Hotel Addis Project Proposal

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Hotel@ Addis Project Proposal
Project management (Mekelle University)
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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE
PROJECT PROPOSAL ON
G+8 FIVE STAR INTERNATIONAL
TOURIST HOTEL
Project Location: - Addis Ababa, Bole Sub city Woreda 11

Promoted by: Aster Derje Belete
March 2018
Contents
Basic Information.......................................................................................................................4
1. EXECUTIVE
SUMMARY ..............................................................................................5
2. INTRODUCTION .................................................................................................
...........8
2.1. Investment in
Ethiopia ................................................................................................8
2.2. Hotel and Tourism sector in
Ethiopia .........................................................................9
2.3. Promoter
Background ...............................................................................................10
2.4. Ambition of creating the hotel
project ......................................................................10

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2.5. Purpose and Amount of

Loan....................................................................................11
3. The
Project......................................................................................................................12
3.1. Project description and
Justification .........................................................................12
3.2. Project
Objective.......................................................................................................12
3.3. Project location and
justification...............................................................................14
3.3.1. Location .....................................................................................................
........14
3.3.2. Climate:......................................................................................................
........14
3.3.3. Demographics:...........................................................................................
........15
3.3.4. Infrastructure and economic
status ....................................................................15
4. MARKET
STUDY .........................................................................................................18
4.1. General
Overview .....................................................................................................18
4.2. Present supply in Addis
Ababa .................................................................................19
4.3. Demand for hotel
services.........................................................................................21
4.4. Demands Evaluation
Mechanism..............................................................................23
4.5. Pricing ...................................................................................................................
...25
4.6. Capacity and service
programme.............................................................................25

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4.6.1. Capacity .....................................................................................................

.......25
4.6.2. Service
Programme:.........................................................................................26
4.7. Marketing
strategy.....................................................................................................26
4.8. Competitors
Overview ..............................................................................................27
5. TECHNICAL
STUDY....................................................................................................28
5.1. Design and
particulars...............................................................................................28
5.2. Physical
appearance ..................................................................................................28
5.3. Core
facilities ............................................................................................................28
5.4. Hotel Furniture and
Equipment’s..............................................................................33
5.5. Inputs/ raw materials and
utilities .............................................................................34
5.5.1. Raw Material
cost ..............................................................................................34
5.2.2. Utilities...................................................................................................................34
5.6. Machinery and
equipment.........................................................................................35
5.7. Land, Building and civil
work ..................................................................................43
5.7.1. Land
lease ..........................................................................................................43
5.8. Environmental impact
assessment ............................................................................44
5.9. Implementation
Schedule..........................................................................................45

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6. ORGANIZATIONS AND
MANAGEMENT ................................................................46
6.1. Organizational
Structure ...........................................................................................46
6.2. Management...........................................................................................................
...47
6.3. Manpower
Requirement............................................................................................47
6.4. Training
Requirement ...............................................................................................48
7. FINANCIAL
STUDY.....................................................................................................49
7.1. Classified Investment
cost.........................................................................................49
7.1.1. Fixed
costs .........................................................................................................49
7.1.2. Operational cost
costs ........................................................................................51
Summary of Operational cost ..........................................................................................53
7.2. Project Capital and
financing....................................................................................54
7.2.1. Project
Capital....................................................................................................54
7.2.2. Financing....................................................................................................
........54
7.3. Revenue
projection....................................................................................................57
7.4. Financial
statements..................................................................................................58
7.4.1. Projected Profit/loss
statement...............................................................................58
7.4.2. Projected cash flow
statement...............................................................................59

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7.4.3. Balance
sheet .....................................................................................................60
7.5.3. Viability and other measurement.......................................................................61
8. SENSITIVITY
ANALYSIS ...........................................................................................63
9. RISK
ANALYSIS...........................................................................................................63
10. MONITORING AND
EVALUATION..........................................................................65
11. CONCLUSION AND
RECOMMENDATION..............................................................65

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Basic Information
 Name of the Promoter: Aster Dereje Belete
Contact Address: 1911229149
 Type of the Project: 5 Star International Tourist Hotel
 Type of Business: Sole proprietor ship
 Project Location: Addis Ababa Bole sub city Woreda 11
 Project capital: The total investment capital of the project is estimated at birr
73,571,629 of which:-
• Birr 47,797,310 (65%) is for fixed investment cost
• Birr 25,774,318 (35%) will be assign for working capital
 Source of 昀椀nance: The total investment capital of the project is to be financed
from the promoter’s equity and bank loan.
• Birr 22,071,488(30%) is contributed by the promoter (Aster
Dereje Belete)
• Birr 51,500,140 (70%) is to be financed by local banks.
 Man power requirement: 300 employees will be benefited within this
project, out of which 125 permanent (100 skilled & 25 unskilled 8 th grade) and 175 casual
workers during construction phase .
 Land requirement: The total area of 974 m2 of land is required for the
Project

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1. EXECUTIVE SUMMARY
The project feasibility study proposed on international tourist hotel apartment investments has
been promoted by Next Step P.L.C in Addis Ababa city. Addis Ababa is a fast-growing
regional economic center and the capital of Ethiopia. It is home to the African Union, the UN
Economic Commission for Africa, foreign missions, regional NGO’s and the UN Conference
Centre. Due to its regional political status Addis Ababa is often referred as the political capital
of Africa. Ethiopian Airlines has become a major demand driver, servicing 115 international
destinations in 78 countries from Bole International Airport. Economic growth is further
increasing demand at +7.5% per annum, this is therefore Next Step P.L.C hotel apartment
investment founded its base on it.
Project justification: International standard tourist hotel is high class hotel where services
like standard bedroom, catering, conference hole, Spa (Hot Spring), gymnasium, sauna and
massage, other sports facilities like tennis or squash court, table tennis and children
playground, night club with dancing to live music or discotheque or cabaret etc.
The demand and supply of hotels and its bed rooms service in Addis Ababa has high gab the
supply of Addis Ababa has a quality 32 hotels and a total of 3,174 bed rooms currently in the
market, giving an average number of 100 rooms per hotel. Branded supply is very low; due to
this demand and supply analysis Newave Hi Tech Solutions P.L.C hotel wants to participate
and minimizes the gab of demand and supply standard hotel in Addis Ababa.
In this profile study an international tourist standard hotel is considered to following provides:
• 10 King size luxury rooms, 20 standard double bed rooms and 50 single
standard bed rooms totally 80 standard bed rooms services
• International and national restaurant service
• Standard bar and cafeteria
• Standard massage and sauna bathe service
• Physical fitness room
• Conference hole and others important needs
The total area of the international tourist hotel investment is about 3,000-meter square, the
area covered and develop the following infrastructures such as main building (G+8) hotel
service, (G+0) fuel station full accommodated, store, gourd house, parking area and other
necessaries facilities.

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The total investment capital of the project is estimated at birr 93,571,629.00 of which birr
47,797,310 (65%) is for fixed investment cost of which 65 % of the fixed cost is need foreign
currency while the remaining balance of birr 25,774,318 (35%) will be working capital.
Profitability: The financial analysis of the envisaged project is carried out for the following
ten years. Based on the 10 years financial projections using the income statement, cash flow
statement and financial internal rate of return (FIRR), the following results are obtained.
 Income statement: According to the projected income statement, the project
will generate profit beginning from the first year of operation. Based on the 10 years
financial projections the projects average annual net profit after payment of bank
interest, depreciation and tax amounts to birr 13,593,732
 Cash flow statement: The cash flow statement also shows a substantial amount
of cash surplus right from the first year of project operation life. The cash balance
grows from birr 21,685,936 in the first year to cumulative balance of birr,
384,396,352 during the 10th year of operation indicating the capacity of the project to
finance itself and generate cash surplus for further investments.
 FIRR Computation: The computation of the project FIRR shows that the
project will profitably generate reasonable return on investment. Before tax financial
internal rate of return is calculated to be 33.9%. This indicates the project is financially
viable with an internal rate of return (IRR) of 33.9 % and net present value (NPV)
102.2 million at discount rate 35 %.
 Socio economic benefits: The socio-economic benefit of the project is also
very high. The project will provide: - 125 permanent employs, generate revenue to
government in the form of taxes, Facilitate and give a good service for local and
international tourists
 Conclusion and recommendation: The Project are found to be operationally
profitable, viable & has significant socio-economic benefits. We recommended that
according to this attractive financial and economic benefit of the project all concerned
offices & financial institutions should give their support to facilitate the
implementation of this plan.

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2. INTRODUCTION
2.1. INVESTMENT IN ETHIOPIA
Ethiopia is now becoming more and more investment friendly country. The Government is
creating favorable condition that would highly encourage the private Sector to be engaged in
almost all areas of the economy. The country with population of come 120 million offers
significant domestic market for locally produced goods and service the country is also a
member of the common Market for eastern and southern Africa COMESA offering huge
benefit of exporting commodities in preferential tariff rates to a wider regional market.
Private investment should be encouraged to increase form year to year and Investment
constraints have to be alleviated in order to pave development ways so that investment
sector happens to be determinant about factor of economic development of the country like
Ethiopia.
It is usually considered as the engine of the economy. Both private and government Bodies in
many ways have commonly agree this idea. Economic development in any case needs both
efforts of the private as well as the public sector. There are Investments that could not be
undertaken by private sector due to its difficult nature, i.e. high initial capital and long
gestation period. However, the passed command economy system and the lack of experience
Between both sides have made it so hard for a private sector to flourish.
But now adays as Ethiopia follows free market economy ‘the roll of private sector for the
achievement of the economy policy. Accordingly, the Ethiopia federal democratic government
is encouraging investors to invest their records to contribute to the development of the country
in all sectors by avoiding all barriers and facilitating all the mince for the investment
2.2. HOTEL AND TOURISM SECTOR IN ETHIOPIA
Ethiopia has vast potential for development of various economic sectors. Although agriculture
is the mainstay of the country’s economy the opportunity to invest in other sectors especially
in Hotel, Tourism and real estate activities are there.

