It has been almost 15 years since the first Starwood Hotels & Resorts branded hotel – Sheraton Addis – was opened in Ethiopia. The group were satisfied with their lone hotel in the country but have recently changed their mind and have decided to open a second.
Four Points by Sheraton is a Starwood hotel brand targeted towards business travelers and small conventions is set to open in Ethiopia within three years. On Tuesday, Alem Fitsum, hotel owner, announced a deal with Starwood to build a 27-storey hotel with 500 rooms at an investment of 2.6 billion birr. Capital’s Eskedar Kifle spoke to Alem about the hotel project and the local hospitality sector.
Capital: Tell us about your businesses.
Alem Fitsum: Alem Genet Trade and Industry, is an umbrella company and under it are a paper factory, a metal sheet and PBC factories. In addition to manufacturing, we are now venturing into the hotel industry. It has been nearly 15 years since we started working in the manufacturing sector.
Capital: What made you decide to go into the hotel business?
Alem: The hotel industry is very young; a lot of room is there for new entrants. We still have only a handful of internationally branded hotels. We discovered this gap and wanted to go into the sector.
Capital: Tell us about your hotel project, Four Points by Sheraton.
Alem: Four Points by Sheraton will be one of the five star chains under the Starwood Group. The hotel we are constructing will have 500 rooms and will fulfill all the requirements of a five star hotel: multipurpose halls, meeting rooms, four restaurants and bars, and a swimming pool, to mention a few.
Capital: How much are you investing on it, and where will it be located?
Alem: The investment amounts to USD 120 million, which amounts to 2.6 billion birr. It is located on the main Bole Road next to Flamingo Restaurant.
Capital: During the Africa Hotel Investment Forum, held here in September, representatives of Starwood had announced different projects in other African countries but they didn’t have a solid plan in Ethiopia. How did you succeed in getting them to reconsider?
Alem: Starwood is a very big player in the hotel industry in the world and carries well-known brands under it. It operates in over a 100 countries with well over one million hotel rooms. Nothing was announced about this specific hotel project because it was under discussion. The negotiation took almost two years; Starwood didn’t have a lot of interest in another hotel in Addis Ababa, but now they have obviously changed their mind.
Capital: How far has the construction gone?
Alem: Right now, the foundation is completed and the ground floor is in progress. We believe it will take two to three years for everything to be finished. The 27-storey hotel is being built on 3,000 square meter of leased land, but we are planning to annex another 2,500 square meter area for parking. We won’t have an underground parking lot, instead we’ll construct another building for that purpose.
Capital: Recently, hotels were given star ratings and some hotel owners were not satisfied with the ratings they were given. What are your thoughts on that, with respect to the hotel you are building?
Alem: Our hotel is at the early stages of construction, which is an advantage. It is deemed to become an international brand hotel with international design and standard. It will of course fulfill the brand’s entire standards and it will also fulfill the local standard as well.
For example, some hotels may lack emergency exits, or might be short of elevators. Our hotel will have four different emergency exits and will have more than ten elevators. We work putting into consideration all of the criteria and we are sure to fulfill them.
Capital: Is the hotel business in Ethiopia profitable?
Alem: Yes, it is profitable. It is because the sector is still young and there is shortage of hotels. Even looking at the tourism sector, it is still untapped. One reason for that is again the small number of hotels, especially branded ones.
So the demand is huge, which means the market is profitable. And we believe that as more hotels are built, the tourism sector will also grow and that will in return become a driving force for more investment in the hotel sector.
Capital: What about availability of skilled workforce? How do plan to tackle that?
Alem: One of the causes for lack of skilled manpower is the fact that the country doesn’t have many international standard hotels and resorts or other world-class hospitality centers. When these branded establishments come up, they also come along with training opportunities and training facilities; they come with the capacity.
So I believe the more international branded establishments we have, the better skilled human resources will be. There will be more training centers, colleges and universities.
Capital: Ernest and Young facilitated the deal for your hotel project. What exactly was the role the company played?
Alem: Ernest and Young facilitated everything from start to finish; they were the ones who played a significante role in getting Starwood to change their mind because as said earlier, they weren’t really interested in another hotel here.