The business of hospitality in Addis Abeba is booming, and many residents are trying to cash in by converting small homes and villas into guest houses.
Many are individually owned and already operating as small pensions or boarding houses that are upgrading to a status of a guest house certified by the Ministry of Culture and Tourism.
Such an establishment is Genet Guest House, a four-storey building located around Haya Hulet area which was once a pension. Six years ago the establishment was upgraded to a guesthouse at a cost of 170,000 Br.
“We upgraded all our service and the quality of our furniture,” said Eden Genet, the manager, adding that being registered as a guest house service brings in more business.
“Unlike pensions, we provide a silent environment, privacy and wider services, like breakfast,” she said.
A room at Genet costs around 400 Br a night for Ethiopian customers. Foreign guests, who generally stay for longer periods, pay 25 to 35 dollars a night.
“I used to get around 130,000 to 140,000 Br per month, the revenue can go higher if it is a holiday season,” Eden said.
Guest house certifications are provided by the ministry office at the district level. According the head of the Lideta District Administration, Andualem Getahun, there is a set of standards for both residences and pensions looking to upgrade into guesthouses.
A guest house is expected to have at least five bed rooms, a guest room or reception room, bathroom, shower, kitchen and other services such as security and housekeepers. The manager of a guest house is required to have at least three years work experience if they are certificate holders, or two years of experience if they have a diploma.
There is two-step certification process. First, the required documents are presented to the district administration. These include current capital, pin number, the map of their place and the facilities they can provide if given the permission to begin operations. The second step is a case team visit to verify whether all the requirements have been fulfilled.
“There are two levels of certification that are awarded,” says Andualem. “If facilities lack things like toilets or showers, they will be given a temporary certification to function as a guest house for a year. This grace period is provided for the owners to build or add facilities. If they provide all the services required, they can have permanent certification immediately.”
Tourism is an important lifeline for establishments like Eden’s. Out of about 910,000 visitors to Ethiopia in the last fiscal year, around 316,000 were recreational visitors.
The largest wave of tourists usually arrives in October, November and December. Ethiopia earned 3.4 billion dollars from 910,128 visitors in 2015/16.
The target for the second part of the Growth and Transformation Plan is to generate six billion birr from tourism.
However, lately there has been a dip in tourist numbers and guesthouses are feeling it acutely.
“It is hard to even earn 70,000 per month nowadays,” says Eden.
She believes tourists are afraid to travel to Ethiopia due to the state of emergency. However, she does hope that the situation levels out when the state of emergency is lifted.
Currently, Ethiopia ranks eighth on the continent in terms of hotel development with 1,000 rooms, with 84pc of hotel development in the pipeline, while Egypt ranks first on the continent, with 18 international brand hotels.
Another pension in the Haya Hulet area used to be a residence, before the owners decided to transform it into a business.
“The owners built five bedrooms in their compound and established the pension business,” says Tekalene Berku, the manager.
Business is at its best on the weekends, according to Tekalene. All the rooms can be fully booked. Charges vary from 350 Br a night to 450 Br a night, depending on whether or not the room comes with its own shower. Most customers are local, says Tekalene. The majority of the guests are people who have stayed late at bars and clubs. Tewodros Hailemariam is looking to rent out his furnished one bed room villa, for 9,000 Br. He lived in the house for six months before deciding to rent it out.
“I had the idea when I was trying to work out a business plan that could be profitable,” said Tewodros. “I decided to furnish my villa to increase its value. Unfurnished, the renting price would not be more than 4,000 Br”.
“In our country, the most expensive need to my knowledge is shelter, so it is a business venture that should be explored,” he explained.
A house broker in Addis Abeba, Tadesse Hailu who has been in the business for six years, agrees.
“Many people are changing their homes into guest houses. The practice has flourished over the last two years,” he said.
Taddesse added that since buying a home is very expensive, people tend to rent. Some customers are searching for a quiet space with less people around, in this case, they mostly prefer the villa guest houses. Others prefer apartments for their security, and proximity to other people.
Tadesse claims that the most expensive villas and apartments are located around Bole. The highest price for a two bedroom apartment in Bole district ranges from 2,000 dollar to 2,300 dollar, while prices can get as low as 1,000 dollar at some locations. Villas cost from 35,000 Br to 112,500 Br.
Desta Tessema, a student at Addis Abeba University, spends most of his Sunday nights in pensions. He prefers to spend less than pay more for a better comfort.
“Even though some guest houses charge the same as pensions, most are expensive,” Desta said.
He usually pays around 250 to 300 Br. “If I had the capacity to do so, I would prefer guest houses since they are more comfortable, neat and provide additional services,” he added.
Helena Kifle, a business owner, seems to favour guest houses more than pensions, as they tend to be more secure and provide more services. “They charge a fair amount of money compared to the service they provide,” she said.
One of the factors that are making the business more attractive to new players and customers alike are online services such as Betoch.com, which is an Ethiopia-based listing site that is used as a platform to advertise rental homes of all types.
Tewodros is one of the users of this site. Since he started looking for customers, he has used only online advertising.
“It saves time since I don’t have to negotiate with a broker. And unlike broker services, it is free,” Tewdros said.
Another customer that favours online listings is Henok Abebe.
He built his villa three years ago, but since he doesn’t permanently reside in Ethiopia, he rents his five bedroom villa for 30,000 Br per month.
“The online listings give you the opportunity to reach a lot of customers at once. It saves time and it’s free, Henok said.
However, others find traditional customer attraction methods work the best.
“Even though I pay the for online listings, the taxi drivers in the Bole area that I make deals with bring me more customers,” Eden said.
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