ASSESSMENT OF FACTORS THAT AFFECT

INVESTMENT IN HOTEL INDUSTRY:

EXPERIENCE FROM JIMMA TOWN

A RESEARCH PAPER PREPARED IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR BA
DEGREE IN MANAGEMENT

BY: - EBSA ABDURAHMAN

ADVISOR: - GEREMEW TEKLU (MBA)

JIMMA UNIVERSITY
BUSINESS AND ECONOMICS COLLEGE
DEPARTMENT OF MANAGEMENT

MAY, 2012
JIMMA, ETHIOPIAN
2
 Abstract

The study was conducted on an assessment of factors that affect hotel

investment in Jimma town. To answer the question what are the factors
that affect hotel investment activity in the town, it makes it necessary to
study the factors that are behind this problem. From this effect the
researcher has investigate the factors that affect hotel investment in
Jimma town and their consequences on the over all economic
development of town. Data collected from investors and concerned
government officials. Method of data collection involve interviews and
both open and close ended questionnaire. The census survey was used to
collect data. Thus to investigate the study so, investors and concerned
government officials would be taken as a sample size. Finally the result
was presented, analyzed and interpreted using tables and percentage
and findings was compared and discussed with relevant literature,
conclusion and recommendations.

I
 Acknowledgement

I would like to express my heart felt gratitude to my advisor Ato Geremew

Teklu for his close guidance comments he gives Me, especially for his
precious time to read and correcting me in writing this paper. Last but
not least, I also thank to w/ro Fistum Asrat for her help for writing this
paper.

II
 Table Content
Title

Page
Abstract..............................................................................................................................I
Acknowledgement.........................................................................................................II
Table Content.....................................................................................................................III
Chapter One....................................................................................................................1
1. Introduction......................................................................................................................1
1.1. Background of the Study..........................................................................................1
1.2. Statement of the Problem..........................................................................................2
1.3. Objective of the Study..............................................................................................3
1.3.1. General Objective..............................................................................................3
1.3.2. Specific Objectives............................................................................................3
1.4. Significance of the Study..........................................................................................3
1.5. Scope of the Study....................................................................................................4
1.6. Limitation of the Study.............................................................................................4
Chapter Two....................................................................................................................5
2. Literature Review......................................................................................................5
2.1. Investment Definition and an over view...................................................................5
2.2. Prerequisites of Investment.......................................................................................7
2.3. Advantage of Investment..........................................................................................7
2.4. Objective of Investment............................................................................................7
2.6. Steps in Investment Decisions..................................................................................9
Chapter Three....................................................................................................................10
3. Research Design and Methods.......................................................................................10
3.1. Study area...............................................................................................................10
3.2. Research Design.....................................................................................................10
3.3. Population and Sampling........................................................................................10
3.4. Data and Data Collection Tool...............................................................................11
3.5. Data Analysis Technique........................................................................................11
Chapter Four.................................................................................................................12
4. Data Presentation Analysis and Interpretation............................................12
Chapter Five..................................................................................................................24
5. Summary, Conclusion and Recommendation...............................................24
5.1 Summary..................................................................................................................24
5.2 Conclusion...............................................................................................................25
5.3 Recommendation.....................................................................................................26
Reference........................................................................................................................27

III
I
 Chapter One

1. Introduction

1.1. Background of the Study

Investment is one of the key element of economic development activities
of a country. The more investment activities in a county. The more
potential for economic development. In finance and business an
investment is an asset purchased for profit, whether via income or
capital appreciation or some combination.
The entity making the investment is an investor. The opposite of making
an investment or selling the asset is divestment. Investment has a
connotation of long a term holding period in contrast to speculation,
which is the purchase of asset seeking profit from short term price
movements; (www.investorglossary.com).

Investment is a process of exchanging income during one period of time

for an asset that expected to produce earnings in the future periods.
Thus consumption in the current period is for gone in order to obtain a
great return in the future as it is appointed out in; (shoums. 1997, p
205).

