Abebe Project Final

Project Proposal of Ato Abebe Debela 3* Hotel Building
UNIT ONE
Executive Summary
This is a feasibility study made for the newly built three star G+5 hotel building project of Ato Abebe
Debela Hawas found in Bishoftu town. The location of the project is very attractive and ideal for running
such type of business in the town. The hotel will occupy all the standards for three star hotel set by
Ethiopian Standards Agency.
The proposed project will be managed by the promoter himself for a better hotel management and service
outlets since he has accumulated adequate experience in several types of business sectors and activities
within the country. In addition to this, hired employees will handle the day to day activities of the project.
It will also create employment opportunities for about 42 residents of Bishoftu town in different types of
employment designation.
The Promoter Ato Abebe Debela has an ideal mix of educational background, versatile work and
business experience in a wide range of business sectors and activities’. He is fully familiar with the
envisaged project, locality area and environment. He is therefore highly enthusiastic to contribute as a
corporate citizen playing socially responsible and exemplary roles as developmental entrepreneurs.
Ato Abebe also cognizant of the fact that service sector is the mainstay of the Ethiopian economy plus as
the main resource of the country, it contributes the predominant share of the GDP, Foreign currency
earnings and is the source of livelihood of the majority of the population.
This brief survey has been undertaken to assess the technical as well as economic viability of the
complex outfit. As subsequent sections of the report reveal; the project shall be financially sound while
its socio-economic contributions cannot be neglected.
The location of the project is ultimate for successfully run such a business. This new project is located at
the center of Bishoftu town in front of Rift Valley University and adjacent to Tommy International Hotel
on the way to the right side of the road to Addis Ababa. Since its location is on the way to the main gate
of Addis Ababa (capital of the nation), the business opportunities for the owner as well as other business
persons who have a business centers around the project is considerably high.
The promoter of the business (Ato Abebe Debela) can be named as investors and also an entrepreneur for
the town due to his vision and courage to construct this new G+5 three star standardized hotel building in
the town.
This new project lies on a total area of 394.5sqm of land, out of which the construction of the buildings
are on 187sqm of land. The hotel building project consists of 25 rooms used for bed room services of its
clients and guests, reception area, gift shop, meeting hall, bar and restaurants.
The total investment cost of the project including its working capital requirement and contingency,
furniture’s, vehicle and related equipments is estimated to Birr 22,677,330.00 based on the bill of
quantities prepared by the engineers of the building and assessment of current market price of vehicle,
furniture’s and equipments. Out of which about 37% accounts for Birr 8,284,585.12 is already injected to
the construction, acquisition and pre-production costs of the land and remaining cash balance raised from
the owners own capital. The remaining balance of investment Birr 14,392,744.88 (63%) will be expected
from Bank’s in the form of long term debt.
The investment under consideration is also equipped with the aim of establishing a modern three star
hotel and room service complex at Bishoftu town.
Since the area under consideration is only 44kms far from the metropolis of the country and
uninterrupted struggle of the municipality of the town, Bishoftu town had to have well developed socio-
economic infrastructures. Such as road, electric power, water sources, telephone & internet line accesses
and other infrastructures.
To take a broad view, the project is ideally located for the purpose of modern hotel and room service
center. Even though, like most other business ventures, it aims to maximize return on invested capital, it
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also aspires to contribute an additional view to the town, create more job opportunities for the local
people and making its own contribution to the renaissance and development of the country as a whole.
Moreover, in a process of attaining this basic original idea, it also benefits the community by creating a
new recreational hotel place and the youth of the town will also benefited by having a high-quality
recreational compound. The town’s administrations will also have an additional revenue/income through
taxation and employment income taxes.
Ethiopia is one of the African countries that possess the highest number of UNESCO World Heritage
Sites in Africa, with different sites spread throughout the whole country, and, therefore, has great
potential to develop itself as a tourist destination. The Government of Ethiopia (GOE) has prioritized
tourism development in its development strategy, to optimize the existing tourism resources as a driving
force of economic growth for the whole country.
It is clear that Ethiopia follows the free market system and this in turn needs the individuals and
companies like that of Ato Abebe Debela to inject their potentials to the economy, as a result the
problems that the nation currently faced will gradually eradicated and the national economy will also
become progressively developed. It is this understanding and courage for this project to be planned by the
promoter Ato Abebe Debela.
This feasibility study is meant to briefly show the project’s importance, area advantages, planned
activities, estimated project capital, its profitability and other important aspects for the concerned
stakeholders.
Major Findings of this Study are:
 The minimum net profit from service is expected to be Birr 140,865.00 in the first year and the
maximum profit will be registered in year 8 is birr 3,683,206.00. The cumulative net cash inflow is to
be Birr 10.8 million at the end of the project life.
 Using the major investment decision techniques, the launching of the hotel project is found to be
attractive showing positive financial results, presented in financial evaluation section of this study.
 The project will create job opportunity for more than 42 workers permanently and will pay more than
590,400.00 birr yearly for its employees as a salary.
 The project will generate income to the government in the form of profit tax during its project life
(7,841,908.00).
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UNIT TWO
Project Promoter
Legality
 Project promoter: - Ato Abebe Debela Hawase
 Project:- Three Star Hotel
 Address:-Oromia Region, Bishoftu town, Kebele-01 H.No. 749
 Registered capital: - birr 5 million.
 Form of Business: - Sole Proprietorship
 Investment License:-KIO/ID/H2440/03
 Issued on 21/01/2003
 Authorizing Office:-Oromia Regional Government, Bishoftu Town Investment Bureau.
Background
Ato Abebe Debela as a sole trader engaged in several types of businesses since 1970. He has started his
business activity by establishing a Mill house and cultivating different types of agricultural products in
East Shoa zone, Bishoftu & Godino towns of Oromia regional state. Before starting the current three star
hotel services, the promoter Ato Abebe has engaged in manufacturing sector and starts a hollow section
production center in Bishoftu town. In relation with the manufacturing business sector Ato Abebe has
also provide several types of construction materials for several contractors, construction areas,
Governmental and Non Governmental organizations. In addition to the above businesses he engaged, Ato
Abebe has also has an experience in a freight transport sector.
The manufacturing, transport & mill house business sectors has been also the main income generating
businesses and has now become an equity source for the construction of a three star hotel project under
consideration.
Ato Abebe is one of the well known & accredited business persons in Bishoftu town.
Standard of the Hotel Project
The project under consideration is a construction of comprehensive three star hotel located at one of the
fastest growing suburb town of Bishoftu which is located about only 44 kilometers distance from Addis
Ababa on the road to Djibouti.
The new hotel will be a three star hotel so as to render high quality services and accommodation to its
clients. The Ethiopian Standards Agency has prepared new hotels rating requirements and classification
directives that will involve in the standardization process of grading hotels to different star levels.
As per the Ethiopian Standards Agency definition, Hotel is a commercial establishment which provides
rooms in which people can stay, especially to travelers and sometimes to permanent residents, and which
provides food, lodging and other services for paying guests, including the general public.
Therefore in order to gain three star level; Ato Abebe Debela plans to include the following points as per
the standard of the agency:
 The hotel will have 25 standardized rooms with a minimum room size of 16m2, most of them will
have a standard bed size of 1.80m x 2.00m, some of the rooms will have a double bed with a size of
0.90m x 2.00m.
 All rooms will be equipped with necessary facilities like TV sets, Refrigerator, Cupboard, Sofa,
Tables and Chairs etc
 In addition the hotel will give free internet/Wi-Fi/ services for its clients
 All furniture’s and equipments used will be selected in order to satisfy its clients and are chosen to
make the standard of the hotel factual
 Meeting hall with a capacity of 100+ persons will be built up
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 The construction work of the buildings will be finalized with a quality finishing materials and
equipments, acceptable decorations, harmonized and impressive wall and mirror coverings and paints,
well-constructed and professional finishes and detail on all furniture’s, quality flooring and ceilings
using outstanding materials will be used for the buildings
 An elevator will be available for the G+5 building (1 to 25 rooms)
 The lighting system of the hotel (inside & outside) will be done as per the requirements of the
standard
 There will be 42 skilled and semi skilled, qualified & certified permanent employees
 The requirements for health, safety and fire security, environmental services requirement for waste
management and will have certified documentary evidence of compliance
 The hygiene and sanitation of the kitchen and public area will be at a high standard
 The hotel will have one bar and one restaurant available for services
 There will be a separate & independent reception area ready for users 24/7
 All guest rooms will have their own bathrooms for personal use
 All rooms will be serviced including linen/towel change, removal of rubbish and cleaning 7 days a
week
 There will be a contact person at a reception area 24 hrs / 7 days a week
 There will be a meeting hall with high quality sound system and lightening
 Gallery & Gift shop will be one of the hotel’s service area
 Separate Bar, Restaurant & smoking area available for clients of the hotel
 It is much available to use a taxi and is only 5 minutes far from bus station of the town
 Recreational activities like beauty center & shopping centers will be available
 Clean, neat & appropriate uniform dress will be used by all staffs with proper identifications
 Full laundry/dry cleaning service will be available for users all the time
 Sufficient car parking area will be available for users of the hotel
Project Status
Location: The main highway road crossing the town is considered to be the life line of the capital city of
Ethiopia, at the same time it is also the main gateway to the major parts and connects to most important
business cities such as Djibouti, Adama, Hawassa, Dire Dawa, Harar, Asala, etc. This indicates that the
site selected for the construction is suitable for the reason that the site is located adjacent to the main
highway road from Addis Ababa to Djibouti and on the center of Bishoftu town.
 The hotel business project site is found in Oromia Regional State East Shoa Zone, Ada Woreda,
Bishoftu Town, Kebele 05 locality area.
 The proposed project site of the hotel building is found in front of Rift Valley University, adjacent to
Tommy International Hotel.
Land: The project is implemented on a plot of land with area of 394.5 square meters. The land is
acquired on lease basis for 37 years from Bishoftu town municipality office. Per the agreement, the
annual rental payment is birr 7,890. The total lease value of the land is birr 291,930.
Building: The total construction cost consists of G+5 hotel building. The construction cost is estimated
to be Birr 16,755,344.02. Per engineers of the project estimate the building’s 41.75% was completed and
ready for use.
Hotel Furnishing Items: Hotel furnishing items include machinery, equipment, soft furnishings, kitchen
materials and utensils, furniture and fixtures are determined and to be purchased from local market and
imported from abroad.
Pre-operating Expenses: Pre-production expenditure includes interest during construction, costs of
registration, licensing and formation of the company including legal fees, commissioning expenses,
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architectural, structural, electrical, sanitary, bill of quantity & feasibility studies etc. Hence the pre-
operating expenses of the project reaches birr 887,585.97 including land lease payments made by the
promoter Ato Abebe Debela.
Total Investment Made So far
Investments Made So far
Description Value
Hotel Building 6,984,411.15
Land Acquisition & Pre-operating Expenses 887,585.97
Total 7,871,997.12
Project Implementation Plan
Year Activity Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Before Land
2015 Acquisition
Legal Document
Preparation
2016
Construction of
Building
Debt Financing
Acquisition of
Hotel Furnisher
2017
Construction
Finalization
Operation
As indicated in the above schedule, the project inception was started before 2015 and majority works
have been done for the last two years. The remaining works would be finalized within this year and the
hotel become operational in month of December, 2017.
Beneficiaries of the Project
The major beneficiaries include the following:-
 Returns on investment
 Supply of quality hotel and accommodation services to clients
 Tax to the government
 Foreign currency generation
 Job opportunity for productive and unemployed labor force and
 Indirect benefits accrue to the country as a whole in the form of generating potential investment
capital.
Project Rationales
The government privileged the sector by giving duty free import of appliances & equipments and
availing land. The project is very near to the capital Addis Ababa, which is known, as centre of Africa,
the seat of diplomats, suitable condition for foreign direct investment, and the attraction of tourists.
Considering these favorable market conditions, the promoter decided to construct a three star hotel in
Bishoftu town.
Currently the promoter of the project needs his new business to be located in one of the first standard
cities of Oromia Regional State or near to those first standard cities, especially on Bishoftu town.
According to urban reform proclamation 65/2003 Bishoftu, Adama and Jimma towns are categorized as
the first standard cities of Oromia towns.
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The land on which the new project lies was acquired by the promoter in thinking of starting a new three
hotel business in the town with a total price of birr 887,585.97 including its land acquisition & pre-
production costs. The terrain has a total of 394.5sqm of land for the project construction work. The
promoter Ato Abebe has been studied several places around Adds Ababa and the surrounding special
zone towns of Oromia in order to start his new business, subsequently after extensive studies was done
and due to the next points he decided to start his hotel project in Bishoftu town.
 Bishoftu town is in near distance to Addis Ababa
 Bishoftu town is on the way to the Eastern part of the country, on which he can find ample market
demands for his businesses
 The town is one of the major gate pass to Addis and outside of Addis
 There are a lot of travelers who spent their day & night time to work; rest and enjoy. They consider
