INVESTMENT PROJECT

PROPOSAL ON
THREE STAR HOTEL

Project Location: - HALBA KULITO

Promoted by: Wondimu Habte
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
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
3.3.3. Demographics: ...................................................................................................15
3.3.4. Infrastructure and economic status ....................................................................15
4. MARKET STUDY .........................................................................................................18
4.1. General Overview .....................................................................................................18
4.2. Present supply in Halaba .................................................................................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
4.6.1. Capacity ............................................................................................................25
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
Page 3
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
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

Page2
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
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

Page3
Basic Information
Name of the Promoter: Wondimu Habte
Type of the Project: 3 Star Hotel
Type of Business: Sole proprietor ship
Project Location: Halaba Kulito
Project capital: The total investment capital of the project is estimated at birr
53,812,310 of which:-
Source of finance: The total investment capital of the project is to be
financed from the promoter’s equity and bank loan.
Birr 37,668,617(70%) is contributed by the bank loan
Birr 16,143,693 (30%) is to be financed by promoter (Wondimu habte)
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.
2
Land requirement: The total area of 6000 m of land is required for the
project

1. EXECUTIVE SUMMARY
The project feasibility study proposed on 3 star hotel investments has been
promoted by Wondimu Habte in Halaba Kulito. Halaba Kulito is a fast
growing regional economic center and the capital of Ethiopia. It is home to
the, regional NGO’s and the government Conference Centre.
Project justification: International standard 3 star 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, min-golf or badminton, bowling, table tennis and
children playground, etc.
The demand and supply of hotels and its bed rooms service in Halaba Kulito has high gab the supply
of Halaba Kulito has a quality 2 hotels and a total of 30 bed rooms currently in the market, giving an
average number of 12 rooms per hotel. Branded supply is very low; due to this demand and supply
analysis Wondimu Habte hotel wants to participate and minimizes the gab of demand and supply
standard hotel in Halaba Kulito.
In this profile study a 3 star international tourist standard hotel is
considered to following provides:-

Page4
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 3 star international tourist hotel investment is about 6000 meter
square the area covered and develop the following infrastructures such as main building hotel
service and, store, gourd house, gas station, parking area and other necessaries facilities
The total investment capital fixed asset of the project is estimated at birr 53,812,693 of
which birr 39,978,001(65%) is for fixed investment cost of which 65 % of the fixed cost is
need foreign currency while the remaining balance of birr 18,834,308 (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.
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
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 100 million offers
significant domestic market for locally 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. Privet
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 agreed this idea .economic development in Any case needs both efforts of the
privet as well as the public sector. There are Investments that could not be undertaken by

Page5
privet 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 a day 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 various recreation activities are there. 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 halaba, 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, 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 of regions.

Page6
The number of hotels and recreation service facilities in other near neighbor of the city have
remained insignificant to respond to the customers demand. Only 2 hotels and recreation
centers out of Halaba kulito 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 3 star Hotel service in Halaba kulito for the benefit of the promoter,
the district community as well as the country as a whole.

2.3. Promoter Background

The promoter, Wondimu Habte has a work experience in construction activities. Wondimu
Habte is the building contractor has years’ experience .During this time, the promoter gained a
vast knowledge and skill. With this reliable experience, Wondimu Habte knows how to
manage and lead any organization to profit and also know how to handle different challenges
in the working environment. Moreover Wondimu Habte 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 (3 stars) in the area. So there is good scope for establishing the units
for establishing and maintain 3 star standard /international and tourist hotel service in Halaba
kulito as well as in the region. Due to this, it has become imperative to build and maintain 3
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
16,143,693 (30%) is to be contributed by the promoter while the remaining balance of Birr
37,668,617(70%) is to be covered by the local bank

