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Report ranks Ethiopia third in pipeline hotel projects

Report ranks Ethiopia third in pipeline hotel projects

Local hoteliers await latent investors

The annual report, which features hotel projects across major destinations globally, has named Ethiopia as the third most evolving market of the hospitality industry with a growing number of hotel projects in the pipeline this year.

Headquartered in Nigeria, W Hospitality Group, a specialized consultancy firm in the hospitality sector has published the 10th series of the annual report dubbed: Hotel Chain Development Pipelines in Africa, 2018. In its findings, Ethiopia has been ranked the top third country next to Egypt and Nigeria from the list of top 10 countries of the continent. Ethiopia has been placed third with 31 hotels ready to enter the business in the foreseeable future.

The report detailed that Ethiopia’s hotel pipeline projects are about to introduce additional 5,717 rooms in the years to come while Egypt ranked atop with 43 pipeline projects with 13,636 rooms and Nigeria second with 57 hotels and 9,603 rooms. In fact, statistically, Ethiopia should have been put in fourth position giving its way to Morocco whose number of hotels in the pipeline reaching 33. However, Ethiopia edges Morocco with the number of rooms since the latter has a size of 5,456, less by 261 rooms Ethiopia has embarked on.

Out of the 5,717 rooms, 60 percent is found to be under construction and the rest wait to be part of the actual construction work. Between 2017 and 2018, Ethiopia has witnessed a 50 percent increase in hotel pipeline projects, while some 25 hotel development deals have been signed until March 2018 across the continent.

“Ethiopia, in third place, has seen a massive increase in pipeline deals, up from 20 hotels in 2017 to 31 hotels in 2018, signed both by international chains such as Accor Hotels and Hilton, as well as regional chains such as aha and Latitude. The majority of these deals (86 percent of total rooms) are in Addis Ababa,” the report reads. The sub-regional perspective of the report also indicated that the pipeline hotel development activities in East Africa found Ethiopia to be the leader in the pack.

However, local developers have faced major setbacks to secure funding for hotel properties in the pipeline. Travor Ward, managing director of W Hospitality Group, wrote in an e-mail reply to the questions The Reporter sent and said that “here are many businessmen and women who have started to build hotels, but do not have the funds to finish them – often they have under-estimated the cost of building a hotel.  They cannot raise the needed funds in the domestic market, and are therefore looking for overseas partners”.

It is to be recalled that some developers were looking for global chain operators capable of securing required finances for the projects at hand. The Trade and Development Bank (TDB) aka PTA Bank provided a USD 20 million project financing for Accor Group’s upscale Pullman brand to operate in Ethiopia. Since then, many developers are still looking for more financers to the properties they slanted for hotel development.

In a related news, the African Hotel Investment Forum (AHIF), a premium conference in the hospitality sector is about to be held in Nairobi from October 2 to 4, 2018.

David Tarsh, consultant and media relations head with Bench Events, the organizer of AHIF told The Reporter via email that the coming of AHIF to Ethiopia has not yet been considered. “Where AHIF goes is determined by the event’s organizer, Bench Events and that decisions can be influenced by preferences of the delegates and by a destination that is interested to host.”