Ethiopian Airlines, the national carrier, moves further to conquer the hotel industry through the construction of a 637-key five-star hotel in the capital. The hotel costs the Company about 2.5 billion Br.
The hotel will also have a duty-free shop, cultural shop, an aviation museum and parking lots built on a 22,410sqm plot of land.
The Airline announced a tender to hire a consultant for the second phase project of incorporating a five-star hotel and duty-free mall on the plot located in front of the Millennium Hall. Its other hotel, which is already under construction, is also situated there.
The winning company will deal with the design review and approval, site supervision and contract administration of the Hotel. Construction will begin this fiscal year.
The completion of the new hotel's design and construction is expected within two and half years after awarding the contract. Along with the ongoing phase one hotel, the total number of rooms to be operated by the Airlines will reach 1,110. The two hotels will lie on a combined 42,410sqm plot of land.
According to international brand hotel's estimate for Ethiopia, it costs 150,000 dollars to construct a room with a five-star standard. Thus, the total cost for the new project could reach to 95.5 million dollars.
"Ethiopian will be availing a sufficient number of hotel rooms with an acceptable international standard to create a conducive environment for tourists besides accommodating passengers during transits, layovers or technical delays," the bidding document of the Company reads, explaining the objective of the construction of the new hotel.
Its target customer base is not limited to passengers only, but will also include tourists.
"It plans to provide rooms for customers, and tourists while they stay in town for business, meetings, and conferences," adds the bidding document.
The bidders are expected to oversee both phases of the design, usage of shared facilities, landscaping designs, parking, security, check posts, entrances, and exits. The winning company is also expected to search for a recognised internationally chained management company.
Founded in 1946, Ethiopian Airlines has 36 cargo, 95 international and 19 domestic destinations. As of April 30, 2017, the company's staff reached over 13,484. During the 2015/16 fiscal year, it netted a 6.12 billion Br profit. The same year, it carried about 7.5 million passengers.
Recently, the Airline was restructured as the Ethiopian Airlines Group comprising of the Ethiopian Airport Enterprise (EAE), Passenger Airline, Cargo Airline & Logistics Company, Ethiopian In-flight Catering Services, Ethiopian Aviation Academy, Ethiopian MRO Services and Ethiopian Hotel & Tourism Services.
China National Aero-Technology is undertaking the construction of the 373-room hotel since two years. The Chinese company is expected to hand over the project in 720 days from the award date. The hotel was designed and is currently under supervision by a joint venture of a local firm, Sileshi Consultant and International & Molen Associates, a Hong Kong-based company.
The phase one hotel project, which is underway on a 20,000sqm land in front of Millennium Hall on Africa Avenue, has had many ups and downs since its announcement nine years ago. The bid for its construction was cancelled three times after being awarded to construction companies due to reasons that were not disclosed.
In the first round, National Consultant Plc, Ultimate Plan Plc, and ETG Designers & Consultants Plc. were shortlisted, but Ethiopian cancelled it after an 11-month-long process. For the second time, it announced a closed bid in March 2012 which was also annulled later.
As a third alternative, the Airline agreed with the China-Africa Development Fund and HNA Hotels & Resorts (Group) Co. Ltd. to develop the hotel in a joint venture arrangement. But, to no avail. Finally, it awarded the project to the Chinese Construction Company two years ago.
For an expert in the Hotel Consultancy business for over two decades, Ethiopian Airlines' move could be a threat for the existing hotel businesses in the city, which are still in their infancy.
"Rather than sharing others' business, it could invest in the areas not yet tapped by private investors such as developing conference destinations," said this expert.
As of August 2017, the number of star-rated hotels reached 164. These hotels have a total of 8,000 rooms with 10,000 beds. From these star level hotels, 80 have already received their ratings from the Ministry of Culture & Tourism, and seven were titled as five-star hotels.
But, Lud Abiy, general manager of Addis Abeba Hotel Owners Sectoral Association, sees the new development with a positive eye as it would contribute a lot to the hotel industry and raise the quality and standard of the hotel industry in the capital.
"As most of the tourists come to the country to attended conferences, it will not threaten the business of other hotels in the city," commented Lud.
The technical evaluation of the bid was expected to be held last week, but it is postponed for two more weeks.
Ethiopian Airlines did not respond to the inquiry through emails and letters from Fortune until the paper was sent to print.