Intercontinental, Louvre Hotel Groups Venture to Ethiopia

One comes in controversy over ‘shared’ brand which could make it lose intended name

Tsemex Hotels & Business Plc, the World Bank’s International Finance Corporation (IFC) and Intercontinental Hotels Group (IHG) are expected to sign agreements for a loan of 9.5 million dollars to introduce to Ethiopia an Intercontinental Hotels group brand called Crowne Plazza. The initiative is already facing a court battle over its name by Crown Hotel, an Ethiopian hotel that has already been in business in Addis Abeba for years.

However, the IHG website says that it has already signed a management agreement with Tsemex, on a September 9, 2014 press release, without indicating where and when the agreement took place.

The Louvre Hotel Groups agreement with Aschalew Belay Hotel Projects, owner of a six-story building, was expected to be signed on Saturday, when Fortune went to print. The agreement between Tsemex Global and IFC involves a loan agreement for 9.5 million dollars, which Tsemex will use for the completion of its hotel project in Lideta District, at a total cost of 37 million dollars, according to Tsemex. The hotel will have 210 rooms, conference facilities and restaurants. This agreement is expected to be signed by Oumar Seydi, IFC director for Eastern and Southern Africa, and Rezene Ayalew, managing director of Tsemex.

Tsemex Hotels and Tsemex Global, established in 2001, are both owned by Rezene and his children. Tsemex Global is in the business of importing water-related materials, such as pipes, fittings, hand pumps, waste water treatment equipment and mobile water reservoirs.

The agreement to be signed involves an eight-storey building with two basements in Lideta District at the condominium site near Balcha Hospital.

The other agreement to be signed with IHG, however, is already being legally challenged by Zewditu Mesfin, owner of Crown Hotel.  Tsemex Hotels took the brand name Crowne Plazza Addis for the international hotel from the Ethiopian Intellectual Property Office (EIPO) on September 20, 2013. But months earlier, on February 25, 2013, the EIPO had given Zewditu license to the brand name Crown. She contacted the Office asking it to reject the new brand, Crowne Plazza Addis.

On May 5, 2014, the EIPO rejected the claim of Zewditu, saying both Crowne Plazza and Crown Hotel can have their own brand names. Zewditu appealed to the Federal High Court on June 2014, claiming that the EIPO decision in the favour of Tsemex displeased her. On September 17, 2014, following her claim, the Federal High Court banned the decision of the EIPO until the oral proceedings took place on October 22, 2014.

Zewditu Mesfine Hagos Hotel was registered by the Addis Abeba City Administration Investment Agency as a four-star hotel in 2003, but the hotel got the current entity Crown Hotel on February 22, 2013.

A press release sent to Fortune by IFC from Washington, says that IHG “will manage the Addis Abeba hotel, transferring its global brand and expertise to local staff and suppliers”.

The five-star-to-be hotel, which rests on 2,260sqm, will have 210 rooms, nine meeting halls, three restaurants and three bars along with a gymnasium, steam and swimming pool. The construction of the Hotel has reached to 70pc.

Crowne Plazza could become the sixth international branded hotel in Ethiopia, after the Hilton, Sheraton, Radison Blu, Marriott and Golden Tulip, the last of which was expected the management agreement  to be signed yesterday, Saturday, September 27, 2014, between Aschalew Belay Hotel Projects and the Louvre Hotel Group.

The Golden Tulip Hotel will be housed in a six-storey building behind the Kenenisa Hotel on Cameroun St. The building, which has been under construction since 2008, rests on a 1,500sqm plot. It has 90 rooms, and will have two bars, two restaurants, one big conference hall and two small conference halls.

The Louvre Hotel Group, which will manage the hotel, will have a 20pc share from the net profit of the business, according to Aschalew. The Group’s website claims that it manages 1,200 hotels in 43 countries around the world. The agreement between the two sides will be signed by Ashalew Belay and Alan Sebah, Chief Operating Officer of Golden Tulip Hotels.

The IFC’s press release quotes their own study on Africa, which found that each hotel room created three direct jobs. The 210-room hotel it is investing in will employ 300 local staff. IFC’s global hotel investment since 1956 amounts to 2.5 billion dollars. Exclusively focusing on the private sector, Ethiopia was its largest beneficiary in Eastern Africa in 2014 with total financing of 228 million dollars.


FORTUNE STAFF WIRTER (Aster Mengesha, Fortune staff writer, has contributed to this story.)

Published on September 28, 2014 [ Vol 15 ,No 752]



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