Fortune News | Jul 18,2021
It is a tiny dwelling made of corrugated iron near the Gerji Mebrat Hail area, Bole District. For Aster Tsegaye, a 30-year-old woman, it is home.
Working as a housekeeper in one of the hotels located on Haile Gebresellasie (Asmara) Road, Aster has been content as the pay put a roof over her head and enabled her to support extended family, including ageing parents. Like all the 107 employees at the Hotel, meals were provided at work, helping her cut down on costs.
“I consider the Hotel home,” says Aster, speaking of Holiday Hotel (no relations with the international franchise) as a source of her income for the past four years.
First opened in 1994, the Holiday Hotel Plc was incorporated with equity contributions from eight shareholders. A decade later, it was recapitalised with a 5.9 million Br, going through an expansion to upgrade to 84 rooms.
Aster was petrified to hear the city authorities had shut down the Hotel two weeks ago, unable to grasp the prospect of losing an income that had dried up abruptly.
The weeks since the Hotel's closure have been challenging; she had to rely on those close to her to meet basic needs.
“My neighbour brought me bread,” she said, wearing on her face an expression of gratitude.
So are all the employees hired by the Hotel out of their jobs.
The Holiday was one of a series of establishments authorities at the City Administration forced to close over the past few weeks. They claim these hotels were found operating with expired licenses, breached COVID-19 protocols and failed to keep accurate employee records, among other things. In the case of Holiday, the management had been issued a day's notice, considering it enough to vacate guests and move perishable goods.
It was a prescheduled wedding party set to take place in the Hotel's halls over the weekend that convinced a task force deployed by the Woreda 07 Trade Bureau of Yeka District to extend the deadline by a couple of days. The Hotel closed its doors on July 19, 2021.
City officials have also shut down Axum, located a few meters down the same road, and Kaleb and Harmony hotels farther south-east; a move that created turmoil in the service industry. Bole District officials closed 90 hotels, restaurants, and bars, and those in the Yeka District have shut down 196 businesses.
There were multiple reasons local authorities attributed for the closures: sound pollution, non-compliance with food safety rules, tax fraud, and "disrupting peace and security" are some of them, Tesfaye Shiferaw, Yeka District communications director, told Fortune.
Several decades-old restaurants and hotels located in Piassa were shuttered about a month ago on allegations of breaking the law.
"They'd been given a series of warnings," he said. "Businesses are inspected and closed regularly, and this is different only because it was done intensively."
He does not see the District as responsible for the loss of jobs. The businesses ought to pay severance packages to their workers should they remain closed for good, says Tesfaye.
Officials at the District are reluctant to reopen any of the businesses shut down for now; they are working to close more.
The service industry, an economic powerhouse, is estimated to employ two million people and makes up 34pc of the GDP. In a sector with extensive labour and trade links, shutting down a business has consequences that go far past proprietors. Employees such as Aster are the foremost to be affected, especially in a country with a high unemployment rate. Addis Abeba's unemployment rate stood at 19.3pc last year, two-thirds of which is comprised of women like Aster.
"I went to employment agencies and brokers spread out all over the city," Aster told Fortune. "My efforts to get a job have been in vain."
The hospitality industry's contributions to the economy usually do not go unnoticed. From priority in land provision and loan services to COVID-19 bailouts, the industry can hardly complain of a lack of attention from the government. When the COVID-19 pandemic hit in March last year, the service sector faced damaging disruptions. As travel, meetings and gatherings were restricted, hotel occupancy rates dropped across the board below 10pc.
A few hotels sustained themselves by letting employees go, while others took out loans. Some survived by engaging in COVID-19 management works.
With pleas from hotels and industry lobby groups representing 1,400 hotels, the government arranged for soft loans to see them through the tough days. The first round of the loans availed 3.3 billion Br; the financing lasted for four months beginning June 30, 2020, with five per cent interest to be paid within six months. The loan was expected to go to covering operational costs and payroll. The second round of loans was issued in December 2020.
Having received a permit from the Ethiopian Public Health Institute, Holiday Hotel persevered by providing quarantine services and managed to push through the worst of the pandemic.
The Hotel was picked by the authorities to serve as an isolation centre, a privilege given to some hotels in the city to offset the impacts of the outbreak on the hospitality industry and out of necessity for quarantine spaces.
"The first two months were the hardest," Fekadu Abraham remembered. "We almost had 100pc occupancy after we were selected to accommodate travellers needing to quarantine."
