TOM DALE DEALER Hotel

TOM DALE DEALER Hotel

Business Plan

OWNER NAME – TESHOME MITORE LEIMANGO

TELEPHONE No: 0110518210, 0110518210

FAX: 0856488234

EMAIL: [email protected]

Address: shop no 309, pan Africa mall, bree street, Johannesburg, Gauteng, 2001

Prepared February, 2023

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Contents
Confidentiality Agreement.....................................................................................................................4
1. Introduction....................................................................................................................................5
1.1 Business description.....................................................................................................................5
1.2 overview of project location.........................................................................................................5
1.3 Managers/Directors......................................................................................................................7
1.3.1 Management team................................................................................................................7
2. Executive summary.........................................................................................................................8
2.1 Business goals/mission.................................................................................................................8
2.2 Business philosophies/identity.....................................................................................................8
2.3 Location........................................................................................................................................8
2.3.1 Geographical markets............................................................................................................8
2.4 Vision of the future.......................................................................................................................8
2.5 Main objectives............................................................................................................................9
2.5.1 Business objectives................................................................................................................9
2.6 Financial objectives.......................................................................................................................9
2.6.1 Marketing objectives.............................................................................................................9
2.6.2 Key advantages......................................................................................................................9
2.7 Strategic alliance........................................................................................................................10
2.7.1 Strategic positioning................................................................................................................10
3. Personnel......................................................................................................................................11
3.1 Licenses......................................................................................................................................11
3.2 Sales............................................................................................................................................12
3.3 Internet.......................................................................................................................................12
4. Marketing.....................................................................................................................................13
4.1 Accommodation.........................................................................................................................13
4.2 Food Service/Room Service........................................................................................................13
4.3 Recreation..................................................................................................................................13
4.4 Conference facilities...................................................................................................................13

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4.5 Market analysis...........................................................................................................................15
4.5.1 Market segmentation..........................................................................................................15
4.5.2 Marketing goals...................................................................................................................15
4.5.3 Personnel and the marketing concept.................................................................................16
4.6 Pricing strategy...........................................................................................................................16
4.7 Operations..................................................................................................................................16
5. Analysis of the advertising expenditures/Advertising with promotion goals:...............................18
5.1 SWOT analysis............................................................................................................................19
5.2 Problems and Possibilities..........................................................................................................19
5.3 The organizational structure......................................................................................................21
5.4 Contingency................................................................................................................................21
6. FINANCIAL PLAN...............................................................................................................................23
6.1 Revenue Streams:.......................................................................................................................23
6.2 COST STRUCTURE:......................................................................................................................23
6.3 Project Cost:...............................................................................................................................24
6.4 Loan liquidation pattern............................................................................................................25
Table 2 – loan amount and amortization schedule.......................................................................26
6.5 Profitability analysis...................................................................................................................26
6.5.1 Profit or loss statement.......................................................................................................27
Table 3 for the period of five years from commencement of the operation................................27
6.6 Cash flow statement...................................................................................................................27
6.5.1 Cost benefit and sensitivity analysis........................................................................................28
Table 5 computation of NPV and IRR..........................................................................................29
7. Implementation:.......................................................................................................................30

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Confidentiality Agreement
The undersigned reader acknowledges that the information provided by TOM DALE
DEALER hotel in this business plan is confidential; therefore, reader agrees not to
disclose it without the express written permission of Teshome Mitore.

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1. Introduction
1.1 Business description
TOM DALE DEALER Hotel is a 3-diamond hotel and offers luxury accommodation and
associated amenities to local, regional and national tourists and travelers. For business
travelers we offer a wide range of facilities such as conference and meeting rooms and
exhibition space, including all necessary conferencing equipment and security.

1.2 overview of project location

Areka is one of the cities located in Wolaita Zone of SNNPR State of Ethiopia. Areka City
was established in 1957 E.C. In 1970E.C, has obtained legal status from Sidamo province
work and urban development minister branch office. By 1996 E.C it was transformed to a
reform City. Due to absence of enlightened municipal leadership and financial constraints,
insignificant development was experienced until 1983 E.C. The increased migration of
people from the surrounding rural kebeles and other areas aggravated the problems of
inaccessibility of infrastructure services. In 1976 E.C, the city had its master plan, which
contributed significantly to the planned growth of the city. The city is along Addis Ababa-
Hosanna Wolaita Soddo road at a distance of 299 Km from Addis Ababa and 197 Km
South from the regional Capital Hawassa and 29 Km south west from Wolaita Soddo, the
capital city of Wolaita.

