Half of hotel projects in the pipeline have been abandoned
The US-based JLL Hotels and Hospitality Group reported that Ethiopia has seen a significant decline in tourism arrivals over the past four year, with the first quarter of this year exhibiting a further 35.5 percent decrease.
A new report dubbed: “Spotlight on Ethiopia,” which provides a brief hotel market review, indicated that in the early months of the COVID-19 pandemic, January to March 2020, Ethiopia received 118,947 international arrivals compared to the 184,433 tourists who came to Ethiopia in the same period in 2019, indicating a 65,485 decline in tourist arrivals.
However, the report underscored that the decline have long been felt, since 2017. For that, according to David Desta, associate of JLL Group for Sub-Saharan Africa Region, there are many contributing factors. “Increased competition from regional countries, lack of a diversified tourism product and political unrest are among these factors,” David said.
He also emphasized the race among East African nations with Kenya, Rwanda, Uganda, and Tanzania stimulating and promoting their destinations to travelers, better than Ethiopia. Rwanda, for instance, has been investing on promoting its destinations; using major football clubs like Arsenal, wearing “visit Rwanda” jerseys on games.
These countries are more appealing because they have a “Combination of safari and beach destinations that steer travelers to Kenya and Tanzania, where packages are affordable and competitive.”
While the rest of the East African destinations have created more vibrant and diverse tourism activities, David says, Ethiopia’s tourism market is highly dependent on “Its historical and cultural assets, such as the Northern Circuit of Bahir Dar, Gondar, Lalibela, and Axum. It is true that, Erta-Ale and the Danakil Depression attract thousands of visitors every year; however, there is potential for Ethiopia to invest and promote other attractions in the south and central parts of the country.”
On the other hand, ongoing hotel projects in Ethiopia are also reported to be experiencing difficulties, such as having adequate access to hard currency and lack of prompt services to facilitate Letter of Credit facilities, making it unappealing to travellers.
The report mentions that out of the 21 international hotel projects in the pipeline, almost half have been abandoned, so far. “Difficulty accessing foreign currency in Ethiopia has also led to the delay of many projects. As a result, some projects have been abandoned, which is evident in other real estate assets with skeleton structures visible throughout the city,” David said.
Despite the shortcomings in the tourism sector, the long-term prospects seem optimistic, with major face-lifting projects undertaken to be a more appealing destinations. The launch of Unity Park, with the ongoing Beautifying Sheger projects and Entoto Park alongside Mesqel Square’s Renovation, are believed to be significant projects that could uplift the tourism and hospitality sector in Ethiopia.
Welcoming the contents of the report, Neway Berhanu, managing director of Calibra Hospitality Consultancy and Business PLC, told The Reporter that the impacts of COVID-19 and the erratic peace and stability situation has impacted both sectors. According to Neway, the tourism sector has sustained numerous upheavals and concerned parties should work on addressing these factors that substantially impact the sensitive sector.
JLL Group has been active in the Ethiopian market over the years, advising and consulting clients throughout the entire hotel investment lifecycle: from feasibility studies, operator selections, to financial advisory and investment sales. In addition to its offices in the US and South Africa, the firm has representations in Kenya, Morocco and Tunisia.