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Value Chain Analysis Ethiopia Tourism Value Chain Analysis Ethiopia Tourism Commissioned by The Centre for the Promotion of Imports from developing countries (CBI) Carmen Altes September 2018 Table of contents ACRONYMS ...................................................................................................................................................... 5 INTRODUCTION ............................................................................................................................................... 7 MANAGEMENT SUMMARY .............................................................................................................................. 8 ELEMENT 1. GENERATING EU TOURISM MARKETS AND COMPETITIVENESS OF THE ETHIOPIAN TOURISM SECTOR IN THOSE MARKETS .......................................................................................................................... 11 1. TRENDS IN INTERNATIONAL VISITOR ARRIVALS ........................................................................................ 12 2. CURRENT EUROPEAN MARKET DEMAND .................................................................................................. 16 3. THE POTENTIAL TO FURTHER DEVELOP THE EUROPEAN MARKET AND RISKS OF A REDUCTION IN DEMAND........................................................................................................................................................ 19 4. ETHIOPIA IN THE EUROPEAN TRAVEL DISTRIBUTION CHANNELS .............................................................. 21 4.1. THE STRUCTURE OF THE TRAVEL TRADE IN THE EUROPEAN MARKETS ................................................................. 21 4.2. SMALL PLAYERS MOST INTERESTING FOR THE ETHIOPIAN TOURISM SECTOR ......................................................... 22 4.3. PACKAGES TO ETHIOPIA MARKETED BY EUROPEAN TOUR OPERATORS ............................................................... 22 4.4. IMAGE OF ETHIOPIA AS A TOURISM DESTINATION IN THE EUROPEAN MARKETS .................................................... 24 4.5. MAIN REQUIREMENTS TO BE COMPETITIVE IN THE EUROPEAN MARKETS ............................................................ 27 4.6. ARE THERE OPPORTUNITIES FOR PRODUCTS WITH IMPROVED CSR PERFORMANCE? .............................................. 29 5. CURRENT ETHIOPIAN TOURISM SECTOR PRODUCT RANGE ...................................................................... 32 6. COMPARATIVE ADVANTAGE..................................................................................................................... 35 6.1. GLOBAL COMPETITIVENESS ...................................................................................................................... 35 6.2. COMPETITOR ANALYSIS .......................................................................................................................... 36 7. POTENTIAL FOR NEW PRODUCTS.............................................................................................................. 38 7.1. HIGH-YIELDING TARGET SEGMENTS ........................................................................................................... 38 7.2. MAIN LEISURE PRODUCTS OF INTEREST TO THE EUROPEAN MARKET .................................................................. 40 RATE FROM ‘LEAST IMPORTANT’ (1) TO ‘MOST IMPORTANT’ (5)................................................................... 43 7.3. HIGH-YIELD GEOGRAPHIC MARKETS ........................................................................................................... 44 8. DESTINATIONS OFFERING HIGHER POTENTIAL FOR EUROPEAN TOURISM ................................................ 47 ELEMENT 2. STRUCTURE, GOVERNANCE AND SUSTAINABILITY OF THE VALUE CHAIN ................................... 51 9. THE TOURISM VALUE CHAIN ..................................................................................................................... 52 9.1. STRUCTURE OF THE TOURISM VALUE CHAIN ................................................................................................. 52 9.2. TOURISM SERVICE SUPPLIERS: THE KEY ACTORS IN THE TOURISM VALUE CHAIN..................................................... 53 9.3. PRIVATE SECTOR ORGANISATIONS THAT SUPPORT THE TOURISM VALUE CHAIN ..................................................... 57 9.4. VALUE CHAIN SUPPORTERS IN THE PUBLIC SECTOR ......................................................................................... 58 9.5. DONOR-FINANCED INITIATIVES SUPPORTING THE TOURISM VALUE CHAIN ........................................................... 68 9.6. OPPORTUNITIES FOR CREATING SYNERGY .................................................................................................... 