Page7
3. Project description and Justification
International standard 3 star hotel is high class hotel (from three to five star level) where
services like bedroom, catering, meeting rooms, multipurpose assembly hall, swimming pool,
Spa (Hot Spring), gymnasium, sauna and massage, other sports facilities like tennis or squash
court, min golf or badminton, bowling, table tennis and children playground, etc.
A hotel is an establishment that provides paid lodging on a short-term basis Facilities provided
may range from a modest-quality mattress in a small room to large suites with bigger, higher-
quality beds, a dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat
screen television and en-suite bathrooms. Small, lower-priced hotels may offer only the most
basic guest services and facilities. Larger, higher-priced hotels may provide additional guest
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. Hotel rooms are usually numbered (or named in some smaller hotels and
B&BS) to allow guests to identify their room. Some boutique, high-end hotels have custom
decorated rooms. Hotels offer meals as part of a room and board arrangement.
4. 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 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 hotel service
 Effectively use local inputs and strengthening the linkage between agriculture and
other sectors of the economy
 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
5. Mission

Page8
  Mission of the particular project is to expand the standard star hotel 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.

6. Project location and justification

6.1. Location
The proposed project of 3 star hotel will planned to be located in Halaba Kulito, which is the capital
city of Halaba zone. According to the 2007 population census, the city has a total population of 82,000
inhabitants. The total land size the promoter requesting for the Implementation of the project is
estimated at 4700 square meters, which will been obtained from investment commission of Halaba
kulito city administration Hence the owners select Halaba kulito for proposed project by looking every
aspects of business integrity tourist area.

6. 2 Infrastructure and economic status

Tourism: Tourism is a growing industry within south region 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 south region. In 2015, the European Council on Tourism and Trade named
Ethiopia the #1 tourist spot in the world
Transport: Halaba is the center for cities of the region that able to connect all truism area
which create opportunity to give services for tourists and regional and national meeting.

Road: The construction of the Road was initiated in 3 years ago to implement the city master
plan and enhance peripheral development. The new Road planned to construct by federal
government which are 2 major roads that connect all the 4 main gates in and out of kulito with
all other cities (Hawasa, wolayta, werabe, hosana and shashemene)
7. MARKET STUDY
7.1. General Overview
The hotel industry consists of many different services, including accommodation, restaurants,
and 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

Page9
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.
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.
7.2. 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 region mainly tourists towards arbamich is:-
 Fast growing regional economic center
 foreign missions
 regional NGO’s and the Conference Centre
 Due to its near future regional political status Halaba will be economic center of the
region
 Economic growth is further increasing demand at +8% per annum
.

7.2.1 Demands Evaluation Mechanism

Page10
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 alaba. Ethiopia
has a strong domestic economy which is driving demand growth in the mid-market.
7.2.1.1 Investment
Halaba has increasing 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 easier access to finance and technical service expertise associated with
having a brand are driving this change.
7.2.1.2 Outlook
Corporate demand growth prospects are positive with strong GDP forecasts and rowing
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.

7.3. Pricing
The pricing of hotel services depends considerably on the quality of service Rendered and its
location. The relatively high standard hotels in Ethiopia 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.

7.4. Capacity

Page11
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:
service capacity of the envisaged international tourist standard hotel

no Type of Service Feasible Service Capacity

1 Bedroom 80 rooms, 20 will be double rooms, 50 single rooms and
10 suits.
2 Restaurants (Modern and traditional 200 Persons at a time.

3 Coffee Shop 10- 15 seats at a time

4 Sauna and steam bath 20 heads/day
5 Gymnasium 20 heads/day
6 Swimming pool (Big and small 45 Heads/day and 20
pools) head/day
7 Meeting room 50x3 seats
8 Gas station total area Usable (sq.ft)=300

8. Marketing strategy
As discussed earlier the major target groups of hotel sector are tourists and conference that
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,
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.

8.1 Competitors Overview

Page12
Three is no standard 3 star hotels in Halaba which is a huge gab so 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
 In conclusion, his service compared to the competitors looks like:

9. TECHNICAL STUDY

9.1. 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 3 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.
9.2. Physical appearance
The hotel would have building placed on an area of 6000m 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.