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Although Ethiopia is endowed with many natural and manmade tourist attractions, these
resources have not been sufficiently exploited. The country’s geographical location and the
remarkable physical features and climate have endorsed it with rich and varied natural
heritages. Despite considerable demand, tourism sector remains at relatively low stage of
development.
The Hotel and recreation service facilities in Ethiopia have been found at a lower level of
development. The number of Hotel service establishments in the country has remained
insignificant to respond to the customer’s demand. Only few Hotels have the capacity or
quality to provide good accommodation and catering facilities to fulfill tourists need. There are
only few hotels in the capital, Addis Ababa, and other big towns of the region states that
organized on international standard to fulfill the consumer’s needs.
The government of Ethiopia has devised a long-term strategy that gives due regard to the
preservation, development and promotion of the country’s tourist attraction. This includes plan
for expansion of tourist facilities and the necessary infrastructure.
Indeed, in the wider sense the country has a good potential for the development of high
standard hotels, apartments, recreation and market center and there is a growing realization
that this sector holds a significant development perspective, which should be fully exploited in
the planned and controlled manner.
In adopting a planned and regulated approach the country is in a position to expand its hotel
and tourism sector in a way that emphasizes environmental conservation and enhances the
quality of the overall tourist experience. This will contribute substantially towards improving
the standard of living and the quality of life of the population.
The past trend shows that most of the high standard hotels and recreation centers are
concentrated in the capital, Addis Ababa. The number of hotels and apartment service facilities
in other regions of the country has remained insignificant to respond to the customer’s
demand. Only few hotels and apartment centers out of Addis Ababa have the capacity to
provide accommodation for mid or high-class guests.
By taking this encouraging as an opportunity the promoter project plan to establish
international/tourist Hotel Apartment in Addis Ababa city for the benefit of the promoter,
community as well as the country as a whole.

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2.3. PROMOTER BACKGROUND
The promoter, Aster Dereje has a work experience in hotel and management business
activities. During this time, the promoter gained a vast knowledge and skill. With this reliable
experience, Aster Dereje knows how to manage and lead any organization to profit and also
know how to handle different challenges in the working environment. Moreover Aster Dereje
has a very good reputation with banks
and different financial organizations.
2.4. AMBITION OF CREATING THE HOTEL PROJECT
According to the preliminary market research, the demand for hotel service is very high and
yet the supply is limited leaving a huge service gap to the customer. Unfortunately, there is no
saturated standard hotel (5 stars) in the area. Although few less than five star hotels have
already working in the area, but still huge gap is there in between demand and supply in the
town. The service (5 star hotels) is widely accepted in Addis Ababa, Government employees,
Private employees, Tourists, local customers, and to some extent even in rich house-holds. So
there is good scope for establishing the units for establishing and maintain 5 star standard
/international and tourist hotel service in Addis Ababa as well as in the country. Due to this, it
has become imperative to build and maintain 5 star standard hotels service for the mankind in
prevailing conditions.
2.5. PURPOSE AND AMOUNT OF LOAN
Purpose and amount of loan requested: The purpose of the loan is to import
machineries and purchasing steel for building construction. Beside this the promoter believes
that, the loan will strengthen the relationship between the investor and the bank. Furthermore,
the investor gets strength to advance to various viable economy sectors in the country.
The source of the project finance is from the promoter’s equity and bank loan. Out of the total
investment capital of birr 73,571,629 birr 25,774,318 (30%) is to be contributed by the
promoter (Aster Dereje Belete) while the remaining balance of 47,571,629 (70%) is to be
covered by the local bank

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3. The Project
3.1. PROJECT DESCRIPTION AND JUSTIFICATION
International standard tourist hotel apartment is high class hotel apartment, where services like
three bedroom apartments, two bedroom apartments, one bedrooms, penthouse, catering,
meeting rooms, multipurpose assembly halls, swimming pools, Spa (Hot Spring),
gymnasiums, sauna and massage, cinemas, supermarkets, retail shops, gift shops, fuel station,
garage, service shops, other sports facilities like tennis or basketball court, minigolf or
badminton, bowling, table tennis and children playground, etc.
A hotel apartment is an establishment that provides paid lodging on a long-term basis.
Facilities provided may range from a fully furnished modest-quality one bedroom to fully
furnished high quality pent house all units having, higher-quality beds, a dresser, a refrigerator
and other kitchen facilities, upholstered chairs, a flat screen television and several bathrooms.
And also, facilities such as a swimming pool, business center (with computers, printers and
other office equipment), childcare, conference and event facilities, tennis or basketball courts,
gymnasium, restaurants, day spa and social function services.
3.2. PROJECT OBJECTIVE
The main objective of the project is aimed at to maximize the return on invested capital in the
form of profit for the promoter. However, its implementation will benefit the employee, the
consumer society and the government at different levels. In this respect the project is aimed to
promote the following objectives: -
• To maximize the return on invested capital through modern Hotel apartment
services
• To raise the significance and importance of the sector and thereby raising its
contribution to the national economic development
• To give quality and standard service
• Effectively use local inputs and strengthening the linkage between agriculture
and other sectors of the economy

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• To provide gainful employment to a large segment of the population of the

project area and augment earning capacity at the grassroots level,
• Increase government revenue through the different forms of taxes, which in
turn used to facilitate social and economic development.
In general, the project is believed to have significant social and economic benefits that accrue
to the society, the region and the country beyond the financial returns to its owner.
3.4. Mission and goal
MISSION
 Mission of the particular project is to expand the standard hotels system and to
give quality service.
 To prove to other people that struggle for a better life and economic
independences can do business and bring change and can make a difference if
opportunities are given.
 To become financially liquid and guaranteed more than ever.
GOAL
Objectives are the goals toward which activities of the business are directed and one of the
most important functions the business owner must perform is setting objectives. These
important aims of this partnership business among others include the following highly
interrelated general goals with each other.
• To create employment opportunities for 125 permanent and 600 causals
• To achieve standard tourist hotel apartment and give quality service.
3.3. Project location and justi昀椀cation
3.3.1. Location
The proposed project of 5 star International hotel will planned to be located in Addis Ababa
Bole sub city woreda 11 Town. Addis Ababa is the capital and largest city of Ethiopia. It
is the seat of the Ethiopian federal government. According to the 2007 population census, the
city has a total population of 2,739,551 inhabitants. The total land size the promoter requesting
for the implementation of the project is estimated at 974 square meters, which will been
obtained from investment commission of Addis Ababa city administration Hence the owners
select Addis Ababa for proposed project by looking every aspects of business integrity tourist
area.

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As a chartered city (ras gez astedader), Addis Ababa has the status of both a city and a state. It
is where the African Union is and its predecessor the OAU was based. It also hosts the
headquarters of the United Nations Economic Commission for Africa (ECA) and numerous
other continental and international organizations. Addis Ababa is therefore often referred to as
"the political capital of Africa" for its historical, diplomatic and political significance for the
continent
3.3.2. Climate:
Addis Ababa has a subtropical highland climate. The city has a complex mix of highland
climate zones, with temperature differences of up to 10 °C (18 °F), depending on elevation and
prevailing wind patterns. The high elevation moderates temperatures year-round, and the city's
position near the equator means that temperatures are very constant from month to month. As
such the climate would be maritime if its elevation was not taken into account, as no month is
above 22 °C (72 °F) in mean temperatures.
Geography: Addis Ababa lies at an elevation of 2,200 metres (7,200 ft) and is a grassland
biome, located at 9°1′48″N 38°44′24″ECoordinates: 9°1′48″N 38°44′24″E.[14] The city lies at
the foot of Mount Entoto and forms part of the watershed for the Awash. From its lowest
point, around Bole International Airport, at 2,326 metres (7,631 ft) above sea level in the
southern periphery, the city rises to over 3,000 metres (9,800 ft) in the Entoto Mountains to the
north
3.3.3. Demographics:
As of the latest 2007 population census conducted by the Ethiopian national statistics
authorities, Addis Ababa has a total population of 2,739,551 urban and rural inhabitants. For
the capital city 662,728 households were counted living in 628,984 housing units, which
results in an average of 5.3 persons to a household. Although all Ethiopian ethnic groups are
represented in Addis Ababa because it is the capital of the country, the largest groups include
all nation nationality

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3.3.4. Infrastructure and economic status
Economy: The economic activities in Addis Ababa are diverse. According to official
statistics from the federal government, some 119,197 people in the city are engaged in trade
and commerce; 113,977 in manufacturing and industry; 80,391 Homemakers of different
variety; 71,186 in civil administration; 50,538 in transport and communication; 42,514 in
education, health and social services; 32,685 in hotel and catering services; and 16,602 in
agriculture. In addition to the residents of rural parts of Addis Ababa, the city dwellers also
participate in animal husbandry and cultivation of gardens. 677 hectares (1,670 acres) of land
is irrigated annually, on which 129,880 quintals of vegetables are cultivated. [citation needed] It
is a relatively clean and safe city, with the most common crimes being pickpocketing, scams
and minor burglary.[37] The city has recently been in a construction boom with tall buildings
rising in many places. Various luxury services have also become available and the construction
of shopping malls has recently increased. According to Tia Goldenberg of IOL, area spa
professionals said that some people have labeled the city, "the spa capital of Africa."
Ethiopian Airlines has its headquarters on the grounds of Bole International Airport in Addis
Ababa.
Tourism: Tourism is a growing industry within Addis Ababa and Ethiopia as a whole.
The country has seen a 10% increase in tourism over the last decade, subsequently bringing an
influx of tourists to Addis Ababa. In 2015, the European Council on Tourism and Trade named
Ethiopia the #1 tourist spot in the world
Development: The city hosts the We Are the Future center, a child care center that
provides children with a higher standard of living. The center is managed under the direction
of the mayor's office, and the international NGO Global Forum serves as the fundraiser and
program planner and coordinator for the WAF child center in each city. Each WAF city is
linked to several peer cities and public and private partners to create a unique international
coalition.
Launched in 2004, the program is the result of a strategic partnership between the Global
Forum, the Quincy Jones Listen Up Foundation and Mr. Hani Masri, with the support of the
World Bank, UN agencies and major companies

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Education: Addis Ababa University was founded in 1950 and was originally
named "University College of Addis Ababa", then renamed in 1962 for the former Ethiopian
emperor Haile Selassie I who had donated his Genete Leul Palace to be the university's main
campus in the previous year. It is the home of the Institute of Ethiopian Studies and the
Ethnological Museum. The city also has numerous public universities and private colleges
including Addis Ababa Science and Technology University, Ethiopian Civil Service
University, Admas University College, St. Mary's University, Unity University, Kotebe
Metropolitan University and Rift Valley University.
Transport: Public transport is through public buses from Anbessa City Bus Service
Enterprise, Light Rail or blue and white taxis. The taxis are usually minibuses that can seat at
most twelve people. Two people are responsible for each taxi, the driver and a weyala who
collects fares and calls out the taxi's destination.
Road: The construction of the Addis Ababa Ring Road was initiated in 1998 to implement
the city master plan and enhance peripheral development. The Ring Road was divided into
three major phases that connect all the five main gates in and out of Addis Ababa with all
other regions (Jimma, Debre Zeit, Dessie, Gojjam and Ambo). For this project, China Road
and Bridge Corporation (CRBC) was the partner of Addis Ababa City Roads Authority
(AACRA). The Ring Road has greatly helped to decongest and alleviate city traffic.

