The feasibility of solar water heater for two hotels in Dangila were assessed based on flat plate collector supplied by Beretta (SC-F20) and evacuated tube collector supplied by Beijing Tinapu solar Co. Ltd (TPH-15/18). The economic analysis of the proposed solar water heating system was analysed using a thermal simulating software, T*SOL. The thermal performance of the two collectors were analysed based on saving of electricity, solar fractions, energy required to heat auxiliary (E-Aux), amount of solar contribution to heat the load (E-SOL), carbon dioxide emissions avoided and efficiency of the system. The flat plate collector has a better performance in saving of electricity, carbon dioxide emissions avoided and reducing the energy requirement for auxiliary heating but its efficiency reduced in cold conditions during which the evacuated tube collector performed best. The solar contribution to the heating load is nearly the same, the selection of the types of collectors were not matter once a properly designed SWHS. However, in terms of the life span evacuated tube collector (ETC) performed 5-15 years and 20-25 years for flat plate collector (FPC). Therefore FPC were used to analyse the economic analysis using T*SOL simulation programme. The economic analysis have an input parameter of initial investment of 105,000ETB for Adugna hotel and 173,640 ETB, capital interest rate (4.5%), fixed running cost (1%), amount of loan (2000£) and loan interest rate (9.5%) which yielded a life cycle savings of 321,810 ETB for Adugna hotel and 639,660 ETB for Gashuna hotel. Since the programme gave a positive net present value of 183,249 ETB for Adugna hotel and 397,590 ETB for Gashuna hotel, the proposed solar water heating system is feasible with a payback period of 16.7 and 15.2 years for Adugna hotel and Gashuna hotel respectively. However, when the newly proposed electric tariff is implemented, the payback period would reduce from 16.7 years to 8.8 years for Adugna hotel and 7.8 years for Gashuna hotel.