EDited LODGE-22

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Owner;… ..........

Mob:
09…………

PROJECT PROPOSAL FOR


ESTABLISHMENT OF
LODGE RESORT ON THE
SHORELINE OF LAKE TANA
(AROUND DEBREMARIAM
MONASTERY), BAHIRDAR
CITY, ETHIOPIA.

March, 2023 G.C


ROJECT PROPOSAL FOR ESTABLISHMENT OF LODGE & RESORT AT BAHIRDAR CITY, ETHIOPIA.

Table of Content
1. SUMMARY AND RECOMENDATIONS .................................................................................................... 1
1.1. Description of the Project ............................................................................................................. 4
1.2. Brief history of the Promoter ........................................................................................................ 4
1.3. Objectives of the project............................................................................................................... 5
1.4. Rationale of the project ................................................................................................................ 6
1.5. Planned Financial Investment and Expected Returns ................................................................... 6
1.6. Implementation Period ................................................................................................................. 7
2. POLICY ENVIROMENT AND SECTOR ANALYSIS...................................................................................... 7
2.1. Government Policy and Hospitality Sector ................................................................................... 7
2.2. Key Success and Risk factors ......................................................................................................... 9
3. MARKET STUDY ................................................................................................................................... 11
3.1. Recent Trends of Tourist Inflow in Ethiopia ................................................................................ 11
3.2. Demand for Room Services at Bahir Dar..................................................................................... 12
3.3. Supply Considerations................................................................................................................. 14
3.4. Marketing Strategy ..................................................................................................................... 15
3.5. Pricing.......................................................................................................................................... 16
4. SWOT ANALYSIS .................................................................................................................................. 16
5. TECHNICAL STUDY ............................................................................................................................... 17
5.1. Location....................................................................................................................................... 17
5.2. Land Ownership .......................................................................................................................... 18
5.3. Resort Structure .......................................................................................................................... 19
6. MANAGEMENT AND ORGANIZATION ................................................................................................. 25
8. ENVIROMENAL IMPACT ASSESSMENT .................................................................................................... 31
7. FINANCIAL ANALYSIS ........................................................................................................................... 32
7.1. Summary of Investment Cost...................................................................................................... 32
8. CONCLUSION AND RECOMMENDATION............................................................................................. 35
9. ANNEXS ............................................................................................................................................... 36

…………….PLC | SUMMARY AND RECOMENDATIONS


 Name of the project Promoter: Ato ………………………………..
 Type of Project: Resort Lodge with standard furnishing
and full-fledged services
 Name of The Resort Lodge: '… ............................. ’
Proposed Project Address
Region: Amhara National Regional State
Sub-city/Zone: Bahir Dar City: around Debremariam
monastery.
 Form of Business: Sole proprietorship
 Proposed Land holding: 4000m2
 Project Status: Under Initiation Stage
 Name of the General Manager: Ato …………..
Address of the General Manager
Address: Region: ……………………….
Mobile: 09……….. email: misganaw58@gmail.com
 Purpose of the feasibility study: to assess the overall
feasibility of implementing
 standard lodge resort project with a capacity of 30 bed
rooms and a camping site for 100 or more people with full-
fledged resort services at Bahir Dar Zuria Woreda and
portray the socio economic benefits of the project.
 TIN: Under Process
 Investment Certificate: will be Processed
 Principal Registration: will be Processed
P

1. SUMMARY AND RECOMENDATIONS

This is a project feasibility study on a stop rated Resort project proposed to be established
in the capital of Amhara National Regional State, Regional State, at Bahir Dar City being
implemented by Mr.……... It envisages the overall feasibility and viability of star rated
Resort project at Baba Dar city Ethiopia near Lake Tana.

The promoter, Mr. ……………. who hails from ............. is experienced and energetic business
man. He has about …..years of work & business experience, managing his private
businesses. He has been living in …… for …. Years and managed to successfully own private
business in that country. He has invested and owned many properties in the country he
lives. With that experience, he started to invest in Ethiopia property market and
discovered the favorable investment conditions that encouraged him to migrate his
accumulated capital worth more than Birr 150 million. Currently, he wants to do more in
Ethiopia and decided to permanently move back to home. To realize same, he established
a share company called .............. PLC in 2015.

Overall, the project promoter has an in working in managing his own private business
both at home and abroad. He has the necessary experience and qualification to execute
and implement project initiatives.

Assessing potential for standard resort services in bahirdar city, the promoter derided to
establish a resort project having a capacity of 30 rooms on total land premises of 4000m2.
To realize some, prefeasibility assessments and other legal requirements has been done
and the promoter in under process to obtain the essential land.

The technical feasibility of the project which includes the suitability of the area, the
construction work, furniture, equipment and other facilities has also been done in detail as
presented in the technical Ninth' part of this feasibility. The intended project is located in
the capital of the regional state at Bahir Dar city in the shorelines of Lake Tana around
Debremariam Monastery area. The proposed resort project is situated on ideal location
accessible for all type of customers as it is on the center of the city and in the highway
front Bahir Dar to Gondar near the main asphalt road. Additionally, all the infrastructure

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and utilities like transport, power, water and communications are available for the project.
Most of all, the city is one of the naturally blessed cities of Ethiopia that highly enjoy
frequent tourist inflow and manpower can be mobilized from the city. All the assessments
made with this regard depicted the project's technical usability and feasibility. The civil
work constructions and procurement of resort equipment’s and machineries will also be
made giving priority for quality in conformity with the standard for star rated resort
project.

The market for hotel and room services has been assessed based on the government
strategies for the sector, high inflow of investments to the regional state, and capacity of
existing standard homes in the city. In all protection years, the project demand is
projected to exceed the project, supply with a wider and increasing gap. The reasons for
this growth is the prospective growth in tourist inflow to the regional state, international
and national meeting, frequent conferences as it is regional capital, tourist arrival because
of the regional heritages, Lake Tana and other cultural sites. The target groups of
proposed resort are local and foreign nationals who come to City for business, local
citizens come to the city for assembly and conferences, tourists who arrives for leisure and
other purposes, local customers arrives for leisure and other purposes, citizens who are
living in the city and also diasporas. Providing quality services with reasonable price,
Strategy to accommodate all level of customers by consistently improving with the
changing situations would be the promoter's objective.

Well planned and effective organization is vital for the success of service delivery projects.
The project will be implemented by a well-organized management staff. The promoter has
a vision to render quality and standardized resort service for both local and foreign
customers. The General Manager of the project, Mr……………… will have a key role in
overall leadership and strategic planning and designing the overall operation of the
project. There will also be a qualified and experienced Resort Manager for running the day
to day operation of the proposed Resort. The management aspect of the project is
considered and found to be dependable considering the vast experience of the owner-
General Manager.