Areka city was founded in 1964 and it has City Administration Status in 2003.
Geographically, the city is situated at 7.04°-7.1° latitude north and 37.68°-37.72min°’
longitude east. The total area of the city covered by Master Plan is 32 km2, while the total
Built-up area/’Municipal area’/ of the city 15 km2. The altitude of the city ranges from
1500 to 2000 meters above sea level. On the bases of SNNP Regional State City grading
process and proclamation of 65/2003, Areka is categorized as the 2nd grade city.

Important and unique feature of the city includes that its suitability for establishment of
agro industries, like spices processing as the city is surrounded by ginger belt areas,
existence of proximity to tourist attraction sites like Ajora falls ,and prevalence of
institutions like Areka Agricultural Research center which could be considered as to
acquire agro related services.

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Spatial form of the city: Areka city is the political, economic, social and administrative
center of Boloso Sorie Woerda, in Wolaita zone, South Nations, Nationalities and People’s
Region. Areka city is one of the 44 reform cites in the SNNP region and it has Three
administrative kebeles. It is located in the southern part of the country, 299km from the
Federal capital Addis Ababa and 185km from the regional capital Hawassa and the total
area of the city is 3484 hectare (Areka City ATPLUP, 2014/15) is mainly the result of its
altitude. The city is located at an altitude of 1750m above sea level with astronomical
location of 7.170- 7.980 latitude and 37.620- 37.830 longitudes in the east direction. From
this altitudinal point of view, the city's weather condition can be categorized under “Dega”
or medium land climate with warm air condition. The mean annual temperature of the city
ranges from 17.60c- 22.50c. However, the hottest months of the city are January and
February. The average annual rain fall is about 1600-1701 mm on during summer season
(Areka City FEDO, 2013).

Population of the city is about 64316 (49.7% are female) as per report of, whereas the
estimation of the city administration and ZoFED of Wolaita Zone shows that the
population of Areka city is estimated to be about 64316 in the year 2009E.C . This
implies that the population of the city has been growing at the rate of about 6.3% per year,
revealing the alarming rate population growth. Of the total populations in the city, about
31514 (49%) are Working age population (15-60 years), 41% are children under the age of
15; and the remaining 10 % are elderly population (60 & above years). This leads to
dependency ratio of 143. The livelihood of most of the city population was earned from
small trading, farming, and employment in government and non-government organization
(Areka City FEDO, 2017).

TOM DALE DEALER Hotel will located in Areka –sodo main asphalt road sefer selam
Kebele geberna Mender local name “ bolosso sore woreda administration office” , Woliyta
Zone.

The company will also construct its mini depot in the outskirt of Areka during its first five
years of operation. The company has already carefully identified strategic locations at
which its service stations are going to be built. As a strategy, TOM DALE DEALER will
focus to optimally invest in trade areas with significant traffic flow and locations, which

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are convenient and accessible for vehicles and motorists. In addition to the traditional
channel of providing service solely through service stations, the company will also
introduce its unique channel to provide service by getting much closer to end users.

1.3 Managers/Directors
The manager/director is Mrs. Alemayeh Wolde. The Board of Managers/Directors and
they have the principal responsibility for fulfillment of the hotel's mission and the legal
accountability for its operations. As construction proceeds, managers/directors will be
added to the Board from the community. Our Board of Mangers/Directors further ensures
adequate human and financial resources and actively monitors and evaluates the
organization's executive director, as well as the overall financial results. The board
members approve and implement policies to ensure achievement of the mission of the
organization and to prevent perceived, potential or actual conflict of interest. They will
accomplish these functions through regular meetings scheduled monthly.

1.3.1 Management team

Foundations’ management team will have direct knowledge of the hospitality industry and
will possess the necessary professional administration skills. Our team will include a
general manager, chief engineer, marketing personnel, and professionals with accounting
experience. The team will tailor to the needs of the corporate client and will provide
complementary personal services where needed. Foundations will offer all of its
management team competitive salaries.

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2. Executive summary
2.1 Business goals/mission
TOM DALE DEALER Hotel, as a business hotel obtaining a permanent place in the local
and national market place is our primary goal. We wish to acquire national renown as a
business destination within the next 5 years. We see it as our main mission to provide high
quality accommodation and associated amenities and services at competitive prices to our
targeted markets. Basic business objective is reflected in everything that we do, which is to
contribute to the enrichment of the quality of lives for people around the nation.

