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Low occupancy rates a quandary for local hotels

Hotel rates in Addis Ababa have been dropping at an alarming rate. This is especially true of hotels away from the major business and entertainment centers of Bole and Kasanchies which are close to organizations like the ECA, UN and the Bole International Airport.
Hotels are still doing well during peak times like when the AU Summit occurs and during holidays like Meskel and Epihany. During the month of January, when the AU hosts its bi-annual summit for heads of state, they city becomes crowded with aid workers, diplomats, lobbyists, and journalists. Then hotels fill up and many conference participants are forced to stay at expensive lodges and resorts outside the city but when they leave, many hotels empty out again.
In the past this was not as much of a problem due to the limited supply but when the many new hotels were built the competition became fierce. Some have around a 70 percent occupancy rate but others are below 40 percent.
Now some hotels switch on the room lights even though the room is empty just so people will think they have customers and the hotel is popular.
In the past five years, on average one hotel has been built every month. Twenty years ago there were less than 10 standard hotels. Now there are over 140 hotels and many more international and brand hotels in the pipeline.
According to data from the Ministry of Culture and Tourism (MoT)886,000 tourists came to Ethiopia and stayed an average of 16 days. They spent, on average USD 234. However, some do not agree with the data. They say that if the figure was correct the occupancy rate would not have been this low.
Zelalam is a tour operator who does not believe the data from MoT.
“If the figures are true then one hotel should have over 6,000 customers per year but this is not the case. One thing that people might not realize is that if someone from the Diaspora comes from another country to Ethiopia they are registered as a tourist but they frequently stay with their family and relatives and spend nothing in the hotels.”
He feels there needs to be more attractions built in Addis to lure tourists. “When a tourist comes to Addis we send them to see the National Museum of Addis Ababa, the Menelik Palace in Entoto and take a half day tour of the city by car and at night go to traditional restaurants. The next day they travel to other parts of the country to look at different historical sites and natural attractions. From my experience tourists do not stay in Adds for more than one or two days because there is not enough to keep them occupied.
“We need more recreational centers and other historical houses and places to attract tourists. This will cause people to stay in hotels longer,” he said.
Price is another factor, in Paris you can get a good hotel room for USD 30 but in Addis they are very expensive. Some charge up to USD 120. There are some, which may be a little more reasonable, they charge USD 40.
He feels the price must be fairer so tourists feel like they are getting a better value. When the price is very high they won’t stay in the hotel as long.
“We do need more rooms but they need to be quality rooms and have better accommodation facilities. He says that in the future hotels need to do more product development and give better deals when there is a low season. This will enable Ethiopians to stay in hotels because most foreigners visit during high seasons,” he said.
Gezagahn Abate, who handles public relations for MoT argues that the main reason tourists do not stay in Addis longer is because tour operators do not incorporate Addis Ababa in their tour package.
“There is not a problem with the data. Ethiopian Airlines has a system to determine the reason someone comes here. They list questions asking if a person is visiting, or coming for a meeting or coming for another purpose. What we observe is tourist operators sending tourists to other regions of the country without staying a night in Addis Ababa which negatively affects the Hotel’s income. However, I strongly believe that we have more work to do to modernize our infrastructure and hotel standards to attract more visitors.”
“It used to be that opening a hotel was easy all you needed to do was open a building. Recently we applieda star rating so hotels would be judged by international standards and work harder to make their rooms cleaner and develop food and beverages that were up to standards and provide excellent customer service. I believe that the more we work on standards, the more we will satisfy visitors and therefore attract more tourists,” he said.
Kumneger Teketel works as a hotel consultant. He argues that occupancy rates will remain low unless more is done to attract more meetings to Ethiopia.
Companies often give their conference participants a budget that covers their hotel accommodations and a per diem which frees them up to spend more money where the meeting is hosted.
“Data from the last five years indicates that only eight percent of tourists come to Ethiopia for meetings. You can see how the hotels are full when there is big meeting in the AU or UN but sadly there is not an organization in Ethiopia which works to attract big meetings that instead are held inAfrica or across the globe. We must have a national convention center. To do this task like in Kenya or South Africa. We need to host big international exhibitions in many sectors that can attract a lot of participants so that our hotels can increase their market,” Kumneger said.
The recent political unrest which has slightly decreased the numbers of tourists, and the expensive price of hotels are also major reasons for the local occupancy rates.
Last year the Addis Ababa Hotel Owners Association wrote a letter to the Prime Minister’s office and the Ministry of Culture and Tourism asking that all hotels in Addis be exempt from profit tax and loan interest. They argued that protests caused low occupancy rates and reduced income.
Wegene Alemayhu, a marketing manager at Inter Continental Addis Hotel says attracting local customers is another option to increase the occupancy rates.
“I have seen that hotels concentrate more on their room market, but they should work to have more meetings in their halls and more people in their restaurants by offering customersan affordable price. The perception of local people about hotel prices and value needs to change to attract more local people to hotels,” he said.
“Honestly speaking the food in some restaurants is more expensive than the hotel but many people do not know that. Though it is gradually changing some may people think that room and foodprice of the hotel is not affordable for them but there are many hotels who can serve them with a fair price and the hotel should promote themselves to stop this incorrect perception,” he further stated.
The Ministry of Culture and Tourism has a vision to make Ethiopia one of the top five tourist destinations by 2020. Yohannes Tilahun Head of the Ethiopian Tourism Organization (ETO),says increasing hotel occupancy rates is not a one person task.
‘’We must create more infrastructure, we must host big events with thousands of participants and we are working to set up a convention center, we must upgrade our hotels interims of quality and quantity so they can serve many people, we need tour services. Accomplishing this is a hard job that we are now working on and ultimately we will come up with our ways to increase their occupancy rates,’’ he said.


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