Investment as sizable out lay of funds that commit a firm some course of
action. The form lies on specific procedures to analyze and select. Those
investment sector before investment decision investors examine required
rate of return, rate of expected inflation and the risk involved which are
basic to invest in any kind of investment and investment area; (Gitman,
1997, p. 198).

1
Ethiopia is a country having many resources in an abundance. These are
natural resource like gold, ail, natural pass, agriculture and livestock. All
these are potential for investment and have been invested over the year.

Human being engage in different types of work depending on their

interest, talent, capacity and favorable condition for performing what
they desire to attain. But any of these activities are not free of obstacles
and problems; (Kumar, 1999 p. 242).

Among the activities people engage in hotel investment is one that mostly
implemented in urban areas and tourist attraction sight. As any
activities hotel investment is surrounded by different factor that may
hinder its activity. Hence it is important to deal with it is problems that
hindering it.

In any case, hotel investment in Jimma town is very small in number,

comparing to the area coverage of the town and this research would try
to find out the basic problems that affect investment in hotel industry in
Jimma town.

1.2. Statement of the Problem

Investment is one of the key elements for growth of the economy, it is not
doubtful to deal with problems hindering it. Among the investment
activities hotel investment is one that mostly implemented in urban
areas and tourist attraction sight. As any activities hotel investment is
surrounded by different factors that may hindering it.

Therefore, the researcher would try to identify and investigate the factor
that affect investment in hotel industry in Jimma town. To this effect the
research would try to answer the following basic question.

2
 What are the factors that affect hotel investment in Jimma Town?
 What does the trend of investment in Jimma town looks like since
regime change?
 What do inventors attitude towards hotel investment?

1.3. Objective of the Study

1.3.1. General Objective
The main objective of this study has been to identify factors that affect
investment in Hotel industry in Jimma town Jimma zone, oromia region
and in order to recommend some reasonable suggestion for the future
period.

1.3.2. Specific Objectives

 To identify the factors that affect hotel investment in Jimma
town.
 To assess the investors attitude towards hotel investment
 To examine the trend of hotel investment in Jimma town.
 To suggest possible solution to the identified problems.

1.4. Significance of the Study

As an investment is one of key elements that play a great role in the

development of an economy of the country makes it very crucial to study
the factors that affects investments in Hotel industry.

The study would try to find out the factors that affect the investment
activities in Jimma town and in order to provide some reasonable
solutions and suggest some possible ways of solving this problems that

3
may be used as an input for investors who engage in hotel industry in
the town for their investment activities and the study will help
government bodies who are working to improve hotel industry and
related activities as an input the findings of this study and also uses for
students as a reference.

1.5. Scope of the Study

The study has been conducted on the investment in hotel industry in
Jimma town. The study was mostly focus on the ideas and feeling of
investors who engage in hotel industry in Jimma town.

1.6. Limitation of the Study

 Unwillingness of respondents of filling the questionnaire since
most of them was busy with their work.
 Inability to get sufficient information from government officials at
the right time.
 Difficulty in finding secondary sources from the organization which
was created by the officials not to give the information of the
organization.

4
 Chapter Two

2. Literature Review

2.1. Investment Definition and an over view

For many years investment has been defined in different ways by
different authors, but in the same concept, different countries have also
different investment policy, rules and regulations for example one
country may give more freedom for say private investors with in the
nation. The other country may close its door for foreign investors more
than the other country; (Dickerson, 1995, p.105).

Investment is a spending or setting a side money for future financial

gain. For an individual investment might include the purchase of
financial asset such as stock, bonds, mutual funds or life insurance.
Investment can also include the purchase of durable goods such as
having car, for an economist investment refers to the increase in factories
and machinery or in its human capital that is skilled and educated labor
force; (Encarta, 2007, p.38).

Brown, (1997, p.463); defines investment as the current commitment if

dollars for a period of time to derive future payments that well
compensate the investor for
1. The time the funds are committed
2. The expected rate of inflation
3. The uncertainty of future payment.

