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Build it and they will come

Chief engineer Genet supervises Crowne Plaza construction

The Crowne Plaza Hotel brings business, tourism and jobs to Ethiopia

When the Crowne Plaza opens its doors in 2017, it will become the Addis Ababa’s fifth international brand hotel, meeting an urgent need in a city going through a business boom.

While the ribbons have not yet been cut, the Crowne Plaza’s impact on the domestic economy is being felt. Construction alone hired more than 300 labourers, many of whom will continue to work with the sponsor’s other building projects. The hotel will employ 300 local staff, including several youth and women. Ethiopian entrepreneurs who provide food, transport and other general services will also benefit from Crowne Plaza’s supply chain.

Top-tier hotels create more high-paying jobs than other tourist accommodations, according to the United Nations’ World Tourism Organization. They provide better service and facilities, and generally employ more people than budget hotels.

Addis Ababa needs top-quality tourism services to meet needs and improve the supply of services in an increasingly sophisticated urban market. The city’s infrastructure evolution has quickened in the past few years. Skyscrapers stand where shacks once did, and a new metro line – Sub Saharan Africa’s first – is providing relief to commuters. Bole airport serves 20 million passengers per year, with flag carrier Ethiopian Airlines flying nearly everywhere, from Gaborone to Guangzhou. Flights are packed with investors seeking opportunities in Ethiopia’s agriculture, minerals and manufacturing sectors, along with the usual throng of tourists and diplomats.

Home to the African Union, United Nations Economic Commission for Africa and several international organisations, Addis Ababa is a hub for diplomatic events, the largest being last year’s global Financing for Development conference.

 

Limited Lodging

Despite the high business traffic, Addis Ababa has only four international-brand hotels, which provide required health and safety standards, business and internet services. Unsurprisingly, these are regularly over-booked.

The Crowne Plaza is a step towards filling the gap. Financed with the help of a $9.5 million loan from IFC, the hotel will provide 210 rooms, an all-day restaurant, conference facilities, more than 200 parking spaces, a business centre, and reliable internet to travellers. Its central location in Addis Ababa’s commercial district, close to the UN headquarters, and the new metro is an added draw.

Reda Getchew, Communications Minister for Ethiopia said, “The news that international brand hotels such as Crowne Plaza are coming to Addis is a more than welcome here, because this country deserves things of quality. Addis needs more business hotels, and quality ones such as Crowne Plaza even more so”.

 

Ripple Effect

The hotel is the brainchild of Rezene Ayalew, Ethiopian entrepreneur and founder of Tsemex Global Enterprise. Having tried his hand – successfully – at a number of business ventures, from importing pasta to building water tanks and pipes; Ayalew decided to take a gamble on the hospitality industry.

“This hotel is like a dream for me”, explains Ayalew. “Addis Ababa has grown a lot in the past fifteen years, and you have more investors and tourists coming to the city. We have local hotels, but many of them don’t meet international standards for health, safety and business facilities. By developing the Crowne Plaza hotel, I can participate in the growth and development of my country.”

To help him navigate the hotel industry, Ayalew hired Calibra Hospitality Consultancy, a firm run by two Ethiopian partners, ex-Hilton employees, who advise local investors on how to construct and operate international hotel chains.

Calibra Consulting has also taken inspiration from their involvement in the project to explore a new business idea.

“Recruiting and training hotel staff is a real challenge in Ethiopia as we don’t have world class hospitality schools in the country. At Calibra, as we sign on more local clients who are looking to work with international brands, we think it would be a good venture to open a hospitality school in the country”, explains Neway Berhanu, Managing Director at Calibra.

The multiplier effect of hotels on local economies is not unusual. “IFC has invested in 250 hotels globally, and witnessed how they impact the economy by creating jobs, generating tax revenues for governments and attracting business and tourists”, says Oumar Seydi from IFC. “In Africa, four- and five-star hotels create between 1.5 to 3 jobs for each hotel room.”

 

Homegrown Enterprise

A firm believer that charity starts at home, Ayalew is also doing his part to ensure that the Crowne Plaza will benefit not only international guests but Ethiopians as well.

He hails from the remote village of Dela in Ethiopia’s Tigray region, born into a civil servant’s family, and has never forgotten his roots. One could even say that it has taken the village to raise this hotel. Ayalew’s wife, Arsema, also an entrepreneur from Tigray, manages Raycon Construction, Tsemex Group’s construction arm, which is building the hotel. The site’s chief engineer is a diligent young woman, Genet, who has become a close friend of the Ayalews.

The Ayalews also fund scholarships for students from rural regions of Ethiopia, enabling them to study at the University of Addis Ababa. Many of the students are then hired by Tsemex Group.

When probed, Ayalew will speak about his fondest community project – a school that enrols over 3000 girls in Tigray, funded by Tsemex. “In Tigray, there are very few high schools for girls, most of them have to stop studies after elementary school. I saw this as an opportunity to give back to my community, so we started the school in 2003, not as a business, but out of love for my country and for where I was brought up.”

 

Published in May 2016

Written by Neha Sud, IFC