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4. MARKET STUDY
4.1. GENERAL OVERVIEW
The hotel industry consists of many different services, including accommodation, restaurants,
cafes and catering. The market for the hotel industry, especially classified hotels in a
developing country like Ethiopia, is closely linked to the tourism industry, because a majority
of consumers for the sector services come from international tourists.
According to the United Nations Statistical Commission, Tourism comprises the activities of
persons traveling to and staying in places outside their usual environment for not more than
one consecutive year and staying at least 24 hours in the country visited.
The total number of international tourists arriving in Ethiopia is steadily increasing. The
highest number of tourist arrival is in 2005 i.e. 227.4 thousand. As can be seen from Table 3.3,
during the period 1991-2005 except for the decline observed in year 1998, the number of
tourists visiting the country was consistently growing. The growth rate registered varies from
year to year; the lowest was in 1992 (2%) and the highest in 1997 (27.7%). However, on
average during the period under consideration tourist arrivals have been increasing by about 8
% per annum.
Table 4.1 Total Tourist arrivals inEthiopia
Year Number Growth Rate

1991 81,581 -
1992 83,213 2
1993 93,072 11.9
1994 98,070 5.4
1995 103,336 5.4
1996 108,885 5.4
1997 139,000 27.7
1998 112,000 -19.4
1999 115,000 2.7
2000 135,954 18.2

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2001 148,438 9.2

2002 156,327 5.3
2003 179,910 15.1
2004 184,079 2.3
2005 227,398 23.5
Source: - Ethiopian TourismCommunion.
During the same period (1991- 2005), on average about 17% of the total number of tourists
that have visited the country were for vacation purpose while those who visited the country for
business account 22% of the total. Regarding the others, transit accounts for 18%, visiting
relative 9%, conference 11% and those who did not stated their purpose account for 22% of
the total.
4.2. PRESENT SUPPLY IN ADDIS ABABA
According to Current 2017 Information Addis Ababa has a quality supply of 32 hotels and a
total of 3634 keys bed rooms currently in the market, giving an average number of 100 rooms
per hotel. Branded supply is very low, with only Starwood, Rezidor, Marriott and Louvre
present. Future supply is predominantly branded
Table 4.2 internationalstandardhotels inAddisAbaba
S/N Name of Hotels in Ethiopia Number of
Beds
1 Hilton Hotel 372

2 Sheraton Hotel 293
3 Ghion Hotel 210
4 Radisson Blu Hotel 204
5 Radisson Blu Hotel 204
6 Elilly Hotel 154
7 Intercontinental Hotel 152
8 Harmony Hotel 150
9 Capital Hotel And Spa 114
10 Ethiopia Hotel 110

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11 Jupiter International Hotel - Kasanches 102

12 Dreamliner Hotel 96
13 Saro Maria Hotel 96
14 Mn International Hotel 91
15 Wassamar Hotel 66
16 Washington Hotel 65
27 Kaleb Hotel 64
18 Axum Hotel 56
19 Churchll Hotel 53
20 Aphrodite Hotel 52
21 National Hotel 52
22 Global Hotel 50
23 Bole Ambassador Hotel 48
24 Panorama Hotel 45
25 Tds Hotel 41
26 Adot-Tina Hotel 40
27 Jupiter International Hotel – Bole 40
28 Plaza Hotel 39
29 Nigist Towers Guest House 32
30 Kz Hotel 32
31 Nigist Towers Guest House 32
32 The Residence Hotel 19
3174
Source: - Ethiopian TourismCommunion.
Accordingly, assuming 365 working days, currently international standard hotels in Addis
Ababa have a total of 597,140 per annum tourist night room capacity. Based on discussion
with various private hotel managers and other knowledgeable persons the average stay of
tourists in a hotel is assumed to be 4 days.

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In order to project tourist arrival in to Ethiopia, the past trend in tourist arrival is considered.
During the period 1991-2005, the total tourist arrival in the country has registered an 8.2%
average growth rate. Accordingly, assuming that this growth rate will continue in the future
and taking year 2005 figure (227,398) as a base, tourist arrival is forecasted. Moreover, in
order to compute the unsatisfied demand the total annual capacity of international standard
hotels in Addis Ababa, which computed to be 597,140 rooms per annum is taken as the
existing capacity. The projected tourist room requirement, which is calculated by taking the
projected tourist arrival and multiplying it by the average hotel stay of tourists (4 days), the
unsatisfied demand is shown in Table 4.3.
Table 4.3.existing hotel capacities, projectedandunsatisfied demand
Projection of Room Night Existing Hotels Un
Year Tourist Arrival Demand Annual Satisfied
Capacity Demand
2008 286,456 716140 597,140 119,000
2009 309,372 773430 597,140 282,283
2010 334,122 835305 597,140 381,283
2011 360,852 902130 597,140 488,203
2012 389,720 974300 597,140 603,675
2013 420,898 1052245 597,140 728,387
2014 454,570 1136425 597,140 863,075
2015 490,935 1227338 597,140 1,008,535
2016 530,210 1325525 597,140 1,165,635
2017 572,627 1431568 597,140 1,335,303
2018 618,437 1546093 597,140 1,518,543
2019 667,912 1669780 597,140 1,716,443
2020 721,345 1803363 597,140 1,930,175
Accordingly, based on the market study and other considerations a five star hotel with room
capacity of 75 to 100 is recommended.

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4.3. DEMAND FOR HOTEL SERVICES
The feasibility study conducted for this project deals with the demand and supply analysis for
the hotel project to be established in the area by taking the number of international and
national tourist, investors, employers and government directly related with the level of
development of the economy in general and the tourism sector in particular. It is a function of
the number of both domestic and foreign tourist travelers in the area, travelers for the
commercial or business purposes, travelers for conference and other assembly purposes,
residents in the area (in fact it depends up on the standard of the hotel and the living status of
the residents) etc. Tourist could come to the country for the purpose of visiting our country
areas and rest on Addis Ababa mainly Addis Ababa is:-
• fast growing regional economic center and the capital of Ethiopia
• African Union
• UN Economic Commission for Africa
• foreign missions
• regional NGO’s and the UN Conference Centre
• Due to its regional political status Addis is often referred as the political capital
of Africa.
• Ethiopian Airlines has become a major demand driver, servicing 101
destinations from Bole International Airport.
• Economic growth is further increasing demand at +8% per annum
.
HOTEL SUPPLY AND ITS GROWTH
Addis Ababa is poised to undergo a high level of supply growth during the next five years with
a total of 2,375 rooms (76%) having been announced. We anticipate that 50% of this supply
(1,188 rooms) to be completed, with cash flow constraints, low access to debt funding and a
shortage of foreign currency holding back further supply growth. Promotors with stronger
balance sheets, technical support and access to foreign currency have a higher likelihood of
completing their developments. The result of this is a more measured and appropriate supply
pipeline of new hotels. New supply is increasingly branded with this growing

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4.4. Demands Evaluation Mechanism
The following are some of the methods which can be used to evaluate the demand of the
services. By use of Customers feedback follow up form
High GDP growth and increasing corporate entry is driving hotel demand in the business and
conference segment. The aid and diplomatic segments continue to provide the majority of the
market demand in Addis Ababa. Ethiopia has a strong domestic economy which is driving
demand growth in the mid-market.
Performance
Addis Ababa achieved an occupancy of 58% at an average daily rate of USD 220 in 2015*.
We estimate market wide occupancy at 65% at an ADR of USD 135. Once the locally branded
quality supply is included.

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Investment
Addis Ababa has received significant investment into the hotel sector in recent years, with a
number of successful local entrepreneurs investing in hotels. This has largely shaped the type
of supply in the market, with few of these investors having turned to global brands to manage
their properties. The extensive list of branded hotels that has been announced, is evidence that
this trend has changed. The easier access to finance and technical service expertise associated
with having a brand are driving this change. The latest branded entrants are the Marriott
Executive Apartments and the Golden Tulip Addis Ababa, with the Ramada Addis Ababa
scheduled to open in Q2 2016. Assets are tightly held and liquidity is low.
Outlook
Corporate demand growth prospects are positive with strong GDP forecasts and growing
regional demand, complimenting the significant and well established aid and diplomatic
markets that are already present in the city. Performance will be shaped by the extensive
supply pipeline of hotels across the city during the coming years. Many of these projects have
stalled, the expectation of further delays and projects being put on hold, is likely to offer
existing players in the market some respite. On the whole we are positive about the
performance outlook, yet caution against potential oversupply.
Addis Ababa Hotel Market Trends
What drives Addis Ababa demand?
5.
Addis Ababa has three distinct demand segments, namely the corporate market, aid and
diplomatic markets. The corporate market is primarily domestically driven, with a limited
presence of international companies despite the high growth in the economy. This segment
typically uses 3-star unbranded hotels. There are signs that the Ethiopian economy is opening
up and although this trend is anticipated to be gradual, it will ultimately increase corporate
entry into the market and subsequently hotel demand from the international corporate market.
We are already starting to see this happen with the number of regional and business travelers
to the market growing steadily. The 4- and 5-star markets are in turn primarily driven by the
aid and diplomatic markets. The city is home to the world’s third highest concentration of
embassies as well as the African Union headquarters, which collectively generate the majority
of the diplomatic market. The various conflicts affecting neighboring countries and its history
of donor presence make Addis Ababa one of the largest global bases for NGO’s and aid
agencies.