Helfert, (1997 p.274); has defined investment as a “fixed and initial

operating resources used for the production of goods, the prevision of
services and development of science and technology capability”.

5
Investment is a sizable out lays of funds that commit a firm to some
course of action. The firm lies on specific procedures to analyze and
select those investment property; (Gitman, 1997, p. 198).

Regardless of how you use your income investment can be defined as

postponed consumption; (R Stephan, sears, 1993, p.206). Individual
should make decision regarding such matters as how much of their
current in come should be spent or consumed and how much should be
saved or invested in accordance with their preference; (L. Trennephol,
1993, p.200).

Investment (capital investment) is the change in the capital stock over

period normally a year for accounting purpose it is often called capital
investment and different from consumption goods in that they yield a
flow of services over a period of time and these services do not directly
satisfy consumer wants but facilitate production of goods and services;
(The social science encyclopedia 2nd edn, 1996, p.308).

2.1.1. Types of Investment Decision

Gitman (1998, p. 200); has set the process for evaluating and selecting
long term investment band classifies investment decision.
1. Selecting decision concerning proposed projects that involves
investment in long term asset. Such as property, plant and
equipment or resources commitments in the form of new products.
2. Replacement decision such as replacement of existing facilities with
new facilities.

6
2.2. Prerequisites of Investment
Before starting an investment activities one investor must know and
analyze in what area he is going to invest the available fund he/she has
for investment the economic and political situations of the country,
availability of row material for running its activity and finally he/she
must put standard of evaluating the profitability of the investments.
Investment decisions are basically major decisions, to be adopted with
the enterprise; (Birritu. May 1996).

2.3. Advantage of Investment

Shaums, (1998, p.203); An investors engaged in the investment activity
must see whether the investment is contributing some advantage for
nearest society and the nation in general. Thus the following investment
advantages may be achieved by an investor:-
 To achieve an increase in the verify, quality and value of the supply
goods and services on the country.
 To create wide employment to the nation.
 To encourage the expansion involve in verity and quality of the export
of the nation.
 To encourage the production and utilization of domestic goods.
 To achieve protect, develop enrich and utilize the natural resources of
the country and others.

2.4. Objective of Investment.

Planning, selection and supervision of securities portfolio depend up on
its investment objectives. Individual investors develop specific objectives
in a number of variables but most of them generally agree on a few
universal rules and objectives.
Security of principal:- one critical objective of all investment is to
maintain the security of the principal. This gives rise to general aversion

7
to risk and an overriding effort to maintain. The principal value of the
securities in a portfolio.
Current income:- most investors like to receive some income from their
investments, even though these small payment can support little
additional consumption. Some people, however, identify the highest
possible level of stable income as an essential investment goal, giving
secondary importance to growth in principal value over time.
Marketability and liquidity: - the ability to sell a security easily and
quickly influence all investors portfolio management. This goal leads
them to confine their purchases to better known stocks with large
numbers of shares out standing.(Ibid. pp)

2.5. Method of evaluating investment project for judging.

The attractiveness of one investment, an investor should first consider:
the amount to be expended on the investment. The potential benefit of
the investment, the time period and final recovery of capital.

Generally for evaluating investment project, shamus (1997. 202). Has set
5 main methods of evaluation.
A. Pay back period:- measures the length of time required to
recover the amount of initial investment. According to this
method the investor choose an investment activity with the
shortest pay back period.
B. Accounting rate of return (ARR):- this measures the profitability
from the conventional stand point by relating this required
investment (average investment) to the future annual net
income. According to this rule, the investor has to choose the
project with the higher rate of return.
C. Net present value (NPV):- the excess of the present value of
cash in flows generated from the investment over the amount of

8
 initial investment and the rule says; accept an investment
activity with the positive net present value.
D. Internal rate of return (IRR):- is defined as the rate that equals
interest with the present value of future cash inflows. In this
method the investment decision is accepted if IRR exceeds the
cost of the total investment.
E. Profitability index (PI):_ it is the ratio of the total present value
of future cash inflows to the initial investment i.e. PV/I the rule
say, accept the investment if the profitability, index is greater
than initial investment.