2.2 Business philosophies/identity

Due to the hotel management and tourist industry experience of Foundations’ staff, we will
be able to create a high satisfaction level for our customers, business travelers and the local
economy. Foundations’ accommodation and conference facilities meet the highest
standards of the industry and will enable us to offer a high quality product mix.

2.3 Location
We are going to be located in Areka Town Sefer Selam Kebele geberna Mender local
name “ bolosso sore woreda administration office” , Woliyta Zone. This location has been
selected because of its location, size, visibility, and image.

2.3.1 Geographical markets

The primary market TOM DALE DEALER Hotel will be Areka town, surrounding zones
and national customer due to location of the hotel close to the business district and main
road.

2.4 Vision of the future

TOM DALE DEALER Company can look forward to a promising future, because of the
experienced staff, our careful planning, the potential of the targeted market segments, and
skills training program. Our pre-market research has shown the intended market to have
plenty of room for a hotel such as Foundations intends to run. The management style is
flexible, progressive and energetic. Enthusiasm of the management as well as the employees
will greatly stimulate the envisioned growth.

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2.5 Main objectives

2.5.1 Business objectives
1. Our clients and potential clients at the core of our activities and to satisfy their
needs
2. Provide a venue for the creation of a local/regional business employee pool
3. Become established as a renowned hotel
4. Partner with community to which we address human worth, Integrity, Honesty
and Responsibly.
5. Establish a funding source for the development of new small business ventures
within the town (with profits offering non-interest bearing loans)

2.6 Financial objectives

1. Obtain grants/contributions in the amount of 50,000,000.00 Million Birr
(construction/start costs)
2. Create profit margin which allows above median wage rates for all staff
3. Establish profit margin which allows

2.6.1 Marketing objectives

1. Running a company capable of developing more skills and capacity able to handle the growth
volume of works as the business grows.
2. Ethical business standards and top quality goods and services at all times
3. Sustainability, profitability and growth of the business
4. Positive image projection
5. Training and staff development at the of our human resource strategy

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2.6.2 Key advantages
TOM DALE DEALER Hotel will become a renowned hotel because of the following
key advantages:
 Our hotel is formulated along current ecological guidelines greatly reducing its impact
on the surrounding environment whilst stimulating local economy.
 The hotel will have a 3-diamond rating in international hotel rating systems.
 The hotel will have a state of the art security system with direct communication to the
local law enforcement department.
 Specifically designed ambiance in a classical culture style setting.
 Maintenance of high-quality real time financial and reservation system.
 Our unique formula for service and ambiance.
 Senior management will have significant business experience.
 Foundations will have strict financial guidelines in the areas of liquidity, inventory
management, and profitability and is positioned well for future growth.
 Foundations will have negligible long-term debt.

2.7 Strategic alliance

TOM DALE DEALER hotel will successfully brand itself as a 3-diamond quality
hotel and will be inspected and listed as such by all major travel agents and hotel
associations nationally. We will continuously develop associations with the travel,
business and tourist organizations and expect these alliances to further enhance our
reputation as a quality destination. Our attorneys will assist us with all of the land
use, permitting, environmental, and construction issues inherent in the development
of our hotel to ensure the project is completed on schedule and in accordance with
the planned budget. Their partners will have extensive experience representing
developers before local, regional, and state agencies with respect to zoning, land
use, impact fee and impact fee credit, transportation and infrastructure
requirements, as well as financing, and other development-related issues.

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2.7.1 Strategic positioning

TOM DALE DEALER hotel will differentiate and position its business from its
competitors by offering a secure and pleasurable stay, providing high quality
services, a state of the art security system and professionally trained staff.
Its concern for the environment and its level of no-fuss service and accountability
set it apart from other, more expensive, similarly positioned hotels in the area.

3. Personnel
The 5-year projection for personnel is expected to show the following:

Personnel projection Year 1 Year 2 Year 3 Year 4 Year 5

Accounting 2 3 3 4 4
Engineer – Plant 3 1 1 1 1
Hotel Accommodations 13 15 16 16 16
Security 3 3 4 4 4
Food/Beverage/Catering 6 6 7 7 7

Housekeeping 8 8 9 9 9
Marketing 1 2 3 3 3
Sales – Convention 2 3 3 3 3

Convention/Conference 1 2 2 2 2
Total 39 44 46 47 47

These figures are a blend of full and part-time employees. It is anticipated that each
department/area will engage 1-2 interns at any given time through the first 2 years.
Foundations will consider increasing these figures in conjunction with increased business
activity after year 2.