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Bole bound demand
The majority of hotel demand generators are found 2in the districts of Kirkos and Bole, where
diplomatic. Missions and larger corporates are situated.The Bole area is a new area expanding
to the southeast of the city Centre, between Kirkos and the International Airport. This area is
expected to experience the largest growth of hotel supply over the coming five 5years by 70%
to 1499 rooms driven by availability and affordability of land and ease of access. Whilst
supply is increasingly shifting south-east, the key demand generators are likely to remain in
Kirkos, with the midscale demand likely to shift towards Bole. The growing presence of
Ethiopian Airlines further underpins demand into this node and hotels near the airports have
been announced including a hotel funded by HNA and
Ethiopian Airlines.
4.5.Pricing
The pricing of hotel services depends considerably on the quality of service rendered and its
location. The relatively high standard hotels in Addis Ababa charge a price, which ranges from
USD 110(Ellili Hotel) to USD 255(Sheraton Addis) for a single night per single room. Other
hotels charge prices that fall in this range. For this envisaged project a price of Birr 1000, for
single bed, 1400 for double bed room and 1800 for suit king size hotel per room per single
night is proposed.
The hotel service will also earn revenues from the sale of food and drinks and other hotel
services. The total revenue earned from this service is estimated at 35 per cent of the revenue
obtained from room rents.
4.6.Capacity and service programme
4.6.1. Capacity
From the market study, it is observed that there is a great demand gap between the demand and
supply of international tourist standard hotel service. Therefore, taking in to account the
market study and economic scale of service provision the envisaged international tourist
standard hotel will have capacities as shown below:
Table 4.4 service capacity ofthe envisaged internationaltourist standardhotel
Sr. No. Type of Service Feasible Service Capacity

1 Bedroom 80 rooms, 20 will be double rooms,
50 single rooms and 10 suits.

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2 Bar and Restaurant

•• Restaurant (Modern 200 at a time each
and traditional
• Coffee Shop 10- 15 seats at a time
3 Sauna and steam bath 20 heads/day
4 Gymnasium 20 heads/day
5 Swimming pool (Big and small 45 Heads/day and 20 head/day
pools)
6 Meeting room 50x3 seats

7 Night club 300 at a time
4.6.2. Service Programme:
At the initial stage of the service provision period, the hotel would require some years to
penetrate into the market and capture a significant market share. Therefore, in the first and
second year of service the capacity utilization rate will be 75% and 90%, respectively. Full
service provision shall be attained in the third year and then after. The proposed service
provision program is shown in Table 4.7.
Table 4.5 service provision programe
Sr. Service Service Year

No. 1 2 3- 10
1 Service provision rate (%) 75 90 100
4.7.Marketing strategy
As discussed earlier the major target groups of hotel sector are tourists who arrives the country
for business, leisure, conference and other purposes. Providing quality services and
consistently improving with the changing situations should be the promoters’ objective.
Hence, according to the feasibility study, the promoter has the following marketing strategies:
• Contacting government and private agencies affiliated with tourism on a regular
basis, informing them of any corporate rate, discount programs, availability of services,
etc.
• Emphasizing the access of the proposed hotel to support client’s attractions, as
well as the services and amenities available,
• Special effort will be made to emphasize the price-value relationship of the
service available,

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• Actively marketing the hotel prior to the completion and opening,

• An aggressive local marketing effort and promotion of the hotel market to
enable the hotel to capture a more than proportionate share of support within the
market,
• Working with local people to establish a competitive amenity package
responsive to specific requirements.
4.8.Competitors Overview
Three are 36 standard 3 to 5 hotels in Addis Ababa but still three is a huge gab but our hotel
service is do quality and clean services.
In addition to the above, the failure stories that I have observed from others and the comments
collected from my customers will help me to win my competitors.
In conclusion, my service compared to the competitors looks like:
 I keep the promise I make
 Quality service is my motto
 Transparent price setting and fair price will be bases to win the competitors
 The promoter long term experience and goodwill that he has achieved from his
respected customers will allow me to win the competitor. In addition to the above, the
failure stories that we have observed from others and the comments collected from our
customers will help us to win our competitors.
 In conclusion, his service compared to the competitors looks like:

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5. TECHNICAL STUDY
5.1. DESIGN AND PARTICULARS
The project owner interest, as regards to how the overall building design looks like and the
level of service to be rendered by the envisaged project, is dependent on the area at which the
buildings to be placed. The owner has already decided to commit himself to construct a 昀椀ve
star hotel having the full knowledge what is required by the national and international
standard of Hotels in Ethiopia. The standard by the way its exhaustiveness as well as being
explicitly specific on the level of the service expected under the selected category, determines
also the physical and financial requirement of the project. Hence, in effect the contents of
project components to be described below are the derivatives of the requirements mentioned
above.
5.2. PHYSICAL APPEARANCE
The hotel would have G + 8 building placed on an area of 974 m 2. The architecture of the
buildings are influenced by the modern design setting holding the characters of attracting
customers from out ward and allowing the maximum comfort it can provide from service point
of view. Apart from the need to add a new look within the locality, exterior of the building will
be dominated by a glass panel at the strategic corners to provide a maximum opportunity for
guest to have, a look at the important land escape/scenery of the area.
The outer space is allocated to have an open garden, children’s playing ground, parking area,
fountains and inter campus paving with a medium size swimming pool adjoining the front side
of the buildings.

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5.3. CORE FACILITIES
The envisaged hotel should have sufficient and comfortable space to accommodate the core
services as per the requirements of the Five star hotel. Actually this has been considered
seriously at the design stage of the building along with the allocation of appropriate area and
placement of each components with the building accordingly. On the other hand, it is also
important to figure out the layout of each component not only from the perspective of having
compliance for the standard but for the benefit exploring possibilities of bringing
complementary services under the same location and allow maximum convenience in the work
processes.
The size (area) of each service, which will be explained below, determine the holding capacity
of guests as it determines the level and quality of service. Other than the critical factors
mentioned above the market aspect i.e. customers need and resource availability are
considered in which case they are the determinants to give the final set up of the facilities.
(A) BED ROOMS
A total of 80 classes are allotted for room services with options to avail two
different types of accommodations. In the interest of following the trend in the industry
single and double bedrooms. Actually
the standard requires
allowing maximum 30% from
the total while the rest can remain with
big double bed rooms or any other
smaller rooms. On the bases of the
above considerations under this
component, the hotel will have 50
single ,20 double and 10 suit king bed rooms

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(B) BARS
Standard Five star hotels must have at least one bars with a superior comfort and service
quality. The furniture and equipment’s, as being the basic sources of customer’s attractions,
need to be fashionable of higher quality commensurate with the expectation of guests who
happen to prefer this class. Therefore, the envisaged hotel, having the requirements considered
too, will have one main bar at the ground floor adjoining the reception area. Another bar
preferably with smaller space but furnished with cozy furniture will be placed at top floor of
the building. This is just to add another attractive look for the hotel as it will be placed at a
strategic location for customer to have a panoramic view of the area. The minimum carrying
capacity of the bars is estimated 200 persons per day.
(C) MAIN RESTAURANT
Technically a hotel to be classified under Five stars of as such this one must have at least two
dining places having the size proportional to the guests who have checked in as normally
customers do not prefer to worry about going out once they have settled. The area
determination has to take into account this. Hence, the hotel must provide the maximum range
of varieties at all times.
The hotel will have the capacity entertaining 200 guests and allow maximum efficiency
in the service by having the restaurant located nearer to the main kitchen.
(D)BANQUET/CONFERENCE HALL
A hotel with Five stars needs to have a conference/banquet hall of larger area which can be
used for banquet or conference interchangeably. This project considers this component as the
second important function next to the room services as this area has a higher potential for such
services. The holding capacity of the main conference hall will be 500 persons.

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BUSINESS CENTER(MINI MARKET SHOP)
A Five star hotel needs to have also a business center with the service that would the
customers need. For such a service, the envisaged project will allocate a relatively bigger area
preferably separate rooms at the ground floor. Rooms are allocated to secretarial service,
executive rooms for business meeting and shopping corners. The secretarial service will be
furnished with all the machines and equipment to handle any business enquiry that may be
raised by hotel guests. The shopping corner also accommodates mini boutique, cosmetics and
d/t type of shop
(E) SUPPORTS KITCHEN
Two kitchens, with the processes of multiple varieties of food preparation and a proportional
capacity to handle the maximum guests to be served in the main restaurant as well as in
banquet hall, is the critical requirement for the proposed hotel. It should be large enough also
to accommodate the working areas of cold and hot meals on the one hand and pastries and
bakery on the other.

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In order to allow reasonable space for workers to move around as well as to avoid the
possibility of contamination and spoilage, the pastries and bakery will be placed at the nearest
door joining the main buffet at the gate of the restaurant. On the other hand, the kitchen should
be provided with a space to add a small store with a flexible structure to contain butchery and
cold rooms. These are critical for easy facilitation of cooking’s. Moreover, the kitchen will
have a well-connected washing corner with at most margin of clearance to make the area safe
and clean.
POWER HOUSE
For the service of the hotel to continue uninterrupted, a power house is already planned to be
placed in the underground or back to the building. Hence, the power house will be supplied
with a gener r planned to be fixed for emergency service.
STORE
Alike the capacity projection made on the kitchen, the envisaged project requires a store as big
as the varieties of items that are needed to be kept as stock. The store will need to have a
systematic management for stocks properly placed and identified at the time of delivery and
inventory. Hence, it is the required procedure to organize the stock items in separate sections
so that the proper handling of stocks shall be maintained. In view of this, the hotel requires a
number of stores with sections for food items, beverage, glass wares, silver wares, soft
furnishings, cleaning and sanitary materials, stationery materials all placed according to their
physical appearances. The store will be placed in locations nearer to kitchen or leisure service.
CAR PARKING
The hotel must provide the service of car parking with 24 hours protection at least for those
customers who have checked in. Again, it should be large enough to accommodate as many
vehicles as the hotel is going to entertain a large crowd. In view of this, a parking space for
about 17 vehicles is planned to be allocated with the standard width and height of the
drive in routes.

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5.4. Hotel Furniture and Equipment’s
Furniture and equipment required to furnish the envisaged hotel depend on the space to be
available as well as on the quality and volume of service to be rendered. Normally the quantity
required will also depend on the standard of the hotel i.e. Five star hotel. To the extent that the
engineering design of the building align with the requirements of the standard, the projection
of furniture and equipment’s has to be consistent with the size and number of rooms, bars,
restaurants and leisure center. However, one has to be realistic in the sense that the forecasting
trend to link with the technical feasibility particularly with that of the envisaged service
capacity. Moreover, the balance to be between image building and income generation capacity
has the same level of influence as said above.
Therefore, for this particular category of forecasting two levels of considerations are taken into
account. One, by the fact that the design of building directly determines the space available for
every item, size will be governed by this and again the quality required furniture will
determine base on the kinds of facilities available. In any case the required quantities are
forecasted based on the components stated below:
 80bed rooms, o 10 king size luxury bed rooms o 20 standard Double
bedrooms o 50 standard Single bed rooms
 Special Bar and cafeteria
 Traditional and international restaurant
 conference rooms,
 Massage room
 Sauna and steam bath room
 Physical fitness room
 Night club (dancing area)
 Indoor and outdoor game facilities,
 Management office and store,
 Other civil works including land escaping, parking area, fountains and inter
campus paving.

