value chain of tourism

VALUE CHAIN OF TOURISM: PROBLEMS OF TOURISM TO CONTRIBUTE FOR ECONOMIC

GROWTH OF ETHIOPIA

Prepared by: Bayebegn Zewdie

A Senior Essay Submitted in Partial Fulfillment of the Requirements for Degree of Bachelor of

Arts in Economics

Advisor: Ato Atlaw Alemu

Addis Ababa University Faculty of Business and Economics

Department of Economics

July, 2008

Acknowledgment

I am faithful to the Almighty God for every thing He has dome to me.

I extend my special thanks to my senior essay advisor Ato Atlew Alemu

for his valuable comments and suggestions in undertaking this study.

I would like take this opportunity to express my heartfelt and special

appreciation to my brother Ato Abeje Zewdie and Dr. Wubaye Walelgn

and his wife Wro. Abeba Mengesha, for their moral and financial as well

as material assistance not only in my stay in the university but also in all

way to wards my achievement.

I would like to extend my gratitude to the CTTI Liberalist, Ministry of

Culture and Tourism of Ethiopia’s workers, National Bank liberalist etc…

for providing me necessary material that helped me for the preparation of

the study.

Last but not least, I would like to extend my thanks to my father Blata

Zewdie Tewlatu, my mother Wro Ziyn Alene and my brother Bayreyegn

Zewdie to their contribution in my achievement and to the typist

Wublame Haile.

Bayebegh Zewdie

Table of Content

Page

CHAPTER ONE

1. PROBLEMS AND ITS SETTINGS ................................................ 1

1.1 Background ......................................................................... 1

1.2 Research Question ............................................................... 2

1.3 Delimitations ....................................................................... 3

1.4 Definition of Important Terms Assumptions ........................ 3

1.5 Assumptions ........................................................................ 5

1.6 Importance of the Study ....................................................... 5

CHAPTER TWO

2. REVIEW OF THE RELATED LITERATURE .................................. 6

2.1 Historical Development of Tourism ...................................... 6

2.2 Classification of Tourism ...................................................... 7

2.2.1 Special forms of Tourism.......................................... 9

2.3 Sustainable Tourism Development ...................................... 9

2.4 What is Value Chain? ........................................................... 11

2.4.1 Global value Chain .................................................. 12

2.4.2 The Importance of Value Chain Approach for

Policy Makers and Practitioners ................................ 13

2.5 Value Chain of Tourism Industry.......................................... 13

2.5.1 Identifying the Main Sources of Growth of Tourism .. 14

2.5.2 Identifying the Key Policy and Institutional

Constraints Affecting Performance ........................... 17

CHAPTER THREE

3. DATA AND TREATMENT OF THE DATA ..................................... 19

CHAPTER FOUR

EMPIRICAL ANALYSIS .................................................................. 22

4. Value Chains of Tourism and Problems with in the Value Chain

in Ethiopia ..................................................................................... 22

4.1 The Stock of Resources .................................................... 24

4.1.1 Profile of Tourism Resource base in Ethiopia ............ 24

4.2 Promotion and Advertisement............................................ 28

4.3 National Tourism Policy .................................................... 30

4.3.1 Budget Allocation for Tourism ................................. 30

4.3.2 Visa and Exit Tax Payment ..................................... 31

4.4 Tourist accommodation Facilities and Infrastructure ............ 32

4.4.1 Transportation ......................................................... 32

4.4.2 Telecommunication .................................................. 35

4.4.3 Accommodation ...................................................... 38

Hotels ....................................................................... 39

4.4.3 (a) Availability of Hotels and Ownership in Ethiopia . 39

4.4.3 (b) Distribution of hotels in Ethiopia ........................ 41

4.4.3 (c) Tourism Rating of Hotels and Restaurants .......... 42

4.4.4 Average Rating of Tourism Products by Tourists ...... 43

Conference Facilities ............................................... 44

4.5 Tour Operations and Guides ............................................... 45

4.6 Skilled Man Power ................................................................ 46

4.6.1 Human Resource Development in the

Tourism Industry ............................................... 46

4.7 Social and Political Stability ................................................ 48

4.8 Attitudes and Habits ............................................................ 49

4.9 The State of Technical Knowledge ........................................ 51

CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION .................................... 53

5.1 Conclusions ......................................................................... 53

5.2 Recommendations ............................................................... 54

Bibliography

List of Table

Table 4.1.1 (a) National Parks .............................................................. 25

Table 4.1.1 (b) Game Reservers ............................................................ 25

Table 4.1.1 (c) Sanctuaries .................................................................. 26

Table 4.1.2 Other Major Tourist Attraction Sites by Region

and Recognition by UNESCO ............................................. 26

Table 4.2 Ethiopia’s Market Share in the International Tourism

Market from 1991 to 2003 ..................................................... 29

(Table 4.3.1) Budget Allocation for Tourism ......................................... 30

(Table 4.3.2) Visa and Exit tax Payment Comparison of Ethiopia to

Keny (in USD) ................................................................... 32

Table 4.4.1 (a) Major Sites and their Accessibility by Road .................. 34

Table 4.4.1 (b) Major Sites and their Accessibility by Air ...................... 35

Table 4.4.2 Summary of Basic Telecom statistics (1993-1998

EC (2000/01-2005/06) ...................................................... 38

Table 4.4.3 (a) Number of star hotels, recommended hotels,

ownership, and new additions until 2005 ....................... 39

Table 4.4.3 (b) Distribution of hotels in general and star hotels by

region (end of 2005) ...................................................... 41

Table 4.4.3 (c) Tourism Rating of Hotels and restaurants ..................... 42

Table 4.4.4 Average Ratings of Tourism Products by Tourists .............. 43

Table 4.4.5 Summary of International Tourist by Purpose of Visit

from 1991-2005 ................................................................ 44

Table 4.6.1 Level of Education and Training amongst Hotels and

Tour Operators .................................................................. 47

Table 4.7 Arrivals and Receipts From 1991-2005 via Addis Ababa

Airport and Other ................................................................ 48

Table 4.8 Arrivals by Age and Gender Group for 2003,

2004 and 2005 ..................................................................... 50

Acronyms

UNIDO United Nation Industrial Development Organization

WTO World Tourism Organization

UN United Nations

LDCs Less Developed Countries

CSA Central Statistic Authority

GDP Gross Domestic Product

UNESCO United Nations Educational Scientific and Cultural

Organization

AU Africa Union

ECA Economic Commission for Africa

CTTI Catering and Tourism Institute

ETC Ethiopian Telecommunication Corporation

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CHAPTER ONE

1. PROBLEMS AND ITS SETTINGS

1.1 Background

Half a century ago, history shows that the role of tourism as an economic

sector was negligible and until the global tourism statistics was not even

compiled. However, since 1950s it has showed a dramatic performance

and in recent years it has manifested itself as abundant industry

recording remarkable achievements in job creation, foreign currency

earning, and redistribution of income and generation of tax revenue.

(Theodros, 2002)

WTO (1994) stated that:

“Tourism sector is the most productive sector in the world and acconts

for 12 % of the world GDP”

Ethiopia is one of the sub-Saharan countries which is endowed with

natural and man made resources, which can be exploited for the

improvements of its economic performances and changing its images.

The country has a number of interesting and wonderful tourist attraction

sites. She is endowed with wildlife and game parks, ancient building and

historical traditions, magnificent scenery and pleasant weather etc…

(Ajebush,2004).

Despite this huge potential, the annual inflow of tourists in to the

country is low. In fact, Ethiopia’s share of the African Tourism market in

the year 1998 was only 0.5%, while that of the East Africa was only 1.7%

(Abebech, 2001).

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The trend of tourism contribution to GDP shows continuous increment,

but there was a slight decline in 1998 and 1999 due to the reduction of

tourist arrivals to Ethiopia following the Ethio-Eritrean war. In 1992 the

sectors contribution was 0.28 which is very insignificant, in 1997 it

reaches 0.67%, however, this increment in trends of tourism’s share to

GDP is negligible (Hawaz, 2006).

Previous statistics shown that,Ethiopia with relative to great potential of

both natural as well as man made tourist attraction sites, the economic

benefit from this sector and the contribution to national income is

insignificant. This is due to problems with in the value chain of tourism

at that time.

Tourism value chain cuts across many sectors, such as retail, housing

construction, hotels and restaurants telecom and transportation, and

activities like market promotion, tourism sector policy, political situation,

(Abebeh, 2006). It also includes tour operation activities human

resources development related to tourism profession and travel agents,

tour operators, conference organizers etc. (Mekonnen, 2006).

There for this paper investigates the value chain of tourism and identify

where the main problems for the low contribution of tourism with in the

value chain exists.

The statements of the sub-problems are:

(i) To investigate the existing value chains of tourism of Ethiopia.

(ii) To identify where the main problems exist with in the value chain of

tourism of Ethiopia.

1.2 Research Question

The basic questions that this paper addresses are the following:

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(i) What are the major factors that are included in tourism value

chain?

(ii) Where the bottlenecks of tourism development are with in the

value chain exists?

1.3 Delimitations

On this paper, attempt is made to treat value chain of tourism industry

and problems with in the value chain of tourism industry exist. This

includes stock of resources like National parks, sanctuaries and Game

reserve’s; promotion and advertisement; tourist accommodation and

infrastructural like transportation that is road, rail, air, water;

accommodation that is hotels and conference facilities; national tourism

policy like budget allocation,and visa and exit tax; telecommunication;

tour operations and guides; skilled man power; social and political

stability; attitudes and habits of the visitors and the suppliers; and state

of technical knowledge.

Some of the sectors with in the value chain of tourism face quantitative

data constraints due to lack of organized and effective statistical system

in the country.

