for harmonization of trademark registration rules and thus simply facilitates the propagation of a single trademark application to essentially set off a number of registrations in applicable jurisdictions. Ethiopia is not a signatory to this treaty (or treaties).

Since Ethiopia is not (yet) a signatory to any applicable agreement, the question might naturally arise; exactly what might MOTI consider an international trademark. One that is registered in any of the major protocols? The United States? WTO accession will likely provide more clarity to this question although it will not address every aspect fully.

Prospective entrepreneurs in Ethiopia would be well advised to thoroughly research their proposed brand names (trademarks registered under the Madrid System can be found in the WIPO hosted Madrid Express database) and avoid using any trademarks that may invite legal scrutiny by international firms to avoid potentially expensive reconfiguration later on.

In the meantime, the stage may be set for a battle that could give many cause for a double take…Marriott vs. Mariot. Possibly coming to a courtroom near you in 2010.

http://www.horizonethiopia.com/index..._In_2010_.html

Check out the pic of the real Marriott. Looks like the Sunshine bldg is completed

[Simfan34]

Originally Posted by abesha

Marriott vs. Mariot: At A Courtroom Near You In 2010?

http://www.horizonethiopia.com/index..._In_2010_.html

Check out the pic of the real Marriott. Looks like the Sunshine bldg is completed

I have been waiting for this day ever since I saw that place! Is that the actual hotel?
I wish Sunshine would change their name to Desta though.

[Vildana]

Originally Posted by abesha

Marriott vs. Mariot: At A Courtroom Near You In 2010?

http://www.horizonethiopia.com/index..._In_2010_.html

Check out the pic of the real Marriott. Looks like the Sunshine bldg is completed

I dont think that is the real marriot bldg. sunshin is building . I think it is a random marriot some where else.

[abesha]

Riviera to upgrade itself to five star
By Groum Abate

A 30 million birr expansion for Riviera International Hotel is in the pipeline.
The four star hotel, which plans to upgrade to five star according to new regulations, has plans to construct a children’s play land, swimming pool and a big ballroom with a capacity of 1,000 people.

General Manager Berhanu Zeleke told Capital the expansion plan onto a 5,000 sq metre plot will meet all the standards set by the new regulation enforced by the Ministry of Culture and Tourism.

The government recently ratified a law that sets standards for hotels in the country. The law, which is new to Ethiopia, gives detailed instruction for hotels if they want to be given a star rating.

Fire extinguishers, fire exits, room spaces, what they have in the room, kitchen space and tools are some of the criteria set by the ministry in order to grade the hotels with a star rating. Furthermore, the new regulation states that every hotel should be run by a professional with hotel management experience.
Ethiopia has one school that teaches hotel management in Hawassa.
The hotel, which was inaugurated 18 months ago with an investment of 67 million birr, lies on a 3,500 sq metre plot along the ring road around Lafto.

According to the general manager, the expansion will be launched in six months.
The hotel is owned by Alem Fitsum an industrialist who runs a number of factories. His businesses vary from a paper factory to a sheet steel factory. He also owns a PVC factory that produces plastic pipes.

http://www.capitalethiopia.com/index...-news&Itemid=4

The bolded is what I love about Ethiopia. Our economy is in the hands of our people, not foreigners or naturalized immigrants who still act like they are foreigners.

[abesha]

Ad for Jupiter International Hotel - looks like a really nice place.

[abesha]

Intercontinental Addis

[lamrof]

Originally Posted by abesha

http://www.capitalethiopia.com/index...-news&Itemid=4

The bolded is what I love about Ethiopia. Our economy is in the hands of our people, not foreigners or naturalized immigrants who still act like they are foreigners.

Whew, hurt my feelings there. I am one just like that who live in the USA. Do you think those born here will say that about me?

[abesha]

Yoly Hotel




Another of Jupiter International Hotel

[mike7743]

I love how those ads don't feature Europeans (as it is in many cases) but local individuals. well done!

[Hersh]

Originally Posted by abesha

Ad for Jupiter International Hotel - looks like a really nice place.