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Financially, the project is estimated to cost a total of Birr 79,681, 793 of which Birr
64,641,420 (81%) is earmarked to finance fixed assets and Birr 15,040,373 (19%) for
preproduction costs and satisfy the working capital requirement of the project. The fund
for the establishment of the profeet is planned to come from equity sources of Birr
35,377,886.02(44%) and the remaining Birr 44,303,907.01 (56%) is Bank loan.

The income projection reveals that the project will generate an average net profit of Birr
11.3 million/annum over the 10 years project life time. The profit margin begins with Birr
6.8 million in the first year which increases to Birr 15.5 million in the 10th year of
operation. The cash flow forecast also portrays that the project generates sufficient cash in
its operation servicing its obligations with cumulative cash balance of Birr 4.3 million in
the first year which surges to Birr 80.8 million at the 10th year. The financial internal rate
of return calculated shows that, the project will have before and after tax of 26% and 20%;
respectively. The NPV at 12% discount is Birr 59.5 million which reveals the project's
positive investment return. Sensitivity test is also carried out to test how the project is
sensitive to adverse effects. All financial results reveal the project's financial soundness.

Above and beyond to all positive financial outcomes, the project will create permanent
employment opportunity for more than 200 people besides a number of daily laborers will
be encompassed during the project's implementation. The establishment of the project
will also contribute its part to the development of the community and surrounding
farmers through experience and knowledge transfer of agro tourism like better
harvesting, vegetation, beekeeping and other modern agro business along with
improvement of the country's and the regions hospitality sector. It also increases the
government's treasure generating an average of Birr 6.1 million in the form tax over the
project's life.

Assessing the overall financial results, economic and social benefits, and the feasibility of
the planned project can be placed beyond any doubt and timely implementation of the
resort project is recommended. In this respect, the necessary support shall be availed by
all the concerned organs.

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1.1. Description of the Project

The project is a star rated lodge resort project with 30 soundproofed rooms providing free
WiFi and free wired Internet, and fully furnished beds. Guests can enjoy deep full room
service and other standard amenities include 24-hour room service, refrigerators, and
LCD TVs. A full-service Cafeteria, restaurants, bars, golf course, horse ride, children play
grounds, spa and a health club will be available at this resort. Free WiFi and free self-
parking are also provided. Additionally, 2 restaurants, 1 bar/lounge, 2 coffee shops/cafés,
business center. mini market and on door services will be onsite.

The construction of the G+1 main resort building will be made on a total land holding of
1722m² and built up area of 400m². The land is expected to be obtained on investment
bases from Bahir Dar city Administration Office. The resort civil works along with the
machineries and equipment’s to be procured with total worth Birr 64,641,420.20.
Working capital requirement is estimated at Birr 10,388,465 while pre-production Costs
are estimated at Birr 4,302,263. The total loan tenure is planned to be 2555 days or 7 ears
excluding 12 months implementation period.

1.2. Brief history of the Promoter

Ato ………………… is an experienced and energetic business man. He hails from ..................... in
nearby where the proposed project is located. He has Diploma in ................................ at
……………….Collage of education. Ato ……………. has overall work experience of more than
…... years in running his own company. The past business experience he had and natural
talent of entrepreneurship did lead him to a great success. As a General Manger, he is
successfully managing and handling the business activities by creating an environment
which is attractive and conducive for both clients and workers, dealing with his suppliers
for the proper flow of supply, checking customer feedback for better client satisfaction and
business development, over all control on quality of stock purchased and balance of their
book keeping. With that experience, he started to invest in Ethiopia property market and
discovered the favorable investment conditions that encouraged him to migrate his
accumulated capital more than Birr 150 million.

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Currently, he wants to do more in Ethiopia and decided to permanently move back to


home to realize same, he established a share company called PLC in 2015.

1.3. Objectives of the project

The objective of the project is to establish and execute star rated lodge resort project on
total land holding of 4000m2 in the shorelines of Lake Tana around Debremariam
Monastery of bahirdar city, the capital of Amhara National Regional State. The promoter
has an intention to execute full-fledged resort project having room services, restaurant,
bar, bakery, swimming pool. Health and spa center, cultural and traditional house, golf
course, horse ride, fishing pond, children play ground. Camping site, business center, mini
market and agribusiness undertakings intended for both Ethiopian and foreign customers.
The specific objectives of the project being to:-

 Implement and execute standard Lodge Resort undertaking in Lake Tana shoreline,
 Build fancy resort for vacation or business trip or to break from busy life or enjoy
with organic vegetable and fruits and honey supplies with multiple facilities
ecotourism splendid view of mixed agriculture and horticulture campout scenic
drive m beach.
 Generate reasonable profit rendering quality and standardize resort services both
for local and foreign customers.
 Contribute its part to improve the lively hood and harvesting practice of the
farmers through partnership experience sharing and provision of better
horticulture seeds.
 Contribute its part for tourism development of the country especially Bahir Dar city
by providing Tourist standard resort Services.
 Provision of standard hotel and other entertainment services for the local
communities with affordable options

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1.4. Rationale of the project

Tourism is one of the sectors that Ethiopia is the potential to invest and reward from it
given the country is endowed with many tourist attractions. Many have been said and
written about the tourism potential of the country and the very relation of the hospitality
sector which is undeveloped yet. The highlands of Ethiopia have an attractive landscape,
scenery and wildlife. The low lands of the Great Rift Valley have also a wide variety of
wildlife and several bird species which are the routes for tourists in Ethiopia. The tourist
inflow in the country has been showing an increasing trend for the last five years following
the stability, promotions and better developments in tourism infrastructures in the
country.

The Amhara Regional State is one of the regions holding many attraction sites for both
local and foreign visitors. The region is endowed with natural and culture heritages. It has
diversified agro ecology, infrastructure facilities. increasing flow of investment. This and
the very availability of market and future prospect for growth in hospitality sector are the
basic factors for the project's establishment. The agro-ecological conditions of the area are
found to be suitable for the envisaged resort project. The climate, temperature, soil
properties, quality and availability of water as well as the landscape of Bahir Dar city and
infrastructural facilities are also found to be appropriate. Additionally, high development
priority is given to Bahir Dar City by regional government given the natural blessings and
being the capital city of the regional state. The intended star rated resort project initiative
is also adhered to the above indicated rationale.

