Hotel Association asks PM for tax, interest exemption

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Low occupancy rate affecting hospitality industry

The Addis Abeba Hotel Owners’ Association has written a letter to the Prime Minister’s office and the Ministry of Culture and Tourism asking that all hotels in Addis be exempt from profit tax and loan interest this fiscal year. They claim that hotels have experienced a low occupancy rate due to the recent protests which has caused their income to drop.

Addis has seen average hotel occupancy rates fall from 20 to 40 percent in the first six months of this fiscal year, according to some hotel reports. The tourism ministry said that income from the sector had fallen by more than USD seven million over the last quarter alone.

Previously the Ethiopian government compensated companies when they lost property from protests.  Benyam Asrat president of the Addis Abeba Hotel Owners’ Association told Capital that they are not asking to be compensated for loss of income from the decrease in tourism like manufacturing companies did, but that not having to pay profit tax or loan interest this year will help them recover.

The association is waiting for a response from the PM. Benyam added that the hotel market has been improving over the last six weeks.

“Now things are getting better, there have been several international events including the African Union Summit held in the city but we need all stakeholders to help us improve the market. Hotel owners are also asking the government to promote the city to increase the number of tourists.”

Zenawi Mesfin General Manager of Intercontinental Addis Hotel said “in our hotels occupancy rate has dropped by 20 percent and there are less customers than before. Now Ethiopia is peaceful but many foreigners outside the country think we are still having trouble and they do not want to come here and I think it is the responsibility of the media, private sector and embassies to get the word out that Ethiopia is peaceful.”

But according to Solomon Tadesse, CEO of the newly established Ethiopian Tourism Organization, hotels are charging way more than they should for their rooms.

“It is obvious that the recent political scenario is one reason but hotels are charging up to USD 600 when there is a high number of visitors and these exaggerated prices prevent people from being able to afford using hotels,” he said.

Kumneger Teketel, managing director of Ozzie Business and Hospitality Group suggested that there should be a conventional center to increase the occupancy level of hotels.

“We have around 140 hotels in the city and more will come in the future. The big problem is that there is not a conventional center here like Rwanda and South Africa have. This place conducts research and provides solutions for hotels. In Ethiopia the supply is increasing more than the demand which is the reason for low occupancy,” he said.