Ethiopians can be so delusional about their skills sometimes. I'm sure all of you know someone who sees his/her command of English to be infinitely richer than reality would otherwise allow.

This ad is an epitome of that. Somewhat polished accent, with very little give away, but nevertheless lacking in the coherence department. The same funny little grammatical slip-ups that seem to plague most adult immigrant Ethiopians.




They need to get over themselves and hire someone who's not gonna be a victim of some delusional sense of self competence...i.e. a professional who's a native English speaker.

[abesha]

I think it's already a big step forward, so a little slip up is okay.
I think your criticism is really harsh considering the crap ads we're used to.

By the way, just because someone is a native speaker of English does not mean they are more competent. In my experience, it's quite the contrary actually, because a non-native has to apply himself much more to speak a new language, so his grammar and vocabulary are better.

[lamrof]

Originally Posted by Hersh

Ethiopians can be so delusional about their skills sometimes. I'm sure all of you know someone who sees his/her command of English to be infinitely richer than reality would otherwise allow.

This ad is an epitome of that. Somewhat polished accent, with very little give away, but nevertheless lacking in the coherence department. The same funny little grammatical slip-ups that seem to plague most adult immigrant Ethiopians.



They need to get over themselves and hire someone who's not gonna be a victim of some delusional sense of self competence...i.e. a professional who's a native English speaker.

Why are you concerned in the accent if the point is made across. For your information Americans speak the English language with a very heavy and funny accent and the English language itself and its writing system is a piece of crap.

[mike7743]

Originally Posted by Hersh

Ethiopians can be so delusional about their skills sometimes. I'm sure all of you know someone who sees his/her command of English to be infinitely richer than reality would otherwise allow.

This ad is an epitome of that. Somewhat polished accent, with very little give away, but nevertheless lacking in the coherence department. The same funny little grammatical slip-ups that seem to plague most adult immigrant Ethiopians.




They need to get over themselves and hire someone who's not gonna be a victim of some delusional sense of self competence...i.e. a professional who's a native English speaker.

I actually chuckled when the guy said "checking out has never been harder"

whaaaaa?!? how's that helpful, and make me want to stay in your hotel? I was like, you mean "checking out has never been easier?"

it's a legitimate criticism. if you're trying to attract English speakers the least you can do is avoid grammatical errors in your ad. that's like an American company making an ad in Amharic to attract Ethiopian consumers and end up saying something completely different than what they intended.

oh well. it is what it is. I was impressed with the producers giving Ethiopians camera time instead of hiring two pale jerks for the whole ad. that speaks confidence and pride to me. great ad.

[Yoniii]

By Yohannes Anberbir

A technologically advanced tax payment system is coming to Ethiopia. This week, the Investment Climate Facility for Africa signed a 2.8 million dollar grant agreement with the Revenue and Customs Authority (RCuA) to set up an electronic tax payment system.

Nebeyu Samuel, deputy general director of RCuA signed the agreement with Omari Isa, chief executive officer of ICF on Monday July 12, 2010. IFC will fund 1.4 million dollars of the total project cost while the remaining will be financed by the Ethiopian government, Omari Isa, said.

“The electronic tax payment will simplify the current tax payment system and will save tax payers time and energy,” Nebeyu said during the signing ceremony.

Currently, Ethiopian tax payers must physically go to tax offices. However, There are only two federal tax offices in Addis where the majority of tax payers live and there are only 10 tax offices for the Revenue Agency of the City Administration which collects municipal taxes.

The city administration and the federal tax authority are now utilizing commercial banks in the country to collect taxes by offering a commission for their cooperation. However, this has resulted in long lines at crowded bank tax windows.

Only three out of 15 commercial banks have launched electronic money transfer systems; however their number will increase by 2011 at the time the authority will concludes its electronic tax collection system, according to Nebeyu.

The Investment Climate Facility for Africa (ICF), The International Monitory Fund (IMF) and the World Bank have been working to modernize the country’s tax administration system.

Ethiopia, which has the lowest tax revenue among Sub-Saharan African Countries, hopes by transforming its tax system will remove barriers to business while increasing funds.

Source