2.6. Steps in Investment Decisions

Gitman (1997, p.326); puts the investment decision and activities as
consisting of the following five interpreted steps.
1. Proposal generation:- to stimulate a flow of idea that could result in
potential cost saving.
2. Review and analysis:- the proposed costs and benefits are estimated
and then converted in to a series related cash flow to which various
capital budgeting techniques are applied to measure the investment
merit of potential outlay. In addition, various aspects of the risk
associated with the proposal are either incorporated into the economic
analysis or rated and recorded along with the economic measures.
3. decision making:- making the final decision of the project
4. Implementation:- once a proposal has been approved and funding has
been made available, the implementation begins i.e. making the
proposal into action.
5. Follow-up:- involves monitoring the results during the operating
phase of a project.

9
 Chapter Three
3. Research Design and Methods
3.1. Study area
The study has been conducted in Jimma zone, oromia region, Jimma
town is located in south westerner Ethiopia, covering 16.k.ms it has a
dense and its annual rainfall ranges from 1200 to 2500 ml. according to
1999 national census ranges from 1200 to 2500 ml. according to 1999
national census the population of the town is about 12000 which
constitute 51% of the population of the population living in urban of the
zone. The town is administered by town administration of Jimma town
which also divided into kefle ketemas that organized its kebeles forming
the smallest administrative units in the country.

3.2. Research Design

The study has been focused on the factors that affect hotel investment
activities in Jimma town which is found in south western Ethiopia,
Oromia region. The study used descriptive analysis, it uses the present
situation of hotel investment in the area and identifying the major
problem that affect hotel investment in Jimma town.

3.3. Population and Sampling

The target population for this study are investors who engage in hotel
investment and concerned government officials who give an important
information about the investment in hotel industry. Since the study
population is small in number the sampling technique would be census
survey. The reason for selecting this methods would be enable the
researcher to gate accurate information, the population is manageable to
the researchers and the degree of accuracy is very high.

10
3.4. Data and Data Collection Tool
The primary data has been collected from the respondents by using
interview and both open and close ended questionnaire and secondary
data has been collected from different published and un published
material records and documents by reviewing the necessary data has
been collected in great depth.

3.5. Data Analysis Technique

The study is descriptive types of analysis that is performed based on
quantitative and qualitative analysis. Quantitative analysis method has
been presented by using percentage and tables. The result of quantitative
analysis is supported by description of qualitative data analysis.

11
 Chapter Four

4. Data Presentation Analysis and Interpretation

The findings of the research have been assessed using questionnaire and
interview. The questionnaire contained open-ended and close ended
questions. In order to make the data clear and facilitate and to show
what implication they have on the hotel investment sector in Jimma
town. Data obtained through the questionnaire and interview are
presented, analyzed and interpreted into meaningful ways as follows.

A. personal data
I. The Age Distribution
The data obtained about the age of hotel investors was tabulated in the
following table

Table 1. The Age Distribution

20-40 41-60 Greater than 60 TOTAL
Frequency 5 14 8 28
Percentage (%) 17.86 50 28.57 100

The age distribution of respondent show that 14(50%) of population

engaged in hotel investment activity in Jimma town to be between the
ages of 41-60 years about 8(28.57%) of hotel investors are greater than
the age of 60 years and only 5(17.86%) of respondents are between the
age of 20-40 years. From this data most of population of hotel investors
in Jimma town is controlled by the hotel investor whose age is found
between 41-60 years.

12
II. Sex distribution
The data obtained about the sex distribution of hotel investors are
presented in the following table.

Table 2. the sex distribution of hotel investors in Jimma town

Male Female TOTAL
Frequency 21 7 28
Percentage (%) 75 25 100

The sex distribution of the respondents show that 21(75%) of the

populations were found to be male and 7(25%) of the population were
found to be female. From this figure we can conclude that most of hotel
investment activities are controlled by male investors.

