Africa -  Ethiopia - Addis Ababa

Addis Ababa has been one of the most stable economies and safest destinations in Africa since Ethiopia’s independence in 1991. However, the capital has had a tough year in 2016.

President Teshome’s governance and human right’s poor management prompted social protests in the capital. Unrest had been building since late 2015 but 2016 brought violence and fear. The insufficient response from the government led to rising social unrest and foreign firms have been targeted by opponents to the regime in October 2016. These events likely deterred corporate travelers and investors to do business in Addis Ababa.

As the government is not prone to make compromises, a state of emergency was declared and the risk and concerns about stability in the country persist.

However, the picture is not as bad as it looks. The long-term impact of the demonstrations is likely to be modest. The economy is boosted by the government-led infrastructure program and by Chinese investments in many fields, such as water, road infrastructure or telecommunication. Addis Ababa will be one of the main benefiter of this investment. Despite the security situation in 2016, China invested more than US$20 billion in the country overall and is the largest trading partner with Ethiopia. The GDP growth was maintained at 7% in 2016.

While tourism has been affected by the political situation, the impact has been moderate. Indeed, the economic growth enhanced domestic consumption and domestic travelers partly offset the loss in international visitors in the capital. The number of tourist arrivals at Bole International Airport increased by 19% in 2016.  Occupancy and average rate slightly decreased in 2016, mainly due to the security situation and the new supply that entered the market, namely the Ramada Hotel and the Marriott Executive Apartments. REVPAR was down by 3.8% leading to a decrease in values of 15.9% owing to the security situation.

Although 2017 is challenging and new supply will impact hotels performance in the near future, it is likely to be a short-term situation. The improvement of the infrastructure, the ease of the security situation in mid-2017 and the visit of the Ethiopian Prime Minister to Prime Minister Netanyahu in June 2017 and the agreed cooperation between the two countries bring positivity into the picture.

Exchange Rate:

Exchange Rate 2015 Exchange Rate 2016 Change 2015/2016 Exchange Rate 2017 Change 2016/2017
US$ 1 1 1
Ethiopia - Addis Ababa 0.04781 0.04546 -4.9% 0.04337 -4.6%

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Ethiopia - Addis Ababa RevPAR Change

Ethiopia - Addis Ababa RevPAR

Year RevPAR
2012 130.11
2013 139.85
2014 131.78
2015 143.16
2016 137.67
2017 (f) 127.40

For more information, please contact:

Tim Smith, MRICS
tsmith@hvs.com
  • +27 797 342296 (w)
Laura Dutrieux
ldutrieux@hvs.com
Laura Dutrieux
ldutrieux@hvs.com