1.5. Planned Financial Investment and Expected


Returns

The investment outlay and expected returns for the planned hotel project is presented
with the tables:

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TABLE 1 SUMMARY OF PLANNED INVESTMENT OUTLAY

Sr. No Description Cost ( Birr )


1 Building and Civil Works 45,474,375
2 Machinery and Equipment for Resort Operation 16,827,045
3 Working Capital 10,738,110
4 Motor Vehicles ( Pick up and Minibus ) 2,340,000
5 Pre Operating Interest and Costs 4,302,263
Grand Total 79,681,793

TABLE 2: EXPECTED RETURNS

Description Year 1 Year 11


Net profit in Birr 6,811,205.40 15,560 79
Cumulative cash Balance in Birr 4,354,043.56 80,816.44
Project IRR before and after Tax 26% 20%
Sensitivity Test : IRR before and after Tax
a ) When benefit decreases by 10 % 19% 12%
b ) When operating costs increases by 10 % 22% 15%
c ) When investment cost increase by 10 % 24% 18%

1.6. Implementation Period

Proper and timely implementation of a project is vital for its ultimate success. The
promoter has planned to execute the resort project within one year assuming that long
term loan for partial financing of the civil work constructions, procurement of essential
resort equipment’s and working capital will be obtained from Banks in Ethiopia.

2. POLICY ENVIROMENT AND SECTOR ANALYSIS

2.1. Government Policy and Hospitality Sector

The Government of Ethiopia (GOE) has set in train an initiative to develop the tourism
sector. The recent establishment of three institutions, the tourm council, tourism board
and tourism agency, have raised the hopes of tour operators that it will address the
problems they face and allow the sector to flourish.

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The GOE has already begun formulating a policy and strategy for the tourism sector and
many of the ideas are already bulleted in the PASDEP and the recent GTP. Some of the
planed interventions include:

 Upgrading the general quality of hotel management and service standards, this will
require more understanding of what is required by international tourists, best
achieved through demonstration from foreign investors, as well as improved
quality controls;
 Encouraging increased contacts of domestic tour operators with foreign operators,
and supporting foreign participation on equitable terms:
 Broadening the tourism product, and supporting the expansion of tours into new
locations and activities;
• Opening up new regions, for example, mountains, desert regions, with due regard
for environmental and sustainability factors;
 Developing natural parks into tourist destinations with private sector partners,
strengthening local supporting industries and increasing the quality of product.
 Develop the design of handicrafts, create codes of conduct for guides and improved
licensing systems, providing training,
 Promoting special initiatives to promote entrepreneurs in less well-developed
areas and encouraging use of local supplies in hotels,
 Tourist destination development, including physical planning for the areas around
attractions, development of tourist facilities and information centers, and
preparation of plans for marketing and promotion of the destination;
 Expansion and upgrading of the Catering and Tourism Training Institute (CTTI),
from its present capacity of 120 to 600.

All this initiatives and efforts are expected to further strengthen and boosted in the
upcoming Second Growth and Transformation plan of the Government which paves the
way for improvement of hospitality sector in the major tourist destination regions like the
Amhara National Regional State.

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2.2. Key Success and Risk factors

KEY SUCCESS FACTORS

A) Macro Specific Success Factors

 Stable political and economic environment in the country.


 Positive trend of economic growth implying promising record in increasing
purchasing power of the society. Diverse Tourist attraction sites in the Country and
the Region • Improvement in basic infrastructure facility such as roads, electricity,
telephone,
Improvement of air ports, etc. across the country.
 The country is endowed with cheap labor force which makes investment made on
labor intensive technology worthwhile. Investment like hotel could easily fetch
human resource as they require mostly of skilled, semi-skilled and unskilled labor
force.
 Various incentive schemes implemented by the government in the areas of
investment.
 Improvement in service delivery and execution capacity of public institutions which
facilitate timely implementation of projects. 13) Sector Specific Success factors

B) Sector Specific Success Factors

 The government has given keen attention to the development of the hospitality
sector-Tourism Industry. The setting of the ministry office, the policy framework and
the promotion under way are all facilitating measures for the development of tourism
industry in the country.
 The country has rich historical and cultural heritages as well as natural resource
 Abundance which are basic ingredients for the promotion and development of
tourism in the country. The development of infrastructure and promotional work in
the future will

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 Decline the gap between the country's tourism potential and the level of tourist
inflow.

C) Firm-Level Success Factors

 Character: The promoter, Mr. …………….. has more than ….. years of business
experience working in managing different lines of businesses. He works and lives
both in Ethiopia and abroad and in those years he manages to establish good social
relationship and character with the society. Moreover, he has also good
relationship with the Business community and Banks.
 Capacity: The proposed rated Resort project is profitable endeavor with good
market potential. The projected financial indicators also confirm that the project
will generate reasonable profit having adequate cumulative cash balance to service
its obligations satisfying its working capital requirement.
 Competence: Mr. ………….. can manage and make the lodge project competitive in
the market offering star rated and quality resort service with competitive price.
Moreover, the Resort project will be
furnished with quality materials and is in a convenient location which will
strengthen its competence.
 Collateral: The G+1 Resort building and other Resort Civil works will be
constructed giving priority for quality and its marketability is al high Morcoter,
Resort equipments and Vehicles will be imported abroad so as to fulfill the
standard requirement. In this regard, the investments are adequate to the pledged
as collateral.

RISK FACTORS

Market Risk: Minimizing risk depends on the extent level of the company's
management in designing appropriate market penetration mechanism particularly in
rendering quality service, creating network with stakeholder and partners and
promoting the company's products to the wider community. In doing this, when the
management of the business found strong enough in making use of all available

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possibilities, capitalizing on its strength and also working on its grey area based on
customer feedback and industry growth, it will widen its chance of grasping more
opportunity Cognizant of this, the promoter will work towards increasing the market
share of the Resort by properly and timely deliver and serve lus customers.

Management Risk: The intended Resort will be organized with qualified and
experienced staffs. The General Manager of the business, Mr ................has been working
and managing service rendering businesses for the last ……
years. In this regard; the risk associated with management is believed to be minimal.

Business Risk: The promoter can create strong service and reputation by delivering the
resort services and amenities at the right time in conformity with the customer's
demand. Given the availability of market, increase awareness and fast economic
growth, the business risk is at low level.

Financial Risk: The promoter has been running positive profits for the last consecutive
operational years. Additionally, the income and cash flow projection of the business
assures it is financially feasible and to this end the risk with regard to finance is
acceptable.

Liquidity Risk: As evidenced from the trend of operational finance and projection made,
the business will have sufficient cash to service its debts and obligations. In this regard,
the liquidity risk is acceptable.