III. Level of education

Table 3. The educational level of hotel investor in Jimma town.
Complete Certificate Diploma Degree TOTAL
10 grade
Frequency 18 4 5 1 28
Percentage (%) 64.28 14.28 17.85 3.57 100

The educational level respondents show that 18(64.28%) of the

respondent was complete 10 grades. About 5(17.85%) of the respondents
was diploma graduates followed by certificate holders by 4(14.28%) and
finally it was found that 1(3.57%) of degree holder investor included in
the population. From this figure it can be implied that most of population
of hotel investors in Jimma town their by level of education by complete
10 grades.

13
IV. Marital status
Table 4. The marital status of hotel investors in Jimma town
Married Single Divorced TOTAL
Frequency 20 7 1 28
Percentage (%) 71.43 25 3.53 100

As it clearly indicated in the above table the marital status of the

respondents show that 20(71.43%) of the respondents engaged in hotel
investment activities in the town were found to be married about 7(25%)
of the respondents were found to be single only about 1(3.57%) of the
respondents were found to be divorced.
From this figure most of population engaged in hotel investment activity
in Jimma town was married.
B. Data obtained relating to the current hotel investment activity
of investors
1. Do you face difficulties to get investment permission and license form
government when you started investment?

Table 5. Investor who faces difficulties

items No Total
Do you face difficulties to get
investment permission and license
from government when you started
investment?
Yes 22 78.57
No 6 21.43
Total 21.43 100

According to the response obtained from respondents about 22(78.57%)

of the respondents have encountered difficulties from local government

14
and other 6(21.43%) of the respondents doesn’t face difficulties. From
this figure most of the hotel investors face difficulties from local
government when he/she start the project.

Table 6. Feeling of investors about their engagement in investment

Items No Total
What do you feel about engagement in
hotel investment?
Very pleased 7 25
Pleased 15 53.57
Feel noting - -
Not pleased 6 21.43
Total 21.43 100

According to the above table show that 7(25%) of the respondent are very
pleased. About 15(53.57%) of the respondents are pleased and only
6(21.43%) of the respondents are not pleased in their engagement in
hotel investment. As per the data obtained we can conclude that the
most of investors currently engaged in hotel investment activity in Jimma
town seem happy.

Table 7. Investors attitude towards the tax policy

items No Total
How is tax levied on your income?
Very high
High 2 7.14
Fair 18 64.28
Low 8 28.57
-
Total 28 100

15
As we can see from the above table 18(64.28%) of respondents comment
there is high tax levied on them in relation to their income, while
2(7.14%) of the respondents commented as very high and only 8(28.57%)
of respondents suggested as fair. From this data we can conclude that
the attitude of most of investors towards the tax policy commented to be
high taxation in relation to their income.

Table 8. Investor attitude towards government policy of hotel

investment
Items No Total
The present Ethiopian government
policy towards hotel investment is
encouraging?
Agree 17 60.7
Disagree 5 17.86
Strongly agree 6 21.43
In don’t know - -
Total 28 100

As we can see from the above table 6(21.43%) of the respondents agree
strongly and 17(60.7%) of the respondents are agree with the statement
while 5(17.86%) of the respondents disagree with the statement. From
this figure we can conclude that the attitude of most of investors towards
the government policy of hotel investment is satisfied.

