With the current market conditions and travelers looking to fly again, an opportunity is presented when the right product is offered to the right segment.
Ethiopians are concerned with rising prices
When it comes to rising prices, Africa is not spared. In fact, prices have gone up in all retail categories from essentials to discretionary. It is not surprising that 95% of consumers in Ethiopia are concerned with the rising prices according to Kasi’s latest inflation tracker, with 40% saying they are genuinely concerned with rising prices. With high inflation comes diminishing purchase power for Ethiopians, 4 in 10 consumers surveyed do not believe it is a suitable time to make discretionary spending like appliances, travel, furniture and 3 in 10 consumers are on the fence or waiting to see how the situation will unfold over time.
Official data from Ethiopia put inflation rate at 34% in June 2022 down from 37.7% in May. The country faces macroeconomic challenges (currency, investment) and the global supply chain disruption post pandemic. One sector that is seeing a surge is travel with millions of people around the world resuming travel as restrictions are lifted.
Inflation is dampening travelling plans for Ethiopians except for high income earners
During and post pandemic, Ethiopia has benefited from its travel industry thanks to the robust performance of Ethiopian airlines. The company is the leader in Africa and one of the best airlines in the world. During the pandemic, the airline did not lose money, turning profit by converting its fleet to cargo. The industry came to a complete halt during the pandemic but has since rebounded to the point that airlines are having a tough time managing the surge in travelers this summer. While they have been complaints from airlines and passengers travelling via CDG Paris, Chipol Amsterdam and Heathrow (London), Bole (Addis) airport has managed the traffic very well.
Is Ethiopia impacted by the global surge of travelers? Not necessarily. Inflation and currency challenges mean that Ethiopians are not looking to travel this year. Our data shows that 6 in 10 respondents in Ethiopia are not planning to travel outside of the country for vacation this year. But the story is more nuanced. High earners are looking to travel, in fact 8 in 10 respondents making over $1800 of combined household income per year are looking to travel while low-income earners are less likely to travel – just 4 in 10 respondents making less than $900 are planning to travel outside of the country.
What are some of their favorite destination regions? Europe wins – almost 4 in 10 respondents will pick Europe when travelling on a limited budget. North America second – 3 in 10 respondents will pick US/Canada. Travelling within Africa is not preferred for Ethiopians – Only 1 in 10 respondents will travel within Africa. Surprisingly, Ethiopians are not looking to travel in Africa – could it be because they do not have knowledge about the other African countries?
Our data shows that Ethiopians are knowledgeable about the region where they want to travel and for Africa, South Africa is the destination they know the most about. 27% of respondents have a good knowledge of the East Africa region, Central Africa (23%), West Africa (22%), North Africa (28%) and South Africa (34%).
When it comes to the top choice for Ethiopians, Kenya is the top destination (26%) followed by Egypt (24%) surprisingly. The tension between Ethiopia and Egypt seems to have raised the profile of the country as a destination especially amongst millennials (61% of them pick Kenya as top choice).
Focusing on the right segments and destinations critical for airlines and hospitality brands
Coming out the pandemic, brands in the travel and hospitality industry are eager to capture market and make up for the losses incurred during the pandemic. It is important for them to understand how emerging consumer trends are changing their industry – The current market conditions with travelers looking to fly again is an opportunity only if they can offer the right product to the right segment. The good news is, despite inflation and prohibitive cost of living, Ethiopians especially high-income earners, are looking to travel. Europe and North America are their favorite destinations, but limited budget can be a challenge. Africa is a viable option with millennials, as Kenya is their top choice. The country is just a 2 hours flight from Addis and offers attractive experiences and activities for visitors.
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Isha Raja
Isha Raja is an industry analyst at Pan Africa intelligence company Kasi Insight, where she conducts data & consumer analysis to deliver real time insights for leaders in the sector. Interested in connecting with Isha for a media request or a speaking opportunity? Email info@kasiinsight.com
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