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3.1 Licenses
Foundations will obtain the following required licenses:
 Hotel operating license. We have filed registrations with the state and federal
governmental agencies concerning requirements of state laws.
 We will obtain all necessary environmental permits from local, regional, state
and federal regulatory agencies, including wetland impact, endangered and
threatened species, storm water management, water use, and other types of
permits.
 Restaurant/food catering license

3.2 Sales
TOM DALE DEALER Hotel will sign several major agreements with local entrepreneurs
and organizations to receive their customers. As a result of these agreements, sales in the
local and regional market will accelerate and add to the sales momentum.

3.3 Internet
TOM DALE DEALER Hotel has plans to (re)develop its web site as construction
proceeds. In line with trends Foundations will establish a web site through which it will be
possible to make reservations and obtain information about the hotel’s services and
facilities. There has been a dramatic increase in online hotel booking in recent years and
that trend is expected to continue.

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4. Marketing
4.1 Accommodation
The accommodation of TOM DALE DEALER Hotel consists of various suites (honeymoon,
deluxe, business) and rooms (single and double rooms). Each room includes a bathroom,
TV, mini bar, air conditioner, and internet access. Several rooms will have a panoramic
view while most other rooms have a garden view.

Additionally TOM DALE DEALER Hotel will offer security coded entrance to building
and rooms, safety deposit boxes, secure luggage storage, 24-hour reception and helpdesk
and business amenities.

4.2 Food Service/Room Service

Food service is intended to serve a complementary breakfast. Room service will offer
lunch and dinner to guests, but also will cater to convention customers during meetings.
Due to the nature of our hotel, we will serve healthy foods, and can even provide a special
diet service.

4.3 Recreation
TOM DALE DEALER hotel will offer several recreational facilities on the ground.
Facilities available include: pool and sauna/whirlpool. Hotel will also offer access to
activities in the surrounding area. Amenities available within the immediate area include:
walking, hiking, bicycling, parasailing, boating and other water sports, tours of the city,
and many more.

4.4 Conference facilities

TOM DALE DEALER hotel will have 2 conference areas/rooms which can be used
throughout the year for meetings, seminars, parties, and corporate gatherings. Seating in
our largest area will accommodate up to 400 individuals seated at tables, 800 in chairs.
Equipment such as overhead projectors, telephone, fax, copiers, and services such as
security can be provided. Additionally, hotel will have an arboretum which will be
available for public use: personal relaxation, weddings, recitals, etc . . .

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The product line offers the following additional advantages:

For families

For families we offer access to child care and children’s facilities such as local day care
center, playground, and accommodations suited for small children and babies.

For business travelers

For business travelers we have a complete range of conference and business facilities such
as office space, fax, printer and secretarial services and broad band Internet connections.
Our meeting rooms are fully equipped for conferences and we have limousine and taxi
services. We also will have available reservation of our entire third floor for corporate
gatherings over several days. This area offers secluded conference amenities found on the
main floor while affording uninterrupted meetings.

For couples without children

For tourist couples without children we have a large variety of amenities catering to the
young and old such as a full program of recreational activities: walking, hiking,
parasailing, boating and other water sports and historical tours of local cities, and many
more.

For single and group travel

For the single or group traveler there is a selection of group activities available which can
be reserved in advance or after arrival at the hotel. These activities include sports and
recreation, dinner dance evenings [at local venues], guided tours and organized coach
travel to areas of interest in the region. All group travel can be accompanied by a [resident
hotel] guide and the hotel can handle any in-house catering for groups.

For physically impaired

The hotel is amply suitable and adapted to persons who travel in wheelchairs, need nursing
care, have vision or hearing difficulties or otherwise require easy access to amenities,
services and accommodation. All hotel buildings are low on thresholds. Ramps and
elevators are located where stairs are necessary, there is clear signing of all services and
amenities and rooms can be fitted out with alarm buttons for immediate medical attention.

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4.5 Market analysis

At TOM DALE DEALER hotel the following tools were used to analyze and to explore
the market:

 inquiries with existing and potential customers

 requested information from community business support groups
 collected catalogues, price lists and brochures of competitors

The hospitality market is good for millions of birr a year. After two years of struggling, the
hospitality industry is projecting a stronger surge during 2016, in which period a
significant increase in activity is anticipated. Revenues as well as supply and demand all
suggest a season of positive growth. Growth in visitor numbers has steadily increased in
2017. Visitors from Areka town have been the primary source of this growth. We expect
that the increased preferences for domestic travel, close-to-home destinations, and highway
travel will boost Foundations’ visitor numbers.