the town as one of the stop-by cities on their day to day journey
 There are sufficient infrastructures to the business – electricity, water, and telephone line and network
availability has good quality
 There is a huge gap between the supply and demand of hotel and guest house business in the town
 The town is on the way to Modjo, Adama, Hawassa and other Eastern and Southern part of the
country, the town is one of the most of the weekenders of Addis Ababa spent their weekend times
 The town is favorable not only for the current business outfit but also for the Travel & Tour works,
Training and Advertisements on Hotel & Tourism of the town and surrounding areas too, on which
Ato Abebe plans to enter for the future
The above points and findings of the study made by the promoter of the project put together his vision to
decide & prefer Bishoftu town for his business spot and the main issue that creates a competitive
advantage for his project is that there is an access to transportation facilities to the business site, that will
have a great impact on the profitability of the project after being involved in the assembly and marketing
process of the hotel.
Economic & Sector Review
Ethiopian Economy: The service sector of the country’s economy has—for the first time in the history
—overtaken agriculture as the largest segment of the Ethiopian economy. This reverses a centuries-long
economic structure, wherein agriculture was the dominant sector, followed in a distant second place by
the services sector, and lastly a very small industrial sector. The recent release of FY 2008/09 GDP
statistics, however, revealed that the service sector is now clearly at top, comprising 45.1percent of GDP,
followed by agriculture at 43.2 percent, and Industry at just 13.0 percent (Ministry of Finance &
Economic Development). The customary shorthand description of the Ethiopian economy as being
overwhelmingly agriculture-based-has thus just becomes obsolete. The overtaking of agriculture by
services is not some statistical blip or a one-off occurrence linked to a particularly poor crop season.
Agriculture has actually been overtaken by services at a time when crop output reached a record level of
17.1 million tons. Indeed, for close observers, the trend lines have been prevalent for almost a decade;
agriculture was more than 50 percent of GDP as recently as 2000/01 but started a gradual decline over the
past decade, falling to about 47percent in the middle of the decade and to a low of 43.2 percent of GDP
most recently. The services share of GDP moved slowly but consistently in the other direction, moving
up from just 38 percent at the start of the decade to 45 percent of GDP most recently.
Projected Composition of Ethiopian GDP
Services Industry Agriculture
FY 2008/09 GDP Share 45.1 13.0 43.2
FY 2009/10 GDP Share 48.0 13.1 40.2
FY 2010/11 GDP Share 49.6 13.2 38.6
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FY 2011/12 GDP Share 50.9 13.2 37.5
Source: MoFED & Access Capital Projections; figures do not add up to 100 percent
due to a technical adjustment for financial intermediation services in GDP data.
As indicated in the above statistical data the service sector GDP contribution in the overall economy has
grown year after year in arrow.
Tourism Sector
International tourism recovered strongly in 2015 according to the Advance Release of the UNWTO
World Tourism Barometer. International tourist arrivals were up by almost 7% to 935 million, following
the 4%decline in 2009 – the year hardest hit by the global economic crisis. The vast majority of
destinations worldwide posted positive figures, sufficient to offset recent losses or bring them close to
this target. However, recovery came at different speeds and was primarily driven by emerging
economies.
Boosted by improved economic conditions worldwide, international tourism has recovered faster than
expected from the impacts of the global financial crisis and economic recession of late 2008 and 2009.
International tourist arrivals were up by 6.7% compared to 2015, with positive growth reported in all
world regions. Worldwide, the number of international tourist arrivals reached 935 million. While all
regions posted growth in international tourist arrivals, emerging economies remain the main drivers of
this recovery. This multi-speed recovery, lower in advanced economies (+5%), faster in emerging ones
(+8%), is a reflection of the broader global economic situation and is set to dominate 2016 and the
foreseeable future.
The recovery in international tourism is good news, especially for those developing countries that rely on
the sector for much-needed revenue and jobs. Following a year of global recovery in 2010, growth is
expected to continue for the tourism sector in 2012 but at a slower pace. UNWTO forecasts international
tourist arrivals to grow at between 4% & 5% in 2016, a rate slightly above the long-term average.
Tourism Forecasts: The World Tourism Organization long-term forecasts and assessment of the
development of tourism up to the first 20 years of the new millennium. An essential outcome of the
Tourism 2020 Vision is quantitative forecasts covering a 25 years period, with 1995 as the base year and
forecasts for 2010 and 2020.
Although the evolution of tourism in the last few years has been irregular, UNWTO maintains its long-
term forecast for the moment. The underlying structural trends of the forecast are believed not to have
significantly changed. Experience shows that in the short term, periods of faster growth (1995, 1996, and
2000) alternate with periods of slow growth (2001 to 2003). While the pace of growth till 2000 actually
exceeded the Tourism 2020 Vision forecast, it is generally expected that the current slowdown will be
compensated in the medium to long term.
UNWTO's Tourism 2020 Vision forecasts that international arrivals are expected to reach nearly 1.6
billion by the year 2020. Of these worldwide arrivals in 2020, 1.2 billion will be intra regional and 378
million will be long-haul travelers. The total tourist arrivals by region shows that by 2020 the top three
receiving regions will be Europe (717 million tourists), East Asia and the Pacific (397 million) and the
Americas (282 million), followed by Africa, the Middle East and South Asia. East Asia and the Pacific,
Asia, the Middle East and Africa are forecasted to record growth at rates of over 5% year, compared to
the world average of 4.1%. The more mature regions Europe and Americas are anticipated to show lower
than average growth rates. Europe will maintain the highest share of world arrivals, although there will be
a decline from 60 per cent in 1995 to 46 per cent in 2020.
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Base Average
Year Forecasts Market Share Annual Growth
2010 2020 (%) Rate (%)
1995 (Million) 1995 2020 1995 2020
World 565 1006 1561 100 100 4.1
Africa 20 47 77 3.6 5.0 5.5
America 110 190 282 19.3 18.1 3.8
East Asia & the Pacific 81 195 397 14.4 25.4 6.5
Europe 336 527 717 59.8 45.9 3.1
Middle East 14 36 69 2.2 4.4 6.7
South Asia 4 11 19 0.7 1.2 6.2
Ethiopia: With its diversified natural endowments can be one of those main tourist attraction countries in
the world. The main features of the natural tourist attractions of the country are its landscape with
numerous scales of topographies, attractive rivers and waterfalls, gorges, caves, rift valley, lakes, fauna
and flora, monuments and artifacts, and diverse ethnic and cultural blends. Being an ancient country it
has got rich history. The famous historical routes are Addis Ababa, Bahir Dar, Gondar, Axum, Lalibela,
Mekelle, Sof-Oumer, Arba Minch, Hawassa, etc. These areas are famous for monasteries, ritual obelisks,
manuscripts, castles, rift valley and lakes, monolithic stones, etc.
The archeological attractions are Haddar in Awash Valley, Melka Kontur, Dilla and Dire Dawa areas.
Ethiopia is the cradle of mankind where four million years old fossil remains (Selam) has been recently
found. The unique character of the country are its attractive cultures and more than 80 ethnic groups
having over 200 dialect, varied traditions and customs, very interesting music, folk songs and dancing.
In addition to this, Addis Ababa is the centre of Africa, the seat of numerous diplomatic missions and
representatives of international organizations. It is a venue of many conferences and seminars and a home
for thriving commercial community.
Former’s Travel Guides, which has been offering the best tourist destination sites for those planning the
perfect travel excursion for the last 50 years, posted on Frommer’s.com scoured the globe, and poll edits
stable of authors and experts to identify twelve surprising, thriving, or emerging travel destinations.
Following this, Ethiopia is selected one of the top ten travel destinations.
Former’s Travel Guides also disclosed Ethiopia as finally emerged out of the shadows caused by year’s
political strife, economic hardship, and famine. The improved infrastructure has made travelling in
Ethiopia increasingly popular, especially for those seeking adventure. Ethiopia is reverted for its rich
history as one of the earliest Christian country, the town of Axum which is the home of the ancient ark of
the covenants as well as the monolithic rock-hewn churches of Lalibela are some of the tourist attraction
sites in Ethiopia. The country has a unique calendar of its own and it has celebrated its own Millennium.
The African Union head of states on its summit decided the Ethiopian Millennium to be called as the
African Millennium. This helps the country to promote its tourism industry throughout the world.
Statistical report on most developing countries show that the demand for facilities such as hotels,
transportation, banking, insurance, telecommunications, road, electricity, etc are rising and should assist
the growing tourism industry. It is, therefore, high time for the country to develop and improve its tourist
facilities to a level of internationally acceptable standard.
Bishoftu Town: Favorable situation for the private sector in Bishoftu town causes to raise performance
of investment and considerable number of projects are flourished as resent facts reveled. Relatively
presence of well-developed infrastructure and its nearness to national capital makes the town highest
recipient of investment.
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From time to time the increment and expansion of urban zone causes the demand of hotel & commercial
buildings are alarmingly increasing. The good governance experienced in the town is the main cause of
expansion of business movement which in turn seeks for suitable and modern working premises. Due to
the presence of high demand gap, suitability and relative advantage of Bishoftu town as industrial,
commercial and residential quarter, and personal interests of the owner of the project, Ato Abebe Debela
initiates the first project for himself and wants to be one of the pioneers in the town for constructing a
three star hotel commercial compound.
Bishoftu town is located at 44kms southeast of Addis Ababa and gate-way to the eastern and south-
eastern part of the country and is served as the main link to major economic centers of the country and
has a heavy traffic movement due to being a main transit location for heavy and medium weight travelers.
Emerged due to train station of the Ethio-Djibouti Railway, the town is established around 1915E.c in
between Dukem & Modjo towns.
Bishoftu is an Afan Oromo term that literally means ugly or stinking. As to why this term was applied to
the town, group of informants argues that it was because of the physical nature of the land surrounding
the lakes, which made them inaccessible site they are sloppy around their shore. On the other hand, others
relate its name to the stale and not potable nature of Lake Bishoftu with its ‘stinking’ foul odor.
Physical Characteristics of Bishoftu: The landscape of Dukem and Bishoftu owes its origin to the
volcanism Quaternary that gave rise to the existing peculiar geomorphology of volcanic environment.
This was later modified, to a limited extent, by recent alluvial depositions and formation. As a result,
numerous cinder and spatter cones as well as old volcanic create over within and in the vicinity of Dukem
and Bishoftu. The two towns and its immediate vicinity are surrounded by relatively highly elevated
areas like Mt. Yerer to the north, Mt. Sokour to the south, Mt. Zikuala to the south-west and some
scattered cinder and spatter cones to the east and west.
Under this setting, Dukem and Bishoftu towns are located at the northwestern tip of the G.R.V (Great
Rift Valley) within in the southern part of the Awash River Basin. Specifically, it is within the wood chat
River catchments, a tributary of the Modjo River that fall into the Awash and into the Koka Lake and
Aba Samuel River.
Since Bishoftu town is one of the neighboring towns and found in between to the metropolis and Modjo,
different types of consumers should pass through Bishoftu town and that makes the town one of the most
attractive residential, recreational, business plus industrial area of the region.
What makes Bishoftu town unique is also the colorful annual ceremony for Irrechaa (Thanks giving) at
Lake Hora Arsedi as a true manifestation of Oromo religion and culture. This is part of the thousands of
nationals and international visitors. Currently, it has drawn large-scale attention and received wide media
coverage. Thus, in addition to its significant as a shrine for the worship of Oromo religion, it has a
magnificent potential as valuable source of beauty.
Population: Bishoftu is situated along the Addis Ababa - Djibouti highway and is a station on the Ethio-
Djibouti Railway. It is also found adjacent to the location of an industrial park covering 40 hectares
owned and developed by East African Group (Ethiopia), Ltd. The town has an elevation of 1950 meters
above sea level. The town has a population of more than two hundred four thousand. The growth rate
ranges from 5,000 to 10,000 yearly.
Business and Finance: As Bishoftu town is becoming an established investor’s destination throughout
the nation, many state owned and private banks are opening their branch in the city to exploit the
financial activity. The town has more than thirteen private and six state owned banks.
Economic Activities: Despite its status as one of the fastest growing towns in the region for decades,
Bishoftu is physically not larger than most of zonal/woreda towns in the regional state of Oromia.
Coupled with urban agriculture, the availability of suitable flat land, infrastructure, abundant water
resource, feed for animals etc. has contributed to the establishment of agro-industrial manufacturing,
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recreational resorts, hotels and business firms. Presence of a number of governmental, non-governmental
organizations and private sectors, in addition to its proximity to Addis Ababa offered and easy access to
transportation of raw materials, finished goods and other trade and commerce activities. With more to
come, these are the major economic basis and potentials of the town.
Due to its favorable area for investment, there are a lot of private investors investing on different type of
industries which create a lot of employment opportunities for the residents of the town.
Investment Overview: Existing Investment Economic Policy of the country makes Bishoftu the ideal
place to invest.
 Capital and decentralized economy
 Free Market Policy (Minimum Government Intervention)
 Encouraging investment and private capital Accumulation
 Favorable investment Policy and Conditions
 Encouragements made for Investors (Tax free, duty free and the like....) made the town one of the
ideal business locations in the nation.
Infrastructure Development: By way of infrastructure rehabilitation, Bishoftu town has undertaken
various forms and qualities of developmental schemes. Among these are asphalt and coble stone roads,
draining and flood protection structures such as walls and check dams, new and rehabilitated market
places, water supply and sewerage developments within the town.
Hotel Business Sector
Modern hotel Businesses in the country begin at the end of the 19th c, particularly during the Emperor
Minelik II period. At the end of 1890’s a modern hotel was built with the name of “Taitu Hotel” with the
aim to serve the royal families, embassy workers, envoys and tourists. In addition, Italian invention was
contributed to the development of the sector through the establishment of Italian owned hotels in major