3. MARKET STUDY

3.1. Recent Trends of Tourist Inflow in Ethiopia

The market trend of hotel service is closely related to the performance in the overall
economy in general and the tourism sector in particular. The Ethiopian economy has
continued to grow in the previous years at faster rate of more than in which case the
contribution of the service sector, other than agriculture, has been growing significantly as
well. At present, it is a common experience to observe the surge of new investment in this
sector in every corner of the nation as the result of the induced effect from increased flow

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of tourists and business travelers. The country is endowed with unique combination of
natural and cultural heritages, impressive scenery, suitable climate, rich flora and fauna
and recognized archaeological sites. Its capital, Addis Ababa is the venue and political
capital of Africa being the seat of many international organizations including the African
Union (AU), the United Nations Economic Commission for Africa (UNECA) and others.
Ethiopia is also beautifully endowed with many kinds of flora and fauna species. More
than 800 species of birds reside in Ethiopia of which 23 are endemic to the country. There
are more than 100 mammal species, of which seven of the big mammals are unique to
Ethiopia. International tourist arrival to the country has shown growth from 103,000 in
1995 to 523,000 in 2011 with the average growth rate of 11.4% in the period under
consideration. On the other hand, the total receipt from tourists arrived has increased
from 177 Million USD in 1995 to 1,998 Million USD in 2011 with an average growth rate of
17.52% in the same period. Among the total tourist inflow, the number of tourists from
Africa has the highest number which is about 37.6%, next to Africa, 25.07% of the tourists
came from Europe. The provision of infrastructure for tourism is expected to further boost
the country's attraction for tourist arrivals. Conductive opportunities being created by the
economic policy for private investment in hotels, lodges and international restaurants has
improved the availability of vital services necessary for tourists. The country has six major
entry parts, by air. Addis Ababa and Dire Dawa, by road- Moyale, Metema, Wuchale, Galafi,
Gambella and by rail way Dawale.

3.2. Demand for Room Services at Bahir Dar

The feasibility study conducted for this project deals with the demand and supply analysis
for the resort project to be established in Bahir Dar city of the Amhara National Regional
state. The demand for hotels at any location is 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 commercial or business purposes, travelers for conference and other assembly
purposes, residents in the area, etc. Tourist could come to the country for different
purposes. It could be of for leisure and vacation, for conference and businesses. The

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tourism sector in turn largely depends on the political, economic and social stability of the
country.

To determine the Hotel demand in Bhair Dar City, local travelers for conference, travelers
for business, Foreign Tourists and local residents are taken into account. Bhair Dar city is
the capital of the Amhara National Regional State and it has the opportunity to entertain
considerable international, national and regional meetings and conferences in a year.
Bahir Dar City is one of the regional cities in Ethiopia that are registering overwhelming
growth especially in Tourism sub sector as there are huge inflows both local and foreign
tourists. These investments are highly correlated with Hotel services as these investments
hold large number of skilled and unskilled employees and entertain frequent supervision
by owners, financers and government officials. Data obtained from Bahir Dar City
Administration Culture and Tourism Office confirms that local and foreigners visiting
Bahir Dar and the surrounding have been increasing at 14% per annum. The detail tourist
inflow for the last six years is presented below:

TABLE 6: FOREIGN TOURIST INFLOW FOR THE LAST SIX YEARS ETHIOPIAN CALENDAR

years 2007/08 2008/09 2009/10 2010/11 2011/12 Total Average


Foreign tourists 11,774 12613 14286 18347 25721 16,548
Local tourists 26,710 28542 22880 33989 42930 31,010
Total 38,484 41,155 37,166 52,336 68,651 47,558
% change 7% -10% 41% 31% 14%
Taking the trend, number of foreigners that is expected to visit Bahir Dar City and the
surrounding in the next six years is projected as follows:

TABLE 7 PROJECTED TOURIST ARRIVALS FOR THE NEXT SIX YEARS

years 2015/16 2016/17 2017/18 2018/19 2019/20

projected no.of tourists 78,157 89,099 101,573 115,793 132,000


The local travelers for conference, local travelers for business, and local residents
expected to be fivefold of the foreign visitors. Accordingly total visitors and demand for
bed nights is projected assuming a traveler stays 3 days on average given visitors for
conference and business are expected to stay more days in the capital of the regional state.

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All in all, there is high demand for hotel related services and the demand is expected to
boost in the time ahead because of the tourist attractions sites, lake Tana, frequent
conferences at it is regional capital, its richness in wild life, rivers and other heritages that
attract tourists and increasing per capita income. In this regard, there is high demand for
rooms, accommodations and other hotel services at Bahir Dar City.

3.3. Supply Considerations

Market assessment has been made on the existing and potential supply of services of
room, café and restaurant in the city. Existing service providers in the project area are
very limited in type of services provided. Currently, there are about 16 big hotels under
operation with a total of 894 Bed Rooms. These hotels are mainly providing room and
restaurant services except few. Some of the big name hotel and Restaurants in Bahir Dar
city are:

TABLE 9: LIST OF EXISTING AND UNDER IMPLEMENTATION HOTELS

Sr. No. Hotel No. of Rooms


1 Ghion 30
2 Papyrus 100
3 Blue Nile Resort * 64
4 Abayminch lodge 44
5 Homeland 67
6 Dib Anbessa 60
7 Summer Land 40
8 Ethio Star 77
9 Rohama 27
10 Jacaranda 28
11 Ras Amba 69
12 Abebe Yimenu 44
13 Bahir Dar ( 2 ) 36
14 Bitaniya 50
15 Bet Daniel 44
16 Tilk Sew Hotel / Grand Hotel and Spa / * 114
Total Bed room capacities 894

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As can be seen from the above table, the supply of room services of all modern Hotels at
Bahir Dar city is limited to 326,310 bed nights per year despite the increasing market
demand. There are only two hotels that can be comparable with the standard of the
proposed resort project with total room facilities of 178. With the inclusion of the project
on hand the total supply of bed nights of all hotels at Bahir Dar will be 344,560 which still
invite additional future investments in the sector.

In all projection years, the projected demand is expected to exceed the project supply with
a wider and increasing gap. The reasons for this growth is the prospective growth in
tourist inflow to the Regional State because of its immense attractions, international and
national meetings, frequent conferences at it is regional capital, tourist arrival because of
the regional heritages, existence of Lake Tana and other cultural sites.

