Post Graduate Studies: History and Operation of Ethiopian Businesses

This term paper, prepared for the postgraduate studies in Hospitality Management at Hawassa University, provides a comprehensive analysis of the history and operational aspects of the hotel and airline businesses in Ethiopia. The report begins with an introduction to the tourism industry, highlighting the significance of the hospitality sector and the role of hotels in economic development. It then delves into the historical context, discussing the establishment of the first modern hotel, Taitu Hotel, and the evolution of the hotel industry, including the impact of government policies and the growth of international brands like Hilton. The paper also examines the current operations of hotels in Ethiopia, including the classification system, the increasing number of hotels, and the challenges faced by the industry. The report further explores the history and operations of Ethiopian Airlines, the flag carrier of Ethiopia, detailing its establishment, expansion, and its role in the global aviation network. The paper also touches on the airline's performance and its contribution to the Ethiopian economy, concluding with a summary of the key findings and insights into the future of both sectors.

HAWASSA UNIVERSITY
COLLAGE OF BUSINESS AND ECOMOMICS
DEPARTMENT OF HOSPITALITY MANAGEMENT
POST GRADUATE STUDIES IN HOSPITALITY MANAGEMENT
ADVANCED TOUR AND TRAVEL BUSINESS OPERATION
Term Paper on History and Operation of Hotel and Airline Business in Ethiopia
Prepared by:
Name Id number
Simon Shemelash GPHOSMR/0018/14
Submitted to: MR. Amare Y. (Assistant Professor)
December, 2021
Hawassa, Ethiopia

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Table of Contents
1. Introduction ............................................................................................................................. 1
2. History of Hospitality Industry ................................................................................................ 2
2.1 History of Hotel Industry in Ethiopia .................................................................................... 2
2.2 Operation of Hotel Industry in Ethiopia ................................................................................ 3
3. History of Ethiopian Airlines .................................................................................................. 4
3.1 Operations of Ethiopian Airlines .......................................................................................... 5
3.2 Ethiopian Airline Performance.............................................................................................. 6
4. Conclusion ............................................................................................................................... 8
References

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1. Introduction
Tourism is a huge global industry containing several sectors such as restaurants, transportation,
hotels and travel services. Every single sector plays its own important role to tourism
development and improvement (Ebisa et al., 2013). Hospitality is one of the sectors within the
giant tourism industry (Rahimi, 2007). Hotels are one of the greatest major organizations in the
field of hospitality in providing services and also play a necessary role in growing the tourism
industry and developing economic conditions (Sotoudeh, 2006).
The hotel industry comprises numerous services, containing accommodation, restaurants, cafes,
and catering. The hotel industry market, particularly hotels in Ethiopia and other developing
country, is closely associated with the tourism industry, because high numbers of consumers for
the sector services come from international tourists (Ebisa et al., 2013). The international total
number of tourists arriving in Ethiopia is gradually increasing. Addis Ababa has been taking the
lion’s share in the county’s tourist arrivals hosting an estimated 95-99% of the total international
tourist arrivals, because of entryway of all international inbound, outbound and transit tourists/
passengers of the country (MoCT, 2011).
Transport does not only mean just travel. Transport connects people, it provides access to jobs,
communities and goods, it delivers an important social services. Historically, individual transport
methods have progressed at different rates and times, from the decline of horse-drawn carriages
to the growth of the car, or the coming of canal freight to the expansion of the railways
(Vallance, 2019).
In addition to the tourism and hospitality sector, transportation also plays a vital role in any
economic, culture, social and industrial development of any country. Transportation is the
movement of human, animal and goods from one location to another. Now days we are using so
many method for transportation like air, land and water. Air travel remains a huge and
developing industry. It encourages monetary development, world trade, around the world
investment and tourism and is subsequently central to the globalization taking place in various
other industries (IATA 2015 as cited in (Gebeyew 2017).
In the world, the airline industry consists of a vast network of routes that connect cities
throughout the country (Wensven, 2007). Airlines all over the world are currently showing
strong growth in both traffic and profits because of a passenger boom, lower distribution costs,
and increased cooperation through alliances (Goeldner and Ritchie, 2003).