cities and towns of the country. More specifically, they have started to establish better equipped hotels in
Addis Ababa, Dire Dawa and other towns with main objective of providing hotel services to the Italian
armies and beside to this, to strength its colonial position by introducing economic colonization. In
addition, factors like the following contributed towards the development of the sector:-
 The construction of Ethio-Djibouti railways
 The existence of various tourist sites
 The strengthening of Ethiopia’s foreign relations
 The increasing settlement of foreign citizens from countries like Armenia, Greece, Italy, and India
who all helped to bring entrepreneurial capacity to develop the hotel services locally.
 The establishment of various international organizations such as AAU and ECA in Addis Ababa
which resulted in the increase in the demand of conference tourism in the country.
Although the number of foreign travelers who were interested in the natural, cultural, and historical
attractions of Ethiopia had been increasing from year to year since Mimili’s time (late 19th century),
tourism as an economic activity and important industry was given due attention in the early 1960s. Thus,
in Ethiopia, modern tourism activity was started not more than 45 years ago.
Accordingly, the first tourist organization was established in 1961 and consequently, to develop tourism
and attract investors in the sector, the Imperial Government promulgated a decree in 1962. The main
objective of the decree was to initiate private investment in tourism sector. At this time, tourism
infrastructure was very poor and there were inadequate number of hotels to accommodate tourists.
Therefore, the Imperial government emphasized in building hotels and other infrastructure. With this
view, government established various hotels and resorts in the capital city and major tourist attraction
areas. The Hilton Hotel, Ras hotel, Ethiopia hotel and Gihon hotel counts among the hotel chains
established in the capital and major tourist areas of the country during the Imperial Hailessellassie era.
10
During this period, tourism and hotel business was in the process of rapid expansion. However, because
of the change of government in 1974, the rapid growth of tourism had been hindered significantly. Even
during this period, though several efforts were made to develop the tourism sector, due to the
government’s ideology, the sector’s performance was left behind the pre 1974 period. Therefore, the
performance of tourism and hotel Business during the military regime had been disappointing, owing to
the hostile environment for international tourists, restrictions imposed on private sector participation, low
level of investment on tourism promotion and development, inadequate tourist facilities and poor
transport and other infrastructure (Survey of Tourism, 1998; MEDaC, 1999). All these factors accounted
for the poor performance of the sector in terms of tourist flows, foreign exchange generation, and job
creation.
Finally, the military government issued ‘mixed economic policy’ in1989 and the private sector was
invited to participate in tourism business.
In 1991, after the collapse of the military government, a transitional government was established and it
campaigned for the shift from command economy to free market economy. This change of economic
policy further encouraged the participation of private investment that was already started because of the
mixed economy in 1989.Consequently, the government introduced reforms in the tourism sector and
Ethiopia was open for tourists from all parts of the world. The new policy allows the participation of
private investors in the tourism sector. As a result, several private tour operators and travel agencies have
been established. Accordingly, the hotel sector became one of the beneficiaries of the new economic
policy. Thus, there is a relatively conducive investment opportunity in hotel industry and the trend shows
that tourism will be one of the main contributors to the balance of payments as well as pro-poor
economic growth opportunities in the future. Thus, the very intent of this project is to take advantage of
this opportunity and expand and improve the existing hotel business near to the most vibrant and growing
city (Addis Ababa).
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UNIT THREE
Market – Demand & Supply Analysis & Strategy
To undertake the demand and market analysis both primary and secondary data was collected from
primary and secondary sources. The primary data was collected by personal observation, and
interviewing administrators, contractors, investment bureau employees, customers and different peoples
who work in similar businesses.
Secondary data was collected from governmental institutions such as investment office, ministry of
tourism and culture. These collected information’s are about market potential and shares, demand of
community for both satisfied and unsatisfied portions, pricing strategies and related impacts on the raw
material and their suppliers ,business environments (location) influences from both internal and external
etc.
Bishoftu enjoys a relatively better infrastructure as compared to other towns of the administrative zone.
There is an asphalted road that connects the town to the capital city and other major towns around the
metropolis and the eastern part of the regional states. The site is well served by road transportation
system. The important supplies for development of business compounds (Electric power and water) are
sufficiently available. Electric power is supplied to the locality areas and nearby town from Koka Hydro
Power Station. Social service infrastructures are established in the locality and nearby towns with a
sufficient capacity to accommodate further development.
Since the proposed project site is located at the center of the town where there is fast growth in terms of
commercial activities it will have a fast return on investment.
More and more buildings (residential houses, offices, schools and other social and economic institutions)
are coming up to accommodate ever increasing population in our country as well as for other
developmental activities viz hotel and guest houses etc. There is good demand for hotel and guest house
services due to the increasing flow of road transportation through the town, the ever increasing number of
residents within Bishoftu town, high flow of recreational groups from both the metropolis and the nearby
towns.
Recreational services now days is occupying an important position in daily life of people. The hotel &
guest house service is also used by several types of governmental offices, private companies, local area
residents, travelers etc. The demand for hotel and guest house service is increasing day by day due to the
rapid development of living standard of people and industrial and agricultural developments. The demand
is also not limited to major towns of the nation rather it’s getting more popular in small towns and
villages too. Due to this fact the project will not be faced with market problems.
To attain the project objectives, the strategies to be followed will include providing efficient & reliable
customer services, utilizing modern service facilities, strengthening the marketing wing of the company,
introducing service improvement schemes, introducing a computer-aided management information
system, establishing standards for enhanced quality of services. The project will engage in hotel business
services in order to meet its sales targets, the company has planned to create a consumer attraction and
advertisement network through its circulation plan.
Factors Influencing the Market
 Comparative price realization from the other hotel service outputs
 Carryover stocks and serve as per the demand of consumers
 Technological gains through improved facilities and management scheme
 Development of new applications and substitutes of hotel service products
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Customers /Target Market
In light of market research and previous experience of other businesses in the industry, our target markets
are tourists, transit tourists and Bishoftu and surrounding town residents. The detail description of our
target market is listed as follows:
Foreign Tourists: The existence of many tourist attraction sites of the country in general & that of the
city in particular are attracting a large number of tourists to the country. Hence, these tourists prefer our
hotel services since they demand international standard high quality hotel services.
In addition, participants of international conference (seminars), business travelers, transit passengers,
foreign diplomats, officials of different international organizations, NGOs and Ethiopian diasporas who
came home for different reasons are the users of our hotel services. Based on the information obtained
from the Ethiopian tourism commission, the number of tourists visiting Ethiopia is growing fast from
year to year.
Residents of Bishoftu & Surrounding Towns: The hotel is located at Bishoftu town which is the
nearest suburb of the capital Addis, where most of expatriates, Diasporas, icon business men and high
rank politicians are residing. Hence, they are one of targeted customers of the hotel.
Demand Analysis
Ethiopia is endowed with unique cultural heritages, striking scenery, favorable climate, rich flaura fauna,
as well as important archeological sites. These blessings coupled with the government’s initiative to
promote the tourist attraction centers demanded the country to invest on hotel constructions as more
tourist arrival is expected in the future. The capital -Addis Ababa is the venue of Africa being the seat of
many international and regional organizations including UN-ECA, AU, over 90 permanent residents of
diplomatic missions and direct and indirect representative offices.
These diplomatic missions and organizations used to organize regular and extraordinary meetings.
Participants require standard accommodation services and meeting places in the capital. As it is well
known, there are a number of factors affecting the demand of hotel catering service. Mainly the factors
are disposable income of the population, its size, willingness and preference of the customer, quality and
availability of competitors in the sector. There are also implicit factors attributable to the general
political, economical and social activities of the country in general and the city in particular.
In such circumstances, it is difficult to know the exact magnitude of demand especially for local
customers and hence what could be worked out is a demand forecast based on historical tourist’s inbound
trend to Ethiopia.
Per Ethiopian Tourism Commission Statistical abstract of year 2008, (recent issue),
 The actual International tourist arrivals to Ethiopia for year 2008 were 383,399.
 An average annual growth rate of 7.9% over the next 10 years is expected.
 A few numbers of domestic customers and domestic resident diplomatic missions would use the
services. For this project purpose, it is assumed that about 10% of the number of tourists is billed to
the expected number of domestic customers-own estimate. Based on the above facts and figures, the
tourist forecast for the coming 10 years is presented below.
Projected Tourists Customers
Inbound, 7.9% growth rate (Ethiopians and Total Expected
Project per annum Foreign residents) no. of customers
life Year A B =A x 0.1 C= A+B
2008 383,399 - 383,399
2009 413,688 41,369 455,057
Actual
2010 446,369 44,637 491,006
2011 481,632 48,163 529,795
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1 2012 519,681 51,968 571,649
2 2013 560,736 56,074 616,810
3 2014 605,034 60,503 665,537
4 2015 652,831 65,283 718,114
5 2016 704,405 70,441 774,846
6 2017 760,053 76,005 836,058
7 2018 820,097 82,010 902,107
8 2019 884,885 88,489 973,374
9 2020 954,791 95,479 1,050,270
10 2021 1,030,219 103,022 1,133,241
There would be from minimum 571 thousand to maximum 1.1 million tourist arrival in the year’s 2012-
2021.
Supply Analysis
Ethiopia has a limited supply of Star and tourist standard hotels and accommodations. The existing star
hotels in the country are highly slanted towards the capital city. Hotel and accommodation service in
Ethiopia is characterized by among others, the following features:
 Low educational qualification and training system,
 Poor service quality and limited domestic consumption,
 Limited supply of star hotels and over-pricing of the existing hotels for what they offered
 Lack of hotel plain rating system, which prevents the existing licensing authority from downgrading
them,
 Less access to market information and poor infrastructure,
Supply of hotel service is not a mere forecast of the number of available rooms, it includes assessment of
establishment and constructions, expansions, quality of the service and factors that deal with the process
of service delivery. The distribution of tourist class hotels by Region:
Regional States Number of Hotels Rooms Beds
1- Addis Ababa 88 4449 5916
2- Afar 9 174 221
3- Amehara 66 1781 2429
4- Benishangul 6 122 133
5- Dire Dawa 16 551 712
6- Gambella 4 61 85
7- Harari 9 251 314
8- Oromia 115 3083 3706
9- Somali 11 215 245
10-SPNNR 70 1661 1910
11-Tigrai 43 1335 1546
TOTAL 437 13,683 17,217
Source: Ministry of Culture & Tourism Statistical Bulletin, 2008
As shown in table above the total number of star hotels room in Ethiopia in the year 2008 is only 13,683
out of which 4,449 are found in Addis Ababa. Including the recommended and unclassified hotel rooms,
the national supply of rooms and beds is 13,683 and 17,217 respectively.
From this magnitude, Addis Ababa shares 4,449 rooms and 5,916 beds. The number of rooms and beds
are not similar because of existence of 2 beds in one room, which is commonly referred as double
bedrooms. However, each and every double bedroom wouldn’t necessarily be occupied by two
customers; a single occupant could use a double bedroom.
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Trend Based Assumptions for Supply Projection
 The average number of bed and rooms of all starred, recommended and unclassified hotels of the year
2008 in Addis Ababa is taken as the base year data,
 Hotel bedroom supply would grow at the rate of 10% per annum implementation rate
 On average tourists stay only a single week in Addis Ababa,
 Even though tourists have their star preference, and the comparison shall be made for similar stars, it
is assumed that all starred hotels, unclassified and recommended ones are taken as equal competent of
the hotel project at hand.
Assuming 10% growth rate per annum in supply side, the forecasted supply of hotels bedrooms in the
coming 10 years (2012-2021) is shown in table below.
Hotel bedrooms supply projection.
A Single Bed Number of tourists
Number of Serving that can be served
Number Average Bed Days in a Capacity of with the existing
Project of Beds Night/Tourist Year Customer/Year Beds/Annum
Period Year A B C D=C/B E=AxD
2008 5,916 7 365 52 308,477
2009 6,508 7 365 52 339,346
Actual
2010 7,158 7 365 52 373,239
2011 7,874 7 365 52 410,573
1 2012 8,662 7 365 52 451,661
2 2013 9,528 7 365 52 496,817
3 2014 10,481 7 365 52 546,509
4 2015 11,529 7 365 52 601,155
5 2016 12,681 7 365 52 661,224
6 2017 13,950 7 365 52 727,393
7 2018 15,345 7 365 52 800,132
8 2019 16,879 7 365 52 880,119
9 2020 18,567 7 365 52 968,136
10 2021 20,424 7 365 52 1,064,966
Based on the employed trend and assumption, available bedrooms in the city could serve from the
minimum 451 thousand tourists (in 2012)to the maximum 1 million tourists (in 2021), with an annual
capacity growth rate of 10%. The growth in tourist handling capacity would be obtained from expansion
of existing ones and due to new entrants.
Demand & Supply Gap
Demand –Supply- gap of hotel accommodation service for 10 years.
Demand No. of Supply Capacity No. of Excess/Demand No. of
Customers who need Customers that the Customers who do not get
Hotel Accommodation available bedrooms hotel Accommodation
Year Service could serve Service
2008 383,399 308,477 74,922
2009 455,056 339,325 115,731
2010 491,006 373,257 117,749
2011 529,795 410,583 119,212
2012 571,649 451,641 120,008
2013 616,809 496,806 120,003
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2014 665,537 546,486 119,051
2015 718,115 601,135 116,980
2016 774,846 661,248 113,598
2017 836,058 727,373 108,685
2018 902,107 800,110 101,997
2019 973,374 880,121 93,253
2020 1,050,270 968,133 82,137
