The Hotel sector investment in ethiopia

1. HOTEL SECTOR INVESTMENT IN
ETHIOPIA
EBISA C. GOBENA
AND ANDUALEM H. GUDETA

2. Abstract
He stock of hotels in Ethiopia has increased sharply over the last few years.
While tourist accommodation is available as the major attraction,
improvement as well as new construction is taking place. The Inbound
Tourist Arrivals in Ethiopia continued to grow from 76,844 in 1989, to
115,000 in 1999, 184,078 in 2004, 427,286 in 2009 and reaching 523,438
in 2011. The GTP’s target on the number of tourist arrivals by the end of
2014/15 was set at 1 million in-bound tourist arrivals. The total number of
hotel rooms and beds of all hotel establishments in Ethiopia was 19,025
and 24,083, respectively in 2011. A total of 37 investors have taken
investment permit in Addis Ababa alone to construct hotels with star
ratings in 2012/13. Furthermore, the projected unsatisfied demand for
hotel single night rooms in Ethiopia in the years 2015 and 2020 will be 1.3
million and 3.1 million, respectively. In line with this, Sectoral
distribution of outstanding loans of the banking system in Ethiopia
indicated that credit to hotels sector accounted for an insignificant
amount of 2 percent in 2010 and 1.85 percent in 2011. Therefore,
improvements of the banking system inextending credit services would
be helpful for the hotel sector.

3. INTRODUCTION
Tourism is a big industry comprising many
sectors such as accommodation, food and
beverage services, recreation and
entertainment, transportation, and travel
services. Each of these sectors contributes to
tourism development in various destinations,
and has different structures, and
performances. However, in many countries, only
the hotel and restaurant sector is separately
analyzed as being the one closely related to
tourism, being also statistically separate from the
others.

4. JUSTIFICATION OF THE STUDY
Ethiopia has much to offer to international
tourists. It has a unique historical and
cultural heritage, magnificent scenery, a
surprisingly cool climate, rich flora and
fauna, important archaeological sites and
hospitable people. The northern tourist circuit
known as the “Historic Route’’ comprises the
most important tourist sites in the country.

5. RESEARCH QUESTIONS
• How are the demands for
hotels/accommodations explained in Ethiopia?
• Does the supply of hotels match with the current
demand for hotels?
• What does hotel sector investment looks like?
• What factors are influencing service delivery of
hotels?
• How do we explain trends of bank loans to the
sector?

6. METHODOLOGY
The study mainly used secondary data from
journals, books, newspapers, magazines, and
reports of various governmental and
nongovernmental organizations. Above all, crucial
information was obtained from Ministry of
Culture and Tourism and Addis Ababa
Investment Agency. The method of analysis
used in the study is descriptive statistics. In
this study, descriptive analyses were chosen
because of its simplicity and clarity to draw
inferences. Averages, percentages and tables
were used for the presentation of the data.