4.5.1 Market segmentation

Four types of hotel properties generally appeal to leisure travelers: economy, mid priced,
upscale and luxury hotels & resorts. Because of its location and formula the hotel will cater
primarily to business people and will be open all year.

4.5.2 Marketing goals

An important part of TOM DALE DEALER hotel marketing goals and strategies will be
to establish and maintain its level of quality accommodation and associated services. Due
to a lack of rating system in the hotel and accommodation sector, the hotel has decided on
a strategy whereby its rating in Areka is at least that of a luxury hotel. To this end we will
regularly invite representatives of the various rating systems to visit the hotel to ensure that
we will remain listed within these categories. Upgrades and renovations will be carried out
whenever necessary.

4.5.3 Personnel and the marketing concept

The employees must be able to carry out the philosophy and the strategy of the company.
This will be emphasized until the strategies are carried out as planned and the results are
obvious. All new strategies will be forwarded and discussed with the employees on a

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regular basis during the weekly meetings. Responsible for the correct flow of information
will be the department heads as laid out in the organizational chart.

4.6 Pricing strategy

In the hotel branch there is an overall tendency to consider the competitive offers as well as
the degree of acceptance by the customers when planning a pricing strategy. Hotel will
follow this tendency. Foundations’ services are priced at parity with or at a slight premium
over competitive offerings. Extensive promotional activity, including daily and holiday
specials, help to ensure that customers perceive that they are receiving higher quality
products and prompt, courteous service in exchange for the slight premium in price.

4.7 Operations
TOM DALE DEALER Hotel & Conference Center Identity

The identity of the hotel will be made clear by its furnishings and decoration and for its
focus on job skills training. Its classical cultural style will be reflected in the buildings,
grounds, accommodation and all amenities and facilities the hotel offers.

Outside city limits

The location of the hotel has been chosen because of the charm of the natural surroundings,
the accessibility to existing infrastructure such as main asphalt road. The remoteness of the
location offers an ideal retreat for tourist and business travelers who seek a place away
from urban areas and the hustle and bustle of modern life. The surrounding woodland s and
the close proximity to woods / harbor / shopping malls make this a prime location for a
hotel business.

Premises

TOM DALE DEALER hotel will own a 20,000 square meter foot building with a
combination of accommodation, office, storage, and catering and conference space. The
hotel will have 80 rooms, some of which are suites, and several conference/meeting spaces
available.

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Parking

Parking facilities will be our own parking lot for cars to accommodate a full capacity
conference gathering (200 seated at tables).

Security

State-of-the-art security facilities

TOM DALE DEALER hotel will be outfitted with a state of the art security system in
addition to smoke alarms and a sprinkler system. This will include a CCTV (closed circuit
television) system for surveillance of all public areas such as the hotel entrance, the
parking lot, the conference and meeting rooms, and the swimming pool, as well as all
corridors, elevators and service areas of the hotel. Professionally trained security personnel
are part of the hotel staff and can be hired from a local security firm to expand any group
of visitors’ needs. Cooperation with the local authorities furthermore ensures safe transport
to and from the hotel is required. This will ensure that our high profile visitors, be it
dignitaries or businessmen, can be assured of a safe and secure stay at hotel.

Advertising and promotion

TOM DALE DEALER hotel promotional plan is diverse and includes a range of
marketing communications. We will have a Grand Opening to be scheduled upon
construction completion which will be advertised in local newspapers and local radio
channels. To support expansion efforts, the hotel considers using popular media, such as
local TV, radio and the Internet to advertise. It appears that the most successful hotels /
resorts spend a percentage of net sales revenue for promotion and advertising. Hotel plans
to do likewise with a portion of net sales on a yearly basis. Based on this decision,
advertising and promotional possibilities were prioritized in order of probable
effectiveness.

Opening -- we will send out an introductory press kit to all media and place printed
announcements in key publications.

Ongoing -- during the initial year, we intend to get our leaflets displayed in the many
venues in the city. The staff will be trained as to promote by word-of-mouth.

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Future - for our conference services, we intend to hire a sales representative who will be
in charge of prospecting for new clients.

Public relations Press releases are issued to both trade journals and publications such as
local and regional newspapers, travel agents, hotel and accommodation magazines, online
hotel and restaurant directories and in conjunction with local Chambers of Commerce.