2021 1,133,241 1,064,947 68,294
As shown above, among the expected number of tourist-customers and local customers (Ethiopians and
foreign residents), from the maximum 120 thousand (2012) to the minimum 68 thousand (2021) of them
wouldn’t get accommodation service in the considered starred and recommended as well as unclassified
hotels. This would be a good opportunity for investors to enter in the sector.
Conclusion: The demand and supply gap presented above shows the true reflection of hotel and
accommodation service needed in the sector especially in Addis Ababa and the surrounding towns. If
someone wants to arrange a meeting, or get a standard resting room in Addis Ababa and surrounding
towns, he is expected to book two weeks or three weeks earlier than the event. The demand supply gap
also tells us that unless investment in the sector has been made at a faster rate than the rate used in the
growing trend of world tourism industry. To attract more tourists the number of investment being made
has to be increased. The government is encouraging investments being made in the sector so as to control
the shortage.
NB. Even though there are a number of tourist standard hotels in Bishoftu, detailed studies and information’s are
not available for more documentation’s; Because of its proximity to Addis the data considered for the analysis is
that of Addis Ababa.
Marketing Strategy
Product or service marketing is a fundamental job in business operation. The services to be offered
should be properly marketed so as to achieve the desired market share. The marketing techniques to be
followed arousing the proper mixing up of the four marketing techniques.
Pricing Strategy
The hotel is being constructed to fulfill the standards of a three star hotel. Hence, the service price is to be
taken in a three star hotel standard. In order to get the desired market share, however, the prices for the
hotel services shall be set at a lower price than expected. Depending on the market response to the
services and the price, periodical revision of service price is taken into consideration.
Services to be Offered
The hotel will provide all the hotel services expected in a three star hotel. It will give foreign exchange
service, business centers, accommodation, bar and restaurant services in a pleasant environment.
Promotion
Promotion is vital for any business. The services of the hotel should be advertised through the electronic
and print Medias. The hotel will also develop its existing and new marketing links with touring
companies, international organizations, and Airliners. The hotel’s name will be printed in a specialized
news papers such as Selamta, the Ethiopian Tourism and Culture Ministry publications. Sponsoring of
events, conferences and symposiums will also be the other techniques to promote the hotel.
Competitor’s Price Analysis
The proposed hotel project is going to operate with a high class hotel standard, it is, therefore, ready to
identify and monitor the price of its competitors to gain and maintain the loyalty of the market. The best
way for the project to grasp its competition is to take into account the taste and behavior of the customers.
16
Price is the only element in the marketing mix that creates sales revenue. It is, therefore, important to set
reasonable price for all services by paying keen attention to cost, demand and competition:-
To determine the price of the services the project will:
 Assess the operating cost of the service
 Taking into account demand intensity and customers psychology
 Assess the price range and price movement of the hotel through time to support sales and profit
objective and marketing positions in the target group
 The current bed room renting price in Bishoftu is very diverse even among hotels with similar star
levels. This is mainly due to the non standardized nature of the service.
In light of the above and the facilities availed to the bed rooms, the proposed hotel room price would be
able to fetch at least similar with the least priced hotels in the town which have the same three star
standard hotels. Based on this, this study recommends that the room price per night for standard bed
rooms is assumed to be initially at Birr 400.00.
The hotel service will also earn revenues from the sale of food and drinks and other hotel services
especially the night bar will earn more revenue to the hotel. The total revenue earned from this service is
estimated at 55 percent of the revenue obtained from room rents. The Gift and gallery shop will earn
revenue of 10 percent of the revenue gained from room services. In addition meeting hall is expected to
be rented 6 times per month with initial price of birr 16,000.00 with 5% increment per year.
Technical Analysis
Land and Location: The project is located in Bishoftu town suburb to east of Addis showing fastest
growth. The project site is adjacent to main road stretched between Addis and Djibouti. A leased land
area of 394.5 square meters allocated for the hotel project is adequate to accommodate the hotel building
with its facilities and enough for parking spaces.
Infrastructures: The project area is designed by professional engineers. The building designed was
taken keen attention for architectural, structural, sanitary and electrical layouts. The project site is availed
with water, electrical light and power with excellent access road. With regard to electric power and water
however, the project requires additional line for estimated cost of birr 5,594,283.00 as per the bill of
quantities prepared by professionals.
Service Capacity: The Hotel is designed to rank a three-star hotel. It is planned to cater all hotel
facilities. The building floors are designed to give different services as detailed in the table below.
Assuming pre-marketing period, the hotel is assumed to work in the capacity of 80%, 85%, 90% and
100% in the 1st, 2nd, 3rd, 4th and thereafter years, respectively.
No Floors Use Remark
Laundry, Kitchen, Meeting The restaurant will at least hold 80 people &
1 Backyard hall and restaurant meeting hall will occupy 100+ persons at a time
2 Ground Banks, Café & Reception Some rooms will be rented out
3 First 5 Bed Rooms & Offices Well furnished rooms
4 Second 5 Bed Rooms & Offices Well furnished rooms
5 Third 5 Bed Rooms Well furnished rooms
6 Fourth 5 Bed Rooms Well furnished rooms
7 Fifth 5 Bed Rooms Well furnished rooms
Land Utilization Plan
The project has been established on a 394.5sqm area of land. The project has a total of 25 standardized
guest rooms/bed rooms, Bar & Restaurants, Reception area, Meeting Hall, Gift Shop and Offices. The
hotel business will be run by the General Manager Ato Abebe Debela and additional hired professional
hotel manager.
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Out of 394.5sqm of land about 47.4% of land (187sqm) is allocated for the main hotel and guest rooms
building (G+5), which is currently under construction. The rest 52.6% (207.5sqm) of land will be used
for meeting hall, restaurant & kitchen construction areas plus garden and additional parking areas will be
constructed in the area.
In general the planned project will respect the cities rules and master plan instruction and acts
accordingly.
The overall land use pattern is described as follows:
Building Unit Plan of the Project (G+5 Building)
SN Description Unit area (m2) Quantity Total area (m2)
G+5 Building
1 Ground Floor 187 1 187
st
2 1 Floor 187 1 187
3 2nd Floor 187 1 187
rd
4 3 Floor 187 1 187
5 4th Floor 187 1 187
th
6 5 Floor 187 1 187
Sub Total 1,122 1,122
7 Meeting Hall, Restaurant & 107.5 1 107.5
Kitchen
8 Parking & Garden Area 100 1 100
Sub Total 207.5 207.5
Grand Total 1,329.5 1,329.5
Since the project has five additional floors with their respective total floor sizes, the total built-up area
mentioned above (i.e. 187m2 x 6floors = 1,122m2 + 107.5m2 Meeting hall, restaurant & kitchen + 100 m 2
Parking & garden Area = 1,329.5m2).
Capital and Employment
The project is established at a total capital of Birr 22,677,330.00 in Bishoftu town, Ada woreda around
Tommy International Hotel. The project has been previously constructed the ground floor plus the first
floor of the total construction. The ground floor is used for hotel & butchery services owned by the
promoter Ato Abebe, the hotel’s name is Wolin Hotel. In addition to that there is bar, offices and store in
the ground floor.
The first floor of the G+5 building is also finalized and gives services to clients of the hotel, there are five
standardized rooms which are all furnished and start generating income for the business. Each room
currently has a price of 330.00.
The second floor is under construction and all the beam concrete works are done and ready to fill the slab
recently.
Taking the bill of quantities of the building under consideration, finished works and remaining works of
the project the promoter Ato Abebe has already injected birr 6,984,411.15 (41.7%) of the construction
work (without pre-operating expenses and land lease payments) and birr 9,770,932.88 (58.3%) is remain
to finalize the construction work of the proposed project.
The current business project will create job opportunity for 42 permanent and additional temporary
employees will be hired as needed at the time of commencement.
The company will keep records of transaction for Audit by applying Generally Accepted Accounting
Principle more over the project will prepare quarterly and annual reports for concerned parties and
management of the hotel business.
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Environmental and Social Impacts
 The hygiene of the employees /both clerical and non clerical/, the type of outputs and rendered to the
domestic / local markets will be keep up based on the standards and directives stated by Ministry of
Health
 There will be no environmental pollutions affecting the area with relation to the proposed project
 The Eco system of the area will not be degraded by the project work
Developmental Impact of the Project in Socio-economic
Given the multi-sectoral nature of the hotel and guest house economic sector in Ethiopia and as a major
gear to enhance the renaissance and transformation of the country, a valuable impact will be create since
every economic sector needs sufficient supply of credit facilities, land, infrastructures, fuel and gas as
well as transportation services.
The project will help the sector to minimize the current market price of guest house rooms if it is assisted
by the government, banks and related parties to extensive involvement of hotel and pension service
outputs. Help for the foreign exchange earner of the country.
As a whole it will have significant socio-economic developmental impact for several types of
stakeholders.
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UNIT FOUR
Justification of the Project
One of the clear consequences of urban development is increase demand for urbanized hotel service and
shelter. Mismatch between supply and demand of hotel buildings has caused problems that could be
reflected in the socio-economic, health, sanitation, environment and well being of the community in
general. Hotel building problem is seriously felt in any urban centers of the country both quantitatively
and qualitatively. As it is common to Ethiopian towns, Bishoftu town suffer from such a problem as there
is a large gap between the demands on one hand and the lack of supply and stock to services of hotel &
guest house commercial buildings on the other hand.
The increasing human population in the town and the rate of urbanization indicates that there will be
substantial need to improve service giving institution like that of hotels, modern shopping centers,
standardized supermarkets, cafeteria and different business centers.
Since the town was included in to urban reform program, the city administration has been undertaking
various investment promotions encouraging private sectors to invest their wealth and knowledge, is the
driving force of the development of the town. However there are no sufficient modern hotel services
giving organizations. For the demand of modern hotel services citizens are exposed to extra costs by
travelling to the surrounding towns like that of Adama, Addis Ababa and Hawassa. Therefore this project
is intended to solve such problems and to serve the ever increasing number of residents of the town,
travelers and weekenders mainly from the capital city and others.
Why Invest in Bishoftu?
 Access to market because of its geographical location
 Peace and Stability is always in the town and around
 Cheap Potential Resources (Human and Natural Resources)
 Infrastructure is at its best (Transportation, Power, Telecommunication, Water are adequately
available)
 Conducive Environment Policy
 Tourism Center – are some of the reasons to initiate the emotion of the promoter Ato Abebe Debela
to invest his capital and knowledge in Bishoftu town.
SWOT Analysis
Strength:
 The existing promising market for the service
 Availability of labor for the project
 Geographical location of the project area
 Bishoftu town is a busy town connection with different major & small towns and peasant association
Weakness:
 So far there is no significant weakness
Opportunity:
 Existence of good policy environment for investment
 Government incentive for investment
 Existence of high demand for improved and equipped modernized hotel service buildings
 Availability of professionals around project area
 Existence of several standardized hotels and resorts in the town
 There are 7 lakes in Bishoftu town
 Premium prices can be obtained by providing quality service
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Threats:
 Government policies and procedures may be could be characterized as a threat
Market share competitors
Organization & Management
Organizational Structure: Structuring is an internal arrangement of an organization to achieve the
optimum arrangement of functions among many possible alternatives. In order to make the structure
efficient and cost effective there are a number of management principles and logical parameters by which
the process of structuring should be governed.
In the current competitive business environment the hotel business needs a simple functional structure
that can respond and adapt to rapidly changing market conditions. The structure should fit the envisaged
project’s objectives.
Thus the structure should accommodate the following points:
 Start up operation should follow the phase from simple to complex based on market growth,
 Organizational growth must be anticipated in the future and this should be reflected in the structure,
and
 The structure must consider the ability to pay for employees.
 There are different types and approaches in structuring an organization. The following are some of
the commonly used approaches:
 Functional Organization,
 Product or market oriented organization structure, and
 Matrix organization structure
Whatever organizational structure is chosen the essential points in structuring should consider the
organization’s strategy. To achieve the objective set to it, what is needed for the hotel is a structure that
could enable it to be agile and responsive to environmental changes. Thus, simple functional structure
with low complexity and normalization is necessary for the hotel to be successful in achieving its
objectives and solving problems.
Departments: Based on the principles mentioned above, the hotel will be organized based on a simple
functional organization structure principle. The hotel will have three departments and one service unit
under the hotel manager. The hotel manager will be professional in Hotel management who will be
authorized fully to run the hotel with standards set for three star hotels.
The three department managers will also be professional in their respective area. Under the departments
there will be sections. The functional departments are Administration and Finance, Front Manager and
Market development and promotion managers.
Sections: Under the Finance and Administration Department Manager there will be accounts section and
chief casher. The Front Operation Department is responsible for food and beverage section,
accommodation and cleaning sections. Food and beverage section is responsible for the supply of
foodstuffs and beverages. These departments are also responsible for kitchen, beverage and “barista”
operations. The organizational structure of the hotel is pictorially shown below.
21
General Manager
Auditor Legal Dep’t
Hotel Manager
Secretary
Marketing & Operation Dep’t Fin. & Admin Dep’t