3.4. Marketing Strategy

The target groups of proposed resort project are local and foreign nationals who come to
Bahir Dar for business, local citizens come to the city for assembly and conferences,
tourists who arrives for leisure and other purposes, local customers arrives for leisure and
other purposes, citizens who are living in the city and also diaspor Providing quality
services with reasonable price, Strategy to accommodate all level of customers by
consistently improving with the changing situations would be the promoter's objective.
Some of the recommended marketing strategies are:

 Contacting government and private agencies affiliated with tourism on a regular basis,
informing them of any corporate rate, discount programs, availability of services, etc.
 Actively marketing the hotel during implementation and operation Marketing of
safety features such as interior corridors and security locks.
 Giving the kind of service that brings people back for regular treatments, and
encourages clients to recommend the hotel to friends.
 Setting competitive price for the services of the Hotel in line with the facilities and
amenities
 Providing organic and healthy foods

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 Availability of different facilities packages


 Availability of Agro tourism
 Service information is provided to the guest via personal selling, direct marketing,
advertising and the Internet. Delivery channels include travel agents and other
systems.

3.5. Pricing

The resorts will employee identical pricing charges for foreigners and local customers to
start with. The average price of rooms per one night will be USD 35. Competitive price set
for the proposed resort project assessing the market.

TABLE 11 PLANNED PRICES FOR THE ROOM TYPLOGIES

and the standard of the intended resort is


presented with the table below:
Room Cost / Night in
Room type Room Cost / Night in USD Birr
Family Bed Rooms 40 2200
Executive Bed Rooms 35 1925
Luxury Bed Rooms 45 2475
Single Bed Rooms 20 1100

4. SWOT ANALYSIS

Strength Opportunities

 The Promater is running profitable bustness  Conducive political and economie


 Practical experiences of the promoter in environment in the country.
servicing giving businesses  Historical and cultural heritage an
 Qualification and Experience of natural endowment the attracts tourists
the Promoter to the country and the region
 Multiple service feature  High inflow of investment in the region
and facilities  The location of the proposed resort lodge
 International exposure being on the shorelones to Lake Tana and

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 Availability of vegetables fruits from its farm Abay River


 Affordable price
weakness Threat
 Shortage of capital to finance the  Limited availability of manpower
investment cost of the project

Mitigation mechanisms for the identified weaknesses and treats:

 Providing training and experience sharing shall be undertaken on regular bases so


as to develop the human element of the Resort.
 The promoter shall request the Commercial Banks for financing of partial cost of
the project so as to bridge the financial gap
 The Resort project shall utilize appropriate ventilators air conditioners and other
mechanism so as to maintain good environment and temperature in the rooms.
Moreover, other methods shall also be in place like plantation of trees with in the
project's premises.
 The promoter shall recruit qualified and experienced Resort Manager and
respective Service heads

5. TECHNICAL STUDY

5.1. Location

Bahir Dar City is is the capital city of the Amhara national Regional State which is located
adjacent to Lake Tana. It has 17 administrative kebeles and full-fledged with basic physical
and social infrastructures. The intended project is located in the capital of the regional
state at Bahir Dar Zuria Woreda, Robit Batha, adjacent to Lake Tana about 5 km from the
main high way from Bahir Dar to Gondar

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FIGURE 2: PARTIAL GOOGLE EARTH VIEW OF THE PROJECT AREA

The resort is intended to be situated on ideal location accessible for all type of customers
as it is in the vicinity of the city adjacent to Lake Tana. Additionally, all the infrastructures
and utilities like transport, power, water and communications are available for the project.
Most of all, the city is one of naturally blessed cities of Ethiopia as it is surrounded by Lake
Tana and manpower can be mobilized easily from the nearby.

5.2. Land Ownership

The project promoter has identified the project's location and in a process to request
4000m2 of land from the ANRS Bahir dar city Administration Office on lease bases
intended mainly for resort and interrelated investment establishment and undertaking.

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The required land is planned to be obtained legally from the Regional Government City
Administration and it is adequate enough to undertake the planned investments.

5.3. Resort Structure

The envisaged resort should have sufficient and comfortable space to accommodate the
core services as per the requirements of a standard rated resort. Actually this will be
considered seriously at the design stage of the civil work construction and landscape
engineering along with the allocation of appropriate area and the placement of each
component with the proposed location 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
work processes. The sizes (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 10 rooms are allocated for room services with options to avail four different
types of accommodations. The resort will have fully furnished 5 Family Bed Rooms, 5
Executive Bed Rooms, 5 Luxury Bed Rooms and 20 Single Bed Rooms

b) Bar

Standard resorts must have a bar with a superior comfort and service quality. The
furniture and equipments, as being the basic sources of customer attractions, need to be
fashionable of higher quality commensurate with the expectation of guests who happen to
prefer this class. Therefore, the envisaged resort, having the requirements considered too,
will have three standard bars at convenient locations. The maximum carrying capacity of
each bar is estimated to be 300 persons per event.

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c) Restaurant

Technically a resort with the envisaged standard must have dining places having the sizes
(area) 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 resort must provide the maximum range of varieties at all
times. Hence, the intended resort will have three restaurants each having a capacity of
entertaining 100 guests and allow maximum efficiency in the service by having the
restaurant and breakfast rooms placed at same location. One restaurant is reserved for
traditional and cultural foods and furniture and rustic appliances

d) Assembly

Hall A resort with star needs to have a banquet hall of larger area which can be used for
banquet or conference interchangeably. The conference hall will have a capacity of serving
up to 500 people per event.

e) Children's Play Ground and Swimming Pool

The resort will also have play ground's for children's aiming to attract customers
especially on weekends. Moreover, play ground for adults will also be prepared as
sporting facilities, Additionally, the resort will have three swimming pools I from
executive customer, 1 for adult and 1 for children.

f) Bakery and Cultural Houses

Bakery is part of the project aiming to satisfy the day to day need of the resort and in the
future as capacity increases sales outlet will be opened at Abay-mado. Moreover, cultural
and traditional services will be offered through traditional houses and equipments.

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g) Camping Site

A campsite or camping pitch is a place used for overnight stay in the outdoors. The resort
will allocate adequate space with the necessary landscape facilities for customers so as to
satisfy the customers need.

h) Kitchen

A kitchen, with the processes of multiple varieties of food preparation and a proportional
capacity to handle the maximum guests to be served in the three restaurants as well as in
banquet hall, is the critical requirement for the proposed resort project. 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. In order to allow reasonable space for workers to move
around as well as to avoid the possibility of contamination and spoilage, the healthy
pastries and bakery will be placed at the far end of the kitchen where the food section to
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.

i) Laundry

A resort with a size of 90 bed rooms, bars, restaurants and banquet hall need a
proportional laundry facility in terms of handling the burden with proficient speed of
service and quality. The envisaged hotel has considered a laundry service that of an
automated with machines and equipment of dry and wet cleaning. Obviously the service
must remain operational for long hours ie. at least up to the time needed to cope up the
frequency of orders from guests.