9.3. Core Facilities

Page13
The envisaged hotel should have sufficient and comfortable space to accommodate the core
services as per the requirements of the 3 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
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

B. Main restaurant

Page14
Technically a hotel to be classified under 3 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.
C. Banquet/Conference hall
A hotel with 3 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.

D.Business center (mini market shop)

A 3 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

Page15
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. 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 generator 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
Gas/fuel station

Page16
Demand of a fuel filling station is driven by personal income of people in the area, companies
and firms operating in the area, and tourists travel. The profitability depends on site occupancy
rate and effective marketing. The sustainable filling station should materialize with several
positive features which facilitate the clients to increase site occupancy. These factors may
attract clients to the location and the continuity of arrivals of clients who comes again to the
location.
These factors are briefed as follows, The Center near businesses, buildings, or institutions are
often implicitly understood or explicitly labeled to be for the use of their respective customers
or visitors. Since the location provides easy proximity to most popularized locations, and
convenient to visit such locations too.
Furthermore, the Marketing strategy proposed for this Filling Station would give strong
emphasis to the development of competitive capabilities; adaptability and flexibility in order to
respond to technology changes and updates, Solidifying and strengthening the facility’s market
position overtime. In terms of implementation, the strategy recommended would encompass
the following key elements:
1. A focus on enhancing customer value by fulfilling market-driven needs.
2. Purposeful differentiation, emphasizing the development of functional operation strategies.
3. To be up date with new technologies in Automation and providing services through those
newly invented technologies.

10. 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. 3 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,
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

Page17
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,
 10 king size luxury bed rooms
 20 standard Double bedrooms
 50 standard Single bed rooms
 Special cafeteria
 Traditional and international restaurant
 conference rooms,
 Massage room
 Sauna and steam bath room
 Physical fitness room
 gas station
 Indoor and outdoor game facilities,
 Management office and store,
 Other civil works including land escaping, parking area, fountains and inter campus
paving.
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

11. Inputs/ raw materials and utilities

11.1. Raw Material cost

Page18
no Raw materials Quantity per cost per per year
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 lamp sum 15,000.00 180,000.00
related cost

4 Cleaning materials and other lamp sum 15,000.00 180,000.00

miscellaneous uses

Total 12,360,000.00

11.2. 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.
no Description Qty. unit cost Cost per year

1 Electricity, kWh 500000 1.25 625000

2 Water, m3 300000 4.5 1350000
3 LPG, lt 2000 16 32000
4 Diesel, lt 20000 18 360000
Total 2,367,000

12. Machinery and equipment

S/n Description Quantity Unit price Total (birr)
1 Sofa single 20 2,500 50,000
2 TV 29” 10 8,000 80,000
3 Telephone stand 10 500 5,000
4 Telephone apparatus 10 750 7,500
5 small Refrigerators 10 4,000 40,000
6 Coffee table 20 1,500 30,000
7 French Bed (120 x 180cm) 10 20,000 200,000
8 Cupboard built in 20 5,000 100,000
9 Head lump 20 1,000 20,000
10 Writing table with chair set 20 2,500 50,000
11 Chest drawer 20 1,500 30,000
12 Spring mattress 10 5,000 50,000
13 Bed sheets 20 500 10,000
14 Bed cover 10 800 8,000
15 Pillow 30 250 7,500
Total - 688,000

Furniture and equipment's required for double bedrooms (20)

S/n Description Quantity Unit price Total (birr)
1 Sofa single 40 2,500 100000

Page19
2 TV 29” 20 8,000 160000
3 Telephone stand 20 500 10000
4 Telephone apparatus 20 750 15000
5 small Refrigerators 20 4,000 80000
6 Coffee table 40 1,500 60000
7 French Bed (120 x 180cm) 20 20,000 400000
8 Cupboard built in 40 5,000 200000
9 Head lump 40 1,000 40000
10 Writing table with chair set 40 2,500 100000
11 Chest drawer 40 1,500 60000
12 Spring mattress 20 5,000 100000
13 Bed sheets 40 500 20000
14 Bed cover 20 800 16000
15 Pillow 60 250 15000
Total - 3,019,000