Promotion
Foods & Beverages Accommodation & Accounts Cahier

Dep’t Cleaning Section
Manpower Requirement and Salary of the Hotel Project: The Hotel will be run by a hired manager
who has experience in managing well recognized hotels. The department managers will also be
competent and experienced managers.
The hotel manager will be fully responsible for the day to day operation of the hotel. The responsibility
of the owner/General Manager will be limited to the hiring and firing of the hotel manager, and
determination of the hotel manager’s remuneration. They will also review and approve the budget and
performance of the hotel. This mode of management system enables the hotel to attain a three star hotel
standard which is one criterion for grading.
The manpower needs of the hotel project and the related salary &benefits payments for professional as
well as support staff is presented in the following table.
The salary scale will be made based on a three-star hotel standard.
Description No. of Monthly Annual Salary Educational Year of
Persons Salary (Birr) (Birr) Background Experience
Hotel Manager 1 4,500 54,000 BA Degree 4 Years
Department Managers 3 2,500 90,000 BA Degree 2 Years
Secretary 1 1,500 18,000 Diploma 2 Years
Head Accounts 1 2,300 27,600 Diploma 2 Years
Accounts Clerks 1 1,200 14,400 TVET 1 Year
Cashiers 2 900 21,600 TVET 2 Years
Receptionist 2 1,000 24,000 Certificate 1 Year
Legal Advisor 1 1,500 18,000 Diploma 1 Year
Purchaser 1 1,300 15,600 Diploma 2 Years
Store Keeper 1 1,200 14,400 Certificate 1 Year
Laundry Man 1 900 10,800 Certificate 1 Year
Bar Man 1 800 9,600 10+ 1 Year
22
Head-waiters 1 1,000 12,000 Diploma 2 Years
Waiter 8 500 48,000 10+ 1 Year
Chief Cook 1 2,500 30,000 Diploma 2 Years
Cookers 3 1,700 61,200 Certificate 1 Year
Electrician 1 1,500 18,000 Diploma 1 Year
Plumber 1 1,500 18,000 Diploma 1 Year
Sales Promotion Expert 1 1,200 14,400 Certificate 1 Year
Telephone Operator 1 900 10,800 Certificate 1 Year
Property Administrator 1 1,000 12,000 Diploma 1 Year
Cleaners 4 500 24,000 8+ 1 Year
Guards 4 500 24,000 8+ 1 Year
Grand Total 42 32,400 590,400
As shown above the project will have a total of 42 employees working at different level. The annual
salary to be paid is about 590thousand birr. This will grow by 5% every two years.
23
UNIT FIVE
Financial Projections & Analysis
The financial analysis of the project is based on the data provided in the previous chapters and the
following assumptions:-
 Construction period (Remaining) 1 year
 Source of finance 37 % own equity
63 % Bank loan
 Tax holidays 0 years
 Bank interest 15.5%
 Loan Period 8 Years
 Insurance Expense 0.2% of Fixed Assets
 Repair & Maintenance 0.1% of Fixed Assets
 Depreciation Expense 20% for Mach. & Equip., & 5% for Bldgs.
 Accounts receivable 30 days
 Work in progress 365 days
 Raw material (perishable) 3 days
 Raw Material (non perishable) 30 days
 Cash in hand 5 days
 Accounts payable 30 days
Loan Request
 The credit requirement that the promoter of this project presented to the bank is 14,392,744.88 that
can be repaid back within the next 8 years including all the interest and related charges.
 The repayment will be made monthly due to the nature of the business.
 The requested loan amount will be utilized for the remaining construction work of the building,
finishing works, working capital, gardening works, fence and earthworks plus purchasing of
machineries, office equipments and furniture’s for the hotel & guest house service plus acquisition of
vehicle. 3.73% will be used for its working capital and contingency requirements for one year and
19.35% of the loan will be used for purchase of machineries, equipments, fixtures and furniture’s, for
purchase of vehicle 9.03% will be utilized, the rest 67.89% of the loan will be used to finalize the
construction work of the building.
Equity Finance Bank Finance
Description Total cost % age Value % age Value
Hotel Building 16,755,344.03 41.7% 6,984,411.15 58.3% 9,770,932.88
Equipment, Furniture &
Machinery 2,784,400.00 0% - 100% 2,784,400.00
Vehicle 1,300,000.00 0% - 100% 1,300,000.00
Pre-operating Expenditure 887,585.97 100% 887,585.97 0% -
Total Fixed Investment 21,727,330.00 36% 7,871,997.12 64% 13,855,332.88
Other Investments - 0% - 0% -
Initial Working Capital 950,000.00 43% 412,588.00 57% 537,412.00
Total Working Capital 950,000.00 43% 412,588.00 57% 537,412.00
Total Investment 22,677,330.00 37% 8,284,585.12 63% 14,392,744.88
Loan Repayment Schedule
 The banks are assumed to charge an interest rate for the term loans which lasts for eight years is
15.5% per year as per the present scenario.
24
 Hence the requested construction loan will be paid within the scheduled period through monthly
repayment amount of 262,464.98 that leads to an annual repayment amount of 3,149,579.76 , the
related interest charges and principal payments are presented below.
Number of Annual Interest Principal Outstanding
Payments Repayment Payment Payment Loan Balance
0 - - - 14,392,744.88
1 3,149,579.76 2,162,715.71 986,864.05 13,405,880.83
2 3,149,579.76 1,998,403.21 1,151,176.55 12,254,704.28
3 3,149,579.76 1,806,732.74 1,342,847.02 10,911,857.27
4 3,149,579.76 1,583,149.21 1,566,430.55 9,345,426.72
5 3,149,579.76 1,322,339.10 1,827,240.66 7,518,186.06
6 3,149,579.76 1,018,104.21 2,131,475.55 5,386,710.51
7 3,149,579.76 663,214.32 2,486,365.44 2,900,345.07
8 3,149,579.76 249,235.39 2,900,345.08 0.00
Total 25,196,638.08 10,803,893.91 14,392,744.88 0.00
Fixed Investment Costs
Fixed investment costs include constriction/civil work/ cost, Pavement, Garden and Parking area
construction cost, sewerage and electricity installation costs, machinery cost, vehicle and different
equipment costs, while annual operating cost /working capital requirement/ includes the costs that will be
expend per annum for the operation of the project to cover running cost of the whole project. The existing
total project costs requirement of this project is calculated as follows.
The construction cost is the major cost incurred in an establishment of any project. The building has G+5
building that have a ground floor plus additional five floors. As per the bill of quantities prepared by the
concerned professional persons the total cost of the buildings including their final stage will take
16,755,344.03. Out of which the project needs 58.35% (9,770,932.88) only for construction cost; the rest
41.7% (6,984,411.15) birr is already covered by the project owners.
Next to the construction cost of the project the promoter needs to furnish the guest rooms with quality
equipments and furniture’s in order to be a competitor and succeed the current market competition, the
costs that will be incurred to purchase for machineries, furniture’s and related equipments are also
expected to be acquired at the time of commencement of the project with an estimated total cost of birr
2,784,400.00. Out of which the project needs 100% of purchasing costs.
In addition the project needs one vehicle to run the business successfully with a total cost of
1,300,000.00. The other main cost of the project is the related working capital requirements that will be
used after the completion of the whole project including contingencies, the total working capital need of
the project after completion is birr 950,000.00. Out of which the project needs 57% (537,412.00) of the
working capital cost; the rest 43% (412,588.00) birr will be covered by the project owners.
Ato Abebe costs a total of birr 887,585.97 birr for acquisition of land & pre production expenses; all are
covered from his own capital contribution. This pre operating expenditures includes broker commission,
fees made for owner certificate transfer, architectural, structural, electrical, sanitary, bill of quantity,
feasibility study and other charges. Therefore the total cost of the project will be birr 22,677,330.00.
25
No Fixed Investments m2 Total Cost
1 Construction cost 1,229.5 m2
2 Parking, Gardening & Fence Works 100 m2
3 Sewerage, Sanitation Installation -
4 Electrical Installation - 16,755,344.03
Sub Total 16,755,344.03
5 Pre-operating Costs - 887,585.97
6 Equipments, Furniture’s and Fixtures - 2,784,400.00
7 Vehicle - 1,300,000.00
8 Working Capital + Contingency - 950,000.00
Sub Total 5,921,985.97
GRAND TOTAL - 22,677,330.00
* N.B: Pre-production expenditure includes interest during construction, costs of registration, licensing and formation of the
company including legal fees, commissioning expenses, architectural, structural, electrical, sanitary, bill of quantity &
feasibility studies etc.
Owners Debt Equity %
Items to be Purchased Total Cost Equity (37%) (63%) Share
Machineries & Equipments 2,784,400.00 - 2,784,400.00 12.28
Vehicle 1,300,000.00 - 1,300,000.00 5.73
Buildings 16,755,344.03 6,984,411.15 9,770,932.88 73.89
Purchasing & Pre-production Cost 887,585.97 887,585.97 - 3.91
Working Capital + Contingency 950,000.00 412,588.00 537,412.00 4.19
Total Investment Cost 22,677,330.00 8,284,585.12 14,392,744.88 100.00
Annual Revenue Projection
The revenue of the project is expected to be generated from rent of 25 guest rooms, Food & Drink
Services, Night bar services, Gift Shop sales and the income generated from the meeting hall rent
services.
Based on the current market assessment and demand for bed room services made by this feasibility study,
each guest room will be equipped at 80% rate of its total number of rooms per day for the first year, 85%
for second operational year, 90% for third year and will be equipped at 100% rate starting from third
year.
Each room will be given to customers at a price of birr 400.00 per day for the services the client get from
the standard guest rooms on average. The price for the guest rooms will rise by 6% every two years.
It is assumed that the Food and Drinks revenue including the night bar service will be equal to 55% of the
income generated from room services and the gift shop revenue will be 10% of the room service income
produced for the first year. It is expected that 40% of the total sales from Food, Drink & Night bar
Services and Gift Shop sales will be considered as gross profit, so that cost of goods sold will be 60% of
the sales.
Meeting Hall is expected to be rented six times a month for several types of events on average per year
and rise by 5% every year; the price will increase by 5% every two years. Accordingly the project is
assumed to generate annual total income of birr 5,970,000.00 on the first year.
26
Revenue Generated from Standard Room Service
No. of Total No. Service No. of Rooms No of working Total Income
Years of Rooms Rate Rented Price days/year per Year
1 25 0.8 20 400 365 2,920,000.00
2 25 0.85 21 400 365 3,066,000.00
3 25 0.95 24 424 365 3,714,240.00
4 25 0.1 25 424 365 3,869,000.00
5 25 0.1 25 449 365 4,101,140.00
6 25 0.1 25 449 365 4,097,125.00
7 25 0.1 25 471 365 4,301,981.25
8 25 0.1 25 471 365 4,297,875.00
27
Revenue Generated from Meeting Hall & Gift Shop Service

Years 1 2 3 4 5 6 7 8
Standard Room Service 2,920,000 3,066,000 3,714,240 3,869,000 4,101,140 4,097,125 4,301,981 4,297,875
Total Room Service Income 2,920,000 3,066,000 3,714,240 3,869,000 4,101,140 4,097,125 4,301,981 4,297,875
Meeting Hall Rent/Month 72 76 79 83 88 92 96 101
Price 16,000 16,800 17,640 18,522 19,448 20,421 21,442 22,514
Yearly Rent Income 1,152,000 1,270,080 1,400,263 1,543,790 1,702,029 1,876,487 2,068,826 2,280,881
Food & Drink Services 1,606,000 1,686,300 2,042,832 2,127,950 2,255,627 2,253,419 2,366,090 2,363,831
Gift Shop Services 292,000 306,600 371,424 386,900 410,114 409,713 430,198 429,788
Grand Total Income 5,970,000 6,328,980 7,528,759 7,927,640 8,468,910 8,636,743 9,167,096 9,372,375
Projected Total Revenue Table
Years 1 2 3 4 5 6 7 8
Income from Standard Rooms 2,920,000 3,066,000 3,714,240 3,869,000 4,101,140 4,097,125 4,301,981 4,297,875
Income from Meeting Hall Rent 1,152,000 1,270,080 1,400,263 1,543,790 1,702,029 1,876,487 2,068,826 2,280,881
Income from Food & Drinks 1,606,000 1,686,300 2,042,832 2,127,950 2,255,627 2,253,419 2,366,090 2,363,831
Income from Gift Shop 292,000 306,600 371,424 386,900 410,114 409,713 430,198 429,788
Total Income per Year 5,970,000 6,328,980 7,528,759 7,927,640 8,468,910 8,636,743 9,167,096 9,372,375
28
Associated Costs and Expenses