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j) 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, stationary materials all
placed according to their physical appearances. The store will be placed in locations
nearer to kitchen or leisure service.

k) Car Parking and Outdoor Services

The resort must provide the service of car parking with 24 hours protection at least for
those customers who have checked in and external customers whom came for service.
Again, it should be large enough to accommodate as many vehicles as the resort is going to
entertain a large crowd. In view of this, a parking space for 50 vehicles is planned to be
allocated in the compound with the standard width and height of the drive in routes.
Additionally, there will be a space for outdoor services in line with the customers'
demand.

Building and Construction

The civil work construction required for the project includes construction of G+ 1 storey
resort building on 400m2 built up area, Swimming Pool /Half Olympic/ Bar and
Restaurant. Bakery House, Gym and Spa Building, Cultural and traditional center, Staff
Residence Mini Market and Business Center Buildings, Hut Houses, Fishing Ponds,
Landscape Civil works for Golf course, horse ride, camping site and Play ground and other
site works. The total cost of civil work construction is estimated at Birr 45.45 million. The
detail civil work construction breakdown is tabulated with the following table:

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TABLE 12: SUMMARY STATUS OF THE LODGE & RESORT BUILDING

Description Quantity Estimated Cost


G + 1 Resort Building @ 400m2 1 10,800,000.0
G + 1 Resort
Swimming Pool / Half Olympic / @ 314m2 2 5,259,375.0
Swimming Pool / Bar and Restaurant @ 200 m2 1 4,500,000.00
Bakery House @ 50m2 1 275,000.0
Cultural and traditional center @ 100m2 1 950,000.0
Staff Residence @ 200m2 3 3,900,000.0
Hut Houses 5 625,000.0
Landscape Civil works for horse ride , camping site and
Play Round 8,810,000.0
Other Site Works 7,500,000.0

Total 38,119,375.00

Resort Machinery and Equipment’s

The resort requires various furniture and equipments for furnishing so as to smoothly
operate its day to day operation. The project will be equipped with quality and
standardized furniture and equipments.

TABLE 13: COST BREAKDOWN OF RESORT MACHINERY AND EQUIPMENT

Sr. No Description Total Cost


1 Room Services Related Items 3,710,812.35
2 Bar , Restaurant And Cafeteria Services Related Items 2,457,434
3 Conference Hall And General Services 8,463,966.27
Sub Total 14,632,213
Insurance, Port handling and inland transport costs ( 15 % on average ) 2,194,831.98
Grand Total 31,459,257.60

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Motor Vehicles

The proposed resort will have a Pick up intended for supervision and 14 Seat Minibuses for
transportation and tour services. The breakdown is presented with the table below:

TABLE 14 COST BREAKDOWNS OF RESORT MOTOR VEHICLES

No Description Quantity Total Cost


1 Pick Up Double Cabin 1 1,840,000
2 14 Seat Minibus 2 1,500,000
Total 3,340,000

Utilities

Electric and water supply will be secured from EEEPCO Bahir Dar District and Bahir Dar
Municipality Water Supply Power Generator with a capacity of 150 KVA is expected to supply
the power requirement of the project as back up when there is power interruption.
Additionally, boreholes will be drilled within the project premises in case municipality water
supply is not supplied tin time.

Implementation Schedule

The establishment of the Hotel essentially involves two stages: the establishment decision and
the establishment process. The establishment decision has been undertaken and the promoter
has started construction of the hotel building by obtaining land from the government.

 Following securing finance from the Bank, construction finishing of resort buildings,
and procurement of the resort machinery and equipments, recruitment of manpower
and preparing the hotel for operation will commence. During this period, necessary
manpower will be recruited and trained. This will be followed by such activities as
procurement of office equipment and furniture. The proposed activities include:
 Financial Arrangement- bank loans

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 Forestation, agriculture and horticulture process


 Construction finishing of building and other civil works
 Bid document for Hotel machinery and equipment
 Hotel Machinery delivery and installation
 Manpower requirement and training
 Office equipment and furniture procurement
 Operation manuals and guidelines preparation
 Business development strategy development

6. MANAGEMENT AND ORGANIZATION

Well planned and effective organization is vital for the success of star rated resort projects.
The project will be implemented by a well organized management staff. The promoter has a
vision to render quality and standardized service for both local and foreign customers. The
General Manager of the project will have a key role in overall leadership and strategically
planning and designing the overall operation of the project. He has accumulated acute
business experiences managing his private business for more than 10 years. In this respect,
the promoter has the capacity to supervise the overall management of the project at the apex
Under the General Manger, there will also be a qualified and experienced resort Manager for
running the day to day operation of the resort. Under the Resort Manager, there will be
experienced and qualified Finance & Administration, Room Service Manager, Bar and
Restaurant manager, Pool and Spa Related Services Manager and Agribusiness and Related
Services Manager. There will also be Front desk Manager, Sales and marketing Manager, ICT
Manager, conference and business center Manager Engineering and maintenance Manager
security Manager.

Comprehensible framework that endeavors harmonized staff coordination which includes


guidelines for day to day operations, control systems that allow flexibility towards the dynamic

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business environment will be implemented. This project will assume go marketing strategy
that maintains positive environment among different stakeholders. The proposed
organizational structure of the project is depicted here under.

Figure.1. Typical Organizational Structures

General Manager

Lodge & Resort


manager

Manager Finance Agri business &


Room Service Bar & Pool & SPA
administration Related Service
Restaurant Manager Manager
department Manager
Manager

Hr personnel Hourse Court


Hr personnel Reciepents Head Chef Pool service Attendant

Cooks
Accountants
AComping
Attendants
Laundary Waitress SPA Service
Cashiers

Accounting Clerk Child play


Round

Electrician

Stock controller Agri business


attendant

Store Keeper

Guards

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List of permanent Employees

S.No Job Titles Qualification relate field and 10 years ' experience in Staffing F n
BA In Hotel Management Management and any other
relate
Hotel operation out of which 4 years in leadership /
1 General Manager management position 1
BA in Office Management and secret anal science and 4
years experience in
1.1 Executive Assistant secretary 1
BA in Law and 2 years ' experience in legal advisory
position preferably
1.2 Legal Advisor industry . 1 ( partim
BSC in Information technology / computer science and
2 years in system development
1.3 ICT officer field . 1 ( partie )
BA in Hotel Management / Management / Economics /
Accounting from a recognized
college / university and 8 years ' experience in catering
industry out of which 2 years in
1.4 Night Manager supervisory / management position. 1
BA in Management and 8 years in Human Resource
Administration , procurement general service
in catering industry and out of which 2 years in
2 HR & Administration Manager Managerial position 1
College Diploma in office management and secretanal
science 2 years in administrative
assistance position preferably worked in hospitality
2.1 Administration Assistance industry . 1
BA In Management / Human Resource Management
and 4 years ' experience in human resource
2.2 Human Resource Section Head Management in hospitality industry . 1
BA in Management / Human Resource Management
and 2 years ' experience in human resource
2.3 Human Resources Officer Management preferably worked in hospitality industry . 2
Diploma In Management or related field and 4 years
2.4 General service officer experience in general service 1
Diploma in purchase and supply management and 2
years ' experience in purchasing preferably worked in
2.5 Purchaser hospitality industry 2
TVET 10 + 1 TVET diploma in automotive technology or
10th grade complete and 2 years experience in public
2.6 Driver transport 4