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Secondly, in order to fulfill the basic requirements of hotel service, the quantities forecasted
for the above facilities have to be reviewed against the national standard. Such consideration
gives the benefit of consciously sorting out what item goes with what kind of facility or
service. Once this is determined the forecast of quantity will follow accordingly. The project
detail design work has already been undertaken and the planned facilities of the project and the
required quantities are forecasted in section 5.
5.5. Inputs/ raw materials and utilities
5.5.1. Raw Material cost

The annual cost and list of raw materials are indicated in Table 5.1.
Table 5.1 Annual requirements of raw and auxiliary materials
S/N Raw materials Quantity per cost per per year
month month
Food materials raw costs lamp sum 500,000.00 6,000,000.00
d/t type Beverage raw costs lamp sum 500,000.00 6,000,000.00
massage, sauna bath and other lamp sum 15,000.00

related cost 180,000.00
Cleaning materials and other lamp sum 15,000.00

miscellaneous uses 180,000.00
Total 12,360,000.00
5.2.2. Utilities
Annual requirement of electricity, water and fuel is estimated at 2,367,000 birr from which,
500,000 kwh, 300,000 m3 and 2000 liters, are electricity, water and fuel respectively. The total
costs of utilities are, therefore, about Birr 2,367,000 per annum.
Table 5.2 utilities
Description Qty. Cost per
unit cost year
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 2000 16 32000
Diesel, lt 20000 18 360000
Total 2367000

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5.6. Machinery and equipment
Machinery and equipment required for jute bags manufacturing plant are given in Table
Table 5.3 list of machinery and equipment
Furniture and equipment's required for Suit bed rooms (10 )
S/n Description Quantity Unit price Total (birr)
1 Sofa single 20 2,500 50,000

3 TV 29” 10 8,000 80,000
4 Telephone stand 10 500 5,000
5 Telephone apparatus 10 750 7,500
6 small Refrigerators 10 4,000 40,000
8 Coffee table 20 1,500 30,000
9 French Bed (120 x 180cm) 10 20,000 200,000
10 Cupboard built in 20 5,000 100,000
11 Head lump 20 1,000 20,000
12 Writing table with chair set 20 2,500 50,000
13 Chest drawer 20 1,500 30,000
14 Spring mattress 10 5,000 50,000
16 Bed sheets 20 500 10,000
17 Bed cover 10 800 8,000
18 Pillow 30 250 7,500
Total - 688,000
Furniture and equipment's required for double bedrooms (20)
1 Sofa single 40 2,500 100,000

3 TV 21” 20 8,000 160,000
6 Refrigerators 20 4,000 80,000

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7 Standing lump 20 1,000 20,000

8 Coffee table 20 1,500 30,000
9 French Bed (120 x 180cm) 40 12,000 480,000
11 Head lump 20 1,000 20,000
12 Writing table with chair 20 2,500 50,000
13 Chest drawer 20 1,500 30,000
Bed made wood 80 20,000 1,600,000
15 Bed sheets 80 500 40,000
16 Bed cover 80 800 64,000
18 Pillow 80 250 20,000
Total 3,019,000
Furniture and equipment's required for single bedrooms
1 Sofa single 100 2,500 250,000

2 TV stand 50 2,000 100,000
3 TV 21” 50 5,000 250,000
6 Refrigerators 50 4,000 200,000
7 Standing lump 50 1,000 50,000
8 Coffee table 50 1,500 75,000
9 French Bed (150 x 180cm) 50 20,000 1,000,000
11 Head lump 50 1,000 50,000
12 Writing table with chair 50 2,500 125,000
13 Chest drawer 50 1,500 75,000
15 Bed sheets 100 250 25,000
16 Bed cover 100 500 50,000

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17 Blanket 100 1,000 100,000

18 Pillow 100 100 10,000
Total - - 2,822,500
FURNITURE AND EQUIPMENT'S REQUIRED FOR OFFICE, RECEPTION,

LEISURE AND OTHERS
1 Executive double redistill desk 2 20,000 40,000
2 Executive swivel arm chair 2 5,000 10,000
3 Double pedestal desk 5 4,000 20,000
4 Servile admin chair 5 3,500 17,500
5 Secretarial desk 2 3,500 7,000
6 Guest chairs 8 600 4,800
7 Safe box 4 4,000 16,000
8 Shelf 4 3,000 12,000
9 Reception desk 2 40,000 80,000
10 Sofa box 2 15,000 30,000
11 Cash register with stand 2 7,500 15,000
12 Telephone apparatus box 2 20,000 40,000
14 Fax machine with stand 2 30,000 60,000
15 Pc with printer and stand 10 15,000 150,000
16 Single sofa high based 4 5,000 20,000
17 Coffee tables 4 2,000 8,000
18 Standing lump 6 2,000 12,000
19 Recreation facilities Ls - 150,000
21 Emergency power generator 2 300,000 600,000

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Total - - 1,295,300
Furniture and equipment's required for bar and cafe
1 Tables 60 2,500 150,000

2 Chairs 300 750 225,000
3 Long drawer (Balcony) 2 30,000 60,000
5 TV stand 5 2,000 10,000
6 TV set 27” 5 15,000 75,000
7 Casher box 3 5,000 15,000
8 Stools (high chairs) 12 1,500 18,000
9 Coffee machine stand 2 50,000 100,000
10 Refrigerator big 2 20,000 40,000
11 Refrigerator medium 2 12,500 25,000
12 Coffee roaster 2 7,500 15,000
13 Ice maker 2 5,000 10,000
14 Pastries stand 2 15,000 30,000
15 Juice maker 2 5,000 10,000
16 Draft beer machine 2 15,000 30,000
18 Tape recorder 2 10,000 20,000
19 DVD player 2 1,200 2,400
20 Satellite dish with receiver 2 2,500 5,000
21 Shelf with drawer 2 20,000 40,000
22 tea cup 500 25 12,500
23 coffee cup 500 25 12,500
24 Milk cup 500 25 12,500
25 Makiyato cap 500 25 12,500
26 water glass 500 15 7,500
27 draft glass 500 60 30,000
28 wine glass 500 100 50,000
29 Whisky glass 400 100 40,000

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30 local gen glass 500 50 25,000

31 service tree 1000 150 150,000
Total - - 1,232,900
Furniture and equipment's required for dinning/restaurant room
1 Tables 50 2,500 125,000

2 Chairs 200 750 150,000
3 Long drawer (Balcony) 2 30,000 60,000
5 TV stand 2 2,000 4,000
6 TV set 27” 2 7,500 15,000
7 Stools (high chairs) 2 1,500 3,000
8 Refrigerator big for beer 2 20,000 40,000
9 Refrigerator medium for soft drank 2 12,500 25,000
10 Coffee roaster 2 7,500 15,000
11 Ice maker 2 5,000 10,000

12 Draft beer machine 1 15,000 15,000
13 water glass 200 12 2,400
14 draft glass 200 60 12,000
15 service tree 50 30 1,500
16 30-34 sauce pot 10 20 200
17 Sauce-medium 40 30 1,200
18 Soup pot 40 50 2,000
19 Medium 4 45 180
20 Large – round hot pot 10 80 800
21 Medium – round hot pot 10 57 570
22 Small – round hot pot 10 30 300
23 High rim flat 10 70 700
24 Flat rim round 12 50 600

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25 Normal alloy 20 45 900

26 Non stick normal 20 20 400
Total 485,750
Furniture and equipment's required for Conference rooms
1 Tables 100 2,500 250,000

2 Chairs 1000 750 750,000
3 Buffet stand 5 20,000 100,000
4 Speaker (big) 5 5,000 25,000
5 Amplifier 3 20,000 60,000
6 Wireless microphone 5 750 3,750
7 Table microphone 20 350 7,000
8 LCD projector 5 30,000 150,000
9 Slid board 5 5,000 25,000
10 Satellite dish with receiver 5 2,500 12,500
11 TV stand 5 2,000 10,000
12 TV set 27” 5 15,000 75,000
Total - - 1,468,250
kitchen materials
1 Stove 5 45,000.00 225,000.00
2 Toaster 5 15,000.00 75,000.00
3 Oven 5 40,000.00 200,000.00
4 Aluminum tables 8 4,000.00 32,000.00
5 Grill (electrical) 5 15,000.00 75,000.00
6 Washer sink 5 5,000.00 25,000.00
7 Refrigerator 5 20,000.00 100,000.00
8 Clip fryer 5 5,000.00 25,000.00

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9 Pastries formwork 5 5,000.00 25,000.00

10 Petra 10 2,500.00 25,000.00
11 Cupboard 3 7,500.00 22,500.00
12 Shelf 3 5,000.00 15,000.00
13 Grill bench top 5 11,887.00 59,435.00
14 Deep friend double 6 4,218.00 25,308.00
15 Micro wave grill 5 3,250.00 16,250.00
16 Mincer meat 5 12,999.60 64,998.00
17 Brad oven 5 47,999.85 239,999.25
18 Pizza claye oven 5 29,841.00 149,205.00
19 mixer 15 KG capacity 5 37,999.45 189,997.25
20 Range commercial 5 38,745.00 193,725.00
21 Range linear 3 14,995.00 44,985.00
22 Fruit blender 3 3,585.00 10,755.00
23 Potato chopper 3 41,999.30 125,997.90
24 Onion peeler /chopper 3 15,780.00 47,340.00
25 Blender small 3 3,185.00 9,555.00
26 Deep refrigerator 6 9,450.00 56,700.00
27 refrigerator 10 9,960.00 99,600.00
28 Digital scale (35k.g) 3 1,800.00 5,400.00
29 Waiting scale (220 K.g) 3 4,700.00 14,100.00
30 Kitchen hood 5 29,745.00 148,725.00
31 Kitchen cabin with double Sink 5 31,488.00 157,440.00
32 Kitchen cabin 5 27,488.00 137,440.00
33 Kitchen top -stainless steel 8 8,195.00 65,560.00
34 Kitchen top -stainless steel -large 8 13,195.00 105,560.00
35 Chaffing dish -silver 25 9,499.00 237,475.00
36 Spaghetti plate 50 712.2 35,610.00
37 Dinner plate 50 720 36,000.00
38 Dessert plate 50 720 36,000.00

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39 Table fork 10 163.8 1,638.00

40 Table knife 10 136.8 1,368.00
41 Chopper knife 10 62.1 621.00
42 Table spoon 15 163.8 2,457.00
43 Kitchen Pan 10 499 4,990.00
44 Food Box 5 220 1,100.00
45 soup bowl 3 336 1,008.00
46 Cook pot large 10 693.2 6,932.00
47 Cook pot big 38 10 3,054.00 30,540.00
48 Cook pot medium 20 581.4 11,628.00
49 Cook pot small 20 469.6 9,392.00
50 restaurant Table w/ 4 Chair 50 9,246.00 462,300.00
51 cafe table 20 1,455.00 29,100.00
52 Restaurant chair- sheraton Type 100 2,510.00 251,000.00
53 cafe chair 100 964.5 96,450.00
54 Open generator-24 KV 3 389,748.00 1,169,244.00
sub total 5,237,428.40