Utilities Expense: The major essential utilities required for the envisaged project are electricity, water,
internet and telephone lines. Per month-
 Telephone Expense – 570.00
 Water Expense – 1,750.00
 Electricity Expense – 2,240.00
 Utility expenses are assumed to increase by 3% annually.
Projected Years Utility Expenses
1 54,720.00
2 56,361.60
3 58,052.45
4 59,794.02
5 61,587.84
6 63,435.48
7 65,338.54
8 67,298.70
Supplies Expense: Br 4,405.00 for 1st year will be spent for different types of stationeries & printing
expenses and other supplies expenses. Then after it will have an annual increment of 2%.
Projected Years
Expense Item 1 2 3 4 5 6 7 8
Supplies Expense 4,405 4,493 4,583 4,675 4,768 4,863 4,961 5,060
Insurance Expense: Is expected to be 0.2% of the value of total fixed assets owned by Ato Abebe.
41,679.49 will be assumed as an annual insurance expense of the project (20,839,744.03 * 0.2% =
41,679.49).
Repair & Maintenance Expense: is estimated to be 0.1% of the projects fixed asset, which will be birr
20,839.74 per annum (20,839,744.03 * 0.1% = 20,839.74). After five years of operation repair &
maintenance costs of the project is expected to rise to 0.2% of fixed assets and will become birr
41,679.49 per year.
Type of Expenses Rate Fixed Assets Value of Expense
Insurance Expense 0.20% 20,839,744.03 41,679.49
Repair & Maintenance Expense 0.10% 20,839,744.03 20,839.74
Repair & Maintenance Expense after 0.20% 20,839,744.03 41,679.49
five years of operation
Depreciation Expense: Fixed assets of the project will have their proportional depreciation expenses as per
the following determination.
Fixed Assets Original Value Depr. Rate Annual Depreciation
Hotel Buildings 16,755,344.03 5% 837,767.20
Machineries, Equipments & Furniture’s 2,784,400.00 20% 556,880.00
Vehicle 1,300,000.00 20% 260,000.00
Total 20,839,744.03 1,654,647.20
Miscellaneous Expenses: includes expenses incurred for transportation, loading/unloading, fuel and
gases, cleaning and other expenses used for the project. Per annum 39,857.00 birr will be expected to be
spent for miscellaneous reasons and it will have an increment of 2% yearly.
29
Projected Years
Expense Item 1 2 3 4 5 6 7 8
Miscellaneous Expense 39,857 40,654 41,467 42,297 43,142 44,005 44,885 45,783
Salary Payments: The total permanent manpower requirement will be 42, of whom 25 will be skilled
and semi-skilled the rest 17 employees will be unskilled manpower. The list of the manpower
requirement is presented above along with monthly and annual salaries and wages.
Salary will be higher than before by 5% for permanent employees every two years.
Expense Item
Projected Years Salary Expense
1 590,400.00
2 590,400.00
3 619,920.00
4 619,920.00
5 650,916.00
6 650,916.00
7 683,461.80
8 683,461.80
Projected Total Operational Costs
Hence, the operational cost at almost full capacity of the hotel building for one year is estimated at Birr
950,000.00 (Nine hundred fifty thousand birr) including 7.89% contingency for the year. The utility cost
accounts for 5.76 percent while repair and maintenance take 2.12 percent of the operational cost, supplies
expense will cover 0.46 percent, miscellaneous expenses are also take 4.20 percent of the total working
capital needed for the project.
Out of the total operational cost of the project salary and wage expense covers 62.15 percent in addition
to that insurance expense accounts for 4.24 percent of the working capital, the rest but the most of the
working capital budget 13.18 percent will be used for purchase of several types of selling items for the
gift shop used by clients. Contingency will take 7.89 percent of the total working capital budget.
30
Projected Total Cost Table

Project Year
Cost Items 1 2 3 4 5 6 7 8
Utility Expense 54,720 56,362 58,052 59,794 61,588 63,435 65,339 67,299
Supplies Expense 4,405 4,493 4,583 4,675 4,768 4,863 4,961 5,060
Insurance Expense 40,299.49 40,299.49 40,299.49 40,299.49 40,299.49 40,299.49 40,299.49 40,299.49
Salary Expense 590,400 590,400 619,920 619,920 650,916 650,916 683,462 683,462
Repair & Main. Exp. 20,149.74 20,149.74 20,149.74 20,149.74 20,149.74 40,299.49 40,299.49 40,299.49
Misc. Expense 39,857 40,654 41,467 42,297 43,142 44,005 44,885 45,783
Contingency 74,983 75,236 78,447 78,713 82,086 84,382 87,925 88,220
Operational Costs 824,814 827,594 862,919 865,848 902,950 928,201 967,170 970,423
Depreciation Expense 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 837,767.20 837,767.20 837,767.20
Bank Interest Expense 2,162,715.71 1,998,403.21 1,806,732.74 1,583,149.21 1,322,339.10 1,018,104.21 663,214.32 249,235.39
Non-oper. Costs 3,817,363 3,653,050 3,461,380 3,237,796 2,976,986 1,855,871 1,500,982 1,087,003
Total Cost 4,642,177 4,480,644 4,324,299 4,103,644 3,879,936 2,784,073 2,468,152 2,057,425
31
Determination of Working Capital Requirement

From the total investment cost of 22,677,330.00; 4.19 % will be utilized for working capital requirement of the
project including its contingencies. The working capital can be used for one year from where the project
commences its operation.
Description Amount in Birr %age Share
Utility Expense 54,720.00 5.76%
Supplies Expense 4,405.00 0.46%
Insurance Expense 40,299.49 4.24%
Salary Expense 590,400.00 62.15%
Repair & Main. Expense 20,149.74 2.12%
Miscellaneous Expense 39,857.00 4.20%
Contingency 74,983.12 7.89%
Purchase of Direct Materials 125,185.65 13.18%
Total Working Capital Required 950,000.00 100%
32
Projected Income Statement of the Project

Abebe Debela Hawase
Forecasted Profit & Loss Statement of the Project (in Birr)
For the Year Ended XXXX
Description Projected Years
1 2 3 4 5 6 7 8
Room Service Income
2,920,000 3,066,000 3,714,240 3,869,000 4,101,140 4,097,125 4,301,981 4,297,875
Income from Meeting Hall
1,152,000 1,270,080 1,400,263 1,543,790 1,702,029 1,876,487 2,068,826 2,280,881
Income from Food & Drinks
1,606,000 1,686,300 2,042,832 2,127,950 2,255,627 2,253,419 2,366,090 2,363,831
Income from Gift Shop
292,000 306,600 371,424 386,900 410,114 409,713 430,198 429,788
Gross Income
5,970,000 6,328,980 7,528,759 7,927,640 8,468,910 8,636,743 9,167,096 9,372,375
Cost of Goods Sold
1,138,800 1,195,740 1,448,554 1,508,910 1,599,445 1,597,879 1,677,773 1,676,171
Operational Costs
824,814 827,594 862,919 865,848 902,950 928,201 967,170 970,423
Gross Profit
4,006,386 4,305,646 5,217,287 5,552,882 5,966,515 6,110,663 6,522,153 6,725,781
Depreciation Exp.
1,654,647 1,654,647 1,654,647 1,654,647 1,654,647 837,767 837,767 837,767
Interest Payment
2,162,716 1,998,403 1,806,733 1,583,149 1,322,339 1,018,104 663,214 249,235
Non-operational Costs
3,817,363 3,653,050 3,461,380 3,237,796 2,976,986 1,855,871 1,500,982 1,087,003
Profit Before Tax
189,023 652,596 1,755,907 2,315,086 2,989,529 4,254,791 5,021,171 5,638,778
Less: Profit Tax
48,158 210,408 596,567 792,280 1,028,335 1,471,177 1,739,410 1,955,572
Net Profit
140,865 442,187 1,159,339 1,522,806 1,961,194 2,783,614 3,281,761 3,683,206
33
Projected Cash Flow Statement

This study applies a decomposition approach of projection of cash inflows and outflows of Ato Abebe
Debela. Cash flows rather than profits are used in financial analysis for the following three reasons.
 Cash is what ultimately counts; profits are only a guide to cash availability: they cannot actually be
spent.
 Profit measurement is subjective, the time period on which income and expenses are recorded, and so
on, are a matter of judgment.
 Cash is used to pay the term loans and owners equity, owners equity are the ultimate method of
transferring wealth to the project holders as a dividend at the time of official declaration of the
members.
34
Projected Cash Flow Statement of the Project

Abebe Debela Hawase
Forecasted Cash Flow Statement of the Project (in Birr)
For the Year Ended XXXX
Description Projected Years
0 1 2 3 4 5 6 7 8
Cash Inflow
Equity/Beginning Cash 8,284,585 950,000 1,621,992 2,424,161 3,721,474 5,151,427 6,748,094 8,046,255 9,478,085
Balance
Bank loan 14,392,745 - - - - - - - -
Room Service Income - 2,920,000 3,066,000 3,714,240 3,869,000 4,101,140 4,097,125 4,301,981 4,297,875
Meeting Hall Rent Income - 1,152,000 1,270,080 1,400,263 1,543,790 1,702,029 1,876,487 2,068,826 2,280,881
Food & Drink Service - 1,606,000 1,686,300 2,042,832 2,127,950 2,255,627 2,253,419 2,366,090 2,363,831
Gift Shop Sales Income - 292,000 306,600 371,424 386,900 410,114 409,713 430,198 429,788
Total Inflow 22,677,330 6,920,000 7,950,972 9,952,920 11,649,114 13,620,337 15,384,837 17,213,350 18,850,460
Cash Outflow
Fixed Investment 20,839,744 - - - - - - - -
Other Outflows - - - - - - - - -
Pre-operating Costs 887,586 - - - - - - - -
Purchase - 1,275,456 1,339,229 1,622,380 1,689,979 1,791,378 1,789,624 1,879,105 1,877,312
Operating Expense - 824,814 827,594 862,919 865,848 902,950 928,201 967,170 970,423
Bank Repayment - 3,149,580 3,149,580 3,149,580 3,149,580 3,149,580 3,149,580 3,149,580 3,149,580
Tax Payment - 48,158 210,408 596,567 792,280 1,028,335 1,471,177 1,739,410 1,955,572
Total Outflow 21,727,330 5,298,008 5,526,811 6,231,446 6,497,687 6,872,243 7,338,582 7,735,265 7,952,887
Net Cash Balance 950,000 1,621,992 2,424,161 3,721,474 5,151,427 6,748,094 8,046,255 9,478,085 10,897,573
35
Projected Depreciation & Amortization Schedule of the Project

Abebe Debela Hawase
Depreciation & Amortization Expense Schedule
Depreciation & Amortization Schedule
Project Years
Original Rate Depreciation
Description Value % Amount 1 2 3 4 5 6-8
Machineries,
Furniture &
Equipments 2,784,400.00 0.2 556,880.00 556,880.00 556,880.00 556,880.00 556,880.00 556,880.00 0
Vehicle 1,300,000.00 0.2 260,000.00 260,000.00 260,000.00 260,000.00 260,000.00 260,000.00 0
Buildings 16,755,344.03 0.05 837,767.20 837,767.20 837,767.20 837,767.20 837,767.20 837,767.20 837,767.20
Total 20,839,744.03 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 837,767.20
36
Projected Balance Sheet of the Project