1.4 Definition of Important Terms

1. Arrivals are visitors who travel to a country or within a country

other than that in which she/he has his/her usual residence but

outside his/her usual environment for a period not exceeding

twelve months and whose main purpose of visit is other than the

exercise of an activity remunerated from with in the country

visited. (WTO, 2000)

2. Domestic tourism receipts are defined as expenditures of internal

inbound visitors including their payment to national carriers for

domestic flight. They should also include any other prepayments

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made for goods/ services received in the country. This also defined

as expenditures and payments by the domestic travelers with in

their country to visit historical and natural sites. (Ministry of

culture and Tourism annual bulletin, 2006).

3. International tourism receipts are defined as expenditure of

international inbound visitors including their payment to national

carriers’ for domestic flight. They should also include any other

prepayments made for goods/services received in the destination

country. They should in practice also include receipts from same

day visitors except in cases when these are so important as to

justify a separate classification. It is also recommended that, for

the sake of consistency with the balance of payment

recommendation of the international monetary fund, international

fare receipts be classified separately. (Ministry of Culture and

Tourism anural bulletin, 2006).

4. Number of rooms refers to the total capacity in room of

establishments offering accommodation

5. Number of bed refers to the total capacity of beds in the

establishments offering accommodation.

6. Tourism is defined as the process, activities and out comes arising

from relationships and the interactions among tourists, tourism

suppliers, hot government, hot communities and surrounding

environments that are involved in attracting and hosting of

visitors. (WTO, 1995).

7. Value chain is defined as a sequence of productive (value-added)

activities leading to and supporting end use, (Sturgeon T.J, 2001)

and an alliance of enterprise, working vertically to achieve amore

rewarding position in the market place. (K.H. Lei, 2002).

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1.5 Assumptions

(i) Ethiopia wants to fully use its tourism potential properly and

efficiently.

(ii) Ethiopia wants to achieve rewarding position in world’s tourism

market share in both absolute and comparative terms.

1.6 Importance of The Study

In the world of full of competition, expanding tourism sector has become

a relatively better alternative by many developing countries as a means of

promoting their economic development and overcoming balance of

payment deficit as well as debt repayment.

Since Ethiopia is one of the developing countries, analyzing the problems

of tourism sector has significance for the development of the sector,

which contributes to the growth of national income.

The method used in this paper that is value chain analysis is also use

full for linking a sequence of actives which are use full for the growth of

the tourism sector and problems with in the activities with their

solutions. This paper also contributes to further research by introducing

new method of analysis to those persons who are doing their work by

this method and source of information to those who work their paper on

tourism. In general, this paper can be used as an important source of

information for further studies.

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CHAPTER TWO

2. REVIEW OF THE RELATED LITERATURE

2.1 Historical Development of Tourism

Tourism deals with the movement of people away form their normal

residence for holiday, recreation and leisure activities, business, meeting,

visiting relatives and other purposes.

Half a century ago, tourism was a particular little industry mainly in

West Europe and USA. It was viewed largely as frivolous endeavor largely

with in the domain of those with a lot of time and money of their part

with better to spend it. As standard of living, levels of education and

means of transportation and communication improved, the ability and

willingness of the world upper, middle class to travel increased.

Currently,tourism becoming the leading sector and major employer in

the world and expanding at a steady rate. The sector being an important

sector in its own right hand received considerable attention, especially in

the 1960’s (H. Robinson, 1997). The first step towards international

recognition of tourism appeared in UN conference, “On international

travel and Tourism” held in Rome in 1993. By the year, 2000 tourism

was expected to become the largest industry in the world and will

constitute the biggest component of international trade.

As indicated by WTO 2000 report, the volume of world tourism in 1996

was 459.2 million and the number had reached 546.3 million in 1998.

However, the benefits of these developments were skewed towards

Europe and USA as current trends may reveal. For instance in 1994

about 60% and 28% of world tourists visited Europe and USA

respectively. While 50% of the total world tourism receipts went to

Europe and 27% to USA.

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All in all, international tourism is not developing at the same rate and

unevenly distributed in different regions of the world. In LDCs weak

development of tourism due to lack of infrastructure and super structure

to develop their tourism sector (Martin, 2002).

2.2 Classification of Tourism

Tourism can be classified in different ways by different scholars and

organizations. Tourism can be divided in to two broad categories. These

are mass tourism and alternative tourism.

The following figure show different types of tourism briefly.

Figure 1 types of tourism

Source: the alternative tourism (after Mieczhowstes, (1995:459) and cited

by Stephen, 2000).

Tourism

Mass tourism (conventional, standard large scale tourism)

Alternative tourism

Cultural Educational Scientific Adventure Agri- tourism

Nature or eco-tourism

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Mass Tourism

Mass tourism is generally seen as being an overarching term for tourism

that is undertaken by the majority of travelers. This thesis, in exploring

the specific of particular tourist experience in depth, may contribute

towards an understanding of not only the significant divergences and

convergence that exist between both mass tourism and alternative

tourism, but also the subtle nuances that subtend these tourist

experiences. Therefore, it is to not simply a matter of differentiation, in a

binary fashion, between a general category of mass tourism and the

derivation of niche elements with in it.

Alternative tourism

The common feature of alternative tourism is the suggestion of an

attitude diametrically opposed to what is characteristically viewed as

mass tourism. Alternative tourism often is presented as existing in

fundamental opposition by attempting to minimize the perceived negative

environmental and socio-cultural impacts of people at leisure in tourism

promotion of radically different approaches to tourism. Examples include

eco-tourism, green tourism, nature oriented tour, soft tour and defensive

tourism.

Another classification is made by the world tourism organization (WTO

and the Conference on Travel and Tourism Statistics in 1995), the

following three major forms of tourism are outlined.

i. Domestic tourism- involving residents of the given area traveling (as

visitors) only with in that area

ii. Inbound tourism- involving non-residents traveling (as visitors) in a

given area.

iii. Out bound tourism-involving residents traveling (as visitors) in area

other than the given area.

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2.2.1 Special forms of Tourism

There are different forms of tourism. Amongst them some are as follows;

I. Adventure tourism involving travel in rugged regions, adventurous

sport mountaineering, and hiking or tramping.

II. Agro-tourism-farm based tourism, helping to support the

agricultural economy.

III. Cultural tourism-includes urban tourism, visiting historical or

interesting cities and experiencing their cultural experiences, such

as art, museum during the tour, or opera tourism when one sees

many operas or concerts during the tour.

IV. Ecotourism-sustainable tourism which has minimal impact on the

environment, such as safaris and rainforests, or national parks.

V. Heritage tourism-visiting historical or industrial sites such as old

canals, rail ways, battle grounds, etc…

VI. Health tourism-usually to escape from cities or relieve stress,

perhaps for some ‘fun in the sun’ etc. often to ‘Health spas’.

VII. Hobby tourism-tourism a lone or with groups participate in

hobby. Example might be garden tours, or square dance cruises.

VIII. Medical tourism for what is illegal in one’s own country eg.

Abortion, euthanasia, for non-citizens is provided by “Dignitas” in

Switzerland for advance care that is not available in one own

country.

IX. Perpetual tourism-wealthy individuals always on holidays, some

of them for tax purpose, to avoid being residents in any country.

X. Regional tourism-tourism bundle of few countries as the transit

point. (http://en.wikipedai.org/wik/touism)

2.3 Sustainable Tourism Development

The UN Burundtland Report of 1987 cited by Theodros; 2002 offers the

following definition;

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“Sustainable development is development, which meets the requirements

of the present generation with out endangering the requirements of the

future generation”. This requires a development with out over

exploitation of natural resources and with out destroying the basis of

existence. The goal must be to make growth possible in the mid and long

term while energy consumption and environmental stress under go

absolute decrease.

The world tourism organization (WTO, 1993), in which Ethiopia is a

member, has defined sustainable tourism as follows:-

“Sustainable tourism development meets the needs of present tourists and host regions while protecting and enhancing opportunities for the future. It is envisaged as leading to management of all resources in such a way that economic, social, and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, biological diversity, and life support system.”

The sustainable tourism development principles are there fore derived

from the sustainable development principles. The deference lies on the

scope. Tourism is part and parcel of sustainable development with in the

broad frame work of sustainable development. Sustainable development

of tourism has three basic principles as pointed out by WTO (1993).

i. Ecological sustainability ensures that development is compatible with

the maintenance of essential ecological processes, biological diversity

and biological resources.

ii. Social and cultural sustainability ensures that development increases

peoples control over their lives compatible with the culture and values

of people affected by it, and maintains and strengthens community

identity.

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iii. Economic sustainability ensures that development is economically

efficient and that resources are managed so that they can support

future generation. Tourism is not smoke less any more. The increased

movements of people due to high living standard (high income and

free time) in the north, there is high air and water pollution from the

exhaust fumes of aircrafts, motor cars and motor pleasure boats,

threatening the physical environment. These are the reasons, which

brought about the emergence of the idea of sustainable tourism

development.

2.4 What is Value Chain?

Value chain has several definitions and some of the important definitions

are:

Schmitz (2005), define value chain as a sequence of activities required to

make a product or provide a service. The second definition provided by

Keplins R. and Morris M. is that value chain describes the full rage of

activities which required to bring a product or a service form conception,

through the deferent phases of production involving combination of

physical transformation and the in put of various produces and services,

delivery to final service customers, and final disposal after use.

Value chain also defined as a sequence of productive (i.e. value-add)

activities leading to and supporting end uses (Stugesn T.J, 2001) and a

complex web of companies and other actors that affect the production to

consumption (Blowfield M. sited by denial Roduner, 2004).

The last definition presented on this paper is the definition given by

Agriculture and food council, Canada, is that value chain is an alliance of

enterprises, working vertically to achieve a more rewarding position in

the market place. (K.H.Lei, 2002)

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In generals, value chain describes the full range of activities like

- which are required to bring a product or services from conception

- through the deferent phases of production

- delivery to final customers

- to final disposal after use

Unit of analysis is not a company, a country, or a region, but a net work

of companies embodied in the internal and external governance system,

and the analysis focuses on who adds value where in the chain that is

the leading sector in the value chain. (Denial Roduner, 2004)

2.4.1 Global value Chain

A value Chain is the sequence of activities required to make a product or

provide a service (Schmitz, 2005). In itself value chain is a simple idea.

