Yilkal Kefyalew, 53, returned from Canberra, Australia, five years ago. He invested in the guesthouse business when the hospitality industry was booming in Addis Abeba and across the regional states. Yilkal started off renting 14 rooms on two floors of a seven-storey building on Gabon Street, behind Nazra Hotel (from Olympia to Meskel Flower).
It was a promising venture with instant success.
Four years on, success was proven to be nothing but elusive. Yilkal's good fortune changed – along with the rest of the world – when COVID-19 began to wreak havoc on the global economy in early 2020. His business was left wanting for guests despite the offering of substantial discounts. Yilkal could not boost the occupancy rate. If it were not for people who ran away from the civil war in Yemen right after COVID-19 hit, Yilkal would have been out of business.
But they too left searching for cheaper lodgings.
Last May, Yilkal relocated his business to a building he erected a few metres away from where the guesthouse was initially started. Construction was still in progress when he moved, with only two floors completed. Five rooms were open for business. By October, he had 20 rooms spread across five floors. Nevertheless, the occupancy rate remained skimpy.
“I was beginning to regret my decision,” said Yilkal.
He has put up over three million Birr on construction, an investment added to the 2.7 million Br he paid to acquire the plot while still in Australia.
“The cost would have been lower had I have been supervising the construction work myself,” he told Fortune.
In recent years, economic slowdown, travel restrictions and internal conflict had plunged occupancy rates in the hospitality industry to all-time lows of less than 10pc. Many in the industry, like Yilkal, were left to pick up the pieces to cover payroll and operational costs.
Tenants are paying as much as 3,000 dollars for a three-bedroom furnished apartment in the Bole and Cazanchis areas depending on the flats' conditions.
Last month, Yilkal's luck began to turn around when the administration of Prime Minister Abiy Ahmed (PhD) called on Ethiopians abroad to visit for the holidays. One million of them. Administration officials christened the journey back home, "the Great Ethiopian Homecoming."
Yilkal was one of those in the hospitality industry who were delighted with the news of the great homecoming. All his rooms were occupied last week.
His story illustrates the cascade of travellers that has revived the hospitality industry devastated by COVID-19. Homeowners in the capital try to cash in by converting their residences into guesthouses. Perhaps they were responding to a call earlier this month by the city's Tourism, Arts & Culture Bureau for landlords to set fair rent prices. Its officials requested that homeowners making residences available as guesthouses register with their respective districts.
Yilkal says he does not need to register. He would rather count on his personal connections to attract guests.
“Rates are much higher now that almost everything is booked or occupied,” said Yilkal.
The experience of Abel Solomon attests to this. He had spent the past few weeks searching for a one-bedroom furnished apartment for a friend who was flying in from the US for a one-month stay. Abel found suitable lodgings in the Olympia area for 25,000 Br a month two weeks ago. However, when he went back to settle the payment a few days later, he found that the rate had spiked.
“My friend can’t abandon his plan and return," said Abel. "We had to deal with it.”
The unpredictable rent has been a source of concern for Abel as he still needs to find lodgings for other friends and family members flying in from Switzerland and the US.
It is a sunny day for others, such as Tesfaye, a broker who requested his last name be withheld. He works mostly around the Gerji area and has recently rented out around 10 furnished flats in the Gerji condominium compound for between 15,000 Br and 30,000 Br a month.
“Whether it was rented out as a guesthouse or a regular residence makes little difference,” he said.
Agents like Tesfaye get commissions from the landlord and tenant, up to 20pc of the amount paid. The homecoming is a huge business opportunity for him and others in the brokerage business. They put pressure on property owners; several buildings in the neighbourhood have been converted into guesthouses. The fees go for as high as 50,000 Br a month mainly for better furnishing and back up on utilities.
“Demand is through the roof," Tesfaye told Fortune.
He can make up to 30,000 Br in commissions for renting out a single apartment for a couple of months, anticipating more are on their way home.
The hospitality and real estate industries have begun seeing signs of recovery following the arrival of the diaspora community. No accurate data is yet available on how many of the "million" members of the Diaspora expected have arrived. But the anticipation has led the City Administration to open an office, dubbed Addis Diaspora Hall, catering to the visitors' needs.
Occupancy rates have shot up, signalling a slow return to pre-pandemic levels.
When Yegna Home, an online booking platform, was launched a few months ago, the developers were mindful of a new trend among guests visiting Addis Abeba – furnished guesthouses. They had also experienced it themselves when they travelled to the capital from abroad.
Yohannes Tedla, a co-founder, saw a boom in the guesthouse business when developing the platform last year. Incorporated with five million Birr in capital by Yohannes and his partner Melaku Tekola, Yegna Home embarked in the hospitality industry last August after six months of planning and development. Booking requests trickled in slowly after the platform was launched, around four a day. Half of these were unsuccessful.
Things have been picking up. The platform offers bookings at hotels, apartments and villas. Close to 70pc of the requests coming in are for furnished lodgings.
“Demand for furnished guesthouses or apartments is a new trend," said Melaku.
A quick look at rent across the capital attests to Melaku's observation.
A three-bedroom furnished apartment in the Bole or Cazanchis areas goes for as much as 3,000 dollars a month, while rent for a single room could hit 1,000 dollars.
“The advantage is that the guests share costs and live together in different rooms,” Melaku said.
Yegna Home has been receiving many requests from property owners who would like to see their properties registered on the app as furnished guesthouses.
Kumneger Teketel is a managing director of Ozzie Hospitality & Management Consultancy. He advised 21 international franchises in Ethiopia, including Radisson Blu, Mövenpick Hotels & Resorts, Golden Tulip Adama, Bon Hotel Addis Abeba and Royal Tulip. He noted that guesthouses in the market play a vital role in filling gaps in options for accommodations. However, he cautions that it may not be the case for long if they are not regulated.
“Rules and regulations should be implemented to monitor the rate, safety, and security standards to safeguard the industry and encourage loftier investments," said Kumneger.
With business picking up again, the hospitality industry seems to be on the road back to normalcy. Yilkal and others in the business hope to see the revival continue. However, only time will tell whether the Great Ethiopian Homecoming will kickstart an industry that has been on the verge of collapse for nearly two years.
PUBLISHED ON Jan 01,2022 [ VOL 22 , NO 1131]
Commentaries | Jul 24,2021
Fortune News | Jun 26,2021
Radar | Mar 02,2019
Commentaries | Mar 16,2019
Radar | Jun 12,2021
Agenda | Oct 26,2019
Fortune News | Nov 02,2019
My Opinion | Sep 17,2022
View From Arada | Jul 20,2019
Commentaries | Feb 12,2022
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