16
Table 9. Investors attitude towards the present Ethiopian
government policy
Items Response
Frequency Percentage (%)
what your attitude is towards the
present Ethiopian government
investment policy comparing to the
post government?
Very good 10 35.71
good 16 57.14
Fair 2 7.14
less - -
Total 28 100
According to the above table show that 10(35.71%) of the respondents
says very good and 16(57.14%) of respondents says good and only
2(7.14%) the respondents perceive it as fair from this figure we can
conclude that the Ethiopian government policy towards investment is
attractive.
Table 10. Major causes of low hotel investment activities
What do you think that about Response
factors for the causes of low hotel Frequency Percentage (%)
investment activities
lack of adequate capacity of both 9 32.14
human and material resources
bureaucratic nature of local 7 25
government to give investment
permission
high tax levied than income generated 6 21.43
lack of promotional effort to attract 6 21.43
inventors in the town
Total 28 100

17
As it is indicated in the above table there are many factors which
resulted in low hotel investment actitives of the town, the main problem
such as lack of adequate capacity of both human skill and material
resources, bureaucratic nature of local government to give investment
permission, higher tax levied than income generated, lack of promotional
effort to attract investors in the town lack of adequate capacity of both
human skill and materials resources are the main problem to the town.

Table 11. The present Ethiopian government attention

Item Response
Frequency Percentage (%)
The present Ethiopian government
attention to the hotel investment in
Jimma town?
very encouraging 10 35.71
encouraging 14 50
discouraging 4 14.28
Total 28 100

According the above table show that the present Ethiopian government
attention towards hotel investment about 10(35.71%) of respondents put
it as very encouraging and 14(50%) as encouraging and only 4(14.28%) of
the respondents put it as discouraging. From this figure we can conclude
that the most hotel investors are satisfied by the present Ethiopian
government attention towards hotel investment in Jimma town.

18
Table 12. Data about investors contact with coordinating agency
Item Response
Frequency Percentage (%)
Do you contact any other investment
coordination agency in order to
consultancy service?
Yes 4 14.28
No 24 85.71
Total 28 100
According to the data above shows that 24(85.71%) of respondents does
not consulted by any coordinating agency and only 4(14.28%) of the
respondents consulted by coordinating agency.

From this data we can conclude that the most of trained of investors to
consult the concerned people or who has the knowledge is very poor.

Table 13. Hotel investors trained in evaluating their investment project

Item Response
Frequency Percentage (%)
Do you evaluate your investment
project by using methods of evaluating
investment project?
Yes 7 25
No 21 75
Total 28 100

According to the above table show that 21(75%) of the respondents does
not use any evaluation techniques to evaluate their hotel investment only
7(25%) of the respondents use some technique to evaluate their
investment project. This implies that the most investors are running

19
their operation without evaluation techniques to evaluate their hotel
investment project activities.

Table 14. Whether the inventors to continue their business

Item Response
Frequency Percentage (%)
Do you have plan to continue your
business?
Yes 20 71.43
No 8 28.57
Total 28 100
According to the above table show that 20(71.43%) of the respondents
wish to continue their business and only 8(28.57%) of the respondents
are not in favor of continues of their business. This implies that most of
the hotel investors have plan to continue their business.

Table 15. Investor future plan of their investment project

Item Response
Frequency Percentage
(%)
What does the investor wants to do his/her
investment activities or organization for the
facture?
Expanding it 5 17.85%
To continue as it is 7 25%
To start any other job in addition 10 37.71%
Close it completely 6 21.43%
Total 28 100

20
According to the data in the above table show that 7(25%) of the
respondents wants to continue the existing activities, about 10(37.71%)
of the respondents want to start any other job in addition and 5(17.85%)
of the respondents want expand the existed project while about 6(21.4%)
of the respondents wants to close it completely. This implies that most of
the hotel investors wants to continue and to start any other job in
addition for the future.

Table 16. Investment opportunity

Item Response
Frequency Percentage
(%)
Is there investment opportunity in Jimma
town?
Yes 16 57.14
No 12 42.86
Total 28 100

According to the data given in the table shows 16(57.14%) of the

respondent who engaged in investment activities replied that there are
investment opportunities in the town. The rest about 12(42.86%) of the
respondents replied negatively towards the investment opportunities of
the town. From this figure we can conclude that there is investment
opportunity in Jimma town.