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10th grade complete or 10 + 3 TVET in Management or


2.7 Logistic clerk any other field and 472 years experience in logistic area 2
8th grade complete and 2 years ' experience in
2.8 Gardner gardening preferably 10
Diploma in purchasing and supplies management and 4
years property management preferably
2.9 Chief Store Supervisor worked in hospitality industry . 1
10 + 2 TVET level III Diploma in purchasing and supplies
Store clerk / Good receiving / Accounting and 2years experience in
3 clerk related area 3
3.1 Store assistance 8th grade complete 3
BA Degree Accounting and Finance and 8 years '
experience in Accounting and Finance in
Finance and Accounts catering Industry and out of which 2 years in
3.2 Manager managerial Position 1
BA in Hotel and Tourism or Certificate in food &
beverage control from accredited catering
Food & Beverage Control institute and 8 ( 3 ) years for BA and 10 ( 5 ) years ' for
3.3 Head certificate in a well - known Hotel 1
BA in Hotel and Tourism / Certificate in food &
beverage control from accredited catering institute
and 4 ( 2 ) years for BA / 6 ( 3 ) years ' experience for
3.4 Food & Beverage Controller certificate in a well - known Hotel . 3
BA Degree Accounting and Finance and 4 years '
experience in Accounting and Finance in
3.5 Senior Accountant service in hospitality industry 2
BA Degree / Diploma in Accounting and Finance and 2
years ' experience in Accounting and
3.6 Accountant Finance 2
BA Degree in Accounting and Finance and 2 years '
experience in Accounting and Finance
3.7 Cost Accountant preferably worked in hospitality industry . 2
Diploma in Accounting and Finance and 2 years '
3.8 Main Cashier experience in Accounting and Finance 1
Diploma in Accounting and Finance and 2 years '
3.9 Accounting Clerk experience in Accounting and Finance 2
BA Degree Marketing Management and 8 years '
Manager of Marketing and experience in sales and marketing out of
4 customer service which 2 years in service marketing in hospitality 1
Marketing communication and BA Degree Marketing Management and 2 years
4.1 public relation officer expenence in Accounting and Finance 1
Customer service expert /
sales Diploma in Salesmanship / marketing and 2 years '
4.2 officer experience in customer service 3
Diploma in Salesmanship / marketing and 2 years '
4.3 Banquet Service Officer experience in banquet 3
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Diplome in Salesmanship / certificate in Hotel and


4.4 Event Manager tourism and 2 years experience in event organization , 1
Diploma in food preparation from accredited catering
institute and 8 years ' experience in a well known Hotel
5 Executive Chef in the position of cook , chef de partie and sous chef 1
Sous chef Hot Kitchen / sous -
chef
cold Kithen / sous chef Pastry Diploma in food preparation from accredited catering
and institute and 6 years experience in a well - known Hotel
6 bakery as Chef de partiel 9
Chef de partie hof kitchen / Diploma in food preparation from accredited catering
cold institute and 4 years experience in a well - known Hotel
kitchen / Pastry and bakery / 6 years ' experience as senior cook 9
Sowor Cook hot kitchen / Certificate in food preparation from accredited catering
coldkitchen / pastry and institute and 6 years ' experience in cook or senior cock
7 bakery position . 9
Cook hot kitchen / cold Certificate in food preparation from accredited catering
kitchen / pastry institute and 4 years ' experience in a well known Hotel
7.1 and bakery as a cook or as junior cook or commis . 9 ( 9X2-18 )
Certificate in food preparation from accredited catering
institute and 4 years ' expenence in a well known Hotel
7.2 Butchery as butchery 1 ( 3X1 = 3 )
Junior Cook hot kitchen / Certificate in food preparation from accredited catering
7.3 pastry kitchen / cold institute and 2 years ' experience 9
Commis hot kitchen / cold Certificate in food preparation from accredited catering
7.4 kitchon / pastry / bakery institute and 1 year experience in a well known Hotel 9
10th grade complete and 3 years experience as a
7.5 Staff traditional cook OR Certificate in food 6
Canteen worker / Traditional preparation from accredited catering institute and 1
7.6 cook year experience in food preparation .
Diploma in food preparation or pastry from accredited
catering institute and 3 years ' experience as a baker /
7.7 Baker / Pastry Cook pastry in a well - known Hotel 3
Certificate in food & beverage service from accredited
7.8 Waiter / catering institute and 2 years ' experience 7 ( 3X7-21 )
7.9 Waitress in a well - known Hotel
8th grade complete and 2 years ' experience as 3 ( 3X3 = 9 ;
8 Cleaner / Dishwas her / dishwasher years experience in installation , 1
BSC Degree in electrical mechanical Electronics and 4
Manager years ' experience in
8.1 Maintenance Engineering and inspection and maintenance 1
8.2 1 year experience in audiovisual operation 2
Diploma in Audiovisual / electronics and 1 year
8.3 Audio - visual experience in
8.4 Cleaner / Dishwashen 8th grade complete and 2 years ' experience as 3 ( 3X3-9 ;

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dishwasher
8.5 Manager Engineering and BSC Degree in electrical / mechanical
Electronics and 4 years ' experience in installation ,
8.6 Maintenance inspection and maintenance 1
Diploma in Audiovisual / electronics and 1 year
8.7 Audio - visual experience in audiovisual
8.8 Technician audiovisual operation 2
8.9 Engineering Craftsman
9 ( og air - conditioning
9.1 mechanic , boiler man ,
Diploma in General technician and 2 years ' experience
9.2 carpenter , electrician fitter , 3
in equipment maintenance
9.3 general mechanic ,
9.4 mason / plasterer painter ,
9.5 plumber )
10th grade complete and 1 year in similar technical
9.6 Assistance technician position. 3
BA degree in Management / Diploma in management
and certified in police / military and 8 years
9.7 Safety and security Manager for BA Degree and 12 years for Diploma 1
BA or Diploma in management and preferably who
working hospitality industry for 5 years .
9.8 Safety and security supervisor certified in police or military science and 2 18 dep
10 th grade complete or 12 th grade complete and
certified in police years ' experience or in guard
position complete and basic knowledge in computer gate
9.9 Security Guard preferably 3
Bsc degree in Aare and 4 years’ experience
10 Agronomist 2 years’ experience in 2
Total 171

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8. ENVIROMENAL IMPACT ASSESSMENT

An environmental impact assessment is an assessment of the possible impacts that a proposed


project may have on the environment, consisting of the environmental, social and economic
aspects.