71 9.7. SUSTAINABILITY OF THE TOURISM VALUE CHAIN .......................................................................................... 73 ELEMENT 3. OPPORTUNITIES AND OBSTACLES IN THE VALUE CHAIN REGARDING TOURISM FROM EU MARKETS TO ETHIOPIA .................................................................................................................................. 80 10. KEY OPPORTUNITIES AND OBSTACLES IN THE TOURISM VALUE CHAIN .................................................... 81 ELEMENT 4. POSSIBLE INTERVENTIONS IN THE VALUE CHAIN TO INCREASE TOURISM FROM EU MARKETS TO ETHIOPIA ....................................................................................................................................................... 86 11. WHAT CBI CAN DO TO SUPPORT A MORE COMPETITIVE AND SUSTAINABLE TOURISM VALUE CHAIN IN ETHIOPIA ....................................................................................................................................................... 87 ANNEXES ....................................................................................................................................................... 97 ANNEX 1: STAKEHOLDERS CONTACTED DURING THE FIELD TRIP ............................................................................... 97 ANNEX 2: BIBLIOGRAPHY .............................................................................................................................. 99 ANNEX 3. THE OPPORTUNITY TO GET INSPIRATION FROM MEXICO TO UPGRADE TOURISM SMES ................................. 101 Tourism VCA Ethiopia – Final Report – September 2018 3 Tourism VCA Ethiopia – Final Report – September 2018 4 Acronyms ARCCH Agency for Research and Conservation of the Cultural Heritage CRM Customer Relationship Management (software) CSR Corporate Social Responsibility CTTC Catering and Tourism Training Center EIC Ethiopian Investment Commission ESTDP Ethiopian Sustainable Tourism Project1 ETB Ethiopian Birr (official currency) ETO Ethiopian Tourism Organisation EWCA Ethiopian Wildlife Authority GTP Growth and Transformation Plan. IFC International Finance Corporation (World Bank Group) IFIs International Finance Institutions IGAD Intergovernmental Authority for Development (East Africa) MoCT Ministry of Culture and Tourism MoFA Ministry of Foreign Affairs MSMEs Micro, small and medium enterprises PROHEDEV Heritage for Development Project (EU funding) PUM Netherlands Senior Experts SNNPR Southern Nations, Nationalities and Peoples Region SMEs Small and Medium Enterprises SDPASE Sustainable Development of the Protected Areas System of Ethiopia TTCI Tourism and Travel Competitiveness Index UNECA United Nations Economic Commission for Africa UNWTO United Nations World Tourism Organisation VFR Visit Friends and Relatives WTTC World Travel and Tourism Council 1 Financed by the World Bank. Phased out at the end of 2015 Tourism VCA Ethiopia – Final Report – September 2018 5 Tourism VCA Ethiopia – Final Report – September 2018 6 Introduction The purpose of this VCA is to map out current European tourism to Ethiopia, to describe the range of products offered in Ethiopian tourism, current and planned, and to identify opportunities for developing European tourism, including which interventions are needed in order to do so and, specifically, which interventions CBI could include in a project. A Business Case Idea (BCI) was submitted in November 2017 which showed that the tourism sector in Ethiopia has the potential to attract more international tourism, in particular European visitors, who represent about a third of the total demand. The BCI also identified the main gaps and challenges in the value chain to achieve further development and efficiency, as well as some areas in which the CBI could help to address the challenges. According to the procedures for project preparation, a Preliminary Desk Research Report was produced in July 2018 with a compilation of excerpts from different published and non-published documents. This showed that a significant amount of relevant information is available, and that there is a need to: Obtain updated statistics about international visitors and tourism companies Get information regarding the current state of governance of the tourism sector Assess the current status of the Ecotourism Association and Ethiopian Sustainable Tourism Alliance (ESTA) mentioned in the BCI Identify challenges and gaps in marketing and commercialisation in the European markets Find out about sustainable practices and certification among tourism service suppliers Identify projects financed by donors supporting the tourism value chain Make recommendations regarding the type of activities that could be financed by a CBI project To complement the information available through secondary sources, a field trip took place
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