But the idea of a value chain becomes useful for analytical and policy

purposes. It includes three further features Schmitz pointed. These are:

firstly the activities are often carried out in different parts of the world,

hence the term global vale chain. Secondly, some activities add more

value and are more lucrative than others (the policy-makers’ concern is

to help local enterprise to move in to the lucrative activates). Thirdly,

some actors in the chain have power over the others. The powerful actors

are often called the ‘lead firm’ who seek to govern the chain. The set

and/or enforce the terms under which the others in chain analysis is to

“unpack” the relationships between global lead firms and local producers

and the opportunities and constraints that result form entering such

relationships.

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2.4.2 The Importance of Value Chain Approach for

Policy Makers and Practitioners

As stated by Schmitz, (2005) coming up with good economic policy

appropriate to the level of development in an industry and country

require and understanding of how local enterprises fit in to the global

economy. This way is to focus on the sectors in which the local

enterprises specialize and then ask how the global market for products

from this sector, is organized. As panted out before, often these markets

are not free for all open spaces. The spaces are coordinated by global

buyers who source different products and services form around the

world. There is increasing integration between internationally dispersed

activities.

The general point to be made here is that value chain is important, not

only for the entrepreneurs, but also for the policy makers. Understanding

value chains in an industry allows policy makers and practitioners to

provide relevant and appropriate support to local enterprises.

As pointed out by Schmitz, (2005) public policy aimed at the private

sector typically tries to influence decisions of entrepreneurs (owners and

managers) of the industry. So that, they can grow and improve their

performance. However, entrepreneurs are skeptical of the advice they

receive from government agencies or consultants employed by local or

foreign support institutions. Entrepreneurs do, however, listen to their

customers. If policy makers and practitioners start with this fact, they

can more productively engage with the private sector.

2.5 Value Chain of Tourism Industry

Tourism is one of the largest growing sectors and the fastest growing

sectors in the world and a major driver of growth for developing

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countries. Their tourism market shares have actually increased markedly

over the past two decades. Tourism industry cuts across many sectors,

such as retail, housing construction, hotel, restaurants, telecom and

transportation. Serious policy issues in one of these sectors may threaten

the whole tourism value chain. This makes that analysis of the sector

complex but crucial as it could be the catalyst for widespread reforms of

over looked issues (e.g. Land market) (Diagnostic methodology check list,

2007).

As recommended by diagnostic methodology checklist for tourism study

(2007), tourism value chain analysis includes identifying the main

tourism segments based on countries comparative advantages,

benchmark the countries economic performance on these key segments

with relevant international good practice, policy and institutional issues

which may constrains investment and growth, and then design station.

2.5.1 Identifying the Main Sources of Growth of

Tourism

The identification of the main sources of growth emanates form a five fold

exercise involving profile of the tourism sector, a stock taking of existing

and potential new sources of growth and comparative advantage, scope

of sources of markets. These exercises will ultimately bring about sub set

of tourism products in which the country has a comparative and

competitive advantage.

A. What is the tourism profile?

The profile has four parts that is the macro setting, the demand and

supply side and the institutional framework of tourism sector. For this

task the balance of payments statistics (IF/National Bank), the world

travel organization and world travel and tourism council provides good

data points (ibid).

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Macro

As stated by Diagnostic Methodology check list for tourism study, this

includes three important elements that are important for tourism value

chain. They are:

- Basic macro back ground of the economy (structure-

manufacturing, service etc… GDP per capita level and growth,

private and foreign investment as share of GDP);

- Tourisms contribution to the economy-share of GDP and growth

trend: contribution to growth, exports and foreign exchange

earnings; fiscal effect-taxes fees and incentives; job creation;

- Structure of the tourism industry-number of firms, owner ship and

management, employment, direct and indirect, fulltime/per time,

seasonality.

Demand

As stated by Diagnostic methodology checklist for tourism study, (2007)

the demand part of tourism value chain includes: number of foreign

tourists, average length of stay and average daily expenditure, percentage

of tourists return (level and grow trends), main categories of foreign

tourists by socio-demographic profile and country of origin as well as

seasonality’s, revenue by main tourist categories and market shares

(regional and global).

Supply:

As stated by Diagnostic methodology check list for tourism study (2007)

the supply part of tourism value chain also include; main tourist

attraction and circuits, size and structure of industry of hotels and other

accommodation, structure of key services sectors in tourism (such as

restaurants, bars, good transportation), structure of key activities service

providers in tourism (such as diving, horse back riding, guide tours,

fishing adventure activities, main tourist project in the pipeline).

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Policy and Institutional Framework

As stated by this Diagnostic Methodology check list for tourism it can be:

public institutions (ministry, statuary body, etc.), Private institutions

(business associations and business councils), tourism legislation-laws

and regulatory practices (licensing, classification, inspection), does a

country rely on a planning frame work-at what level, national, regional or

local, inventory of relevant policy issues, reforms under way or being

discussed are included.

B. Potential and recognized sources of growth and

comparative advantage

As stated by Diagnostic methodology checklists for tourism study, some

summary of the main sources of comparative advantage of tourism as

follows. These includes cultural assets, natural assets, labourassets,

reliably secured environment, access to world class health care,

education, low access cost (to and with in country), low labor cost,

low/and cost, and proximity to major/growing sources of tourists (ibid).

C. The current and potential tourist products where the

country could be competitive.

As stated by Diagnostic methodology checklists for tourism study, this

includes sun, sand and sea; other natural offerings (e.g. game reserves,

national parks, water falls, mountains); natural events (e.g, volcano

eruptions, eclipse); eco-tourism; sport events; sport offerings (eg. Golf,

rafting, diving, horse back riding, fishing, bird watching and hunting),

adventure activities; festival events; religious events; visiting friend and

families; boating; cultural offerings (e.g. land marks/heritage; theme

parks, museums, archeology, opera, music and dance); other cultural

events and offerings (e.g. spa, serenity, dining, night life, shopping,

gambling, leading hotels); stop on regional circuits; learning facilities

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(language, music, dance); retirement homes; nursing homes; weekend

homes; and conferences.

D. The potential target markets with in the value chain of tourism

As sated by Diagnostic methodology checklist for tourism study, they are

young students, back packers, young professional bachelors, returning

emigrants, expatriates, traveling business men, local business men,

young families, upper in come foreign couple, and retirees.

2.5.2 Identifying the key policy and institutional

constraints affecting performance

According to Diagnostic methodology checklists for tourism study and

intuitional constraint include:

I. Issues affecting tourists directly such as security concerns (social

unrest, terrorism, crime/theft, harassment by people and/or policy,

lack of regulations/enforcement on road traffic), health concern

(HIV/AIDS,) food poisoning, tropical diseases, water safety, in

adequate health care services, restrictive emigration policies (eg.

Foreign retirees), issues with access to and ground services with in

the country (in adequate infrastructure, policy and governance issues

in the transportation sectors), payment issues (foreign exchange

services, credit card facilities), and issues with

management/governance of key tourist cultural land marks.

II. Issue affecting investors directly as stated by Diagnostic methodology

check list for tourism study, it includes difficult access to land

(unsecured property rights, problematic access to government and

customary land, issues with land use rights and development

policies), issue with the work force (relative emigration policies for key

workers, high minimum wages, social security, hiring/firing

regulations, unequal enforcement of regulation, training and

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education issues, corporate social responsibilities and gender issues),

restrictions on FDI for key products and services, barriers to trade for

key imports (e.g. food products), contract enforcement issues (eg.

ineffective commercial courts, problematic enforcement of courts

decisions, lack of alternative dispute resolution , access to finance

issues (e.g. lack of mortgages and secured lending), fiscal issues (high

taxes and/or unequal enforcement), and administration barrier issues

(business registration and inspections).

III. Sector specific policy issues as stated by Diagnostic Methodology

checklists for tourism study, it includes in adequate environment and

conservation policies, licensing policies and practices for key products

or services (e.g. hotels, restaurants, taxis, etc), restrictive policies

(and/or unequal enforcement) in retail and other entertainments (e.g.

opening hours, zoning, price regulations), standard certification

issues (policies and unequal enforcement for key services. (eg hotels,

restaurants, taxis, diving and nursing), and telecom sector policy and

enforcement issue leading to poor internet and mobile services. (ibid)

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CHAPTER THREE

3. DATA AND TREATMENT OF THE DATA

The study will be conducted based on secondary data to show the value

chain of tourism and problems with in the value chain. This includes

data on the stock of resource of Ethiopia which is one of the value chain

of tourism, like number of national parks and their area as well as

regional distribution, game reserves and sanctuaries with their area as

well as regional distribution which constitutes some of profile of tourism

base of Ethiopia. The next data is the national tourism policy related

which includes budget allocation and visa and exit tax price by

comparing with neighboring country Kenya and problems related with

this value chains.

This paper in addition, include tourist accommodation and

infrastructure which is the third with in the value chain of tourism that

include data’s on transportation like major sites and their accessibly by

road to show the quality of road, cost of ticket by bus and distance from

the capital city, and major sites and their accessibility by air to show the

quality, size of the plane and cost of flight whether comfortable to

tourists or not. This value chain of tourism also includes data on

accommodation like distribution of hotels by region, star and

recommended hotels for tourists, ownership as well as new additional

hotels under construction to investigate the quality and quantity of

hotels, besides the general evaluation of tourists facilities, it is important

to see how the services provide look like in the eyes of tourists. This was

shown by the data on tourism rating of hotels and restaurants and

average rating the tourism products by tourists.

This paper also uses data on Ethiopia’s market share in the world

tourism market in both arrivals and receipts to show the effect of

20

promotion and advertisement on tourism which is within of the value

chain of tourism and problems with in this to low performance of this

industry.

