An Ethiopian success story in the Washington DC area
Ask any of the thousands of Ethiopian immigrants working as parking attendants or cabbies around Washington whom they aspire to be like, and you’ll probably hear about Henok Tesfaye.
Tesfaye, 37, started as a parking valet in downtown Washington two decades ago, saving a few hundred dollars each month to pay for business classes and start his company. Today, his U Street Parking (named after his first parking lot, at 12th and U streets NW) ranks among the biggest parking companies in the region.
His success is part of a wave of accomplishment by Ethiopians, who began settling in Washington after fleeing violence in their native country in the 1970s. Tesfaye’s 12-year ascent in Washington’s notoriously cutthroat parking industry is especially notable because it was so unlikely.
Parking is not an easy business. It’s marked by high volume, long hours and low margins. For Tesfaye, the years of 16-hour days and endless financial pressures culminated in a phone call in December. A year after partnering with a Los Angeles-based parking giant, Tesfaye won a lucrative contract to oversee 37,000 public parking spaces at Dulles International and Reagan National airports, including four garages, three surface lots and a valet service.
“When I got the call that we had got the contract, I cried,” said Tesfaye, from his office in a rowhouse on Rhode Island Avenue NE. “We were a long shot. We’ve always been a long shot.”
U Street’s 25 percent share of the nearly $1.3 million in annual management and incentive fees from the airport contracts, which started this summer, could net the company millions over the next five years, along with increased visibility and other clients.
Tesfaye had become the Ethiopian version of the American Dream.
“He’s the leading young entrepreneur in our community. . . . I know him from when he was a parking attendant, and it’s great to see these types of businesses grow,” said Dereje Desta, the publisher of Zethiopia, an Ethiopian newspaper in the District.
The Washington area’s Ethiopian community is the largest in the nation. According to Census Bureau data, about 30,000 Ethiopian immigrants — about one-fifth of those in the United States — live in the region. But the local figure has a history of being underreported and probably tops 100,000, according to the Ethiopian American Constituency Foundation and the Ethiopian Community Development Council.
Ethiopians came in droves after a bloody military coup in 1974, and they worked in low-paying first jobs as cabbies and cooks and parking attendants. But they have begun to stake their claims. Tesfaye’s company now employs 100 people, including many immigrants from Ethiopia and Mauritania.
Open for business
Ethiopian businesses have sprung up across the Washington area. A new crop has appeared in the Skyline section of Falls Church, and restaurants and coffee shops are opening across Shaw, especially along Ninth Street NW, known informally as “Little Ethiopia.” (Five years ago, an attempt to get a formal designation from the city failed.)
“We’ve grown, and now we’ve really begun to make a name for ourselves, in the business sense,” said Tamrat Medhin, a financial adviser at Access Capital, a Falls Church real estate investment firm that has poured millions into luxury properties in Addis Ababa, the capital of Ethiopia.
Other Ethiopian success stories include Abebe “Abe” Abraham, the founder of CMI Management in Alexandria, which has landed millions of dollars’ worth of government maintenance and other contracts since it was started in 1989; restaurateur Zed Wondemu, who started Zed’s restaurant in Georgetown and has since expanded into Virginia; and the Ethiopian-born doctors at Blue Nile Medical Center in Alexandria.
It’s a younger generation of Ethiopians, however, that is making the biggest strides, community members say. Hailu Fulass Hailu, a professor of linguistics at the University of the District of Columbia who left Ethiopia in 1977 and arrived in the District two years later, said many hardworking Ethiopians younger than 40 “are quite adventurous, and many have turned that into being quite successful.”
Many of Hailu’s generation came to the United States on education visas and scholarships, he said. “I find it remarkable because the success we have now is not about education,” he said. “It’s about risk.”
The Ethiopian Community Development Council, based in Arlington County, has stimulated business growth by granting micro-loans to entrepreneurs such as Tesfaye. Recent clients include the owners of a gas station and a salon in Northern Virginia, who have expanded and hired dozens of other immigrants.
“With more and more people coming, there’s a greater diversity with the types of businesses we’re getting and the types of Africans, especially with the young,” said Tsehaye Teferra, the council’s president.
A chance to expand
Tesfaye’s start is reminiscent of the modest beginnings of some of his parking-lot predecessors. One of the local industry giants, Colonial Parking, was started by two young George Washington University graduates on a tiny lot at 25th and E streets NW in the early 1950s. All-day parking cost 30 cents.
In 1998, Tesfaye, then working as a parking valet in downtown Washington, was exhausted and struggling to pay his bills. He was 24 and, as he puts it, “clueless about the world. It was difficult.”
After years of saving, Tesfaye took a gamble on a rough-and-tumble stretch of U Street NW, renting an $800-a-month, 20-car lot at 12th and U streets.
Problem was, people thought it was too dangerous to park there. “I would get out on the street and wave people in, but no one would come,” Tesfaye said.
But as the revitalized U Street corridor slowly grew, so, too, did Tesfaye’s business. The parking lot expanded to include a used-car lot. Valet service was added at a few nearby restaurants and bars. Tesfaye’s three brothers immigrated to the United States to join the rapidly growing family business. Tesfaye took out a $35,000 loan from the Ethiopian Community Development Council, and his company took over management of the 1,200-car parking lot on the site of the old Washington Convention Center.
By the mid-2000s, Tesfaye was a success story. He has held fundraisers for the mayor and bought a home in Alexandria. He even bought his mother a restaurant along U Street and named it Etete, her Amharic nickname.
L&R Group, which oversees parking at the New York area’s three international airports and at Oakland International Airport in California, reached out to Tesfaye in late 2008. The company wanted to bolster its presence in the Washington area to compete for the Dulles and National contracts.
Scott Hutchison, a senior vice president at L&R Group, said Tesfaye’s back story was a draw, and he compared U Street Parking to profitable parking firms started by Ethiopian immigrants in San Francisco, where L&R subsidiary Five Star Parking has contracts.
“I heard Henok’s story and I knew he was the right one,” Hutchison said. “It was impressive. And I know I could be competing against him within the next 10 years.”
The partnership formed, Hutchison and Tesfaye moved to develop a strong business plan for the airports contract, which is chosen through a sealed-bid process by the Metropolitan Washington Airports Authority. The trick to beating the incumbents, Hutchison and Tesfaye said, was to keep the management fees low.
The Five Star-U Street management-fee quote for National was about $160,000 a year less than the previous contractor’s. For Dulles, the quote was about $585,000 a year less. Among four finalists, the firm received the worst score for its operations, management, customer service and personnel plans. But the low management fees essentially won the contracts, Hutchison and Tesfaye said.
Airports officials said that the scores were close and that they expect customers not to notice much different in parking operations.
The companies that U Street replaced — AeroLink Parking in Falls Church and District of Columbia Parking Associates — had to lay off hundreds of workers this year, but the vast majority were hired by Tesfaye’s group, airport officials said.
Tesfaye said he is not resting. The big fish, he said, is managing a parking garage for a high-rise office building.
“That’s where the real money is, but it’s very tough,” Tesfaye said, as his brother Yared, 31, nodded in agreement. “We want to be a big player.”
Just in case, Tesfaye said, he has a fallback plan: He keeps a valet parking attendant’s red jacket in the back seat of his car.