Why Ethiopia’s Hospitality Sector will Struggle to compete with the Rest of Africa’s Giants

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Ethiopia’s tourism and hospitality industry cannot compete with other established markets in the African region. At least not yet. The East African nation has made a renewed push to develop its tourism industry and has a lot to offer in terms of its rich history, significant landmarks, colourful culture and exotic cuisine.

However, other countries have been developing their tourism sectors for decades. Some have established themselves as regional leaders within the travel arena. Others have firmly secured their position and are not willing to give their competitors a chance to usurp them.

Ethiopia was Late to the Party

While economists and sector stakeholders agree that Ethiopia’s travel industry holds promise, giants like Egypt, Kenya, Morocco, Nigeria, South Africa and Tanzania have been dominating the field for decades. In some ways, it seems that Ethiopia is late to the party.

With major cities such as Arusha, Cairo, Cape Town, Dar es Salaam, Lagos, Luxor, Marrakesh, Mombasa and Nairobi, the nations have firmly secured their positions as Africa’s tourist hotspots.

From their bustling nightlife to their white sandy beaches, historic landmarks and large national parks, these cities have put Africa on the map.

And while Addis Ababa has often been described as the ‘Dubai of Africa’, it is tough to compete with established industry players such as Zanzibar and Mombasa.

Insecurity has made things Difficult

Ethiopia, like some of her neighbours, has suffered from recent bouts of insecurity. It is no secret that parts of East Africa are prone to civil unrest, especially during election season. However, some countries have been known to contain the chaos while others struggle to keep the peace.

Safety and security concerns have resulted in some security alerts for foreign travelers.

In a 2019 travel advisory, the US Department of State urged its citizens to exercise increased caution when traveling in Ethiopia due to sporadic civil unrest and communications disruptions. Some areas have increased risk.

The State Department warned its citizens to avoid traveling to the Somali Regional State due to potential for civil unrest, terrorism, and landmines.

The Department also warned its citizens to reconsider travel to border areas with Kenya, Sudan, South Sudan, and Eritrea due to crime, armed conflict, and civil unrest.

The organisation warned that incidents of civil unrest and ethnic violence may occur without warning.

“The Government of Ethiopia has restricted or shut down internet, cellular data, and phone services during and after civil unrest. These restrictions impede the US Embassy’s ability to communicate with, and provide consular services to US citizens in Ethiopia,” the State Department said in its announcement.

Underdeveloped Infrastructure is a Cause for Concern

Ethiopia has been working to improve its road network over the past three decades. However, a World Bank report found that only 22% of the country’s rural population has access to properly paved roads. To make matters worse, major road networks are concentrated in Ethiopia’s central and northern regions, while other areas have been somewhat neglected.

Suffice to say, it will be difficult to compete with countries whose road networks are more developed. Even Kenya’s murram roads within its national parks rival some of Ethiopia’s rural road networks. And the former country’s dirt roads offer a sense of authenticity, while its paved city highways are ahead of some of Ethiopia’s tarmacked freeways.

The Country is Still Trying to Learn from Past Mistakes

Regardless of these hurdles, Ethiopia plans on making a name for itself in Africa’s lucrative travel and tourism industry.

The country is still struggling to maintain its pace as inconsistencies in the sector’s growth hamper its progress. The industry has performed poorly in some years and relatively well in others. Marketing campaigns in recent months seem to have helped but it looks like the country may need a more aggressive approach.

Leisure travel spending in Ethiopia for instance, grew by a dismal 1.1% in 2016 to ETB 71.6 billion ($3.16 billion), and is expected to rise by 4.5% to ETB 111 billion ($4.9 billion) in 2026.

Also, Ethiopia has the enormous task of making sure its political problems do not affect tourists’ perceptions of the region.

The Road ahead is Looking Better Every Day

According to a report from Jumia Travel, a leading regional bookings firm with operations across Africa, the direct contribution of travel and tourism to Ethiopia’s GDP was ETB 51.3 billion ($2.26 billion) in 2015, which was 4.1% of total GDP at the time. It is forecast to rise by 5% by 2026 to ETB 85 billion (USD 3.7 billion).

“This largely reflects the economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services, restaurant and leisure industries,” Jumia Travel said in its report.

In 2015, the total contribution of travel and tourism to employment, including jobs indirectly supported by the industry, was 8.4% of total employment creating more than 2.3 million jobs. This is expected to increase to 6.6% generating more than 2.4 million jobs in 2026.

“The Ethiopian hospitality industry has grown quickly over the last few years, and there remains a lot of untapped potential,” explained Jumia Travel CEO, Paul Midy in a previous address.

“Exploiting these opportunities with the help of new technologies, and accommodation service providers will support the country’s initiative to become one of Africa’s top five destinations in the coming four years. The challenges are abundant but the future is inspiring, and we look forward to bringing the intended growth and progress into reality,” he added.

The country received ETB 14 billion ($618 million) worth of investment on travel and tourism in 2015, bringing the sector investment contribution to 2.9% to the total investment the country is receiving.

The growth is predicted to continue over the next 10 years rising by 5.4%, bringing ETB 24.7 billion ($1 billion) to the country’s economy.

In 2016, 863,742 tourists visited Ethiopia. Now, the country’s Tourism Ministry hopes to increase the number of tourists to 1 million within the next seven years.

Ethiopia’s Prime Minister Abiy Ahmed met and held discussion with Mr Mohammed Al Shaibani, CEO of Investment Corporation of Dubai, a $200 Billion Sovereign Fund on the sidelines of World Economic Forum in Davos. The organization is keen to invest in Ethiopia’s hospitality and agro-business industries.

Speaking at a previous hospitality expo in Addis Ababa, Ethiopia’s President, Dr. Mulatu Teshome stated that his government has given due attention to the development of the hospitality sector.

“To exploit its amazing tourism potential, Ethiopia has committed to provide support to the private sector for the development of tourism and hospitality service,” he said.

The road ahead may not be smooth, but it is safe to say that Ethiopia’s government is dedicated to see this journey through.

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