The recent suspension of project loans from the Commercial Bank of Ethiopia, the very slow process of the Development Bank in approving loans and the inability of private banks to give out big loans to international hotels has slowed the construction of 30 international hotels in Addis Ababa and other area of the country.
Mövenpick Hotel, Park Inn by Radisson Blu, Novotel Addis Ababa, Four Points by Sheraton and Golden Tulip Hotel are among the hotels that almost finished the skeleton works of the hotels but waiting loan for the finishing works.
Seventy percent of the total cost is what goes into a hotel known as finishing work, this includes buying furniture, installing machines and fixing up the inside of the hotel.
A month ago CBE which gave loans at 11 percent interest stopped giving loans for non-export projects which excluded all locally consumed items, goods and foods and service projects.
The bank came to this decision after the sever hard currency shortage.
The hotels owners who are the first victims of the loan suspension said that the bank has made a mistake because it doesn’t see the value of hotels they play in obtaining hard currency.
Binyam Bisrat President of the Addis Ababa Hotel Owners’ Association told Capital that the government should respond to the hotels’ loan requests because they create jobs and provide forex.
“There is a general misconception among the policy makers; they think that only manufacturing earns big dollars for us. What about the hotels? Who provide beds, food, beverages, and other services for tourists who come with hard currency and underestimating the sector and denying loans is not fair at all.”
Kumneger Teketel, Founder and Managing Director of Ozzie Business and Hospitality Group said the absence of loans will both affect the country’s hard currency and create problems for the owners.
“The most important part of this problem is it makes developers upset, and this will lead for other investors to back out from other potential investments’’
“The solutions that I would like to give are: give priority to projects by considering the potential of generating hard
currency, establishing investment financial institutions or banks and allowing higher international hotels and resorts
to access international financing by providing them a guarantee with strict procedures to help continue the momentum.’’
In the past five years on average two hotels have been constructed in the city every month. Twenty years ago there were less than 10 standard hotels but now there are over 140 hotels and many more international and local brand hotels are in the pipeline.
Major criticisms in of Ethiopia’s hospitality industry include low skilled human resources, unaffordable price of rooms for local residents and lack of parking. (Capital Ethiopia)