21
Table 17. The Availability of Natural & Human Resources
Item Response
Frequency Percentage
(%)
Is there natural & human resources
available for hotel investment?
Yes 18 64.28%
No 10 35.72%
Total 28 100
As the above table show that 18(64.28%) of the respondent replied
positive response about availability of natural and human resource for
hotel investment activities. About 10(35.72%) of the respondents replied
that there are lack of natural & human respires availability. From this
figure we can conclude that there is natural and human resources
availability in the town.

Table 18. Type of ownership of hotel investors in Jimma town

Item Response
Frequency Percentage
(%)
type of ownership of hotel investors in
Jimma town?
Sole proprietor 24 85.7%
Private Ltd. Co 3 10.7%
Share Co. 1 3.6%
Total 28 100
As the above table shows that 24(85.7%) of the respondents are sole
proprietors, about 3(10.7%) of respondents are private limited company
and 1(3.6%) of the respondents are share company. From this figure we
can conclude that most of hotel ownership is sole proprietorship.

22
Interview questions to be filled by managers of investment bureau.
1. What is the role of your bureau in investment activities?
question forwarded regarding role of investment bureau of Jimma
town.
Investment bureau contribute to the expansion of hotel investment
activities in the town by providing and distribution suitable land in
the town for hotel investment in the area.
Helping town administration to fulfill infrastructural facilities.
Providing some license and incentives
Approving design and monitoring the infrastructure facilities
2. What do you think the major factors that affect hotel investment
activities in Jimma town?
As question forwarded regarding to factors affecting hotel investment
activities in Jimma town accordingly it is responded as there are
many factors which are resulted in low hotel investment activities of
the town such as lack of adequate capacity of both human skill and
material resources, bureaucratic nature of local government to give
investment permission, higher tax levied, lack of promotion effort to
attract investors in the town etc. confirms that they are really
challenging causes which resulted in low investment activities of the
town.
3. What do you think can contribute to encourage potential investor and
activate the level of investment activities.
Question also forwarded regarding kinds of contribution to encourage
potential investors. The support or incentives the investors get from
government are in the form of loan from bank and provision of market
for their good services land fee and exemption from tax, provide
investment permission, promotional effort to investors and provide
material resources to atract investors.

23
 Chapter Five
5. Summary, Conclusion and Recommendation
5.1 Summary
 Getting investment permission and license from government is
difficult during start the investment.
 The investors have great interest to engage in hotel investment
 The attitude of investors towards the tax policy commented to be high
taxation in relation to their income
 The attitude of most of investors towards current government policy is
attractive.
 The present Ethiopian government attention to the hotel investment
in Jimma town is Encouraging.
 Most of the hotel investors have plan to continue their business.
 Most of hotel investor wants to continue and to start any other job in
addition for the future.
 Natural & human resource is available for hotel investment
 Type of ownership of hotel investments are most dominated by sole
proprietorship.

24
5.2 Conclusion
 In Jimma town even though the potentially of the are is not
studied fully for hotel Investment depending on the current
economic activity in the town and some other conditions it can be
concluded that Jimma town has great potential for hotel
investment but not utilized efficiently.
 Even though there are found many higher school, private and
government colleges, university and large number of residents in
the town contribute to the attractiveness of the town for hotel
Investment activities, but promotion and transformation of
information about these potentials are weak.
 However, comparing to these potentialities hotel investment
activity is found in poor condition in the town. Only 28 investment
are registered for being engaged in hotel investment.
 The development of hotel investment for the future may be better
if factors that affect this hotel investment activity in the town gets
focus by the government as well as the investor themselves
 Hotel investment activity is known to consume large amount of
finance for construction and fulfillment of physical faculties for
which most of hotel investors fail to meet this financial strength
and want to continues their business as it is and some other,
want to engage in other type of business. However this problem
can be simply solved if working together and partnership type of
business is developed.
 Investors also have problem in the ability to generate new ideas for
business which makes them to engage on similar types of
investment activities. Inability to make survey in the
successfulness of an investment activity (such as market survey)
before starting investment.