The paper has in addition data related with the level of education and

training among hotels and tour operators to show the quality of facilities

which the country offered to the tourists arrived to the country. This

data is an indicator within the value chain of tourism that is skilled man

power and problems related to skilled man power.

The data on arrivals and receipts from 1991-2005 via Addis Ababa and

other ports also used to investigate the political and social stability of the

country which is within the value chain of tourism and data on arrivals

by age and gender group for 2003, 2004, and 2005 to investigate the

attitudes and habits of the people to visit with in the value chain of

tourism, are used in the paper. This shows the effect of gender and age

on the people’s behavior to visit or to move for pleasure.

The last data this paper uses is that the basic telecom statistic to show

the level of development of telecommunication in the country which is

within the value chain of tourism, and problems with in telecom services.

The above data’s are obtained from National Bank of Ethiopia i.e data’s

on arrivals and receipts form 1991-2005 via Addis Ababa airport and

other ports; Ministry of Culture and Tourism which is a place where

much of the data obtained for this paper i.e. data’s like budget allocation

for tourism, number of hotels, recommended hotels, ownership, and new

additions, distribution of hotels and stars, level of education and training

amongst hotel and tour operators, arrivals by age and gender group for

2003,2004 2005; World Tourism Organization which the paper gets data

on Ethiopia’s market share in the international tourism market form

21

1991 to 2003; Central Statistic Authority (CSA) which contributes some

data to this paper like data on number of national parks, game reserves

and sanctuaries with their area coverage in square kill meters as well as

their regional distribution; Ethiopian Road Transport Authority which

contributes data on major sites and their accessibility by road for the

fulfillment of this paper; Ethiopian Airline which the paper takes major

sites and their accessibility by air; at the last Ethiopian

Telecommunication which the data like summery of basic

telecommunication statistics are obtained from it.

With regard to the methodology the paper focuses on the value chain

analysis i.e. a sequence of activities that includes main tourisms

segments, bench mark the countries economic performance on these key

segments with relevant international good practice, policy and

institutional issues which may constrains investment and growth, and

then design solution; and descriptive analysis supported by statistical

fools such as tables, percentage, and ratios.

Figure 2 Value Chain of tourism

Stock of resource

- national parks

- game reserves

- sanctuaries

- other cultural

and natural attraction sites

Promotion

and

advertisement

Tourist services

- visa and exist

price

- transportation

like, road, air etc

- telecom

Accommodation

- hotels

and

restauran

ts

- conferen

ce

Tour operation

- guider (training of it)

22

CHAPTER FOUR

EMPIRICAL ANALYSIS

With wide resource base for tourist attraction resources, Ethiopia has the

potential to establish tourism industries that can assist the effort in

achieving a major economic transformation. With the existing resources,

it is also believed to pay a vital role in the poverty reduction endeavors of

the country and meeting the Millennium Development Goals (MDGs) by

absorbing a large number of labor force both skilled and unskilled with

gender consideration thus making the economic independence of woman

possible.

In this chapter there will be a brief discussion of value chains of tourism

and problems with in the value chain of tourism in Ethiopia.

4. Value Chains of Tourism and Problems with in the Value

Chain in Ethiopia

Even though there are numerous sectors and services with in the value

chain of tourism sector this paper focuses on some of the value chains of

tourism in Ethiopia that affects more the tourism industry of Ethiopia.

Thus, what follows a particular treatment of the sectors with in the value

chains of tourism with grater importance and problems with in the value

chain.

Figure 3. Value chain of tourism of Ethiopia

Stock of resource

- national parks

like Awash, Omo,

semen mountain etc…

- game reserves

like Balo, Gambela

Mango etc…

- sanctuaries

like Harer, Yabelo

- other cultural and

natural attraction sites

like Gonder castle,

Axum obelisks,

lalibela, lower Awash

etc…

Promotion and advertisement

By using

- ETV, Ethiopia

Radio, FM, News

Papers,

Magazines etc…

Tourist services

- visa and exist payment

- transportation like,

road, air etc

- telecom etc

ETC

Accommodation

- hotels and

restaurants

like star,

recommended etc

- conference

facilities

like African Hall

etc…

Tour operation

- guider

(Training of it)

23

24

4.1 The Stock of Resources

Economic activity depends first and for most on the stock of resources

available to use as factors of production. In traditional economic terms,

these include the resources of land, labor, capital and entrepreneurship.

Tourism calls on particular resources concerned with land and its

attributes, and the uniqueness of simple possession of these attributes

can ultimately dictate whether or not an economy is likely to be able to

support the sector.

The role and activities of modern tourism however demanded more than

land attributes. Most tourism involves some elements of services, which

requires a competent and willing labor force. According to Dekadt (1997)

whilst many jobs in the industry may not require a very high level of

traditional skills and qualifications, the presence or absence of a pool of

labor with a positive attitude towards tourism and tourists has of vital

importance.

4.1.1 Profile of Tourism Resource base in Ethiopia

All in all, Ethiopia has natural attraction sites i.e eight national parks

with total area of 11570 sq.km which accounts 1.04% of the total land

area of the country, ten game reserve possessing an area of 26600sq.km

that accounts 2.39% of the total land area of the country and

sanctuaries which possesses 7200 sq.km that accounts 0.6% of the total

land area of the country.

And also the country is endowed with cultural heritages like Axum

Oblisque, Gonder Castle, Lalibela Rock hewen churches, Awash Valley

(Hadar), Omovalley, Jegol (Harer) wall, and Tikel Dengay(Tia), and other

natural attractions like Lake Tana and its monasteries, Tis Issat, Sofemer

Cave, Eartali active Volcano, Rift valley and biodiversities with in the Rift

25

vally and attractive wild animals like Walia, Nyala, simen fox (Red Fox),

Zebra, birds and others. In addition to the above, the country endowed

with various nations and nationalities with diversified cultures and

colors which is attractive for tourists.

In general, Ethiopia with its vast area above 1,112,000 sq.km is endowed

with various tourist attraction sites including parks, game reservers,

sanctuaries, cultural heritages and others.

Table 4.1.1 (a) National Parks

National Parks Region Area sq.km Awash Afar 750 Simen mountain Amhara 150 Rift vally Oromia, SNNP 650 OMO SNNP 3,450 Denakil Afar 2000 Mango SNNP 700 Nechisar SNNP 700 Total area 11,400 Source: CSA

NB: sq.km- square killo meter

Table 4.1.1 (b) Game Reservers

Game Reservers Region Area in sq.km

Awash kled Oromia 800 Aledege Hareri 2100 Bale Oromia 10,800 Gambela Gambela 3,400 Mango SNNP 800 Gewale Hareri 2000 Mnie Tenado Amhara 1000 Sendo Amhara 400 Stefenie SNNP 600 Chie Tigray 600 Total Area sq.km 26,600 Source: CSA

26

Table 4.1.1 (c) Sanctuaries

Sanctuaries Region Area in sq.km

Harer Hareri 6000

Yabelo SNNP 1,200

Total Area sq.km 7200

Source: CSA

Ethiopia has national parks and Game reservers which are distributed

among regions of the country. Omo national park which is found in

SNNP is the largest covering an area of 3450 km.sq followed by Denakil

National Park. When it comes to game reservers, Bale is the biggest with

an area of 10,800 sq.km which is found in Oromia region and the last in

area is sendo which is found in Amhara region.

In Ethiopia the number of sanctuaries seems too small. One of the

sanctuaries called Harrer found in Harreri region which covers an area of

6000sq.km and the other is Yabelo which is found in SNNP region, which

covers an area 1200 sq.km.

Table 4.1.2 Other Major Tourist Attraction Sites by Region and Recognition by UNESCO

Major tourist attraction sites Region Recognized by UNISCO

Gondar Castle Amhara Recognized Axum oblisks Tigray Recognized Lalibela Amhara Recognized Lower Awash (Hadar) Afar Recognized Jegol Wall Harreri Recognized Sofomer cave Oromia Unrecognized Tis Issat Amhara Unrecognized Omo Vally SNNP Recognized Tia SNNP Recognized The Islands monastires of Lake Tana

Amhara Unrecognized

Yeha Tigray Unrecognized Source: Ministry of Culture and Tourism

27

As we see from the table above, Ethiopia has different natural and man

made tourist attraction sites which are distributed among the regions of

the country and most of them are recognized by UNESCO as world

heritage i.e. eight of them are recognized as world heritage by UNESCO.

These include Axum Oblisks, Lalibela rock hewncharehes, Gonder

Castle, Omo vally, Hadar (where lucy was discovered), Tia’s curved

standing stone and Simen National Park, and Jegol wall is recognized as

worlds heritage recently. From this Amhara region has possessed three of

the eight sites recognized by UNESCO as worlds heritage and has high

contribution to the development of tourism industry; and followed by

SNNP.

As a result the recognition of the above tourist attraction sites as world

heritage is important for the development of tourism industry in Ethiopia

by attracting large number of tourists to the country and used to change

the image that was attached to Ethiopia in previous years i.e. drought

and famine. Indeed, the above tourist attraction sites are not the only

sites but they are major ones indicated by ministry of culture and

Tourism. There are large number of tourist attraction sites which are not

recognized as tourist attraction sites and not included in the table. This

is due to the problem with in the value chain like lack of transportation,

lack of promotion and advertisement, low level of technical skills and

others.

Moreover Ethiopia is unique among African countries to attract tourists

due to the fact that:

(1) Ethiopia is a cradle of man kind as evidenced by the Skelton

of Lucy and Selam that were found in Afar by Prof. Johnson

in (1974) and Zeresenay Alemseged in (2006) respectively,

(2) The country have its own alphabet (script),

(3) It has its own calendar which has 13 months

28

(4) The Ark of the Covenant which is believed that God gave to

Mosses is suspected to be placed in Ethiopia in Axum

Tsiyion. Etc.