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S/N Aerobics and physical fitness Qty Unit cost Total Cost
1 Public addressing system 3 15,000 45,000
2 Aerobics dumbbell 10 3,500 35,000
3 Stepping rocks(assoried) 120 250 30,000
4 Wall mounted mirror 30 200 6,000
5 Bike Proms 9 5,500 49,500
6 Track tread mills(electrical) 2 22,000 44,000
7 Track tread mills(manual) 6 4,000 24,000
8 heart rate monitors and pedometers 6 2,500 15,000
9 body solid endurance up right 2 11,000 22,000
10 muscular dynamics 2 13,000 26,000
11 simplex II series 2 16,000 32,000
portable massage tables with tools and
12
accessories 2 17,000 34,000
13 massage body work tools 6 4,000 24,000

lOMoARcPSD|47772308
14 massage chairs with tools and accessories 2 11,000 22,000

15 massage store heater 2 1,500 3,000
16 massage table electric warming pad 4 3,000 12,000
17 flece message table pad 12 1,000 12,000
18 massage table and video kit 2 6,000 12,000
19 pillows/body support/back care 16 4,500 72,000
20 cleaner and sanitizers 8 2,500 20,000
21 wall mirror(1.5 -2 ml) 6 400 2,400
22 sofa guest chair(three set) 10 4,500 45,000
23 Wall maound lockers 20 2,500 50,000
24 receptionist table 2 2,200 4,400
25 swivel chair 4 2,000 8,000
26 satellite dish with color 2 10,000 20,000
27 public addressing system 2 6,000 12,000
28 wall watch 2 400 800
Total 682,100
Garden recreation center
S/N Garden recreation center Qty Unit cost Total Cost
1 Lawnmower 5 2000 10000
2 wheelbarrow 10 500 5000
3 Metal scraper 10 100 1000
4 Coffee machine 2 10000 20000
5 plastic chair 40 150 6000
6 Oval shaped plastic table 20 800 16000
7 umbrella 20 400 8000
8 juice glass 40 50 2000
9 tea spoon 50 5 250
10 coffee spoon 50 5 250
11 juice stranner 2 150 300
12 water glass 30 20 600
13 coffee cups with saucer 20 100 2000
14 tea cups with saucer 20 60 1200

lOMoARcPSD|47772308
15 ice-cream box 1 5000 5000

16 water sprinkless 30 40 1200
17 water house nylon rope 4 500 2000
18 Gardner's kits 2 100 200
Total 81,000
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000
For double bed room (20) 3,019,000
Single bed room (50) 2,822,500
2 Furniture and equipment for office and reception area 1,295,300
3 Furniture and equipment for bar and cafeteria 1,232,900
4 Furniture and equipment for restaurant and dining room 485,750
5 Furniture and equipment for conference room 1,468,250
6 Furniture and equipment for kitchen materials 5,237,428
7 Sauna and steam bath materials 526,690
8 Aerobics and physical fitness 682,100
9 Massage service materials 300,000
11 Mini market shop establish costs 200,000
12 Garden and creation area 81,000
Total 17,069,918
5.7. Land, Building and civil work
5.7.1. Land lease
The overall land required is about 974 square meters. Land lease cost at the rate of Birr 45 per
m2 average and for 99 years land holding is estimated to be Birr 4.3 million. Thus, the total
land & construction cost assuming that the total land lease cost will be paid in advance (5%)
amounts to Birr 433,917 government has following significances the remaining amount paid
within 40 years per year . Land use plan of the project

lOMoARcPSD|47772308
A properly designed building construction starting in last year before and insures smooth
functioning of all operations. The building will have wellventilated appropriate international
Hotel service area the structure includes separate services and other different activates the
detail as follows
Table 5.4. Description of Land use plan
S/n Description Qantity Unit Price Total Price
(Br) (Br)
1 Main Building G+8 500 5,000 20,000,000
Gust room
Manager office
Minimarket shops
Bar and restaurant
Bed room (80 rooms,20 will be

double rooms, 50 single rooms and
10 suits.)
Meeting room
Sauna and steam bath
Gymnasium physical fitness
4 Store service 250 5,000 1,000,000
8 Parking area 150 1,000,000
9 Generator house 44 500,000
10 Guard house 30 643,475
Total 974.00 - 23,143,475
5.8. Environmental impact assessment
The project will seriously involve itself protecting conserving and developing the natural and
flora of the project area in line with the millennium development goal. To this to will play a
vital role in participating the varies organization and the community around the project area to
from an environmental commute in charge of all environmental issues to be handled in
accordance to varies environmental and water policies of 97/99.

lOMoARcPSD|47772308
The owner of the project believes to undertake several environmental issues for the
conservation development and creation of sustainable environmental around the project area.
5.9. Implementation Schedule
The actual implementation of the International 5 star hotel is planned to begin on the May
2018. The major activities envisaged are processing of land preparation, construction and
delivery, installation and commissioning of the factory line. Undertaking of civil design works
and execution of construction works which will be carried out by side which opening and
processing of L/C will take 3 months. The FOB delivery of plant machinery and equipment
will take 4 months. Allowing additional one month for sea freight and clearing, the delivery of
plant of project site and thus commencement of installation work requires 5 month. Plant
installation and commissioning will take place for 4 months.
The provision of infrastructural facilities such as Electric Power and water will be carried out
in the course of project implementation schedule. Other activities such us man power
recruitment and training, system development, and procurement of raw and other supplies will
also be duty performed to ensure that everything is in place by the time the plant is ready for
operation. All in all the project is expected to take 12 months for completion as per the below
detailed implementation schedule.
Table 5.5. Implementation schedule
(Months) in Gregorian Calendar
Description 5 6 7 8 9 10 11 12 1 2 3 4
Acquisition of Investment Land

(May 2018)
Opening & Processing of L/C x x x
Building Construction x x x x x x
Delivery of Plant machinery and x x x x x

Clearing
Installation and Commissioning x x x x
Recruitment of man power x x x x x x

arranging for other works

lOMoARcPSD|47772308
Customers, timely availability all the week including week end days, customer care, and quick
response to the feedback from clients.
6. ORGANIZATIONS AND MANAGEMENT
6.1. ORGANIZATIONAL STRUCTURE
The organizational structure of the project is designed by including all the necessary personal
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of plant. Depending up on
the nature of the center and the amount of work to be performs under each will be supervised
by the unit head that is accountability for general manager
CEO
Adviser G/Manager
Internal Audi琀椀ng
& Inspec琀椀on
Coordinator
M a na ger /supervisor
Secretary
Sales & technical Marke琀椀ng Admin &

Unit Unit 昀椀nance Unit
As clearly shown the organizational structure, the integrated projected center has CEO three
Departments under the general manager, Addition and the internal Auditing and inspection.
The departments are the production Department, the marketing department and the general
service department under each department there are different section which are undertaking
different activities

lOMoARcPSD|47772308
6.2. MANAGEMENT
As to the management of the project is concerned the owner will be responsible for the overall
project planning, co-ordination and implementation. After project implementation the
promoter serves as a top management body and frequently visits and supervises the
organization. Cattle fattening farm a business man who has a long year experience in
managing business activities. Therefore, the extensive experience he has enables him to
organize and properly manage the envisaged International 5 star hotel Service.
6.3. MANPOWER REQUIREMENT
For smooth and efficient operation of the organization, it has been anticipated that each units
will have adequate number of qualified and experienced manpower. The labor component of
the International 5 star hotel Service G/manager will hire qualified and experienced in
management whose main responsibility is to coordinate the overall activity of the project. The
distinct units have their own operational teams under them. To fill in all these work units with
the required manpower The project will provide 300 employees, 125 permanent (100 skilled &
25unskilled) and 175 casual skilled and unskilled workers. For smooth operation of the
project, employees will be given on job training, clear duties and responsibilities under the
direct supervision of their respective units.
Table 6.1: Manpower Requirement
Annual
S/n Description of Job Qualification No. Monthly Salary(Br)
1 General Manager BSc in Hotel management 1 10000 120000
2 Coordinator/supervisor BSc in Hotel management 5 6000 360000
1 Assistance Supervisor diploma in Hotel management 5 6,000 360000
2 Receptionist diploma in Accountant 5 5,000 300000
3 Pastry and Staff Cafeteria diploma in food preparation 5 7,000 420000
4 Cafeteria supervisor diploma in Hotel management 2 5,000 120000
5 Waiter diploma and Certificate 20 2,000 480000
6 Cooker diploma in food preparation 20 7,000 1680000
7 Coffee machine operator 12th complete 2 3,000 72000
9 Pastry attendant Certificate 5 5,000 300000

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10 Coffee machine operator 12th complete 5 3,000 180000
11 Dessert attendant skill professional 4 1,500 72000
12 Massage expert Certificate 5 5,000 300000
13 Physiotherapist Certificate 5 5,000 300000
14 Sauna /steam Bath Certificate 5 5,000 300000
15 Sauna and Steam bath Certificate 5 5,000

attendant 300000
16 life saver Certificate 4 5,000 240000
17 Casher diploma in Accountant 4 2,500 120000
18 Cleaner vice 8th grade complete 10 1,500 180000
19 Plumber diploma in electrical 2 2,000

engineering 48000
20 Electrician diploma in electrical 2 2500

engineering 60000
21 Gardener skill professional 2 1000 24000
22 Guards gardener 8 1,000 96000
Total 125 - 6,432,000
6.4. TRAINING REQUIREMENT
Since the machinery and equipment and services are easy to operate, a special training
arrangement is not needed. But operators, chemists, mechanics & electricians need a two
weeks training during erection, commissioning period on the production process, raw material
and product quality and operation and maintenance of machinery and equipment by the expert
of machinery supplier..

lOMoARcPSD|47772308
7. FINANCIAL STUDY
Financial analysis of the proposed project of Cattle fattening farm will be projected to test the
financial visibility if the investigated organization. Quantifying both project cost and benefits
over the assumed project life, which is five years, made the project visible. Besides it has been
tried to make a realistic forecasting of costs and the benefits based in current market price of
all necessary materials. Once the anticipated cattle fattening operation has been attained both
projects cost and revenue is estimated to be consumed to be compensated by increasing in
sales revenue
7.1. CLASSIFIED INVESTMENT COST
The cost of the project is classified as fixed incitement cost and initial working capital. With
regards to fixed investment cost of the project, the land lease, building and civil works cost,
machinery and equipment cost office furniture costs and fuel costs will be required. As to
working and operating cost a brief illustration will be given as to utilities, salary expense,
maintenance cost and depreciation cost and the other related costs
7.1.1. Fixed costs
Fixed cost that include Land development, Building and civil work, machinery equipment and
vehicles and office furniture estimated birr 47,797,310.which is 65 % of the total project.
Table 7.1 land development
Description Qty Unit Price Total Price (Br)
S/N (Br)
1 Land clearing and leveling 974 m2 2,500 1,000,000
2 Land lease (5%) 433,917
3 Canal work 1 600000 600,000
4 Water reservoirs 2 250,000 500,000
Total - - 2,533,917
Table 7.2 Building and civil works
S/n Description Qty Unit Total Price
Price (Br)
(Br)

lOMoARcPSD|47772308
1 Main Building G+8 500 5,000 20,000,000
Gust room
Manager office
Supermarket
Bar and restaurant
Bed room (80 rooms,20 will be double

rooms, 50 single rooms and 10 suits kings
room.)
Meeting room
Sauna and steam bath
Gymnasium
4 Store service 250 5,000 1,000,000
8 Parking area 150 1,000,000
9 Generator house 44 500,000
10 Guard house 30 643,475
Total 974.00 - 23,143,475
N.B. out of the total cost of G+8 Building construction, steel metal is covered 50 % of the
cost therefore the promoter is must be import from foreign using duty free by the rule of
Investment initiation.
Table 7.3 List of summarized machinery and equipment’s and cost
S/n Description Total cost
1
furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000 Import from