Furniture and equipment's required for single bedrooms

S/n Description Quantity Unit price Total (birr)
1 Sofa single 100 2,500 250000
2 TV 29” 50 8,000 400000
3 Telephone stand 50 500 25000
4 Telephone apparatus 50 750 37500
5 small Refrigerators 50 4,000 200000
6 Coffee table 50 1,500 75000
7 French Bed (120 x 180cm) 50 20,000 1000000
8 Cupboard built in 50 5,000 250000
9 Head lump 50 1,000 50000
10 Writing table with chair set 50 2,500 125000
11 Chest drawer 50 1,500 75000
12 Spring mattress 100 5,000 500000
13 Bed sheets 100 500 50000
14 Bed cover 100 800 80000
15 Pillow 100 250 25000
Total - 2,822,500

Furniture and equipment's required for office, reception, leisure and others
S/n Description Quantity Unit price Total (birr)
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

Page20
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
13 Telephone apparatus 10 300 3,000
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
20 Emergency power generator 2 300,000 600,000
21 Total - - 1,295,300

Furniture and equipment's required for cafe

S/n Description Quantity Unit price Total (birr)

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

Page21
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
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

S/n Description Quantity Unit price Total (birr)
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

Page22
23 High rim flat 10 70 700
24 Flat rim round 12 50 600
25 Normal alloy 20 45 900

26 Nonstick normal 20 20 400

Total 485,750

Furniture and equipment's required for Conference rooms

S/n Description Quantity Unit price Total (birr)
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
S/n Description Quantity Unit price Total (birr)
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

Page23
7 Refrigerator 5 20,000.00 100,000.00
8 Clip fryer 5 5,000.00 25,000.00
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
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

Page24
 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

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

Page25
 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
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
15 ice-cream box 1 5000 5000
16 water sprinkless 30 40 1200
17 water house nylon rope 4 500 2000

Page26
18 Gardner's kits 2 100 200
Total 81,000

S/N Garden recreation center Qty Unit cost Total Cost

2 Filling Station Buildings and 1 3,700,000
machineries, fittings
4 Drainages and Fuel tanks 1 1,575,000
5 Furniture for room -1 - 740,000
Total 6,015,000
Gas/fuel station equipment
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 90 Bed room
2 Luxury bed room (10 rooms) 688,000
3 For double bed room (20) 3,019,000
4 Single bed room (50) 2,822,500
5 Furniture and equipment for office and reception area 1,295,300
6 Furniture and equipment for bar and cafeteria 1,232,900
7 Furniture and equipment for restaurant and dining room 485,750
8 Furniture and equipment for conference room 1,468,250
9 Furniture and equipment for kitchen materials 5,237,428
11 Sauna and steam bath materials 526,690
12 Aerobics and physical fitness 682,100
13 Massage service materials 300,000
14 Mini market shop establish costs 200,000
15 Garden and creation area 81,000
16 Gas/fuel station equipment 6,015,000
Total 23,084,000

Page27
 13. Land, Building and civil work

13.1. Land lease

The overall land required is about 6000 square meters. Land lease cost at the rate of Birr 90
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 .

13.2 Land use plan of the project

A properly designed building construction starting in last year before and insures smooth
functioning of all operations. The building will have well ventilated appropriate international
Hotel service area the structure includes separate services and other different activates the
detail as follows

S/n Description Quantity Unit Price Total Price ( Br )

(Br)
1 Main Building 2500 5,000 20,000,000
2 Gust room
3 Manager office
4 Minimarket shops
5 Bar and restaurant
6 Bed room (80 rooms, 20 will be double
rooms, 50 single rooms and 10 suits.)

7 Meeting room
8 Sauna and steam bath
9 Gymnasium physical fitness
10 Store service 250 5,000 1,000,000
11 Parking area 150 1,000,000
12 Generator house 44 500,000
13 Guard house 30 643,475
14 Gas station 1 6,015,000
Total - 29,158,475

14. Environmental impact assessment

Page28
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.The owner of the project
believes to undertake several environmental issues for the conservation development and
creation of sustainable environmental around the project area.