4.2 Promotion and Advertisement

Tourism promotion and advertisement in Ethiopia is expected to under

take:

• Sustainable hotel services especially star hotels and other

restaurants

• Effective tourist attraction areas and service promotion in the

country.

Hence, tourism advertisement and promotion are the basic elements of

tourism marketing both in increasing the number of tourist arrivals and

increasing the level of revenue from the industry.

In Ethiopia the above mentioned activities are not well done because of

inadequate financing given to the industry. As a result of this the country

couldn’t get sufficient market share in international tourism market. For

instance as we see from the table 4.2 the market share of the country in

international tourism market is almost negligible in both tourist arrival

and receipts. Ethiopia’s share in receipts show ups and downs i.e. in

1991 its share was about 0.0074%, in 1995 it declines and reach

0.0064% and by 1997 it increases slightly and reaches the figure of

0.0099% and then decreases to 0.0073% in 1998. After 1998, it shows

up ward movement i.e. in 1999 grows to 0.0075% then the market share

in receipts nearly doubles and reaches to 0.0143% in 2000 and increased

to 0.0172% in 2003.

Ethiopia’s share interms of number of tourists arrived also shows up and

down. As we see from the table below arrivals share of Ethiopia decreases

from 0.0176% to 0.0165% in 1991 to 1992 and then increases to

0.0179% in 1993. It also decreases to 0.0178% in 1994 and the share

29

increases from this on wards to 1997 and then decreases from 1997 to

2000. After this it shows increment i.e. increase from 2000 to 2003. This

shows the instability of tourist flows into the country due to problems

with in the value chain like inadequate promotion and advertisement

activities.

The promotion and advertisement activity to promote the country’s

tourist sites was not sufficient in comparison with other countries.

Moreover, very poor tourism promotion services have occurred. These

problems have seriously affected the tourism market and image of the

country.

Table 4.2 Ethiopia’s Market Share in the International Tourism

Market from 1991 to 2003

Description World total Ethiopias share Amount

Percent

1991 Arivals Receipts

Thousands Millions us $

466,044 271,827

82 20

0.0176 0.0074

1992 Arrivals Receipts


503,617 308,596

83 23

0.0165 0.0075



519,045 324,090

93 22

0.0179 0.0068



550,471 353,998

98 25

0.0178 0.0071



565,495 405,110

103 26

0.0182 0.0064



596,524 435,594

109 28

0.0183 0.0064



610,763 435,981

139 43

0.0228 0.0099



535,485.00 450,556.30

112 32.7

0.0209 0.0073



549,175 450,181

115 33.6

0.0209 0.0075



685,500 476,400

136 68

0.0198 0.0143



684,000 464,400

148,4 75

0.0217 0.0161



703,000 482,300

156.3 77.1

0.0222 0.0160



691000 524200

179.9 89.9

0.0260 0.0172

Source: World Tourism Organization

30

4.3 National Tourism Policy

Tourism industry needs a properly formulated and sound tourism sector

policy for its conducive development. In Ethiopia, although there are

some policies related to tourism, one of the fundamental problems in

tourism sector development is the absence of clearly specified tourism

sector policy. Because of these policy problems, it is difficult to

coordinate the various institutions and organizations directly or

indirectly affecting the activities of tourism and to ensure the protection

and development of the countries tourist attraction.

4.3.1 Budget Allocation for Tourism

One of the factors that affects the quality of services and success of the

tourism industry is budget allocation to the sector i.e. the total budget

allocated to the sector is generally low as compared to the other sectors

of the economy such as agriculture and industry.

(Table 4.3.1) Budget Allocation for Tourism

Fiscal Year Budget allocated (in USD)

1998/99

1999/2000

2000/01

64,252

65,058

260,858

Total 390,168

2001/02 121,329

2002/03 93,240

2003/04 93,240

Total 307,809

Overall total 697,977

Source: Ministry of Culture and Ttourism, CSA

As (table 4.3.1) shows that there is a fluctuation with a declining trend in

the budget allocated to the sector. The budget allocated in 1999/2000

31

has shown an increase $806 than it was during the previous year. The

budget in the new millennium has shown, a 400% rise than the year

before, the next year shows a decline of $ 139,529 with constant decline

in the following two years. This fluctuation implies that there is a

problem of maintaining constant budget allocation standards leading to

fluctuation to earnings from the sector thus its contribution to the

national economy. Fluctuation in budgetary allocation can also affect

development works in and around tourist sites, thus failure to handle

tourists during peak seasons resulting in dissatisfaction among visitor’s

contribution to the GDP.

One of the main factors that can be sited to the lower number of tourist

visits in Ethiopia is its reputation as a poor nation, which is affected by

repeated drought and famine. Thus this requires undertaking a wide

range of promotional activity on the part of the government. However,

lower budget implies lower promotion of the tourism resources of the

country and this means that a lot of tourists are curtailed from knowing

what the country is really looking like and are not encouraged to visit.

4.3.2 Visa and Exit Tax Payment

Besides the natural and man made tourism endowments, visa and exit

tax payments play a vital role in making a particular country interesting

to a foreign visitor. If one wishes to visit a nation that doesn’t have an

embassy in his home town (capital city), then he needs to send his

documents to that particular country in order to make his visit a reality.

However this makes one’s travel costly because there will be added postal

and time costs. The number of countries from which visas are required

also has its own bearing on the number of tourist inflow.

32

(Table 4.3.2) Visa and Exit tax Payment Comparison of Ethiopia to

Keny (in USD)

Ethiopia Kenya

Visa free (single entry) 70 57

Air port tax 20 0

Getting in and out 90 57

Number of countries that do not require a visa 2 52

Source: World Travel Guide

The table shows that comparing the Ethiopian visa free for a single entry,

air port tax and transit fees, with the neighboring country Kenya, which

is claimed to be one of the successful countries in tourism, the fees are

much higher in Ethiopia than in Kenya explaining one of the reasons

behind Kenya’s success in the sector.

In considering the numbers of countries that do not require visa to enter

a nation are 52 to Kenya and only 2 countries which do not require visa

to Ethiopia, limiting the number of inflow of tourist. Thus leading to

lower earnings in the Ethiopian case.

4.4 Tourist accommodation Facilities and Infrastructure

Provision of efficient and standardized tourist accommodation and

infrastructure is one of the essential services in tourism industry

development. If there is a lack in all or some of these services such as

provision of lodging and food, transportation etc, the tourism sector will

collapse.

4.4.1 Transportation

Transportation for tourism is an essential element of the tourist product

in two ways: it is the means to reach the destinations and it is necessary

as a means of movement at the destination (Winhil et al, 1998).

33

The most obvious way of analyzing by mode to denote the manner in

which transports take place. There are four major modes of transport:

road, rail, water and air. But in Ethiopia air and road transports are the

most appropriate modes of transportations to reach major tourist

attraction sites.

(a) Road Transport

Road transport is dominated by the motor car and coaches. In deed, the

car is almost the perfect tool for providing door-to-door flexibility, going

views of the landscape and a means of transporting recreational

equipment (Adrian, 1995).

The number of tourist visit to a particular site is highly affected by its

infrastructural facility and its accessibility by major means of transport

particularly-road.

As the table 4.4.1 (a) expresses the accessibility of different tourist sites

by road interms of their distance from Addis Ababa or other major cities,

the time it takes, the cost of round ticket by bus in birr, road quality and

considers future plans to up grade the road for the betterment of the

service below. As can be seen from the table the cost of transportation to

get to the tourist sites is relatively cheaper to both foreigners and local

tourists. However most of the roads are in poor conditions with the

exception of the road to Hadar and Awash national park; and the road to

Netchsar discouraging the use of land transport. The poor status of roads

also means longer travel time ruling out the lower cost option of road

transport. Most of the sites take between 1-3 days to reach from Addis

Ababa due to poor status of the road.

34

And as to the future plans, in nine out of twelve sites there in no plan of

up grading the road to the sites while in 3 sites under consideration, up

grading works have commenced but not completed.

Table 4.4.1 (a) Major Sites and their Accessibility by Road

Name of sites Distance from A.A or other sites (in km)

Time it takes

Cost of round ticket by bus/birr

Road quality Plan to up grade road

Bahir Dar and its monasteries

565 1.5 days 135.80 Partially good Under the government action to up grade

Blue Nile falls 32 from Bahir Dar

1 hr from Bahir Dar

150.80 Poor road No

Gonder 768 from A.A 83 from Bahir Dar

2 days 200 2/3 good 1/3 poor

-

Semien mountains

101 km to Debark $ 50 km from debark to the mountains

2.25 days 250 Gonder to Debark is poor and Debark to the park is rough road

No

Axum 1005 from A.A

25 days Partically good No

Lalibela 642 from A.A and 241 from Dessie

2 days 200 520 kms good $ 122 kms poor

400 km road is under constriction

Harrer 535 km from A.A

1 day 110 Good No

Jima 335 km from A.A

1 day 75 Not good Up grading has started

Up grading has started

Hadar - 1.5 days - Very good - Awash National park

190 km from A.A

0.5 day 40 Very good -

Bale mountains National park

450 km from A.A

1 day 100 Partially good No

Netchisar National Park

510 km from A.A

1 day 110 Very good -

Source: Ethiopian Road Transport Authority

(b) Air Transport

The chief mode of travel to Ethiopia for tourist is by air, and the main

carrier is the Ethiopian Airline. Major international carriers such as the

Lufthansa, Alifalia and Saudi also land at Addis Ababa, the principal gate

35

way to Ethiopia. Several other airlines are at various degrees of

negotiation to fly to Ethiopia.