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1. History of Hospitality Industry
The hospitality industry is one of the essential components of the tourism sector of an economy.
It refers to hotels, resorts and other lodging service giving businesses within the tourism sector
where its economic reach is uncommonly broad. Hotels also provide a forum for business
meetings, trade shows and conventions that are an essential catalyst of economic growth (ILO,
2010). Hospitality is a major global growth industry. There are now some 12.7 million hotel
rooms around the world and the number of new rooms planned or under development (1.3
million) equates to more than 7% of the existing worldwide, while in the Middle East and Africa
which together are responsible for almost half of the new rooms under construction the share is
more than 20% (Africa Travel Association, 2010). According to the Ethiopian Ministry of
Culture and Tourism, the number of hotels in the country has significantly increased particularly
over the last few years. Just a decade ago there were only 50 to 60 hotels while there are
currently some 350 (about 100 of them in Addis) that are expected to fall under five-star to basic
rating categories that can provide services ranging from highly rated to the basic ones. These
hotels are expected to accommodate 20,000 to 30,000 guests where the presence of lodges and
guests houses will increase that number (The Ethiopian Tourism bulletin, 2012).
2.1 History of Hotel Industry in Ethiopia
The history of hospitality sector in Ethiopia was started during the period of Emperor Menelik II
the first modern hotel of Ethiopia was Taitu Hotel built in the beginning of 1900s, assumed to be
the first modern hotel in Ethiopia. It was named after its founder Empress Taitu Betul, wife of
emperor Menelik II. It was constructed particularly for providing service to foreigners as
impressive place to rest and dine.
The building of Itege Taitu Hotel is a museum complete of antique fixtures and finely decorated.
Taitu Hotel is found in the center of Addis Ababa commonly known as Piazza. The hotel has 264
anciently decorated bedrooms, with diversified important facilities. Today, the hotel offers a lot
of history and inexpensive private rooms for only a few bucks a night (Tsegay, 2017).
Hilton is also another great 12 story establishment of Ethiopia which opened its door over four
decades ago. It was opened in 1969 by Emperor Haile Selassie. Together with the exquisite
garden wing extension, the complex offers a total of 402 rooms. The architectural design is
centered on the Lalibela Cross, one of the most popular tourist attractions in Ethiopia which is
also as considered the 8th wonder of the world. Blending traditional Ethiopian cultures with
contemporary style, Hilton Addis Ababa was designed to mirror the famous Lalibela Cross. It
has a geothermal outdoor swimming pool, spa, tennis court, and an 18-hole golf course. With six
distinctive restaurants and bars, Hilton Addis Ababa gives an enticing range of cuisine including
the popular poolside Sunday brunch with live music; music; that is a way of life that has been
stored for a long time (Eden, 2015).
The evolution of hospitality industry in Ethiopia, before, 1991 Ethiopia was struggling to be in
the list of the hospitality sector. The well known13 months of Sunshine slogan which was

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launched during the time of Emperor Haialesellaise I serve a plenty in selling the Ethiopian
hospitality sector. Behind branding and cultivating the tourism sector, one bold figure is to be
mentioned. Habtesellaise Tafesse was a minister of tourism back in imperial days. It was that
time which gave opportunities for many local as well as international brands like the Hilton to
come into the playground until the Derg took the power. Before the military took over the
government, Bekele Mola Hotels, Ghion Imperial Hotel, Wabi Shebelle Hotel, Ras Hotel,
Ethiopia Hotel, Omedad Hotel and the likes have been increasing with inside the capital and
nearby cities (Mamo, 2014).
2.2 Operation of Hotel Industry in Ethiopia
Currently, the investment of hotel & tourism sector comparatively developed. The hotel industry
consists of many different services, including accommodation, restaurants, and cafes and
catering. The market for the hotel industry, especially classified hotels in a developing country
like Ethiopia, is closely linked to the tourism industry, because a majority of consumers for the
sector services come from international tourists.
According to the United Nations Statistical Commission, tourism comprises the activities of
persons traveling to and staying in places outside their usual environment for not more than one
consecutive year and staying at least 24 hours in the country visited. The total number of
international tourists arriving in Ethiopia is progressively increasing. As the gateway of all
international inbound, outbound and transit tourists/ passengers, Addis Ababa has been taking
the lion’s share in the county’s tourist arrivals hosting an estimated 95-99% of the total
international tourist arrivals. With an additional 39 million international tourists, up from 996
million worldwide in 2011, international tourist arrivals surpassed 1 billion (1.035 billion) for the
first time in history in 2012. The African continent receives approximately 5.0% of international
tourist arrivals in 2011. In the same year, there were over 50.17 million international tourist
arrivals to Africa, an increase of 0.9% over 2010. Compared with other world countries,
Ethiopia’s share in international tourist arrivals, increased from 0.03% in 2005, to 0.053% in
2011. The Inbound Tourist Arrivals in Ethiopia continued to grow from 76,844 in 1989, to
115,000 in 1999, 184,078 in 2004, 427,286 in 2009 and reaching 523,438 in 2011. During the
year 2011, Ethiopia witnessed a positive tourist growth of 11.8 % over 2010. The compound
annual growth rate in Inbound Tourist Arrivals in Ethiopia during 1989 to 2011 was 9.7 %
(MoCT, 2011).
Ethiopia has a small number of hotels which are, generally, of poor standard. If we compare the
number of international standard hotels in Ethiopia with hotels in countries like Egypt, Morocco
and Kenya we notice a big difference in number. According to The Embassy of Japan in Ethiopia
(2008), even by 2004 data the hotel stock amounted to more than 140,000 in Egypt, in Morocco
80,000 and more than 65,000 in Kenya. The international hotel classification system is adopted
in Ethiopia and hotels are classified into categories with stars from one to five and hotels without
stars. The total number of hotels in Ethiopia in the year 2009 was 426. Current data on the

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number of hotels in the country was unavailable. As a result, to estimate the total number of
hotels in 2012, we can take a 20% growth rates over 2009 making it 511 hotels in the country.
This number includes all five stars, four stars, three stars, two stars, one star and not classified
categories of hotels (MoCT, 2011).
The number of hotels in Ethiopia is smaller and in this regard Ethiopia has less competitiveness
to attract large international conferences than other countries. In the regional states, the shortage
of accommodation which meets international standards is quite serious and improving the
existing accommodation and building additional lodging are vital to attract international tourists
to the natural and cultural tourism destinations in the country (Ebisa, et al., 2013).Another major
issue is the hotel structures. After the fall of the communist regime, from 1995, Ethiopia started
privatizing. Over 287 enterprises were transferred from the public to the private sector – out of
which 34, or 11.8%, were hotels (Orthodox, 2018).
2. History of Ethiopian Airlines
https://corporate.ethiopianairlines.com assess that, Ethiopian Airlines is the flag carrier of
Ethiopia. Unrivalled in Africa for efficiency and operational success, turning profits for almost
all the years of its existence Ethiopian has become one of the continents leading carriers during
the past seventy plus years. The airline has also become one of Ethiopia's major industries and a
veritable institution in Africa by operating at the vanguard of technology. This includes the daily
and double daily east-west flight across the continents. It commands a lion share of the pan
African network. Ethiopian now functions or works 100 international and 21 domestic
destinations operating the newest and youngest fleet.
Ethiopian Airlines is wholly owned by the Government of the Federal Democratic Republic of
Ethiopia. It was established on 21 Dec1945 and commenced its first flight took place to Cairo
through Asmara on 8th April 1946.The aircraft has been a part of the IATA since 1959 and of
the African Airlines Association (AFRAA) since 1968 and Ethiopian is joined the largest
alliance of airlines (star alliance) on December 2011. By beginning from its fundamental center
at Bole international airport, it serves as network of 92 international and 20 residential
destinations as well as 35 freighter destinations. As of JUN 2016, Ethiopian airline international
destinations are 51 African cities, 25 Center East & Asia, and 16 Europe & USA respectively.
EAL, today more than ever before, aggressively expanded its presence or destinations in all
directions of the globe and flies to more destinations in Africa than any other carrier did
(WWW.Ethiopianairlines.com).
https://www.afdb.org (accessed in 23/11/2021), recognizes that, Ethiopian Airlines is the
flagship airline for Ethiopia. The operations of Ethiopian airline are covering all aspects of
aviation services including passenger services, cargo services, maintenance, ground handling,
catering and training with the aviation academy. With 93 destinations served, it is linking the
continent through its pan-African routes and it is also linking Africa to the rest of the world. The

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public support will allow Ethiopian Airlines to keep the momentum on its expansion plan and be
on track on its route operating roadmap. Ethiopian airlines operates as a modern and fuel
efficient fleet aviation sector in Africa with establishing the standards.
Ethiopia air transport services history dates back to the 1920s, when the first aircraft arrived in
country (Bright et al, 2015). On Sunday August 1929 the first airplane, a poet landed in Addis
Ababa. This day was the memorable date in the history of aviation in Ethiopia, a date well worth
regarding in its annals (Abel and Pasteau, 1972). Ethiopia started training pilots in the 1930s,
and the Ethiopian Air Force established in the similar period. After the liberation of Ethiopia,
Emperor Haile Selassie I asked the United States of America, the United Kingdom, and France
to assist Ethiopians modernization efforts by supporting the establishment of a national airline.
Ethiopian Air Lines Corporation was founded as a commercial aviation corporation in 1945
through an agreement between the Ethiopian government and Transcontinental and Western
Airlines (TWA) (Bright et al, 2015).
3.1 Operations of Ethiopian Airlines
At year of colonization in Africa during 1945, Ethiopia built up an airline in a joint venture with
Trans World Aircrafts. It was a strong, yet humble, starting that would change the aviation
industry in Africa. It introduced in an era of prominence: an African airline with weekly services
to destinations in Africa and beyond. Sometime recently 1946, travelers had to transit through
countries outside of Africa in order to reach their destinations inside the continent. With its motto
of “Bringing Africa Together,” Ethiopian Airlines facilitated travel inside Africa while moreover
stamping major points of reference in the continents aviation industry. In spite of the fact that
numerous routes in Africa back then were exceptionally lean, with traveler numbers not
justifying benefit, Ethiopian stuck to its operations (Selamta, 2013).
Port Sudan was evacuated from the list of destinations on 1 Walk 1960. The aircraft had its to
begin with fatal accident on 15 July when a DC-3 crashed in route from Bulchi to Jimma, killing
the pilot. On 12 August, an arrangement with Boeing for two Boeing 720B air ship was placed.
EAL's common manager had already brought the thought of obtaining two fly aircraft for long-
haul operations up as of now in February, recommending the Boeing 720B. The first east–west
interface made by an African aircraft begins on 8 November when the Addis Ababa–Accra–
Lagos–Monrovia course was propelled utilizing DC-6B equipment. The second deadly accident
took place on 5 September 1961 when another DC-3 slammed shortly after takeoff from
Sendafa; a flight orderly and four travelers lost their lives in the accident. The occasion urged the
Gracious Flying Office to explore the accidents. It was found that the lack of infrastructure at
many airfields, marginal even for DC-3 operations, was a major contribution. Landing
destinations at Gore, Mizan Teferi and Tippi were included in the list of airfields that would
require closure. On 13 January 1962, the group and four travelers lost their lives in another
accident including a DC-3 -registration ET-T-1, EAL's to begin with aircraft of the sort-, this
time the crash taking place at Teppi while the aircraft was taking off. The event prompted the

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government to decide the closure of the airfields at both Mizan Teferi and Teppi.
(https//en.m.Wikipedia.org/wiki/Sud-Aviation-Caravelle Accessed 23, 11, 2021).
As Factsheet (2019) states, Ethiopian airline begun operation with the first 5 C-47 aircraft, scraps
of 2nd World War, back in 1946 during its make a big appearance flight to Cairo through
Asmara. Ethiopia has been developing in leaps and bounds and has kept on presenting modern
flying innovation and systems, with so many firsts within the history of African aviation as an
aircraft technology leader giving the first fly service in the continent. Availing the first African
B767, the first African B777- 200LR in 2010 and the first African and second only to Japan
B787 Dreamliner in 2012.
In a continuation of that tradition, Ethiopian was the first in Africa to obtain Airbus A350 XWB,
introducing the additional effect to the African continent. Driving the way once again, Ethiopian
was the primary African Airline to function the most recent Boeing 787-9 in 2017.
In eighty international and seventeen domestic destinations Ethiopian Airlines has fleet
operations. African countries, then Middle East & Asia are the most destinations worldwide and
also it serves to 11 destinations in Europe & USA. The company’s main business service
offerings are passengers transport, Cargo, airplanes maintenance for other airliners and aviation
academy. The aviation academy gives training for pilots, aircraft technicians, cabin crews,
marketing, sales, management and finance staffs (Eyob, 2014).
3.2 Ethiopian Airline Performance
In order to measure the operational level and financial performance of its business a certain
company can use several parameters. Likewise, Ethiopian Airlines has used numerous
operational performance evaluating parameters which comprise capacity availed in terms of
Available Seat Kilometers (ASK), Revenue Passenger Kilometers (RPK), Load Factor etc. To
start with available seat kilometers (ASK), it is the product of passenger seat capacity measured
in seats offered by distance flown and it measures available passenger capacity (Annual report of
ET 2010/ 11, Aviation & Allied Business 2006 cited in Selamawit 2012).
At the end of June 2015, Ethiopian remained profitable with record operating profit of ETB 4.31
billion and a net profit of 3.53 billion, despite the difficulty and challenges in the operating
environment Ethiopian airline annual report June2015 as cited in Gebeyew 2017). Even if there
are many operating and management problems, Ethiopian airline had shown its potential growth
and development to the industry. In this regard, it won different awards such as:
 It won the African Airline of the year award for 2016 during the 25th anniversary African
Aviation Air Finance Africa Conference & Exhibition and African Aviation Summit held
on May 2016 in, South Africa.

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 Ethiopian airline aviation Academy has been accepted as ICAO Regional Training Center
of Excellence on May 2016 at the ICAO‟s Global Aviation Training and Train air plus
symposium.
 Ethiopian Airlines has won Airline of the Year Award for the fifth year in a row, at the
48th Annual General Assembly of the AFRAA held on November 21, 2016.
Ethiopian Airlines was presented with the prestigious 2008 "Best Airline in Africa Award" at the
African Travel Award occasion, organized by the Akwaaba Travel Market in Lagos, Nigeria on
October 25, 2008. The award was deliberated to Ethiopian for its “excellent network and helpful
connections in Africa.” Akwaaba Travel Market is the only international travel exhibition in
West Africa recognized by the United Nations World Tourism Organization. It organized
annually by African Travel Quarter magazine, the primary international travel magazine in West
Africa. Akwaaba Travel Market is the African equivalent of the World popular World Travel
Market in London and the International Travel Market in Berlin. In addition to the most recent
grant, Ethiopian won the 2008 corporate achievement award in Johannesburg in August 2008
given by the Aviation and Associated Business Publication for appreciation of prominence in the
airline industry and Brussels Airport Company Award.

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3. Conclusion
The hotel industry in Ethiopia is highly growing from time to time, and also the history and
operation of hotel in Ethiopia has long history. Hotel and tourism are inseparable sectors. To
build well developed tourism and hospitality sector, Ethiopia needs to modern and standard
hotels, lodges and other recreational centers to stay competitive in the world and not to lose the
existing potential. Principal’s capabilities to accommodate the existing and potential demand
remain unfilled especially in the rural areas.
The number of hotels in Ethiopia is smaller when we compare it with the neighboring countries
and in this regard Ethiopia has less competitiveness to attract large international conferences than
other countries. In the regional states, the shortage of accommodation which meets international
standards is quite serious and should improve the existing accommodation and building
additional lodging are vital to attract international tourists to the natural and cultural tourism
destinations in the country. Additionally, the boom of inbound tourist arrival will create a big
business opportunities for those planning to enter the hotels industry which makes the barriers
entry to the industry easy and attractive. So increasing principal capabilities in numbers and also
with a quality hotel accommodation throughout the country is necessary for the subsequent
improvement of the competitiveness of the sector either in the region or the world.
Ethiopian airline is established on 21 Dec1945 and initiated its first flight took place to Cairo
through Asmara on 8th April 1946. And registered as a commercial aviation corporation in 1945
and joined the largest alliance of airlines (star alliance) on December 2011.
Ethiopian airline is strongest and powerful starting from its establishment until now that changed
the aviation industry in Africa. In the era of prominence when it incorporated to the recent serves
as an African airline with weekly services to destinations in Africa and beyond. Furthermore the
Ethiopian airline shows its importance when the continent travelers had to transit through
countries outside of Africa in order to reach their destinations inside the continent which is
difficult to think and makes travels to suffer and spend a lot. Satisfied the customer by its famous
motto “bringing Africa together” which is changed now to the “new spirit of Africa” which
draws a big picture than the previous and come after achieving its goal.
Generally the Ethiopian airline is great contributor for the country economy directly and
indirectly. The public support will allow Ethiopian Airlines to keep the momentum, and its
market share, and on its expansion plan and be on track on its route operating roadmap.

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