Abebe Debela Hawase
Forecasted Balance Sheet of the Project (in Birr)
Projected Years
Description 0 1 2 3 4 5 6 7 8
ASSETS
Current Assets
Cash 950,000 1,621,992 2,424,161 3,721,474 5,151,427 6,748,094 8,046,255 9,478,085 10,897,573
Inventory 0 136,656 143,489 173,826 181,069 191,933 191,745 201,333 201,141
Total Current Assets 950,000 1,758,648 2,567,650 3,895,300 5,332,497 6,940,028 8,238,000 9,679,418 11,098,714
Fixed Assets
Bldg. & Civil Work 16,755,344 16,065,344 16,065,344 16,065,344 16,065,344 16,065,344 16,065,344 16,065,344 16,065,344
Machineries, Furniture
& Equipments 2,784,400 2,784,400 2,784,400 2,784,400 2,784,400 2,784,400 0 0 0
Vehicle 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 0 0 0
Acc. Depr. - Bldg 0 -837,767 -1,675,534 -2,513,302 -3,351,069 -4,188,836 -5,026,603 -5,864,370 -6,702,138
Acc. Depr. - Mac, Fur
& Eqpm’t & Vehicle 0 -816,880 -1,633,760 -2,450,640 -3,267,520 -4,084,400 0 0 0
Total Fixed Assets 20,839,744 18,495,097 16,840,450 15,185,802 13,531,155 11,876,508 11,038,741 10,200,974 9,363,206
Total Assets 21,789,744 20,253,745 19,408,099 19,081,103 18,863,652 18,816,536 19,276,741 19,880,392 20,461,920
LIABILITIES
Bank Loan 14,392,745 13,405,881 12,254,704 10,911,857 9,345,427 7,518,186 5,386,711 2,900,345 0
Tax Payable 0 48,158 210,408 596,567 792,280 1,028,335 1,471,177 1,739,410 1,955,572
Total Liabilities 14,392,745 13,454,039 12,465,113 11,508,425 10,137,707 8,546,521 6,857,888 4,639,755 1,955,572
CAPITAL
Owner's Equity 7,396,999 6,658,841 6,500,799 6,413,339 7,203,139 8,308,821 9,635,239 11,958,875 14,823,142
Current Year Profit 0 140,865 442,187 1,159,339 1,522,806 1,961,194 2,783,614 3,281,761 3,683,206
Total Capital 7,396,999 6,799,706 6,942,987 7,572,678 8,725,945 10,270,014 12,418,854 15,240,637 18,506,348
Total Liab. & Capital 21,789,744 20,253,745 19,408,099 19,081,103 18,863,652 18,816,536 19,276,741 19,880,392 20,461,920
37
UNIT SIX
Financial Evaluations
Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax will be Birr 140,865.00 at the first year of its operation and at
the end of the project year it will have a profit of birr 3,683,206.00.
Liquidity
The cash flow projection also shows an incremental cumulative cash balance from Birr 1,621,992.00 of
the first project year to Birr 10,897,573.00 of the last projection period implying that the project will not
face liquidity constraint to finance its operational costs and at the same time its debt obligation.
Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for evaluating
the financial position of a firm. It is also an indicator for the strength and weakness of the firm or a
project. Using the year-end balance sheet figures and other relevant data, the most important ratios such
as return on sales which is computed by dividing net income by revenue, return on assets (operating
income divided by assets), return on equity (net profit divided by equity) and return on total investment
(net profit plus interest divided by total investment) has been carried out over the period of the project
life and all the results are found to be satisfactory.
Acid Test Ratios: Is a strength indicator that determines whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than
the working capital ratio, primarily because the working capital ratio allows for the inclusion of
inventory assets. As per the determination of this ratio it shows that the project has an acid test ratio of
0.12 at the beginning of the project year and 5.57 at the end of its projected years.
Debt Ratio: A financial ratio that measures the extent of a company’s or consumer’s leverage. The debt
ratio is defined as the ratio of total debt to total assets, expressed in percentage, and can be interpreted as
the proportion of a company’s assets that are financed by debt.
The higher this ratio, the more leveraged the company and the greater its financial risk. As per this ratio
indicates that at the end of first year the projects debt ratio shows 0.66 and then will decline as long as
the loan is paid regularly, finally at the end of its project life the debt ratio will become 0.10.
Asset Turnover Ratio: The amount of sales or revenues generated per birr of assets. The Asset
Turnover ratio is an indicator of the efficiency with which a company is deploying its assets.
Generally speaking, the higher the ratio, the better it is, since it implies the company is generating more
revenues per birr of assets. At the first the project will record a 0.29 asset turnover ratio and finally will
reach 0.46 at the end of its project life.
Gross Profit Margin: A financial metric used to assess a firm's financial health by revealing the
proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings. This study proves that the
project will amount 0.81 gross profit margins at the beginning and 0.82 at the end of its project life.
Return on Assets/Return on Investment: An indicator of how profitable a company is relative to its
total assets. ROA gives an idea as to how efficient management is at using its assets to generate
earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "Return on Investment". The project reaches 0.29 percent of
Return on Asset/Investment at the beginning and finally will reach 0.46 percent of Return on
Assets/Investments at the end of its project life.
38
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 is
estimated by using income statement projection.
BE = Fixed Cost = 5.20%
Sales – Variable Cost
Payback Period
The payback period, also called pay–off period is defined as the period required recovering the original
investment outlay through the accumulated net cash flows earned by the project. Accordingly, based on
the projected cash flow it is estimated that the project’s initial investment will be fully recovered within
its project life time.
Economic Benefits
The project can create employment benefit for 42 permanent employees at the time of operation and
more than 90 temporary laborers under the construction period.
In addition to supply of the domestic needs of standardized hotel service and narrow the gap, the project
will generate birr 7,841,908.00 in terms of profit tax revenue for the Government within the projected
years of time. Moreover, the Regional Government can collect Employment Income Tax and Sales Tax
Revenue.
39
UNIT SEVEN
Conclusions & Recommendations
Since the service sector in Ethiopia is in a low level progress, growth and improvement of the service
sector can substantially contribute to the economic development at National, Regional and Family level.
The project promoter believes that, the project will contribute its own part to the modern hotel trading
system of the town as well as will confirm sustainability of the firm’s growth and development.
By investment in advanced technologies, standardized hotel machineries and equipments and by
implementing codes of conducts of the town and regional government more added values can be
generated to the towns marketing system.
As shown in the above analysis, the project will pay back its debt equity within eight years as per the
scheduled time table. Create a job opportunity for not less than 42 permanent residents of Bishoftu town.
Contribute to the government significant revenue in the form of income tax and VAT.
Therefore, the project is beneficial both for the owner, residents of Bishoftu town, the town
administration and the regional government as a whole.
Hence this study believes and recommends that financing the project of Ato Abebe Debela and replying
the requests of the promoter has a great impact for the development of the town and will have a direct
and indirect positive effect on the project owners wealth, the development and renaissance of the region
and the country as a whole.
The bank will also be profitable from the loan it injects to this project by generating an interest of
10,803,893.91 within the project loan period.
 This project study believes that, Ato Abebe Debela’s hotel Building will have its own part to the
modern plus standardized hotel services in Bishoftu town.
 The financial analysis confirms sustainability of the firm’s growth and development.
 By investment in customary hotel buildings and by implementing codes of conducts of the region
and the town, more added values can be generated.
 Loan should be obtained in order to manage the cash flow during the construction period. The loan
would cover only 63% of the project value and therefore pre-finance request from the project owners
shall be presented to the bank on time.
 The Investment agency of the town should also give a hand to the project by renewing the
Investment license and paves the way to facilitate duty free privileges to the promoters on time.
 The strong management capacity is one of the main aspects to accelerate the process of acting
according to business plan indicators.
 In order to increase loyalty of employees and other stakeholders towards the projects aim and goal,
the communication flow shall be strengthened. Loyalty and membership feeling within the
stakeholders is important aspects to increase accountability and responsibility of employees.
As a result this study believes that financing this project will have a direct and indirect positive effect on
Ato Abebe Debela’s wealth, the residents lived in Bishoftu town, other stakeholders and yet the project
will have a great impact to the development and renaissance of the country as a whole.
40
VEHICLE, MACHINERY & EQUIPMENT REQUIREMENT AND COSTS

Sr. Description U/M Qty Unit Price Total Price Total
No Price
(Birr) (Birr) (USD)
Vehicle
1 One Double Cabin Pick-up Vehicle Pcs 1 1,300,000.00 1,300,000.00 59,078.02
Bed Rooms
Bed sets - 2 by 0.90m (for double bed Pcs 20 3,850.00 77,000.00 3,499.24
1 rooms)
2 Bed -2*1.90 (for 20 standard rooms) Pcs 20 6,500.00 130,000.00 5,907.80
3 Bed-1.2*1.90 for staffs Pcs 10 3,500.00 35,000.00 1,590.56
Bed side armoires-wood with 2 chest Pcs 50 1,650.00 82,500.00 3,749.18
4 drawers
5 Wall mirror (1x 1.5mt) Pcs 40 385.00 15,400.00 699.85
6 Color TV 14" & antenna Pcs 25 2,745.00 68,625.00 3,118.64
Digital satellite dish with all Set 1 15,000.00 15,000.00 681.67
7 accessories + DSTv
Sofa- single seat upholstery 2 for each Pcs 25 2,245.00 56,125.00 2,550.58
9 room
10 Coffee table- round glass top Pcs 10 800.00 8,000.00 363.56
11 Chair- wooden Pcs 35 760.00 26,600.00 1,208.83
Writing table- wooden with 4 chest Pcs 35 1,150.00 40,250.00 1,829.15
12 drawers
13 Luggage rack- movable & flexible Pcs 2 2,700.00 5,400.00 245.40
Wardrobe – wooden built-in with Pcs 31 1,745.00 54,095.00 2,458.33
14 partitions
16 Bed side lamps Pcs 35 150.00 5,250.00 238.58
17 Hair Dryer Pcs 20 450.00 9,000.00 409.00
19 Coat hunger Pcs 31 800.00 24,800.00 1,127.03
20 Telephone Set 31 220.00 6,820.00 309.93
21 Beauty table with Mirrors Pcs 31 1,410.00 43,710.00 1,986.38
22 Wall watch Pcs 10 135.00 1,350.00 61.35
Laundry Center
1 Laundry center - comprising of Set 1 115,440.00 115,440.00 5,246.13
Washing, Drying, Squeezing, Ironing
(Pressing), and Steam Drying
machines, Electrical Hydro-extractor &
Sewing machine. Daily a capacity of
providing 70 clean set of towels, 50
sets of linen & cover 50 sets of
uniforms.
2 Wall attached shelf Pcs 4 2,300.00 9,200.00 418.09
3 Chair- wooden Pcs 5 550.00 2,750.00 124.97
4 Table Pcs 2 1,500.00 3,000.00 136.33
41
5 File Cabinet Pcs 1 2,505.00 2,505.00 113.84

6 Cub Board Pcs 2 2,800.00 5,600.00 254.49
Multi-Purpose Assembly Hall
1 Foldable chair Pcs 200 240.00 48,000.00 2,181.34
2 Guest chair with arm seat Pcs 20 650.00 13,000.00 590.78
3 Laminated conference table Pcs 4 3,250.00 13,000.00 590.78
4 Window curtain Set 1 14,500.00 14,500.00 658.95
5 Stage lighting (decorative quartz flood Set 1 10,400.00 10,400.00 472.62
lights and spot lights) (assorted)
6 Audio Visual Projectors and Set 1 19,480.00 19,480.00 885.26
equipments
7 Sound Evacuation Systems Set 1 13,400.00 13,400.00 608.96
8 Translation Equipments Set 1 7,660.00 7,660.00 348.11
9 Air Conditioning Machines Pcs 2 10,400.00 20,800.00 945.25
10 TV with stand Table 60 inch Pcs 1 20,755.00 20,755.00 943.20
11 Multimedia projector Set 1 7,500.00 7,500.00 340.83
12 Overhead projector Pcs 1 8,500.00 8,500.00 386.28
13 LCD projector Pcs 1 9,000.00 9,000.00 409.00
14 Projector screen with portable tripod Pcs 2 2,400.00 4,800.00 218.13
(250x250)
15 Wall mounted projector screen (300- Pcs 1 1,155.00 1,155.00 52.49
350x300-350)
16 Meeting room chairs with arm seat Pcs 40 455.00 18,200.00 827.09
17 Meeting room table (200x100x125) Pcs 6 1,755.00 10,530.00 478.53
18 White board (200x150) Pcs 3 700.00 2,100.00 95.43
19 Public Addressing System, Auditoria Set 1 12,500.00 12,500.00 568.06
type
Reception & Waiting Areas
1 Multimedia service - Server Network Set 1 10,550.00 10,550.00 479.44
accessories (Terminals, patch cords,
patch panels, switches/hubs, cables,
cable trays, etc) Tele broad band
service line.
2 Heavy duty & color photocopy Pcs 1 20,700.00 20,700.00 940.70
machine
3 Binding machine Pcs 1 1,300.00 1,300.00 59.08
4 Laminating machine Pcs 1 1,500.00 1,500.00 68.17
5 Cash safe box Pcs 1 10,000.00 10,000.00 454.45
6 Chair with arm seat Pcs 4 710.00 2,840.00 129.06
7 Metallic storage cabinet, slide Pcs 1 3,500.00 3,500.00 159.06
8 Brand desktop computer Pcs 4 5,000.00 20,000.00 908.89
9 Laser jet printer Pcs 3 2,500.00 7,500.00 340.83
10 Fax machine (with scanner) Pcs 1 4,100.00 4,100.00 186.32
11 Electronic type writer Pcs 1 2,600.00 2,600.00 118.16
12 Carpet, woolen strip Set 6 1,500.00 9,000.00 409.00
42
13 Window curtain, Blind vertical fabric Set 1 11,000.00 11,000.00 499.89

1st grade
14 Tables Pcs 4 1,600.00 6,400.00 290.85
15 TV 42 inch with stand Pcs 1 17,400.00 17,400.00 790.74
16 Telephone with its Accessories Set 1 2,400.00 2,400.00 109.07
17 File Cabinet Pcs 2 2,500.00 5,000.00 227.22
18 Balcony Pcs 2 4,700.00 9,400.00 427.18
19 Shelf attached with wall Pcs 1 3,750.00 3,750.00 170.42
20 Receptionist Swivel chair Pcs 3 1,500.00 4,500.00 204.50
21 Sofa Seats Set 2 2,500.00 5,000.00 227.22
22 Coat Hunger Pcs 2 800.00 1,600.00 72.71
23 Traveler Equipments for Guests Pcs 2 1,700.00 3,400.00 154.51
Luggage
24 Air conditioner with its accessories Pcs 1 17,400.00 17,400.00 790.74
25 Wheel Chair Pcs 2 3,000.00 6,000.00 272.67
26 Dollar Checker Machine Pcs 1 8,100.00 8,100.00 368.10
27 Passport Scanner Machine Pcs 1 5,700.00 5,700.00 259.03
28 Note/Birr Counter Machine Pcs 1 10,000.00 10,000.00 454.45
29 Vandlayer Lamp - Big /used for Pcs 1 23,000.00 23,000.00 1,045.23
reception area/
Other Equipments
1 Cabinet for coffee, tea cups, spoons etc Pcs 1 5,500.00 5,500.00 249.95
2 Sink with two bay for washing tea and Pcs 3 1,300.00 3,900.00 177.23
coffee cups, draft glasses, water glasses
etc
3 Steel legged adjustable height chairs Pcs 15 1,055.00 15,825.00 719.16
around the balcony
4 Plastic chair Pcs 120 240.00 28,800.00 1,308.81
5 Oval shaped plastic table Pcs 40 350.00 14,000.00 636.22
6 Umbrella Pcs 10 405.00 4,050.00 184.05
7 Presidential desk 75x32x100cm) Pcs 1 10,000.00 10,000.00 454.45
8 Law back swivel chair Pcs 3 2,500.00 7,500.00 340.83
9 Laminated conference table Pcs 2 4,500.00 9,000.00 409.00
10 Guest chair with arm seat Pcs 7 985.00 6,895.00 313.34
11 Sofa guest chair with arm seat Pcs 6 2,500.00 15,000.00 681.67
12 Oval coffee table Pcs 2 1,500.00 3,000.00 136.33
13 Open shelf and sliding door office Pcs 2 4,800.00 9,600.00 436.27
cabinet
14 Open book shelf (151x78x35) Pcs 1 2,900.00 2,900.00 131.79
15 Wooden filling cabinet, four drawers Pcs 2 3,500.00 7,000.00 318.11
16 Coat hunger Pcs 1 800.00 800.00 36.36
17 Executive sec. Desk and chair Set 1 4,600.00 4,600.00 209.05
18 Arc joint table (75x75) Pcs 1 2,500.00 2,500.00 113.61
19 Computer table (90x75x75) Pcs 4 1,715.00 6,860.00 311.75
20 Mobile drawer Pcs 2 2,290.00 4,580.00 208.14
43
21 Swivel chair for staffs Pcs 3 3,500.00 10,500.00 477.17