The WTO focuses on its advisory and technical assistance services on policies, development
guidelines, management techniques and measurement instruments that allow national, local
governments, tourism sector and other stakeholders to overcome challenges on sustainability
by employing sustainability and environmental friendly approaches in their decision making
process and day to day operational activities. The UNEP has also initiated a program that aims
at integrating environmental sustainability into decision making in the tourism industry and
into consumers' purchasing choices by disseminating technical knowhow and building business
networks to catalyze sustainability in the tourism sector. Sustainability along with
environmentally friendly approach in the hospitality sector articulates 12 aims that address
economic, social and environmental impacts. This aims are:

 Ensuring Economic Viability


 Maximize Local Prosperity
 Strengthening Employment Quality
 Social Equity
 Visitor fulfillment
 Local control
 Community Wellbeing & Cultural rich
 Physical Integrity
 Biological diversity
 Resource efficiency
 Environmental Purity. Minimize the pollution of air, water, land and generation of
waste by the company and /or consumers.

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The Project will give special attention on environmental friendly approaches both at the time
of project implementation and operation. To this end, there will not be adverse environmental
impact on the project are because of implanting the project. The promoter will utilize the
culture diversification and norms of the community for the success of the project. Moreover,
the project will keep afforest and make green the project premises so as to balance the
atmospheric nature of the area which in turn result in soil fertility, create conducive
environment for the hotel and maintain the ecosystem in general.

The project in this regard will bring positive features of to the project area's environment
through forestation and other environmental friendly mechanisms.

7. FINANCIAL ANALYSIS

7.1. Summary of Investment Cost

The proposed development works of the project requires a period of 13 months so as to


commence full operation. Building and civil works construction and procuring resort
machineries and equipment are the major activities to be performed in the period. The
investment outlay of the project is presented below:-

TABLE 15: SUMMARY OF INVESTMENT COST

Sr. No Description Cost ( Birr )


1 Building and Civil Works 45,474,375
2 Machinery and Equipment for Resort Operation 16,827,045
3 Working Capital 10,738,110
4 Motor Vehicles ( Pick up and Minibus ) 2,340,000
5 Pre Operating Interest and Costs 4,302,263
Grand Total 79,681,793
The total investment cost of the project is estimated at Birr 79.68 million of which Birr 64.6
million (81%) is earmarked to finance fixed assets and Birr 15 million (19%) for preproduction
costs and meet the working capital requirement of the project.

Source of Finance and Financing The total investment cost is planned to be financed from two
sources: equity and hank loan. Bank loan accounts 56% and equity 44% that is Birr

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11:303.907.01 bank loan while the balance Birr 35,377,886.02 is expected to come from equity
sources.

TABLE 16 SOURCE OF FINANCE

Total Cost Bank Loan


Description ( Birr ) ( Birr ) Equity
Building and Civil Works 45,474,375.00 27,284,625.00 18,189,750.00
Machinery and Equipment for
Resort Operation 16,827,045.20 10,096,227.12 6,730,818.08
Motor Vehicles ( Pick up and
Minibus ) 2,340,000.00 1,404,000.00 936,000.00
Working Capital 10,738,109.78 5,369,054.89 5,369,054.89
Pre Operating Costs 150,000.00 150,000.00
Financial Requirement 75,529,529.98 44,303,907.01 31,225,622.97
Pre Production Interest 4,152,263.05 - 4,152,263.05
Total Financial Requirement 155,211,323.01 88,607,814.02 66,603,508.99
Debt to Equity 100 % 56 % 44 %

Operating Financial Results

Profitability

The projected financial statements annexed indicate that the project is profitable and liquid.
The project will generate an average net profit of Birr 11.3 million over the 10 years project life
time. The profit margin begins with Birr 6.8 million in the first year operation which increases
to Birr 15,5 million in the 10th year.

Liquidity

The cash flow forecast also portrays that the project generates surplus cumulative cash in its
operation servicing its obligations with cumulative cash balance of Birr 4.3 million in the first
year which increases to Birr 80.8 million at the 10th year of operation. The liquidity position
also permits financing of all capital replacement cost over its time from internally generated
flows without re financing.

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IRR and NPV

Profitability of the investment is further tested using internal rate of return and the project
yields before tax and after tax financial internal rates of return of 26% and 20%; respectively.
The NPV at 12% discount rate is Birr 59,519.625 which reveals the positive project's
investment return.

Payback Period

The payback period is the period required to recover the initial investment outlay through the
accumulated net cash flow earned by the project's financing. investing and operating activities.
The pay-back period of the fixed assets of the envisaged project is estimated to be around 7
years. This implies that the initial investment will be recovered in nearly in its sixth years of
operation.

Sensitivity Analysis

Sensitivity test is also carried out to test how the project is sensitive to adverse effects revenue
decrease, operating cost and investment cost increase. To this end, a 10 % reduction in sales
yields an after tax IRR of 12%, whereas a 10% increase in operating cost and investment cost
results an after tax IRR of 15% and 18%, respectively. This reveals that the project can
accommodate any likely external shocks being slightly sensitive to decrease in revenue. These
results reveal the financial soundness of the project

Employment and Socioeconomic Impact

Implementation of the project generates direct and indigo employment to considerable


number of citizens both temporary and permanent. It generates permanent employment for
more than 200 permanent professionals, semiprofessionals and technical persons.
Additionally, the resort project will escort up to 100 citizens during the implementation phase.
Accordingly, the economic impact in terms of creating jobs is tremendous. Additionally, the
hotel project will generate an average of 6.1 million Birr for the government in the form of
profit tax over the project period.

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8. CONCLUSION AND RECOMMENDATION

In conclusion, the project is commercially and financially viable. Besides, it creates


employment opportunity directly and indirectly in the project area. It is also consistent
with the government's Plan and effort to bring about rapid economic development and
promoting the service sector. The project will also play a key role specifically for the
Amhara national Regional state as it will be furnished and organized to star rated
Resort standard and unique in its kind for Bahir Dar City. In this, retard, the
implementation of the project is recommended.

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9. ANNEXS

……… PLC | ANNEXS 36

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