5. Analysis of the advertising expenditures/Advertising with

promotion goals:
These areas will be established with a professional marketing consultant as construction
begins. This will allow Foundations to prepare for the grand opening and on-going
business.

5.1 SWOT analysis

Our analysis is based on input collected during discussions with staff, distributors,
customers interviews.

Summary of Strengths and Weaknesses

Strengths Weaknesses
Business Positive focus on job skills An overcapacity in the industry has
climate training/internships/job creation resulted in a deterioration of trading
endeavors conditions. Atrophy in consumer spending
is fueling decreased visits or numbers.
Internal Built with little (if any) debt Establishment of new organizational
organization load values process will require intense oversight
Political Strong push for job creation Low consumer expenditure. increasing
factors living costs.
Social Many people spend their Poor economic times are decreasing
factors vacations in our town unnecessary spending
Workforce Increased unemployment Internships for
figures will provide optimal unemployed/underemployed workers will

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opportunity for full staff require increased number of regular staff

Economic Tax-exempt entity Due to overcapacity in the sector profit
margins are squeezed to the minimum.

5.2 Problems and Possibilities

Problems / Threats Possibilities / Opportunities

Economic In times of recession less people Offer excellent value for money.
may be inclined to travel.
Internal Parent organization changes Establish Board of Directors with community
organization leadership members, as well as members
External factors Lack of community support Job creation and skills training brings hope and
economic uplift to community
Personnel Finding qualified personnel can Motivate current personnel.
be a tedious task
Accommodation Many hotels in area of similar Emphasize focus on business sector and
mix room numbers and pricing conference space availability
price none comparable in area for space available
quality
purchasing
customers
competitors
other
Food No restaurant on site Specific catering for conference needs,
mix complimentary breakfasts and room service
price available (grill)
quality
purchasing
customers
competitors
other

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Conferencing Need for increased staff and No other similar sized space available in area
mix marketing, increased risk with equitable pricing
price management issues
quality
purchasing
customers
competitors
other

5.3 The organizational structure

Management and personnel: See Chart Below

Board of Directors

General Manager

Accounting Chief Rooms Security Food & Housekeeping Director of

Auditor Engineer Assistant Beverage Marketing
Manager and
Convention
Services

5.4 Contingency
In the event anything might occur that prevents the General Manager/Director to conduct
his / her business the following persons will ensure the continuation of the company:
Board of Directors.

Information

Foundations will have systems in place to provide the appropriate information needed by
staff and board to make sound financial decisions and to fulfill IRS require

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Accounting principles

The projections have been prepared using generally accepted accounting principles that
Foundations expects to use when preparing its financial statements. The company’s CPA
will prepare management letters containing recommendations for improvements in the
financial operations of the organization. This will be reviewed by the Board of Directors.
The report will be made available upon written request.

Insurance

Foundations will have suitable insurance coverage which will be periodically reviewed to
ensure that the appropriate levels and types of coverage are in place.

 fire insurance
 building insurance
 liability insurance
 burglary & dishonesty insurance
Construction Bid
See report from Comstock Construction listed on the “Business Page” of the
Foundations website.
Anticipate beginning of construction in of 2016 E.C.
Education/Skills Training/Internships
 3-6 months
 Paid above minimum wage rates
 8 hour day: 6 hours “hands on”, 2 hours of individualized classroom learning
 Reference out to business community
 Provided limited healthcare benefits
 Ability to work in an area of intern’s interest: landscaping, catering, etc…
 Professional educators
 Mentoring outside of workplace if intern desires
 Access to computers and other technologies to aid learning
 Anticipate partnering with Michigan Works and other employment agencies to
insure that interns are indeed, unemployed or under-employed

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 Housing will be the responsibility of the intern, not Foundations
 Internships available beginning with the construction phase
 Internships available for teens through all age spectrums of adulthood

6. FINANCIAL PLAN
TOM DALE DEALER hotel major revenue will come from the hotel room revenue and
event hall rentals and other revenue streams. The major costs for the company will be
salaries of the staff and cost to maintain the standards of the hotel.

We plan to obtain a loan from commercial Bank to begin our business. Our shareholders
would also play a major role in the contribution of money to develop this bank.