Double bed room (20 rooms) 3,019,000 duty free
Single bed room (50 rooms) 2,822,500

2 furniture and equipment for office and reception area 1,295,300 Local market

lOMoARcPSD|47772308
3 furniture and equipment for bar and cafeteria 1,232,900 Local market
4 furniture and equipment for restaurant and dining room 485,750 Local market
5 furniture and equipment for conference room 1,468,250 Local market
6 furniture and equipment for kitchen materials 5,237,428 Local market
7 Sauna and steam bath materials 526,690 Duty free
8 Aerobics and physical fitness 682,100 Duty free
9 Massage service materials 300,000 Duty free
11 Mini market shop establish costs 200,000 Local market
12 Garden and creation area 81,000 Local market
Total 17,069,918
Table 7.4. Procurement of Vehicles and furniture’s
S/N Type of Vehicles Unit Qty Unit Price Remark
(Br)
1 Pick-up (4WD)/ No. 2 1,250,000 duty free

2 Mini bus No. 2 1,100,000 duty free
3 Bus service No. 2 1,800,000 duty free
4 Office furniture’s Ls - 400000 Local market
5 computer and accessories 500000 Local market
Total - - 5,050,000
Table 7.5 Summary of Fixed asset
S/n Description Cost Estimate Remark
(Birr)
1 Land development 2,533,917 100% local market
2 Building & Constructions 23,143,475 50% duty free imported
3 Machinery and equipment 17,069,918 50 % duty free imported
4 Procurement of Vehicles & furniture’s 5,050,000 90 % duty free imported
Total 47,797,310 49.7 % duty free
imported

lOMoARcPSD|47772308

7.1.2. Operational cost costs
Production cost of the project includes direct production and overhead costs. The major cost
item under this category includes cost of material and labour inputs, fuel and lubricants, repair
and maintenance, employee salary and benefits, insurance, office supplies and other
miscellaneous expenses; the total estimated production cost is birr 6,732,310 million 20.8 % of
the total project capital is.
Direct cost
Table 7.6.Raw materials
S/N Raw materials Quantity cost per per year
per month month
1 Food materials raw costs Lamp sum 500,000.00 6,000,000.00
2 d/t type Beverage raw costs Lamp sum 500,000.00 6,000,000.00
3 massage, sauna bath and other related Lamp sum 15,000.00

cost 180,000.00
4 Cleaning materials and Lamp sum 15,000.00

other
Miscellaneous uses 180,000.00
Total 12,360,000.00
Table 7.7 Utilities
Description Qty. unit cost Cost per year

Electricity, kWh 500000 1.25625000
Water, m3 300000 4.5 1350000
LPG, lt 2000 16 32000
Diesel, lt 20000 18 360000
Total 2367000
Administration cost
• Employee bene昀椀ts : It includes medical expense, uniform and other

incentive package and assumed to be 25% of annual salary expense = birr
1,608,000

lOMoARcPSD|47772308
• Travel expense: It is assumed to be 10% of annual salary expense i.e.

birr 643,200
• Repair and maintenance
Cost estimate/ year
Item
% Price
Land development 2 50678.34

Building & Constructions 2 462869.5
Machinery and equipment 3 512097.552
Vehicles & furniture’s 5 151500
Total - 1,177,145.39
• Insurance: It is assumed to be 1% of fixed investment cost = birr 477,973
• O昀케ce supplies: Including stationery and sanitary supplies annual cost of
birr 100,000 is considered.
• Miscellaneous expense: It includes cost of land rent, telephone and
postage, audit, legal and license fees and other miscellaneous expenses. The total
annual cost of these cost components is estimated to be birr 150,000 /year.
SUMMARY OF OPERATIONAL COST/ WORKING CAPITAL
Table 7.8 Determination of Initial Working capital requirement

S/n Cost item Annual cost
1 Raw materials
1.1 Direct coast 12,360,000
1.2 Utilities 2,367,000
Sub total 14,727,000
2 Administrative costs
2.1 Salary and wage 6,432,000
2.2 Employee benefits 1,608,000
2.3 Travel expense 643,200
2.4 Repair and maintenance 1,177,145
2.5 Insurance 477,973

lOMoARcPSD|47772308
2.6 Advertising expense 50,000

2.7 Telephone expense 365,000
2.8 Wi fi Internet service 60,000
2.9 Office supplies 100,000
2.1 Miscellaneous expense 150,000
Initial W.C. requirement 25,790,318

lOMoARcPSD|47772308

7.2. Project Capital and 昀椀nancing
7.2.1. Project Capital

The total investment capital of the project is estimated at birr 73,587,629 of which birr
47,797,310 (65%) is for fixed investment items while the remaining balance of birr
25,790,318 (35%) will be initial working capital.
The detail of investment capital of the project is given below 7.9. Project capital and
source of income
S/n Investment Source of Income Remark
Description
capital (Br.)
1 Land development 2,533,917 Local Market

2 Building & Constructions 23,143,475 50% foreign currency Duty free
3 Machinery and equipment 17,069,918 45% foreign currency Duty free
4 vehicles and furniture 5,050,000 90% foreign currency Duty free
Sub total 47,797,310 49.7% foreign currency Duty free
5 Working Capital 25,790,318 Local market
Total 73,587,629 32% need foreign currency Duty free
7.2.2. Financing
The total investment capital of the project is to be financed from the promoter’s equity and
bank loan. Out of the total capital birr 22,076,289 (30%) is contributed by the
promoter, Aster Dereje PLC while the remaining balance of birr 51,511,340
(70%) is to be financed by local banks. The bank loan will be repaid based on the following
terms and conditions:
 Loan amount = birr 51,511,340
 Installment period/ term = 10 years
 Interest on loan (including service charge) = 11.5%
Table 7.10 Loan Repayment Schedule
Principal Interest Year ending
Year

lOMoARcPSD|47772308
Repayment Payment Balance
0 - - 51,511,340
1 5,151,134 5,923,804 46,360,206
2 5,151,134 5,331,424 41,209,072
3 5,151,134 4,739,043 36,057,938
4 5,151,134 4,146,663 30,906,804
5 5,151,134 3,554,282 25,755,670
6 5,151,134 2,961,902 20,604,536
7 5,151,134 2,369,522 15,453,402
8 5,151,134 1,777,141 10,302,268
9 5,151,134 1,184,761 5,151,134
10 5,151,134 592,380 0
Total 51,511,340 32,580,923
Depreciation of fixed investment items
The straight-line method has been used to depreciate/amortize all fixed items of the project.
The depreciation rate applied for all fixed assets is given below:
Table 7.11 Depreciation Schedule
Original Annual Depreciation
S/n Item
Value % Amount (Br.)
1 Land development 2,533,917 10 253,392
2 Building & Constructions 23,143,475 10 2,314,348
3 Machinery and equipment 17,069,918 10 1,706,992
4 vehicles and furniture 5,050,000 10 505,000
Total 47,797,310 - 4,779,731

lOMoARcPSD|47772308
Table 7.12 Summary of project Annual production costs

S/n Cost item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1 Direct cost
1.1 Direct cost 12,360,000 12,978,000 13,626,900 14,308,245 15,023,657 15,774,840 16,563,58 17,391,761 18,261,349 19,174,417
2
1.3 Utilities 2,367,000 2,485,350 2,609,618 2,740,098 2,877,103 3,020,958 3,172,006 3,330,607 3,497,137 3,671,994
Sub total 14,727,000 15,463,350 16,236,518 17,048,343 17,900,761 18,795,799 19,735,58 20,722,368 21,758,486 22,846,411
8
2 Administrative
costs
2.1 Salary and 6,432,000 6,753,600 7,091,280 7,445,844 7,818,136 8,209,043 8,619,495 9,050,470 9,502,993 9,978,143
wage
2.2 Employee 1,608,000 1,688,400 1,772,820 1,861,461 1,954,534 2,052,261 2,154,874 2,262,617 2,375,748 2,494,536
benefits
2.3 Travel expense 643,200 675,360 709,128 744,584 781,814 820,904 861,950 905,047 950,299 997,814
Repair and
2.4 1,177,145 1,236,003 1,297,803 1,362,693 1,430,828 1,502,369 1,577,487 1,656,362 1,739,180 1,826,139
maintenance
2.5 Insurance 477,973 501,872 526,965 553,314 580,979 610,028 640,530 672,556 706,184 741,493
Advertising
2.6 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
expense

lOMoARcPSD|47772308
2.7 Telephone 365,000 383,250 402,413 422,533 443,660 465,843 489,135 513,592 539,271 566,235
expense
Wi fi
2.8 Internet 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080
service
2.9 Office supplies 100,000 105,000 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133
Miscellaneous
2.1 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699
expense
Sub total 11,063,318 11,616,484 12,197,309 12,807,174 13,447,533 14,119,909 14,825,90 15,567,200 16,345,560 17,162,838
5
Total cost working 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,49 36,289,568 38,104,046 40,009,249
capital 3
Note: Production costs are assumed to increase by 5% annually.
Page56

lOMoARcPSD|47772308
7.3. Revenue projection
The project will collect its revenue from the customer service. The selling of food and
beverage and rented rooms has estimated based on the current market price and hotel
standard of similar service provision in town. The annual service program is formulated
based on proposed plant capacity considered the following table
Table 7.13 Description of revenue projection
S/N No of bed Price/day
Bed room service per year

rooms /night
1 King standard room 10 1800 4320000

2 Double bed room 20 1400 6720000
3 Single bed room 50 1000 12000000
Subtotal 23,040,000.00
S/N Raw materials No of cost per per year
customer month
per day
1 Food service income 100 850,000.00 10,200,000.00
2 Beverage service income 200 850,000.00 10,200,000.00
3 income from Massage service 40 360,000.00 4,320,000.00
4 Income from 20 180,000.00
Gymnasium
service 2,160,000.00
5 Income from sauna bath 45 472,500.00 5,670,000.00
6 Income from Meeting hole 20 days/month 150,000.00
service 1,800,000.00
Subtotal 34,350,000.00
Grand total 57,390,000.00
Page57

lOMoARcPSD|47772308
7.4. Financial statements
7.4.1. Projected Pro昀椀t/loss statement
Aster Dereje Belete 5 star international Hotel