Table 4.41 (b) Major Sites and their Accessibility by Air

Time

full

Name of

site

Daily flight

schedule

Cost of (USD)

Flight

Time of

flight/hrs

Size of

plane

Carrier

Residents Non-

residents

Full Bahir Dar Twice in a

day

62.6 140.6 1.5 52 seats 757

Full Gonder Twice in a

day

82.6 187.6 1.4 52 seats 737

Full Axum Once daily 107.6 245.6 2 52 seats 737

Full Lalibela Once daily 82.6 187.6 1.05 52 seats 737

Full Diredawa

to Harreg

Once daily 80.6 181.6 1 52 seats 737

Full Arba

minch

Twice in

aweek

65.6 146.6 1.2 52 seats 737

Source: Ethiopian Airline

Even though the above table shows that most of the flights are full which

is shown in column, there need to be a plan to increase the number of

flight time to each site so as to satisfy both residents and foreigners as

shown in column three. Though there is a gap between the price for

foreigners and residents are charged, they remain expensive to most of

the residents that are at a low or average level of income. Thus there

should be a means of reducing the cost for local travelers to encourage

resident’s visits to different sites.

4.4.2 Telecommunication

Ethiopian Telecommunication Corporation (ETC) is the sole state owned

telecom service provider in the country. According to the Annual

Statistical Bulletin (2005/06), ETC provides national and international

36

telecommunication services using various media of communication such

as satellite, Micro wave, Digital Radio Multi- access system (DRMAS),

VSAT, UHF, VHF, long line and HF Radio. Currently, ETC is serving the

public with its ‘904’ public and exchanges, which showed 4.85 percent

annual growth vis-à-vis the precious years.

Consequently, the total number of fixed telephone subscription

(residential, business, government and others) has increased from

610,347 in 2004/05 to 725,046 in 2005/06 revealing 13.25 percent

annual increase over that of previous year. The number of waiting list for

fixed telephone subscribers, however, has decreased by 5.41 percent

from 58,755 in 2004/05 to 56,053 in 2005/06 (Table 4.4.2).

At the same time, the number of mobile subscribers reached 866,700 in

the review year demonstrating 100.13 percent growth over the previous

year level of 410,630 subscribers. But the policy followed by Ethiopian

Telecommunication Corporation (ETC) is not suitable for tourists to get

mobile services. Due to telecommunication service is supplied by the

government only, that is the rules and regulations followed by ETC are

not suitable for tourists.

In other countries like South Africa Kenya, North American countries

and Europeans mobile service give to those persons even coming to their

country for one day or two day conference. Out it is true opposite to

LDCs (Mekonen, 2006). Even ETC began to provide mobile services to its

citizens in 1991 E.C. (1998/99). i.e. it is a recent phenomenon as shown

on the statistical Bulletin of ETC. It is only in 2000 E.C (2007/08) ETC

provide for visitors of the millennium who are more interested visitors.

Even ETC has no rules and regulations related to mobile service to

visitors. In the related development, the number of internet subscription

went up from 17,710 in 2004/05 to 25,724 in the review year registering

37

42.8 percent increase. Reflecting the increased performance in fixed

telephone, mobile and internet subscription, the country’s

telecommunication penetration rate (tele-density excluding mobile or the

number of telephone subscribers per 100 inhabitants) has increased

from 0.83 in 2004/05 to 0.98 in 2005/06. The penetration rate was

higher (2.14 per 100 inhabitants) when mobile subscriptions are

included.

With respect to telephone traffic, the registered domestic traffic picked up

by 13.44 percent from 2,341.99 million pluses in 2004/05 to 2,475.56

million pluses in 2005/06. Similarly the out going international

telephone traffic calls has increased from 8.6 million in 2004/05 to 11.48

million in 2005/06.

In the country’s five year plan (development strategy) “Plan for

Accelerated and Sustainable Development to End Poverty”, (PASDEP), it

is planned to increase the number of fixed line subscribers from 830.000

in 2005/06 to 3.2 million by the end of 2009/10. The number of mobile

subscribers and internet users, on the other hand, is expected to pick up

to a respective 6.67 million and 193,100 by the end of the plan period

from 1.465 million and 48,970 in 2005/06.

38

Table 4.4.2 Summary of Basic Telecom statistics (1993-1998 EC

(2000/01-2005/06)

No

Item

Years Annual

growth

(%)

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

1 Public station and

exchange

649 700 770 784 865 904 4.85

2 Telephone

subscribers line

283683 353,816 404,790 484368 610347 725,046 13.25

3 Waiting list for

telephone

155208 139095 146662 156,963 58,755 56,053 -5.41

4 Mobile telephone

subscription

27532 42910 51234 155,534 410,630 866,700 100.13

5 Number of internet

subscription

4073 6740 9534 12155 17,710 25,724 42.80

6 Domestic traffic

(pulses)

1253.41 1573.99 1896.337 2,225.14 2,341.99 2,475.56 13.44

7 International

telephone traffic

4.62 4.62 4.93 6.67 8.57 11.48 12.90

8 Population 65.394 67.22 69.13 71.10 73.20 75.2 2.97

9 Tele density 0.43 0.53 0.59 0.68 0.83 0.98 10.11

10 Tele density

including mobile

0.48 0.59 0.66 0.90 1.3 2.14 30.82

Source: Ethiopian Telecommunication, Annual statistical Bulletin, 2005/06

4.4.3 Accommodation

Accommodation is a necessary component in the development of tourism

with in any destination that seeks to serve visitors other than day

trippers. The quality and range of accommodation available will both

reflect and influence the range of Visitors (Copper, Frecher, Gillbert,

Shepered and Wan hill, 1998)).

According to Adrian (1995), accommodation might be classified into

commercial sectors such as hotels, motels, gust houses, holiday campus,

etc… Among these, hotels and conference facilities are the most

important elements of accommodation facilities in Ethiopia.

39

Hotels

The development of hotels is necessary condition for the development of

tourism industry. After hard travel, and site seeing tourists desire

comfort when they return to their rooms in the evening. Thus if tourists

are to be satisfied and tourism to grow, hotel rooms should be of a

tourist standard and be able to accommodate guests during peak periods

with reasonable prices.

(a) Availability of hotels and Ownership in Ethiopia

The table below depicts the number of star and recommended hotels,

ownership structure, and new additions.

Table 4.4.3 (a) Number of star hotels, recommended hotels, ownership, and new additions until 2005

Region No of hotel

available

No of rooms

% of Government ownership

New hotels under

construction

New rooms to be added

Hotels recommended for tourist among available

Addis Ababa 66 3823 47 0 0 5 Afar 4 109 17 0 0 0 Amhara 51 1455 47 6 271 5 Benshangul Gumuz

1 26 0 0 0 0

Dire dawa 14 405 31 0 0 2 Gambella 1 222 100 0 0 0 Harrari 9 238 30 4 401 15 Oromia 148 4072 31 4 401 15 SNNP 61 1378 24 3 93 5 Somali 2 104 0 0 0 1 Tigriay 31 1018 15 2 128 8 Total 388 13105 15 893 46 Average 31.5

Source: Culture and Tourism Minister, CSA

As explicitly illustrated on the above table, there are only 388 hotels in

the whole nation with 13105 rooms of which nearly one third of which

are state owned. Regarding new additions there are only 15 hotels under

construction, which are expected to accommodate additional 893 guests.

And as to the regional distribution of hotels, 17% are situated in Addis

40

while 38% are in Oromia, 13% in Amhara, nearly 16% is situated in

SNNP and 8% in Tigray etc… In addition, from the total number of hotels

of 388 only 46 of them are recommended for tourists which have

adequate provision of lodging and food, transport accessibility like road

to the hotel and adequate parking, clean water supply, sanitary facilities,

security services, post and telephone services, electricity etc...

The above fact shows that there is no enough accommodation facility in

the country with the necessary facilities like telephone and a continuous

supply of electricity and other facilities that ensure tourists’ satisfaction.

Deeply, there is uneven distribution of hotels among regions with which

shows that there is an imbalance between the number of visitors and

available accommodation facilities. This can be seen in the case of

Benshangul Gumuz, Gambela, Dire Dawa, Afar, and Somali in these

regions there are many tourist attraction sites but totals are no more

than 15 in each. Aneven worse scenario is the case of Benshangul

Gumuz and Gamblla, where there is only one hotel in each,

accommodating only 26 and 22 people respectively regardless of the

quality of the service provided.

The construction of 15 hotels does not necessarily mean that there will

be enough tourist absorption capacity during peak periods. The fact that

most of hotels being owned by the state implies that further

development/construction works are subject to government budget to

the sector which is not sufficient let alone to add new ones, to sustain

the quality of the existing ones. This leaves the standard of hotels at low

level, not deserving the star rating given to them and unworthy of the

price charged for their services.

Regarding the number of recommended hotels, it shows the low level of

performance in hotel quality, which is not enough to fulfill tourist

demand, since only 12% of the hotels are recommended for tourists.