6.1 Revenue Streams:

These are sources of revenue of a company or organization. They are the various sources
from which a business earns money from the sales of its goods and services. These are
aspects of the hotel where we will be receiving revenue and they include:

i) Food and Beverage Sales: this revenue will be made from the sale of its continental
and local dishes and also its drinks.
ii) Rooms Revenue: This revenue will be generated from the sale of its rooms.
iii) Banqueting/Events Revenue: This hotel will have a marquee and event halls which
will be rented out for different types of events and functions. This will also generate
income for the hotel.
iv) Swimming Pool Revenue: Guests will also pay for the use of its swimming pool and
may also decide to be members which will also cost money.
v) Gates and Parking: Parking tickets will be issued at the gates and fees will be
charged according to the amount of time used while still in the hotel.
vi) Gym Subscription: For guests to be able to access the gym, payment will be made
and guests can also subscribe for membership which will cost money.
6.2 COST STRUCTURE: This refers to the types of expenses a business incurs and is
typically composed of fixed and variable costs. For this business plan, the cost structure
will be divided into CAPEX (Capital Expenditure) and OPEX (Operating Expenses).

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CAPEX (Capital Expenditure): This is the money spent by a business on
acquiring or maintaining fixed assets. They include:
i) Office Equipment
ii) Crockeries and Cutleries
iii) Uniforms, Linen and Towels
iv) Other forms of Equipment
v) Plants and Generators
vi) Air Conditioners
vii) Furniture and Fittings.

OPEX (Operating Expenses): These are the ongoing cost for running the hotel
and they include:

i) Staff Salaries
ii) Utility Bills which includes Power (Electricity Bills) and Entertainment
( Payment for DSTV for example)
iii) Taxation, Levies and Fines
iv) CSR (Corporate Social Responsibility): This is a self-regulating business
model that helps a company to be accountable to itself, its stakeholders and
the public.
v) Commission
vi) Interest to The Banks which the loan was obtained from

6.3 Project Cost:

The project requires an investment capital of ETB 50,000,000.00. TOM DALE
DEALER hotel is seeking a total funding of 50,000,000.00 to launch the hotel. This will
be used for funding capital expenditures, manpower cots, marketing expenses and
working capital. Accordingly, the capital outlay description with distribution of the
funding sources is discussed in the following table.

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Table 1- START-UP CAPITAL

Distribution of Project Cost
Total by Source of Fund in ETB
Remark
S.N Project Item
Investment
Equity Capital %
Foundations, The Slabs,
Structural Framework, Walling, 27,000,000.0 27,000,000.
1 100
Ceilings, Roof, Electricals and 0 00
Site Works
11,455,409.
2
Furniture and Fixtures 11,455,409 00 100.00
Developmental Start-Up 10,400,000.
Expense: 10,400,000.00 00 100.00
a) Cost of Registration
3 b) Cost of Hotel Equipment*
c) Cost of Accounting Software
-
d) Cost of Insurance
e) Cost of License
operational Cost for the first
4 three months including salaries
of employees 1,144,591.00 1,144,591.00 100.00

Total
50,000,000.00 50,000,000.00 100.00

6.4 Profitability analysis

Profitability assessment of the project is made based on the prevailing situation of the area,
south region and the socio economic develop trend of the country in general. Due attention
has been given for pay capacity of the users and affordability of the service and quality of
services to be delivered by setting price.

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 TOM DALE DEALER Hotel
Cognizant with the demand analysis prices for the product is set price in the sector and
quality is one of key competition factors in the business yield quick revenue to discharge
responsibility of loan repayment and a return on investment for the promoter.

6.5.1 Profit or loss statement

The project will have positive cash flow and profit even from start of first year of
operation. As profit loss statement of the project details below, the project 8,794,570 net
profits in the first year of production and the preceding year also show incremental profit.
A detail of profit and/ or loss analysis of the project is presented below.

TOM DALE DEALER hotel A projected profit or loss statement

Table 3 for the period of five years from commencement of the operation

FINANCIAL FORECAST FOR FIVE YEARS

ITEMS Year 1 Year 2 Year 3 Year 4 Year 5
Room revenue 2,000,000 2,100,000
2,205,000.00 2,315,250.00 2,431,012.50
Food and beverage 10,400,000 13,020,000
13,671,000.00 14,354,550.00 15,072,277.50
Venue hire, Events and
Entertainments
4,500,000 4,725,000 4,961,250 5,209,313 5,469,778
Total Revenue 18,900,000 19,845,000 20,837,250 21,879,113 22,973,068
Payroll 1,800,000 1,890,000 1,984,500 2,083,725 2,187,911