It appears the hospitality industry is still not short on government attention – though just not in the same, salubrious way. The crackdown seems to be happening across the capital.
In Gulele District, several businesses and bars accused of "disturbing the area" were closed, 60 individuals were accused of causing the "public disturbance" and subsequently arrested. An investigation is underway, according to the District's communications office.
Among the many hotels closed by officials of Bole District include starred hotels such as Diamond and Addissinia, accused of playing music "inciting violence and belittling the National Defense Force."
The closures have left over 250 people without jobs. Daniel Mekonnen, the owner of Diamond Hotel, was arrested on allegations of supporting the Tigray People's Liberation Front (TPLF), a ruling party of the Tigray Regional State for three decades but recently designated a terrorist organisation by parliament. Daniel was released a week after.
Hotel owners deny the allegations brought against their establishments. Holiday Hotel has a renewed license, a piece of evidence already presented to the authorities; its staff have received training and certification from the Public Health Institute to operate as a COVID-19 quarantine centre, and it also has a certificate for fulfilling employee file compilation requirements by the Ministry of Labour & Social Affairs.
No formal response has been issued from the District office besides being told the closure was enforced to "preserve national security."
Nonetheless, Fekadu has submitted letters of appeal to the Addis Abeba Police Commission and the City Administration.
The closure of the Hotel has not only impacted employees but suppliers whose businesses depended on the establishments. Holiday receives poultry, dairy and meat products from various suppliers, who have lost out on a significant source of income following the shutdown.
The economic loss could be tremendous. Categorised as a large taxpayer, Holiday Hotel pays the state half a million Birr in taxes every three months. It generates an estimated three million Birr in monthly turnover. Remaining closed, the Hotel loses up to 150,000 Br in daily revenues. Enjoying a daily average occupancy rate of above 70pc, Holiday charges between 1,400 Br to 3,500 Br for a room. It is not the lone property bleeding from the closure.
Along with this property, the authorities have closed nine star-rated hotels, and their managers have requested support from the Hotels Association, which they hope to dispense letters to the corresponding federal authorities.
A family business opened three years ago with 50 rooms, Diamond Hotel's troubles began a month ago when its ground-floor lounge was closed without prior notice. The local authorities claimes the establishment had broken the law. A week later, the Hotel's owner was arrested, and Diamond was shut down, forcing 30 guests to vacate unceremoniously.
There was no evidence provided for the closure of the Hotel, nor the owner's arrest, according to Nebiyou Mekonnen, a brother of Daniel. Enjoying an occupancy rate of 60pc before the closure and employing 160 people, Diamond Hotel loses up to six million Birr in monthly turnover.
The management at Diamond have pleaded before the Bole District Office and the Ministry of Culture & Tourism, with plans to bring the matter to the Ministry of Revenues. It has also petitioned the Ethiopian Hotels Association for an inquiry into the allegations. So far, however, no authority has come forth to tell the management what the Hotel was found guilty of.
"We don't know who is in charge," says Nebiyou.
Filimon Gashaw, head of Woreda 03 Trade bureau in the Bole District, says around half of the businesses will be allowed to reopen soon.
Businesses in Arada District were not spared either. Several closed hotels and restaurants can be seen around Taitu Hotel on Dejach Jote Street. Abyssinia, Florida, and Continental hotels, among several others, have been closed for about a month, most of them without explanations why. Florida Hotel, which has been operating for over three decades, was accused of playing loud music during late-night hours.
"The authorities shut the hotel around 8pm even though we were cautioned not to play loud music past 11pm," said Gebresilassie Tinse'o, Florida's manager.
The closure has left 40 of the Hotel's employees without jobs, and the Manager disclosed that they have yet to hear back from officials on the matter.
Arada District officials declined to comment, stating that investigations are underway.
In the wake of the shutdowns, the hotels and authorities from the City Administration held a consultative meeting where they discussed what had transpired before the closings. The local authorities attributed their moves to the federal government's decision to "prioritise national security."
It is an official sentiment echoed by the political leadership. According to Solomon Haile, sectoral division director of Prosperity Party for Addis Abeba, business owners should worry about "national security" concerns as much they worry about the closure of their businesses.
However, according to those who attended the discussion, the authorities in attendance have conceded that the properties need to reopen.
Fekadu, the manager of Holiday, hopes to see hotels resume operations while investigations are carried out, a decision which may help Aster get back her job.
PUBLISHED ON Jul 31,2021 [ VOL 22 , NO 1109]
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