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5.3 Recommendation
To overcome these and all other problems that contribute to low hotel
investment in the town. The following points may recommended to the
government and the public
 To utilize the great potential that Jimma town has for hotel
investment, the people and government need to work together in
order to increase the economic and social benefit of these great
potentials.
 Government should prepare and conduct panel discussion and
meeting concerning hotel investment activity and creating
awareness about the great potentials that the town has for hotel
investment.
 The government strengthen the promotional works to attract
investor to hotel investment through poster, pamphlets and other
medias.
 Developing infrastructural facilities, maintaining and strengthen
peace & security for free movement of people in the town and the
like must get due attention.
 Sufficient survey on natural resources, developing infrastructure
and making the exchange of information strongly is very important
 Creating the awareness and the benefit of working together as a
partnership and share company and encouraging to this type of
cooperation has a greet potential in solving financial problem of
hotel investors.
 Investors need to be sure as the land they are going to invest is
sufficient enough before they start and when determining the land
size of their project, they have to consider the future growth and
expansion into account the government also have to provide
sufficient land for hotel investment project.

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 Reference

Dickerson. (1995). Introduction To Financial Management. 4th edn

Hart court Brace college forth worth.
Erucla. H (1997). Techniques of financial analysis. 9th edn, New York.
Jimma Export. (1997). Ethio trade show and Bather (Jimma)
Jimma town investment and tourism Bureau.
http//www/investorglossart.com
Lawrence J. Gitman. (1997) principles of managerial Finance. 8 th edn.
ohio.
R. Stephen. L. Trennephol. (1991) investment management.2 nd edn.
New York.
shaums out line, 1998, financial management 2nd edn
Zikmund G. williams (1997) Business research methods 5th edn New
york

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 Appendix A
Jimma University
Business and Economic College
Department of Management

Questionnaire to be filled by hotel investors.

Dear respondents the purpose of this questionnaire is to collect data on factors that affect
hotel investment in Jimma town and suggesting some possible solution for the future time
you area kindly requested to respond genuinely willingness to fill this questionnaires
format. Your participation in filling the questionnaire is expected to have a great
contributing to the study.
I would like to tank you for your help to fill these questionnaires
A. Personal data

1. Age 20 – 40  41- 60  Greater than 60

2. Sex Male  Female

3. Level of Education Complete 10 Grade  Certificate 

Diploma  Degree and above 

4. Marital status Married  Widow  Single 
B. Question related to current hotel investment activity of the investors.
1. Do you face difficulties to get investment permission and license from local
government when you start investment project

Yes  No 

2. what do you feel about engagement in hotel investment

Very pleased  Pleased  Feel nothing  No pleased 

3. How is tax levied on your income?

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 Very high  Fair  High  Low 
4. The present Ethiopian government policy to wards hotel investment is
encouraging.

Agree  Strongly agree Disagree  I don’t know 

5. What your attitude is to wards the present Ethiopian government investment
policy comparing to the past government policy?
__________________________________________________________________
__________________________________________________________
What do you think that about the factors for the cause of low hotel investment
activity in Jimma Town

Very good  Good  Fair  Less 

6. The present Ethiopian government attention to the hotel investment in Jimma

Town is Very encouraging Encouraging Discouraging 

7. Do you contact any other investment coordinating agency in order to consultancy

services? Yes  No 

8. Did you evaluate your investment project by using methods of evaluating

investment project Yes  No 

9. Do you have plan to continue your business? Yes  No 

10. What does the investor want to do his investment activities or organization for the
future?

11. Is there investment opportunity in Jimma Town? Yes  No 

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12. Is there natural and human resources available for hotel investment activities? Yes

 No 

13. Type of ownership of hotel investors in Jimma Town.

Sale proprietor  Private Ltd. company Share Company

Thank you

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 Appendix B

Interview questions to be filled by manager’s of investment bureau

1. What is the role of your bureau in investment activities?
2. What do you think the major factors that affect Hotel investment
activities in Jimma town?
3. What do you think can contribute to encourage potential investor
and activate the level if investment activities?

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