22 Office desk (180x75) with mobile 3 Pcs 2 3,100.00 6,200.00 281.76
drawers
23 Managerial chair, high back Pcs 1 5,500.00 5,500.00 249.95
24 Wooden office shelf (165x30x180) Pcs 2 3,500.00 7,000.00 318.11
25 Secretary swivel chair Pcs 2 3,200.00 6,400.00 290.85
26 Stand By Generator Set With Canopy Pcs 1 140,000.00 140,000.00 6,362.25
And Accessories(15KVA)
27 Water Pump Pcs 2 7,500.00 15,000.00 681.67
28 Fire Extinguisher Equipments Set 1 8,500.00 8,500.00 386.28
29 First Aid Medical Equipments Set 1 3,000.00 3,000.00 136.33
30 Security Cameras with accessories Set 1 15,000.00 15,000.00 681.67
31 Meeting room chairs with arm seat Pcs 15 2,300.00 34,500.00 1,567.84
32 Meeting room table Pcs 4 5,750.00 23,000.00 1,045.23
33 White board Pcs 2 1,300.00 2,600.00 118.16
Bar & Modern Restaurant
1 Beverage shelve/ cupboard Pcs 2 23,500.00 47,000.00 2,135.90
2 Beverage dispenser Pcs 20 150.00 3,000.00 136.33
3 White wine glass Pcs 30 60.00 1,800.00 81.80
4 Red wine glass Pcs 30 60.00 1,800.00 81.80
5 Wine cooler Pcs 10 320.00 3,200.00 145.42
6 Ashtray Pcs 20 75.00 1,500.00 68.17
7 Tables- round Pcs 20 350.00 7,000.00 318.11
8 Chairs Pcs 100 250.00 25,000.00 1,136.12
9 Side service tables Pcs 15 1,450.00 21,750.00 988.42
10 Service trolleys Pcs 5 2,500.00 12,500.00 568.06
11 Cupboards Pcs 4 3,600.00 14,400.00 654.40
12 Main dish Plate with rim- 20 cm Pcs 150 40.00 6,000.00 272.67
13 Soup cup with saucer Pcs 50 30.00 1,500.00 68.17
14 Salad plate Pcs 100 50.00 5,000.00 227.22
15 Bread plate Pcs 100 65.00 6,500.00 295.39
16 Salt & pepper –set Pcs 30 40.00 1,200.00 54.53
17 Butter holder/dish Pcs 30 80.00 2,400.00 109.07
18 Coffee cup with saucer Pcs 50 25.00 1,250.00 56.81
19 Tea cup with saucer Pcs 50 25.00 1,250.00 56.81
20 Soup spoon Pcs 100 14.00 1,400.00 63.62
21 Main dish knife Pcs 100 18.00 1,800.00 81.80
22 Forks Pcs 100 14.00 1,400.00 63.62
23 Salad knife Pcs 100 20.00 2,000.00 90.89
24 Dessert bowl Pcs 100 32.00 3,200.00 145.42
25 Water glass Pcs 100 19.00 1,900.00 86.34
26 Champagne glass Pcs 50 60.00 3,000.00 136.33
27 Liqueur glass Pcs 100 70.00 7,000.00 318.11
28 Cocktail glass Pcs 50 120.00 6,000.00 272.67
29 Beer glass Pcs 100 40.00 4,000.00 181.78
44
30 Wine cooler with stand Pcs 25 140.00 3,500.00 159.06

31 Wine storage shelf Pcs 2 2,600.00 5,200.00 236.31
32 Bar stool (counter chairs) Pcs 5 2,300.00 11,500.00 522.61
33 Mixer & Juicer Pcs 2 3,000.00 6,000.00 272.67
34 Sugar dispenser size 6 Pcs 15 29.00 435.00 19.77
35 Juice glass Pcs 30 50.00 1,500.00 68.17
36 Tea spoon Pcs 50 10.00 500.00 22.72
37 Coffee spoon Pcs 50 10.00 500.00 22.72
38 Oil & vinegar holder Pcs 10 55.00 550.00 24.99
39 Ice bucket Pcs 1 2,500.00 2,500.00 113.61
40 Ice cream machine Pcs 1 11,500.00 11,500.00 522.61
41 Washing basin unit Set 1 5,500.00 5,500.00 249.95
42 Hand Dryer Machine Pcs 4 1,850.00 7,400.00 336.29
43 Coffee machine 2olt. Pcs 1 25,000.00 25,000.00 1,136.12
44 Refrigerator, 240 lt Pcs 2 15,000.00 30,000.00 1,363.34
45 Deepfreeze 500lt Pcs 2 28,000.00 56,000.00 2,544.90
Coffee Service Materials
1 Coffee shop counter unit- custom built Pcs 1 10,950.00 10,950.00 497.62
2 Long-leg counter stool Pcs 5 250.00 1,250.00 56.81
3 Chair with coffee table (set) Pcs 4 2,650.00 10,600.00 481.71
4 Coffee cup with saucer Pcs 25 35.00 875.00 39.76
5 Tea cup with saucer Pcs 20 35.00 700.00 31.81
6 Sugar holder (for outlets) Pcs 12 25.00 300.00 13.63
Kitchen Materials
1 Electrical & gas grill with six burners Pcs 1 14,000.00 14,000.00 636.22
2 Sink with two bay(for the kitchen) Pcs 2 1,855.00 3,710.00 168.60
3 Kitchen working table with drawers, Pcs 3 5,500.00 16,500.00 749.84
3m x90cm
4 Kitchen cabinet Set 2 9,000.00 18,000.00 818.00
5 Cabinet for coffee, tea cups, spoons etc Pcs 2 5,480.00 10,960.00 498.07
6 Sink with two bay for washing tea & Pcs 1 2,300.00 2,300.00 104.52
coffee cups, draft & water glasses
7 Refrigerator, 240 ltr Pcs 1 15,000.00 15,000.00 681.67
8 Deepfreeze 500lt Pcs 1 28,000.00 28,000.00 1,272.45
9 Gas burner with cylinder, 12kg,two gas Pcs 1 12,000.00 12,000.00 545.34
and two electric stoves
10 Frying pans Pcs 1 11,000.00 11,000.00 499.89
11 Dishes with two handle Pcs 10 1,600.00 16,000.00 727.11
12 Pressure cooker (1 up to5 bars) Pcs 4 2,500.00 10,000.00 454.45
13 Medical Equipment, tools, instruments Set 1 4,000.00 4,000.00 181.78
and furniture for the Hotel
14 Microwave oven-20nos Pcs 1 15,000.00 15,000.00 681.67
15 Deep fryer Pcs 2 5,000.00 10,000.00 454.45
16 Mixer Pcs 2 2,500.00 5,000.00 227.22
17 Hot – water bath ( Bain maire) Pcs 2 3,000.00 6,000.00 272.67
45
18 Freezer Pcs 2 2,800.00 5,600.00 254.49

19 Stock pot(50 liters) Pcs 2 2,890.00 5,780.00 262.67
20 Sauce pan Pcs 2 2,850.00 5,700.00 259.03
21 Sauce pot(50 liters) Pcs 2 1,400.00 2,800.00 127.24
22 Boiler( 30 liters) Pcs 1 5,560.00 5,560.00 252.67
23 Baking pan Pcs 1 6,850.00 6,850.00 311.30
24 Bakery Machine Pcs 1 18,000.00 18,000.00 818.00
25 Cake maker Pcs 1 13,000.00 13,000.00 590.78
26 Noodle-Lasagna maker Pcs 1 4,500.00 4,500.00 204.50
27 Pizza machine Pcs 1 5,100.00 5,100.00 231.77
28 Air conditioner machine Pcs 1 23,000.00 23,000.00 1,045.23
29 Roasting pan Pcs 1 3,500.00 3,500.00 159.06
30 Scale(portion) Pcs 1 2,500.00 2,500.00 113.61
31 Measuring spoons Pcs 6 125.00 750.00 34.08
32 Chef’s Knife (10 in.) Pcs 10 250.00 2,500.00 113.61
33 Salad knife (6 in.) Pcs 10 185.00 1,850.00 84.07
34 Vegetable knife (2in.) Pcs 10 244.00 2,440.00 110.88
35 Boning (6in.) Pcs 4 800.00 3,200.00 145.42
36 Slicer knife (12in.) Pcs 10 125.00 1,250.00 56.81
37 Bucher’s knife(12in.) Pcs 10 350.00 3,500.00 159.06
38 Cleaver (4in.) Pcs 6 460.00 2,760.00 125.43
39 Vegetable peeler (set) Set 2 540.00 1,080.00 49.08
40 Cutting Board – hard rubber Pcs 6 740.00 4,440.00 201.77
41 Pastry wheel Pcs 1 1,200.00 1,200.00 54.53
42 Kitchen spoon ( perforated) Pcs 15 15.00 225.00 10.23
43 Kitchen spoon( solid) Pcs 15 25.00 375.00 17.04
44 Grater (normal size) Pcs 4 450.00 1,800.00 81.80
45 Strainer Pcs 4 145.00 580.00 26.36
46 Can opener Pcs 4 90.00 360.00 16.36
47 Sink unit (900 / 1600mm) Pcs 2 1,400.00 2,800.00 127.24
48 Wall attached shelves Pcs 2 4,580.00 9,160.00 416.27
49 Hot cupboard (warmer) Pcs 1 8,750.00 8,750.00 397.64
50 Toaster Pcs 1 3,250.00 3,250.00 147.70
51 Dishwashing machine Pcs 1 5,950.00 5,950.00 270.40
House Keeping Materials
1 Supplies and linen storage shelf unit Pcs 2 5,850.00 11,700.00 531.70
2 Wet and dry floor cleaning machine Pcs 6 2,100.00 12,600.00 572.60
3 Vacuum cleaner (upright) Pcs 4 3,600.00 14,400.00 654.40
4 Cleaning trolley Pcs 4 2,400.00 9,600.00 436.27
5 Mop trolley with squeezer Pcs 4 900.00 3,600.00 163.60
6 Fire extinguisher equipments Set 1 6,580.00 6,580.00 299.03
7 Cloth shelf Pcs 2 5,600.00 11,200.00 508.98
8 Ceramic and tiles cleaner machines Pcs 4 1,890.00 7,560.00 343.56
9 Buckets big size Pcs 4 2,900.00 11,600.00 527.16
10 Buckets small size Pcs 4 1,950.00 7,800.00 354.47
46
Garden & Recreation Area

1 Water sprinklers Pcs 4 400.00 1,600.00 72.71
2 Gardener kit Set 1 5,000.00 5,000.00 227.22
3 Fountain Materials (Set) Set 1 13,500.00 13,500.00 613.50
4 Foldable Rest chair Pcs 10 1,100.00 11,000.00 499.89
5 Contingency 139,220.00 6,326.80
Grand Total 4,084,400 185,614
47

Abebe Project Final

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Abebe Project Final

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Project Proposal of Ato Abebe Debela 3* Hotel Building

Auditor Legal Dep’t

Marketing & Operation Dep’t Fin. & Admin Dep’t

Foods & Beverages Accommodation & Accounts Cahier

Revenue Generated from Meeting Hall & Gift Shop Service

Projected Total Revenue Table

Associated Costs and Expenses

Projected Total Cost Table

Determination of Working Capital Requirement

Projected Income Statement of the Project

Projected Cash Flow Statement

Projected Cash Flow Statement of the Project

Projected Depreciation & Amortization Schedule of the Project

Depreciation & Amortization Schedule

Vehicle 1,300,000.00 0.2 260,000.00 260,000.00 260,000.00 260,000.00 260,000.00 260,000.00 0

Total 20,839,744.03 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 1,654,647.20 837,767.20

Projected Balance Sheet of the Project

VEHICLE, MACHINERY & EQUIPMENT REQUIREMENT AND COSTS

5 File Cabinet Pcs 1 2,505.00 2,505.00 113.84

13 Window curtain, Blind vertical fabric Set 1 11,000.00 11,000.00 499.89

21 Swivel chair for staffs Pcs 3 3,500.00 10,500.00 477.17

30 Wine cooler with stand Pcs 25 140.00 3,500.00 159.06

18 Freezer Pcs 2 2,800.00 5,600.00 254.49

Garden & Recreation Area

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