Ethiopia Hotel up for sale

September 30th, 2008 | by addis portal |

By Groum Abate

CapitalEthiopia Hotels Enterprise, located on Ras Abebe Aregay Avenue in front of the Ministry of Defense has been put up for auction by the Privatization and Public Enterprises Supervising Agency (PPESA), for a joint venture investment.
The hotel that began offering services in 1963 was established with 2.8 million birr capital.

According to the notice published in the Amharic daily Addis Zemen on August 2, 2008, PPESA invited prospective foreign and local companies to express their interest to enter into a contract for 16 public enterprises, including Ethiopia Hotels Enterprise by concluding contracts with the Agency.

PPESA invited interested parties to submit their business plan detailed with production and sales plans, system development, training and skills transfer, financial projections, required investment and financing plan and a marketing strategy, among others.
The submission time of business plans would end on Monday September 29, 2008. So far 10 companies have shown interest.

Ethiopia Hotel is one of the European standard Three Star hotels found in Addis Ababa.
The five storey building located in the center of the city, was controlled by Society Hotelier De Tourism Share Company until 1967. In 1967 the hotel was nationalized when the Derg regime took control.

After nationalization in 1968, nine medium hotels and one restaurant was added to the hotel, and was formed through the control of National Hotels Corporation up to December 1991.
In 1991, Ethiopia Hotels Enterprise was re-established by the government with a working capital of 7.5 million birr and paid up capital of 5.5 million birr.
From its nine branches, the hotel currently manages two hotels and one restaurant in Addis Ababa, after seven of the hotel chains located in regional states were privatized.
The hotel employs 306 staff and had a market share of 7.91% in the year 1997 E.C, according to the information released by the Agency.

Last year, the hotel managed to secure a 4.1 million birr profit before tax.
Currently, hotels that get the most coverage of historical and other popular tourist sites are state owned. The Ghion, Ras, Wabe Shebelle, Ethiopia and Filuha hotels enterprises cover a wide area of the country, with the eastern part being covered by Ras Hotels, the western by Ethiopia Hotels, and the southern areas by the Wabe Shebelle Hotels chain.
The agency has also put up Kombolcha Textile S.C. and Anbessa Shoe S.C. for lease or joint venture among other listed companies that include coffee plantations and chemical processors.

PPESA recently announced that it has privatized companies worth over 560 million birr in the last budget year.

The agency also plans to privatize around 26 companies in the current budget year.
The Ethiopian government, in line with its policy of a free market economy, started privatization of public enterprises since 1995. In this respect, for the last ten years the tenders of 308 enterprises and their branches has been floated. Among these enterprises 214 (69.5%) have been transferred to the private sector. The total sales revenue is 3.138 billion birr out of which 2.57 billion is in foreign exchange. The agency has a strategy to privatize 80 companies in the next five years, according to available information.

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