Sales, Marketing and other expense 500,000 525,000 551,250 578,813 607,753

Utilities 800,000 840,000 882,000 926,100 972,405

Insurance 500,000 500,000
500,000.00 525,000.00 551,250.00
Total Operating Expenses 3,600,000 3,755,000 3,917,750 4,113,638 4,319,319
Profit Before Interest and Taxes 15,300,000 16,090,000 16,919,500 17,765,475 18,653,749

Interest Expenses 4,953,446 4,458,102

3,962,757.20 3,467,412.55 2,972,067.90
profit before tax 10,346,554 11,631,898 12,956,743 14,298,062 15,681,681
tax 15% of profit after interest 1,551,983 1,744,785 1,943,511 2,144,709 2,352,252
Net profit for the periods 8,794,570 9,887,113 11,013,231 12,153,353 13,329,429

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6.6 Cash flow statement

Cash flow analysis is made so as to identify whether the financial statement have positive
balances and oversight the liquidity status of the project. Accordingly the project has shown
positive cash flow balance right starting from the first year of service. There recorded
incremental positive net cash inflow for each consecutive year too. The first year of the
operation has net cash flow of ETB 4,523,777.35 and cumulative total net inflow throughout
the project period including book value of fixed asset is ETB 96,012,533.03

Table 4 a project cash flow statement for the project period

descrption Year_0 Year_1 Year_2 Year_3 Year_4 Year_5

Cash inflow - - - - - -
Sales revenue 71,475,300.00 78,622,830.00 86,485,113.00 95,133,624.30 104,646,986.73
Owner's equity 50,000,000.00
Bank loan 0.00
Book value of building machines
and other fixed assets

Total cash inflow 50,000,000.00 71,475,300.00 78,622,830.00 86,485,113.00 95,133,624.30 104,646,986.73

Cash outflow

Intial investment 50,000,000.00

cost of direct materials 64,330,474.00 64,330,474.00 64,330,474.00 64,330,474.00 64,330,474.00
Operating costs less despection 709,065.65 1,011,385.65 1,540,392.00 1,887,029.35 1,824,611.35
Intrest payment on loan - - - - -
loan repayment - - - - -
Tax payment on operating
1,911,983 2,122,785 2,340,411 2,561,454 2,789,834
income

Total out flow 50,000,000.00 66,951,522.65 67,464,644.65 68,211,277.00 68,778,957.35 68,944,919.35

Net cash flow 4,523,777.35 11,158,185.35 18,273,836.00 26,354,666.95 35,702,067.38
Cumulative cash flow 4,523,777.35 15,681,962.70 33,955,798.70 60,310,465.65 96,012,533.03

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6.5.1 Cost benefit and sensitivity analysis

The project’s costs and benefit are discounted to the present value (PV) and the discounted
benefit over the discounted cost would indicate the net benefit of the project. Accordingly,
the project benefit has shown a positive net present value (NPV) of Birr 168,048,482.52
discounted at 15% , that is the cost capital, and the internal rate of return (IRR) is also
76%, which is greater than the cost of capital (6%), confirming of the project as it is
depicted on the following table.

Table 5 computation of NPV and IRR

Year 1.00 2.00 3.00 4.00 5.00

Net cash inflow 42,870,235.00 1,785,000.00 1,785,000.00 1,785,000.00 1,785,000.00

Total inflow 42,870,235.00 44,655,235.00 46,440,235.00 48,225,235.00 50,010,235.00

Discunting factor at 10% 0.897 0.804 0.721 0.647 0.580

Present value of cash flows 38,454,600.80 35,902,808.94 33,483,409.44 31,201,727.05 29,005,936.30

Total PV cash inflow 168,048,482.52

Less intial investment 50,000,000.00

Net present value 218,048,482.52

IRR 76%

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7. Implementation:

We anticipate that the project approval would take 90 days, following which time they
would have finished organizing financing. They plan to begin construction by September
of 2016 E.C and complete the project on November 2016 E.C.

Construction will commence with establishment of a site store/office after which a

temporary fence will be erected, and after this, the demolition of the existing houses will
immediately take place. Once the site is thus secured the building levels shall be
established, the excavation for the construction of the basement floor will be done and the
retaining walls done to secure the basement & the ground floor. Then construction of
structures will begin from the foundation hotel, and then followed by finishes, while site
works commence. This will be the boundary wall, parking, storm-water collection and
water and sewage disposal. On completion the project will be commissioned and a
management unit will then handle the operations of the development.

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