PROJECT PROPOSAL

ON

THE ESTABLISHMENT OF MIXED USED

BUILDING

THE PROJECT TO BE IMPLEMENTED IN OROMIA

REGIONAL STATE, GELAN TOWN

PROMOTER: OFTANA PLC

August, 2022

Gelan.Ethiopia
1
Contents
EXECUTIVE SUMMARY..............................................................................................4
1. INTRODUCTION....................................................................................................5
1.2. General Background.........................................................................................5
1.2. Profile of the Promoter.......................................................................................5
1.3. Purpose of the Document..................................................................................6
1.4. Project Justification..........................................................................................6
1.5. Objective of the project......................................................................................7
1.6. Description of the Project..................................................................................8
1.7. Socio-Economic Advantage................................................................................8
1.8. Location and Premises Required........................................................................9
2. MARKET STUDY AND SERVICE CAPACITY...........................................................11
2.1. Market Analysis..............................................................................................11
2.2. Demand and Supply Gap................................................................................12
2.3. Demand factors for Hotel and Recreation Center.............................................13
2.3.1. Fast Economy Growth............................................................................13
2.3.2. Population and Population Growth (Demography).....................................14
2.3.3. Tourism....................................................................................................15
2.3.4. Geographical Significance of the Area........................................................15
2.4. Competitors..................................................................................................15
2.5. Target Customers.........................................................................................16
2.6. Marketing Promotion and strategy...................................................................16
2.7. Service Capacity and Service Delivery Program................................................16
2.8. Pricing............................................................................................................18
3. ORGANIZATION AND MANAGEMENT.................................................................19
3.1. Organizational structure...............................................................................19
4.2. Man Power......................................................................................................22
4. FINANCIAL REQUIRMENT AND ANALYSIS...........................................................24
4.1. Fixed Investment.............................................................................................25
4.2. Operating Expenses at Full Capacity...............................................................28
4.3. Underlying Assumption...................................................................................29
4.4. Source of Income.............................................................................................29
4.5. Loan Repayment Schedule..............................................................................30

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 4.6. Depreciation Schedule.....................................................................................30
4.7. Projected Revenue Schedules..........................................................................31
4.8. Pay-Back Period..............................................................................................32
5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL.....................................33

3
EXECUTIVE SUMMARY
1 Project Owner OFTANA PLC
2 Nationality Ethiopian
4 Project Oromia regional state Gelan town.
Proposed
location
5
project Commercial Complex Center/Marketing

The project includes Bar and Restaurant, Cafe,

6 Project Guest house, Assembly hall, super Markets,
Composition Banking Service and Shops
Premises
7
5000m2
Required
Total Initial The total project capital is 40,000,000 Birr from
8 Investment which 30% or 12,000,000 will be covered by the
Cost promoter and the rest 70% or 28,000,000 birr will
The
fromtotal manpower
financial required for the plant will be
institutions.
120 employees at full capacity.

 Permanent workers 80

9  Skilled 60
 Unskilled 20
 Temporary workers 40
Employment  Skilled 10
Opportunity  Unskilled 30

Benefits of the Provide better Bar and Restaurant service,

10 project For The Contribute to Economic development of the Town
region Country as well as of the region.
The promoter will utilize the modern and
11 Applicable standardized service level and Urban
Technology Beautification and development.

4
1. INTRODUCTION
1.2. General Background

The present dynamic economic growth of Ethiopia demands the parallel

development of tertiary sectors. These sectors are mainly related to the
development of the economy in general and tourism sector in specific situation
and able to provide strong backward and forward linkages for other sectors of
economy. