The Ethiopian Airlines Aviation Group has proposed to take over the Addis Ababa Hilton and Ghion Hotels, two state owned hotels found in Addis Ababa.
The new aviation group under establishment comprises Hotel and Tourism Services Company. Reliable sources told The Reporter that the Ethiopian Airlines Aviation Group has proposed to the government to takeover Hilton and Ghion Hotels to annex them to the Hotel and Tourism Services Company which is under formation. “It is not yet decided but the issue is under discussion at higher government level,” sources confirmed to The Reporter.
The Ministry of Public Enterprises in the past has repeatedly tried to privatize Ghion Hotel. Several privatization attempts have failed for various reasons. Recently, Mayor of the Addis Ababa City Administration, Deriba Kuma, announced that the government has decided to transfer Ghion Hotel to the Addis Ababa City Administration. It was also reported that the government would soon put up tender to privatize Hilton Hotel.
The Ministry of Public Enterprises said that it is unaware of any attempt to transfer the two hotels to the aviation group. “Ghion Hotel is transferred to Addis Ababa City Administration. Regarding Hilton, we have planned to undertake asset evaluation work this budget year. We are not informed of Ethiopian Airline’s attempt to take over the hotels. But the idea sounds good,” official of the ministry told The Reporter.
However, reliable sources told The Reporter that Ethiopian Airlines group leadership has proposed to the government to take over the Addis Ababa Hilton and Ghion Hotels and administer them together with the new four star hotel Ethiopian Airlines is building near its headquarters. “When it comes to Hilton Hotel there are three options-one to fully privatize it. While the second is to jointly develop with a private hotel company. And, third is to transfer it to the new aviation group which is under formation. The airline management has proposed the third option and it is under discussion,” sources told The Reporter.
Ethiopian Airlines Group CEO Tewolde Gebremariam told The Reporter that there is the possibility that Ethiopian could acquire Hilton and Ghion Hotels. It could be in the future but now we do not have that instruction from the government. But there is that possibility,” Tewolde said.
The Council of Ministers last month approved the establishment of an aviation group that comprises of Ethiopian Passenger Airline, Aviation Academy, Maintenance Repair and Overhaul (MRO), Catering, Ground Handling, Cargo and Logistics, Ethiopian Airports Enterprise and Hotel and Tourism Services with an authorized capital of 100 billion birr. The aviation group will eventually evolve to a holding company as the existing commercial code of Ethiopia does not provide provisions of for the establishment of a holding company. Currently, the government is drafting holding company proclamation.
Some say that Ethiopian Airlines is growing too fast and may not be able to properly manage its growth. These individuals claim that diversifying its line of business may overstretch the management jeopardizing the survival of the national airline.
Tewolde argue that the management of Ethiopian Airlines has demonstrated that it is very prudent by properly managing the fast growth of the airline. “Our fast, profitable and sustainable growth is well planned and outlined in the Vision2025 growth strategy. And six years into it, we are properly managing our growth in all the parameters.”
Tewolde said diversification in the aviation industry has advantages and also have challenges. We still have memory of Swiss Air. It used to be a very good airline. But too much diversification was one of the risks which were not managed properly which resulted in the demise of Swiss Air some years back. So we have to be very careful in terms of not to diversify too much but at the same time we have to create sufficient economies of scale to prove the customer end to end service in the value chain.”
Tewolde comments, “If I am going to promote Ethiopian tourism in China I will be able to sell air ticket (air travel), hotel and tourism all together. For the customer it will be one point shopping versus buying air ticket from the airline, booking hotel separately, car rental and so on. Through our website on a mobile phone the tourist can buy all her/his needs for leisure travel: air ticket, hotel, car rental, tour packages and other services. We are also creating simplicity for the global customer.”
Tewolde said that tourism in Ethiopia is under developed. Ethiopia as a country has a lot to offer to international tourists but we have not done a good job to promote it. We have to first develop the tourism sector to global standards. We have to offer global standard tourist products and then to promote it to the international market.”
He claims that Ethiopian Airlines is in a better position to do that. “The government wants its national carrier as a strategic company to do this as a national obligation. We are going to carry out that national obligation.”
“It is a matter of risk taking. Business is all about risk taking. We have to make sure that we take the right risk, measure our risk appetite and we measure our competency and capability to manage the risk. So we have to balance that-that is a daily exercise in leadership,” he concludes.
[thereporterethiopia.com]