MIDROC Investment Group has commenced construction on a second Sheraton-branded hotel within the Sheraton Addis compound in Addis Abeba. The project is being undertaken by DEZACON Construction, with a design by ZIAS Architecture & Engineering Plc, managed by Dereje Assefa. The company is known for designing the Federal Police Commission headquarters at Mexico Square. This development is part of MIDROC's strategy to increase its hotel investments in anticipation of the 32nd United Nations Climate Change Conference (COP32), which Ethiopia is set to host in 2027.
The Ethiopian government expects over 80,000 international guests to attend the COP32 summit. However, the current hotel capacity in Addis Abeba can only accommodate approximately 25,000 visitors, leaving a significant shortage. MIDROC's projects in the capital and regional cities aim to provide around 1,500 beds for conference visitors. This is a small fraction of the required capacity, with the company acknowledging the challenge of meeting the demand within a short timeframe.
Alemstehay Paulos, former chief of the Prime Minister's Office, emphasized the urgency of completing the hotel projects within 18 months, meeting international standards, and obtaining the required certifications. She noted that if the capital cannot meet the demand, accommodation development may need to extend into neighboring regional states. Enku Mulugeta, vice-president of the Talak Ethiopia Tour Operators Association, suggested that towns within a few hundred kilometers of Addis Abeba, such as Ambo, Bishoftu, and Adama, may need to provide accommodations for conference attendees.
The International Finance Corporation (IFC) has proposed financing of up to $80 million for MIDROC Ethiopia Plc, which will support the modernization of the 294-room Sheraton Addis and the construction of a second property beside it. The estimated cost of the project is up to $116 million, with the IFC potentially covering over two-thirds of the costs. The IFC's financing will provide longer-term funding in foreign exchange, and its advisory support will help the company adopt international green-building practices and strengthen environmental and social management systems.
Despite the World Bank Group's Country Partnership Framework for Ethiopia listing tourism as a sector it will not prioritize until conditions improve, the federal government has issued an investment incentive directive for the hotel sector as a policy priority. Feteh Woldesenbet, president of the Ethiopian Hotel Employers Federation, noted that provisions for duty-free capital goods and other related imports could help the industry expand. The conference's scale has encouraged operators to consider building or expanding hotels, according to him.
MIDROC has a wider pipeline of projects in Addis Abeba, including a Moxy by Marriott at Millennium Hall and a Four Points by Sheraton at Mohammedia Residential Village. The company has also taken over the Wabe Shebelle Hotel, which is currently under renovation for a rebrand under Marriott International's Autograph Collection. Beyond Addis Abeba, MIDROC is constructing Four Points by Sheraton hotels in Jimma and Hawassa cities and plans to begin work on a Four Points by Sheraton and a Protea by Marriott in Bahir Dar.
The Ethiopian Investment Holdings (EIH), the state's sovereign investment fund, is also developing projects across several sectors, including hospitality. EIH has 36 projects, 16 of which are active, including four in hospitality. The company generated 2.1 billion Br in revenue from its hospitality businesses last year, with four subsidiaries recording a combined pre-tax profit of 564.2 million Br. Industry experts are exploring ways to house visitors without leaving empty rooms after the conference, including using existing buildings as temporary accommodations and adapting other buildings, houses, and guesthouses.
Key points
- MIDROC Investment Group starts construction on a second Sheraton-branded hotel in Addis Abeba to address the hotel capacity shortage ahead of the 32nd United Nations Climate Change Conference (COP32) in 2027.
- The Ethiopian government expects over 80,000 international guests to attend the COP32 summit, but the current hotel capacity can only accommodate approximately 25,000 visitors.
- The International Finance Corporation (IFC) proposes financing of up to $80 million for MIDROC Ethiopia Plc to support the modernization of the Sheraton Addis and the construction of a second property.
