Africa -  Ethiopia - Addis Ababa

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HVS In-Depth Africa Hotel Valuation Index:   2016 | 2015 | 2014

Ethiopia’s GDP growth slowed down from 2017 and is estimated at 7.7% in 2018 and 2019. Although the country went through substantial political and social unrest in 2017/18, it seems to grow back into stability and economic growth. The Prime Minister, Abiy Ahmed, recently awarded the Nobel Peace Prize for 2019, proving once again that the country is on its way to peace and stability. That should reinforce both tourists and investors’ confidence.

Ethiopia’s Travel & Tourism economy grew by 48.6% in 2018, the largest of any country in the world, according to the World Travel & Tourism Council’s (WTTC) annual review of the economic impact and social importance of the sector released in March. This sector contributes BIRR202 billion (US$7.4 billion) to the country’s economy, an increase of BIRR59 billion(US$2.2bn) from 2017. The sector now represents 9.4% of Ethiopia’s total economy. There is a massive opportunity to capture a larger market share of the international tourist movements with the right product, marketing, infrastructure and policies.

Due to major political reforms and relaxed visa legislation international leisure tourists were the biggest spenders in the country: 79% from leisure and 77% from international travelers. Although 2018 was a tough year for Ethiopia, due to political and social unrest, the country is proving to be resilient to crisis and shows a great development and support for the major global hotel brands in the country.

Addis Ababa – Addis Ababa Bole International Airport finished its expansion at the beginning of the year and is now Africa’s biggest airport with a capacity to service 22 million passengers every year. Addis Ababa surpassed Dubai as the top gateway into Africa. Travel bookings between November 2018 and January 2019 increased by 40% based on a year-on-year growth and Ethiopian Airlines more than tripled their passenger numbers in a decade.

New hotel developments include the first Ethiopian Skylight Hotel with 373 rooms inaugurated by Ethiopian Airlines Group last February and has since embarked on the second five-star hotel construction project near the Addis Ababa Bole International Airport with 637 rooms. Hilton is planning to open a DoubleTree Airport hotel in Addis Ababa in May next year with 106 rooms, Radisson will open two hotels in 2021 with a combined 225 rooms and Accorhotels has five hotels and 1,055 rooms in the pipeline for Addis Ababa with planned openings in 2021.

Hotels’ performance in 2018 suffered from the unrest in Addis Ababa. However, 2019 is likely to show signs of recovery with a REVPAR increase of approximately 20% and an increase in value of 11% and this trend is expected to continue in 2020. A 42% increase in supply in 2021 may have a negative impact on performance and value although it should only be temporary.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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For more information, please contact:

Tim Smith, MRICS
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Rishabh Thapar
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