41

4.4.3 (b) Distribution of hotels in Ethiopia Table 4.4.3 (b) distribution of hotels in general and star hotels by region (end of 2005)

Regional state 1-star 2-star

3- star

4-star

5-sar Classified Not classified

Total

Addis Ababa No hotels 14 16 13 4 2 12 5 66 No rooms 1002 432 620 337 695 496 221 3823 No beds 1484 480 880 497 1074 755 313 5483 Amhara No hotels 10 1 5 0 0 8 27 51 No rooms 213 45 307 0 0 367 523 155 No beds 360 93 598 0 0 510 641 2202 Dire dawa No hotels 5 2 1 0 0 0 6 14 No rooms 81 67 68 0 0 0 189 405 No beds 93 105 118 0 0 0 252 568 Harari No hotels 1 2 0 0 0 0 6 9 No rooms 42 44 0 0 0 0 152 238 No beds 80 54 0 0 0 0 164 298 Oromia No hotels 12 7 0 0 0 16 113 148 No rooms 818 236 0 0 0 544 2474 4072 No beds 1920 280 0 0 0 829 2834 5863 SNNP No hotels 12 3 0 0 0 4 42 61 No rooms 342 116 0 0 0 150 712 1320 No beds 492 217 0 0 0 199 770 1678 Tigray No hotels 8 3 2 2 0 1 17 31 No rooms 210 96 91 168 0 21 432 1018 No beds 240 150 155 207 0 30 455 1237 Somali No hotels 2 0 0 0 0 0 0 2 No rooms 81 0 0 0 0 0 0 81 No beds 179 0 0 0 0 0 0 179 Gambela No hotels 1 0 0 0 0 0 0 1 No rooms 41 0 0 0 0 0 0 41 No beds 79 0 0 0 0 0 0 79

Source: Ministry of Culture and Tourism, CSA

Table 4.4.3 (b) shows us the most important problem for tourism

development in Ethiopia, which is uneven and inadequate distribution of

hotels in the whole of the country. As we see from the table, most of the

efficient and standardized hotels are found far from the tourist attraction

sites of the country. Most of the hotels which have star are found in

42

Addis Ababa, i.e. about 128 total with star hotels 49 are found in Addis

Ababa, and the remaining are distributed in the rest of the regions. For

example, Oromia which has the highest share in regional distribution of

hotels contributes only 19 star hotels to the country. This shows high or

large quantity but low quality hotels as well as low quality of services

supplied to the tourist which affects the performance of the tourism

industry.

4.4.3 (c) Tourism Rating of Hotels and Restaurants

Besides the general evaluation of the tourist facilities, it is important to

see how the services provided look like in the eyes of tourists. The table

below sows tourist rating of the facility provided by hotels and

restaurants like rooms, quality of dining variety and other services in

relation to its momentary value of the services.

Table 4.4.3 (c) Tourism Rating of Hotels and restaurants

The quality of rooms and facility

The quality and variety of dining

The quality of service

Value for money

Total travelers 3.0 3.0 3.4 3.7 Low budget travelers (<$40 per day)

3.1 3.1 3.4 3.8

High budget travelers (>$40 per day)

2.9 2.6 3.2 3.4

Note: rating scale 1-5 with 1=very poor, 2-poor,3-average, 4=good 5=very

good

Source: IF team survey with the support of Ministry of Culture and Tourism

It can be seen that most of the services provided by hotels and

restaurants and rated as ‘average’ while the quality of rooms and verity of

dining are rated poor by the high budget travelers indicating the needs

for lot of work to upgrade the services provided so as to satisfy both high

and low budget travelers. Monetary values for all the services are rated

43

average revealing the belief of tourists that what they get is not worth

what they paid, again indicating a disadvantage to future sectoral

development.

4.4.4 Average Rating of Tourism Products by Tourists

Table 4.4.4 Average Ratings of Tourism Products by Tourists

The ability

to use cash

and credit

cards

Control of

un official

guides and

beggars

Personal

security

The cost &

regulation

of taxis and

buses

Total 2.0 2.3 3.6 3.2

Europe and

America

1.9 2.1 3.6 3..3

America and

Asia

2.5 3.0 3.6 3.0

Average 2.2 2.55 3.6 3.15

Source: IF team survey with the support of Ministry of culture and Tourism

Note: the rating system as follows 1=very poor, 2=poor, 3=average,

4=good, 5=very good

In evaluating the tourist sector performance from the point of view of

tourists, the above table shows that none of the tourism facilities or

preparations has been rated above average. Actually only personal

security and safety, and the cost and regulation of taxis and buses were

rated average leaving the ability to use cash and credit cards and the

control of unofficial guides and beggars at a poor level in the eyes of

tourists. This fact will have an impact on the present conditions as well

as the future prospects of the sector and its contribution to the national

economy. Thus, efforts should be made to upgrade the facilities and

44

services provided with in and around the tourist sites so as to maintain

and sustain the earnings of the tourism industry.

Conference Facilities

Conference tourism is already a significant part of Ethiopia’s tourism

product. The flagship facility of the United Nations conference center that

can accommodate 1500 delegates and is a world class facility. There are

also 20 other standard conference centers in star hotels and AU in Addis

with total capacity of 6000. Of these Sheraton holds the greatest share

with 1400 (w.w.w.eatil. org 1/2/2005).

Table 4.4.5 Summary of International Tourist by Purpose of Visit

from 1991-2005

Year in Gc

Business Vacation transit Conference Vesting realties (Diaspora)

Not stated

Total

1991 20042 1566 13166 7011 5677 19419 81581 1992 20436 15974 13435 7768 5789 19811 83213 1993 22896 17870 1984 8656 6515 22151 93072 1994 27010 19522 10957 10264 8690 21627 98070 1995 30538 19984 11610 12436 9109 19659 303336 1996 28360 21446 15599 12127 11866 19487 18885 1997 30494 23511 14952 13526 12710 19539 139000 1998 26246 31143 8916 5983 13272 5287 102000 1999 22646 28803 15425 6917 13031 5037 115000 2000 27646 30768 18670 6689 1589 10321 1359054 2001 26577 41083 17216 5361 14913 11288 148438 2002 32752 10612 49339 20113 17779 25732 156327 2003 36571 11705 53315 31414 19895 27010 179910 2004 35014 11379 56790 34129 18209 28556 184079 2005 53873 42462 44576 25947 24394 36146 227398

Source: Ministry of Culture and Tourism

Visitors who are coming for the purpose of attending conference, which

are called conference tourists take the forth place. This is because Addis

Ababa is a place where many international organizations like, AU, ECA

and other international organization are found. Due to this many

45

conferences take place in the capital city and as a result the number of

tourists in flow in the case of conference becomes valuable for tourism

growth in Ethiopia.

From the table 4.4.5 the number of conference visitors shows ups and

downs like business cycle that is it grows form 1991 to 1997 but it falls

in 1998 due to the Ethio-Eritrean war, and then grows in 1999. It also

shows a declining tend between 1999 to 2001 and then grows up to 2004

and falls in 2005. This type of movements in conference tourism affects

the steadiness of the economy in general and tourism industry in

particular.

4.5 Tour Operations and Guides

There are legal and illegal tour operators in Ethiopia. The legal tour

operators are those that are licensed and can be classified in to two. The

first class consists of those who fulfilled the qualification or criteria, and

they are in rendering tourist services. The problems created by this class

are, they don’t make association, guides are not well trained, there are

also situations in price changes and tourist left, they don’t concern at

quality of services, they make description out of their topic etc. The

second class is those who have not full fill the qualification but they get

license by cheating, most of them use the name as cover and are joined

or evolved into other fields. They reduce the comfort of tourist services.

They also do not have any publication on indicating tour programme and

price as well as tourist attraction destination.

In contrast to the above, the there are illegal tour operations that do to

fulfill the qualification and they don’t have license or by using the name

travel agency as a cover but they are engaged in tour operation and

disturb the work of the sector and they don’t pay tax to the government.

46

Moreover, there are individuals with out training and knowledge who

calling themselves as tour operators and then robe and steal belonging of

tourists. By doing so they create problems on tourists and tourism

industry.

4.6 Skilled Man Power

Tourism industry needs both skilled and unskilled manpower.

Furthermore, the dynamic nature of tourism implies that training of

manpower to cope up with changes in tourism is of a great importance.

Generally, the number and type of manpower engaged in tourism

industry can influence the performance of the industry.

In Ethiopia there is lack of skilled manpower because the training

provided is mostly focused on primary services such as reception,

catering and food preparation and it gives less attention to the important

skills like tour operation, marketing analysis and promotion and

advertisement personnel. This shows us, there is insufficient and

inefficient tourism training center at higher education level. The other

major problem facing the industry is that some of the employees of the

sector are attracted by the private sectors which are not much significant

for tourism industry growth. Because of the fact that private sectors pay

higher salary compared with the salary prevailing in the industry which

is low. This variation or differential in salary leads to shift skilled

manpower form the industry which in turn leads to the shortage of

skilled man power in the industry.

4.6.1 Human Resource Development in the

Tourism Industry

The human resource that operates in the tourism sector interacting with

tourists is as important as the physical tourist infrastructure. Figure in

47

the table below shows that the hotel industry in particular is

characterized by low education levels and poor training. In this sector

only 22.5% of the employees have completed grade 12 and further i.e.

college and 69.7% of the employees are at a level below grade 12. On the

training side, only 15.8% have received any formal hotel training. In

contrast, the tour operator sector is better equipped and better trained.

On average, 51.3% of the tour operators have completed grade 12 and

above and only 41.3% have no sector specific training. Most of those

have received training got it from short term courses from the Catering

and Tourism Training Institute (CTTI).

Table 4.6.1 Level of Education and Training amongst Hotels and Tour Operators

Formal education

Read& write (%)

Grade 1-6(%)

Grade 7-8(%)

Grade 9-12 (%)

Grade 12+ (%)

College (%)

Profile of hotel employees

9.8 15 16.3 36.4 19 3.5

Profile of tour operators employees

0 10.9 7.6 30.2 28.2 23.1

Training None (%) On job (%)

Short term (%)

CTTI (%)

Profile of hotel employees

69.7 14.5 3.8 12

Profile of tour operator employees

41.3 9.3 45.6 3.8


The general view is that the human resource development in the tourism

sector in general and the hotel sector in particular are poor with little

investment to change this picture. This will have its own effect on the

effort to generate a quality service and limits the ability to come up with

creative means of improving the existing structure of the industry by

learning form the experiences of other nations.

48

4.7 Social and Political Stability

Non-economic factors particularly cultural and political ones have been

recognized by economists as vital in determining the capacity and growth

of sectors in an economy. In tourism this is especially important. As

social and political conditions may be responsible for short term

fluctuations either value of productive resources like the value of tourism

sector.

For example the value of tourism contribution to the national out put

(GDP) in Ethiopia decreased due to Ehtio-Eritrean war. It shows decrease

in both tourist arrival & receipts on the table below.