15. Implementation Schedule

The actual implementation of the 3 star hotel is planned to begin on the September 2021. 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.

Implementation schedule

Page29
 ( Months) in Gregorian Calendar

Description 5 6 7 8 9 10 11 12 1 2 3 4

Acquisition of Investment Land

april 2021)

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

.
16. ORGANIZATIONS AND MANAGEMENT
16.1. 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 Auditing

& Inspection

Coordinator
Manager/supervisor

Secretary

Sales & technical Marketing Admin &

Unit Unit Finance 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.

Page30
 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
16.2. 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 3 star hotel Service.

16.3. 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 3 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.

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
10 Coffee machine operator 12th complete 5 3,000 180000

Page31
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 engineering 2 2,000
48000
20 Electrician diploma in electrical engineering 2 2500
60000
21 Gardener skill professional 2 1000 24000
22 Guards gardener 8 1,000 96000
Total 125 - 6,432,000

17. 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

17.1. 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

Page32
17.1.1. 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.

Description Qty Unit Price Total Price (Br)

S/N ( Br )
1 Land clearing and leveling 6000 m2 2 , 50 0 1,000,000
2 Land lease (5%) 433,917
3 Canal work 1 60000 0 600,000
4 Water reservoirs 2 250,00 0 500,000
Total - - 2,533,917
Building and civil works

S/n Description Qty Unit Total Price

Price ( Br )
( Br )
1 Main Building 1500 5,000 20,000,000
1.1 Gust room
1.2 Manager office
1.3 Supermarket
1.4 Bar and restaurant
1.5 Bed room (80 rooms,20 will be double
rooms, 50 single rooms and 10 suits kings
room.)
1.6 Meeting room
1.7 Sauna and steam bath
1.8 Gymnasium
2 Store service 250 5,000 1,000,000
3 Parking area 150 1,000,000
4 Generator house 44 500,000
5 Guard house 30 643,475
Total - 23,143,475
974.00

S/n Description Total

cos t

1 furniture and equipment for 90 Bed room

1.1 Luxury bed room (10 rooms) 688,00 0 Import from

1.2 Double bed room (20 rooms) 3 ,019, 00 0 duty free

1.3 Single bed room (50 rooms) 2 ,822, 50 0

2 furniture and equipment for office and reception area 1 ,295, 30 0 Local market

Page33
 3 furniture and equipment for bar and cafeteria 1 ,232, 90 0 Local market
4 furniture and equipment for restaurant and dining 485,75 0 Local market
room
5 furniture and equipment for conference room 1 ,468, 25 0 Local market
6 furniture and equipment for kitchen materials 5 ,237, 42 8 Local market
7 Sauna and steam bath materials 526,69 0 Duty free
8 Aerobics and physical fitness 682,10 0 Duty free
9 Massage service materials 300,00 0 Duty free
11 Mini market shop establish costs 200,00 0 Local market
12 Garden and creation area 81 , 00 0 Local market
Total 17 ,069, 91 8
Procurement of Vehicles and furniture’s

Type of Vehicles Unit Qty Unit Price Remark

S/N
( 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
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
18. 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 labor 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
S/N Raw materials Quantity cost per per year

Page34
 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 cost Lamp sum 15,000.00 180,000.00
4 Cleaning materials and other Lamp sum 15,000.00
Miscellaneous uses 180,000.00
Total 12,360,000.00

Utilities
Description Qty. unit cost Cost per 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
Administration cost

• Employee benefits : It includes medical expense, uniform and other incentive package
and assumed to be 25% of annual salary expense = birr 1,608,000

• 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

• Office 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
Determination of Initial Working capital requirement

Page35
 S/ Cost item Annual cost
n
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
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
Sub total 11,063,318
Initial W.C. requirement 25,790,318

19. Project Capital and financing

19.1 Project Capital
The total investment capital of the project is estimated at birr 53,812,693 of which birr
39,978,001(65%) is for fixed investment items while the remaining balance of birr 18,834,308
(35%) will be initial working capital.