Projected profit/loss statement
Table 7.14 Project Profit/loss statement
In ‘birr
Project Year
Description 1 2 3 4 5 6 7 8 9 10
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089 80,753,493 84,791,168 89,030,726
Less:
Production 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249
costs
Gross 31,599,682 33,179,666 34,838,649 36,580,581 38,409,610 40,330,091 42,346,595 44,463,925 46,687,121 49,021,478
Income
Less:
Interest on 5,923,804 5,331,424 4,739,043 4,146,663 3,554,282 2,961,902 2,369,522 1,777,141 1,184,761 592,380
loan
Less: 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Depreciatio

lOMoARcPSD|47772308
Profit 20,896,146 23,068,511 25,319,875 27,654,187 30,075,597 32,588,458 35,197,343 37,907,053 40,722,630 43,649,366
before tax
Less:
7313651.2 8073978.7 8861956.0 9678965.5 10526458.9 11405960.2 12319069.9 13267468.5 14252920.3 15277278.1
Income tax
2 9 8 8 0 2 6 2 6 3
(35%)
Net Profit 13,582,495 14,994,532 16,457,918 17,975,222 19,549,138 21,182,498 22,878,273 24,639,584 26,469,709 28,372,088
Note: Sales revenue is assumed to increase by 5% annually
Page58
7.4.2. Projected cash 昀氀ow statement
Projected cash flow statement
Table 7.15 Project cash flow Statement
Project Year
Description
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow 22,076,28 - - - - - - - - -
Equity 9
Bank loan 51,511,34

lOMoARcPSD|47772308
0
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089 80,753,493 84,791,168 89,030,726
Depreciation 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Total Inflow 73,587,62 52,610,269 65,039,231 68,052,206 71,215,830 74,537,635 78,025,530 81,687,820 85,533,224 89,570,899 93,810,457
9
Cash Out
Flow 47,797,31
Fixed Cost 0 - - - - - - - - -
Initial W.C 25,790,31 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249
8
Loan 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134
Repayment 30,941,453 32,230,968 33,584,960 35,006,651 36,499,427 38,066,842 39,712,627 41,440,702 43,255,180 45,160,383
Total Out 73,587,62
flow 9
Net Inflow - 21,668,816 32,808,263 34,467,246 36,209,178 38,038,207 39,958,688 41,975,192 44,092,522 46,315,718 48,650,075
Cumulative 125,153,50 163,191,71 245,125,59 289,218,11 384,183,90
- 21,668,816 54,477,079 88,944,325 203,150,399 335,533,832
balance 3 1 1 3 6
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lOMoARcPSD|47772308
7.4.3. Balance sheet

Current asset
Raw cost and utilities 12,360,000
utilities 2,367,000
Administrative costs
Salary and wage 6,432,000
Employee benefits 1,608,000
Travel expense 643,200
Repair and maintenance 1,177,145
Insurance 477,973
Advertising expense 50,000
Telephone expense 365,000
Wi fi Internet service 60,000
Office supplies 100,000
Miscellaneous expense 150,000
Fixed cost
Land development 2,533,917
Building & Constructions 23,143,475
Machinery and equipment 17,069,918
Procurement of Vehicles & furniture’s 5,050,000
Total fixed cost 47,797,310
Total asset 73,587,629
Liabilities
Bank loan 51,511,340.23
owners Capital 22,076,288.67
Total liabilities and capital 73,587,628.90
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lOMoARcPSD|47772308
7.5.3. Viability and other measurement

Financial IRR computation
Table 7.16 Financial IRR computation
In ' birr
Year 0 1 2 3 4 5 6 7 8 9 10
Gross 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089 80,753,493 84,791,168 89,030,726
income
Total 73,587,629 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249
costs
Gross -73,587,629 31,599,682 33,179,666 34,838,649 36,580,581 38,409,610 40,330,091 42,346,595 44,463,925 46,687,121 49,021,478
profit
Less: 11,059,889 11,612,883 12,193,527 12,803,203 13,443,364 14,115,532 14,821,308 15,562,374 16,340,493 9049001.6
Profit tax
After tax -73,587,629 20,539,793 13,478,615 13,976,013 14,503,150 15,061,512 14,873,630 15,596,585 16,355,688 17,152,746 17,989,656
net benefit
DF at 1 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.05
35% rate

lOMoARcPSD|47772308
Present -73,587,629 42,525,990 33,082,466 25,688,625 19,997,266 15,556,013 12,085,557 9,382,787 7,348,568 5,681,008 4,451,536
Value
Net 102,212,186 - - - - - - - - - -
present
Value
DF at 1 0.769 0.592 0.455 0.35 0.269 0.207 0.159 0.123 0.094 0.073
30% rate
Present -73,587,629 44,132,910. 35673624.0 28788976.1 23252634. 18764876.1 15161880.4 12228386.1 9932679.7 7970369.8 6499243.0
Value 0 6
Net 128,817,951 - - - - - - - - - -
present
Value
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lOMoARcPSD|47772308
 NPV (Net Present Value)

It is a method of calculating the expected net gain or loss from project by discounting rate of
all expected future cash inflow and outflows to the present point in time In the above table
shoes that NPV at 30% and 35 % discount rate is 128.8 million and 102.2 million
respectively, this figure is positive value or NPV>0 it is indicate that accepted the project
until 30 % and 35 % of discount rate
Break-even Analysis
The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point of the project including cost of finance when it starts to operate at full capacity (year 4)
is estimated by using income statement projection.
BE = Fixed Cost = 23 %
Sales – Variable Cost
 Payback Period (PBP)
The payback period is the amount of time required for a firm to recover its initial investment
in a project, as calculate from cash inflow
The investment cost and income statement projection are used to project the pay-back period
PBP = Initial investment Cost Gross Profit + Depreciation
= 73,587,629
13,582,495 + 4,779,731
4=5Years
The payback period =4 is less than the maximum acceptable payback period (10) therefore
accept the project.
 IRR
The internal rate of the project is the rate of discount that radios the present value of the
investigated project to zero. In calculating the IRR, the discount rate can be adjusted until the
NPV becomes Zero or at least as to zero.
Hence, the IRR of this project is calculated as follows
After tax IRR = 35 + 5 (102.2/128.8)
=33.9%
IRR=33.9% of the project returns its initial investment cost within its life

lOMoARcPSD|47772308
Project Proposal on 5 star international /tourist hotel
8. SENSITIVITY ANALYSIS
Sensitivity analysis is variant of scenario analysis in which each scenario represents a change
in only one variable, rather than a number of variables. For the proposed project, the
sensitivity of the project has been computed at 30% and 35% for sales reduction, operating
cost increase and investment cost increased accordingly, as described in table 7.16 the result
shows that IRR at 33.9% operating cost increase and 30 and 35% investment cost increase
and 30% service sales reduction. Predicting among these sales’ reduction is more sensitive to
the project and it should further expand after the project proposed life time because in this
case NPV equal zero at
IRR=33.9
9. RISK ANALYSIS
The major risk of this project shall be high market price fluctuation and turnover the skilled
and trained man power. These risks can be mitigated. The high staff turnover may be lessened
by creating conductive working atmosphere and providing some benefits. For this project,
25% benefit is proposed for the permanent employees
Characteristic (Personal) Risk: This is the most important risk, which should be
seriously considered? As to this company, the promoter have sufficient years of work
experience in both government and private organization (leading private business by
engaging themselves), so personal risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable. The
demand- supply analysis exhibits the need of the service of the business organization.
According to the overall demand the effect of competitors in the sector would not be an
immediate alarming threat at least for the coming few years. In additional to this Long year
experience of the owner in the field will help to react against any adverse situation in the
business. However, the reaction of competitors should be attended. In additional to an
advanced promotional work and sustainable goodwill development by creating new and best
quality products with good service deliveries
Collateral Risk: Since the owners of the project are engaged on different related
business, there is no any risk related to collateral. In this regard, the proposed building and
other proposed equipment and the business as a whole are dependable securities. The
experience and skill of the owner as well as the manager and the other expertise add
confidence to the lenders.
64
lOMoARcPSD|47772308
Project Proposal on 5 star international /tourist hotel
Therefore, there is no risk regarding collateral in general.

Construction Risk: Construction risk is one of the most important areas of risk that
need great consideration during project implementation. In the case of 5 star international
hotel services, the construction work of the proposed building will be made by phase with
self-response supervision.
Hence, there is no as such serious risk related to construction work.
All the identified risks, which are related to the universally accepted lending policy, are to the
acceptable level that keeps the lender’s interest in safe position. Furthermore, the quality of
the assets of the company is dependable and the projected finical reports show that the
company will have a capacity to pay the principal and interest without any problem with in
short period of time.
10. MONITORING AND EVALUATION
Monitoring and Evaluation (M&E) has long been recognized as a vital aspect of development
projects generally and of industrial and services projects in particular. The monitoring of
project performance consists of the tracking of human, physical and financial resources and
the recording of how they are converted into outputs (project goods and services), and in turn,
outcomes and impacts.
11. CONCLUSION AND RECOMMENDATION
Conclusion: The Project is found to be operationally profitable & has significant socio-
economic benefits. According to the projected income statement, the envisaged project starts
earning profit from the first year of production. The income statement and other profitability
indicators show that the project is viable. The project is believed to have significant social
and economic benefits that accrue to the society beyond those financial returns to its owner.
The most remarkable social benefits can be expressed in terms of job creation that leads to
reduction in the level of unemployment.
Recommendation: The project directly employs 125 persons; therefore, considering the
attractive financial and economic benefits the project is to produce, the promoter has made
the necessary preparation hoping that all the concerned offices & financial institutions should
give their support to facilitate the implementation of this plan.
64

Hotel Addis Project Proposal

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Hotel@ Addis Project Proposal

Project management (Mekelle University)

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

Project Location: - Addis Ababa, Bole Sub city Woreda 11

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2.5. Purpose and Amount of

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4.6.1. Capacity .....................................................................................................

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

2.1. INVESTMENT IN ETHIOPIA

2.2. HOTEL AND TOURISM SECTOR IN ETHIOPIA

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

2.3. PROMOTER BACKGROUND

2.4. AMBITION OF CREATING THE HOTEL PROJECT

2.5. PURPOSE AND AMOUNT OF LOAN

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

3.1. PROJECT DESCRIPTION AND JUSTIFICATION

3.2. PROJECT OBJECTIVE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

• To provide gainful employment to a large segment of the population of the

3.3. Project location and justi昀椀cation

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

4.1. GENERAL OVERVIEW

Year Number Growth Rate

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

2001 148,438 9.2

4.2. PRESENT SUPPLY IN ADDIS ABABA

1 Hilton Hotel 372

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

11 Jupiter International Hotel - Kasanches 102

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INTERNATIONAL HOTEL MIXED BUILDING PROJECT PROFILE

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