E-marketing is the practice or process of marketing products or services by means of the internet or online channels. This study was conducted to examine the e-marketing practices, opportunities and challenges in the case of star-rated hotels in Addis Ababa. In recognition of its merits, a descriptive design and mixed research approach were used. Census method was applied to collect data from the marketing managers of the star-rated hotels in Addis Ababa. Primary data were collected through questionnaires from 128 marketing managers. The secondary data were collected from documents and publications. Quantitative data gathered through questionnaire was processed via Statistical Package for Social Sciences (SPSS v.24) software and analyzed using descriptive statistics and one way ANOVA. The findings of the study demonstrated that there is high level of e-marketing practices by star-rated hotels namely online advertising (x=4.32), website marketing (x=4.13), social media marketing (x=4.05), email marketing (x=3.98), mobile phone marketing (x=3.72), and search engine optimization (x=3.52). It was also found that the opportunities for e-marketing practices in the hotel industry include enhanced partnership, builds strong brand image and also plays role in enhancement of ICT infrastructure. The study also revealed that the problem of budget allocation, expensive cost of training, high cost of maintenance, poor internet access were the major challenges affecting the adoption of e-marketing practices by the star-rated hotels. Furthermore, the result of ANOVA revealed there was a statistically significant mean difference among star-rated hotels in terms of adopting digital marketing practices. In this regard, five star-rated hotels were better than the rest of hotel categories in terms of adopting digital marketing practices. Therefore, it is recommended to build strong brand image of the company using digital marketing and focusing on training, budget allocation, and maximizing human capacity in order to adopt digital marketing practices by hospitality businesses. Furthermore, there should be prevalence of secured and reliable server as well.