Table 4.7 Arrivals and Receipts From 1991-2005 via Addis Ababa

Airport and Other

Year Bole Other ports Total Receipts in 1000 (birr)

1991 81581 - 81581 38824 1992 83213 - 83213 57763 1993 93072 - 93072 107822 1994 98070 - 98070 144315 1995 103336 - 103336 144972 1996 108,885 - 108,885 182665 1997 114732 24268 139000 27900 1998 90847 21153 12000 225000 1999 91859 23141 115000 252000 2000 108954 270000 378954 577800 2001 1116438 32000 148438 642000 2002 130947 25380 156327 676100 2003 166162 19748 179910 778000 2004 172954 11124 184078 991200 2005 187453 34110 22798 1177816 Source: Culture and Tourism Minister, National Bank of Ethiopia

Note: other eatry ports are Dire Dawa, Galafi, Moyale, Dewale, Metema, Togo, Chale, Dolo, Omate, Terferibir, Gonder, BahirDar, Mekele etc…

49

Table 4.7 shows that there is an increasing trend of both tourist arrival

and receipts generated form tourists to the country. From the data, one

can figure out a slow but a steady increase in the number of tourist

inflow as well as receipts since 1997.

Arrivals took a sever knock in 1998/99 for the duration of the war with

Eritrean. Taking the arrivals by air as the only indicative of the trend

over the past decade arrivals grew by 3.6% only. But this figure masks

the much higher annual growth rate of 5.8% up until the war began and

a high 9.2% growth form 2000 to 2001. The war caused a 20.8% drop in

total arrivals but there was a rapid recovery as total arrivals almost

reached their prewar level in 2000.

Taking in to consideration the amount of receipts generated by the

industry to the country, there is an increasing trend but with a

decreasing rate over the past decade, even negative rate is recorded

during Ethio-Eritrean war i.e. -24% decline in tourist receipts in 1998

from the previous.

In 2001, total receipts was $642mln up from $577.8mln the year before

by 8.5%, and in 2002 it grew to $676.1mln by 4.5%. However, the sector

registered a very remarkable change in the years 2003, 2004 and 2005

where it grows to $778mln (16.6%),991.2mln (27%) and 1,177.8mln

(17.7%).

4.8 Attitudes and Habits

Another major non-economic determinant is that of psychological values

both of suppliers and consuming tourists. Firstly, the attitudes of a host

population towards tourists, and in particular those of workers with in

the tourism sector have all important effect on the tourism product, and

their influence is similar in nature to that of social and political stability.

50

Secondly, on the demand side, tourism consuming habits are important.

Two persons with similar level of income may, all things being equal,

have deferent propensities to travel. This may be a function of cultural

surroundings at home, age and gender. This propensity to travel will

influence domestic tourism and the development of the sector in any

destination closely linked to those generating areas.

Table 4.8 Arrivals by Age and Gender Group for 2003, 2004 and 2005

Year Sex <15 b/n 15

&24

B/n

25&44

B/n

45&59

>60 Not

stated

Total

2003 Male

Female

Note stated

5593

3759

165

8299

5552

191

60832

27399

1119

36960

11425

552

10593

3900

150

2719

638

64

124996

52673

2241

Total 9517 14042 89350 48937 14643 3421 179910

2004 Male

Female

Note stated

5506

3790

325

8188

6159

305

60899

26918

1807

36491

11033

1014

10112

3687

325

4889

1968

662

126085

53555

4438

Total 9621 14652 89624 48538 14124 7519 184078

2005 Male

Female

Note stated

6744

4615

403

10073

7555

379

75495

33320

2243

45201

13604

1259

12462

4487

403

5979

2353

823

155954

65934

5510

Total 11762 18007 111058 60064 17352 9155 227398


From the table 4.8, in these three yeas adults i.e. age between 25 and 59

are higher in number than that of young and old aged group to visit

Ethiopia that is 138287 in 2003 from the total of arrivals of 179910, and

138162 in 2004 from the total arrivals of 184078. It also 171,122 visitors

from the total arrivals of 227,398 to the country which contributes 76%,

75% and 75.3% of the arrivals in 2003, 2004 and 2005 respectively.

Regarding the gender group, male visitors are significant in number than

those of females, that is form the total of 179,910 arrivals to Ethiopia in

51

2003, males account 124,996 (69.4%) of the arrivals, and from the total

of 184078 arrivals to Ethiopia in 2004, males account 126085 (68.5%) of

the arrivals. And also in 2005, from the total of 227398 males account

155954 (68.6%) of the arrivals to Ethiopia.

This shows a bias that mostly those persons who are adults and that of

males had a chance to visit Ethiopia in the previous years since more

than 68% of the arrivals are males and more than 75% of the arrivals

are adults. This is due to reasons and problems with in the country and

the consuming tourist like image of the country as poor and highly

affected by famine and by thinking not suitable for females and

children’s in tourists mind, fear of disease due to children have no

resistant ability to disease, low level of promotion and advertisement

etc…

4.9 The State of Technical Knowledge

Many less developed countries have regarded tourism as an easy

industry to develop, because it demands relatively low technology

compared with many other industries, and skills which can be easily

mastered. Unfortunately, as tourism world wide has grown and become

more sophisticated, high value contributions to GDP by tourism have

tended to become associated with higher technologies. Examples range

from the ability to operate fleets of large cost efficient aircraft with the

associated technology in reservations and passenger handling, through

technical innovation in providing more interesting, all season attractions.

When technical advances are applied to existing inputs of other

resources, they enhance the productivity of the industry concerned and

hence its contribution to GDP.

52

Certainly there will always be a place for low technology tourism;

particularly while there are market segments which deliberately seek out

the simple or natural life (current fashions i.e. ‘ecotourism’) but dominate

cultural tourism generating areas will ensure that returns within tourism

sectors will continue to be high where supported by good technical

knowledge application. But our country has low level of technical

knowledge which affects the productivity of the sector as well as the

tourism contribution to the GDP.

53

CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1 Conclusions

Tourism deals with movement of people a way from their normal

residence for holidays, recreation and leisure activities, business

meeting, visiting relatives and other purposes. International touristm,

involves persons traveling to different countries while domestic tourism is

part of peoples’ movement with in their won country. Tourism has

significant economic and social benefits which includes, among other

things, foreign exchange earning, creation of employment, generation of

revenue for the government, integration of national cultures and

societies, and the like. These days, the tourism sector is one of the major

economic sectors in the world and is expanding at a steady state in the

world.

Ethiopia is endowed with exotic natural and man made historical

attractions, which could be the basis for growing tourism industry, if

complemented with standardized supporting services like

accommodation, transportation and tour operation, visa and exit prices,

telecom, promotion and advertisement etc… with in the value chain of

tourism industry. Ethiopia stands among the countries of the globe

which possesses great and unique tourist attraction resources. However,

the proper utilization and administration of these resources have been

poor, in the past as well as in the present day of Ethiopia. This is due to

lack of integrated tourism policy, like budget allocation problem and visa

and exist payment problems inadequate training institutes in tourism,

lack of trained man power, lack and low quality of tourist

accommodation facilities and infrastructure at/to tourist attraction sites

like inadequate transportation i.e. low quality roads, lack of air port to

54

much of natural and cultural tourist attraction sites; hotels and

restaurants are at low quality level and unevenly distributed; inadequate

promotion and advertisement, low quality and even untrained tour

operations and guides, low level of technical knowledge, and other

inadequate financial and material support that are vital to the

development of the sector and sectors with in the value chain of tourism.

Moreover lack of peace and stability and periodic drought and famine

have changed the image of the country from tourist attracting to tourist

frustrating.

With the value chain of tourism of Ethiopia government is the lead firm

since it owns on average 31.5% hotels, most of conference facilities,

controls visa and exit procedures, ownership and construction of roads

(as public good), monopoly ownership of airline, training institutes like

CTTI are owned by the government; national parks, game reservers,

sanctuaries, other cultural and natural tourist attraction sites financed,

protected and controlled by the government, monopoly of

telecommunication, control of media monopolistically etc…

The dominancy of the government in tourism sector is not good for

tourism development. But it is common in other most Less Developed

Countries (LDCs) like Ethiopia and African countries which hinder the

fast growth of tourism industry.

5.2 Recommendations

In order to facilitate the rapid development of tourism in Ethiopia both

the government and the private sector or in general the society must

participate in improving, protecting and advertising tourist attraction

55

sites and, supply good quality facilities or services for the tourists in

Ethiopia.

The government must have designed strategies like:

� study, protect and develop the country’s tourist attraction sites, and

give attention for those which are not known;

� encourage the private sector to:

- improve, develop and expand tourism facilitates that is facilities

like high quality hotels and restaurants as well as conference

facilities and others;

- Improve and expend tourism infrastructure that is develop the

quality and the quantity of transportation sector like road, air, rail

and water are important to the sector with the support of private

sector;

- Promote the country’s tourism resources that is by promotion and

advertisement in international media like DSTV, Show Time, G-TV,

ETV and other media’s;

- Awareness creation to the society about tourism industry;

- Create suitable conditions for tourists by avoiding war with

neighboring countries and create internal stability in order to

prevent from any fear of visiting the country.

- Provide high quality hotels and restaurants and other facilities

which includes all gender and age groups;

- Improve the level of technical knowledge by giving high attention to

the sector;

- Control illegal tour operators which have no license to secure

tourists form danger;

- The government should allow the private sectors to

participate/invest in the sectors with in the value chain of tourism

like airline, telecom, hotels, road constriction, national parks,

56

game reserves, sanctuaries and other cultural and natural

attraction sites etc…

On the other hand, the private sector must invest, its resources in

activities that are important for the development of tourism industry of

Ethiopia. i.e:

- participate in protection and development of the county’s tourist

attraction sites;

- participate in improvement, expansion and development of tourism

facilities like hotels and restaurants, conference facilities,

transportation, tour operation and other and as well as control

illegal tour operators which have no license

- etc…

24

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