19.2 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 16,143,693 (30%) is contributed by the promoter,
Wondimu Habte general building contractor while the remaining balance of birr
37,668,617 (70%) is to be financed by local banks. The bank loan will be repaid based on the
following terms and conditions:

 Loan amount = birr 37,668,617

 Installment period/ term = 10 years

Page36
  Interest on loan (including service charge) = 11.5%
Loan Repayment Schedule

Principal Interest Year ending

Year
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

18.3 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:

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

Page37
Total 47,797,310 - 4,779,731

Page38
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 16,563,582 17,391,761 18,261,349 19,174,417
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 19,735,588 20,722,368 21,758,486 22,846,411
2 Administrative costs
2.1 Salary and wage 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
2.2 Employee benefits 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
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

2.6 Advertising expense 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
2.7 Telephone expense 365,000 383,250 402,413 422,533 443,660 465,843 489,135 513,592 539,271 566,235

2.8 Wi fi Internet service 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080
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 14,825,905 15,567,200 16,345,560 17,162,838
Total cost working capital 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

Note: Production costs are assumed to increase by 5% annually.

Page39
 20. 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

No of bed Price/day
S/N 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 10 0 850,000.00 10,200,000.00
2 Beverage service income 20 0 850,000.00 10,200,000.00
3 income from Massage service 40 360,000.00 4,320,000.00
4 Income from Gymnasium 20 180,000.00
Service 2,160,000.00
5 Income from sauna bath 45 472,500.00 5,670,000.00
6 Income from Meeting hole 20 150,000.00
Service days/month 1,800,000.00
Subtotal 34,350,000.00
Grand total 57,390,000.00

Page40
 21. Financial statements
21.1 Projected Profit/loss statement

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 Income 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
Less: Interest on 5,331,42 1,777,14
5,923,804 4,739,043 4,146,663 3,554,282 2,961,902 2,369,522 1,184,761 592,380
loan 4 1
Less: 4,779,731 4,779,73 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,73 4,779,731 4,779,731
Depreciation 1 1
Profit before tax 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
Less: Income tax
7313651.22 8073978.79 8861956.08 9678965.58 10526458.90 11405960.22 12319069.96 13267468.52 14252920.36 15277278.13
(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

21.2 Projected cash flow statement

Wondimu Habte 3 star
Hotel
 Projected cash flow statement
Project Year

Description
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow
Equity 22,076,289 - - - - - - - - -
Bank loan 51,511,340
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 73,587,629 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
Cash Out Flow
Fixed Cost 47,797,310 - - - - - - - - -
Initial W.C 25,790,318 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
Loan Repayment 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
Total Out flow 73,587,629 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
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
- 21,668,816 54,477,079 88,944,325 125,153,503 163,191,711 203,150,399 245,125,591 289,218,113 335,533,832 384,183,906
balance

Page59
 21.3 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
Sub total 11,063,318
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 53,812,310
Liabilities
Bank loan 37,668,617
owners Capital 16,143,693
Total liabilities and capital 53,812,310

Page43
 21.4 Viability and other measurement
20.4.1 Financial IRR computation

Year 0 1 2 3 4 5 6 7 8 9 10
Gross income 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

Total costs 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
Gross profit -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
Less: Profit tax 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

After tax net benefit -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
DF at 35% rate 1 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.05
Present Value -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
Net present Value 102,212,186 - - - - - - - - - -
DF at 30% rate 1 0.769 0.592 0.455 0.35 0.269 0.207 0.159 0.123 0.094 0.073
Present Value -73,587,629 44132910.0 35673624.0 28788976.1 23252634.6 18764876.1 15161880.4 12228386.1 9932679.7 7970369.8 6499243.0
Net present Value 128,817,951 - - - - - - - - - -

Page44
 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 = FixedCost = 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

= 53,812,310
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

22. 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

23. 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. 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 3 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.
24. 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.
25. 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.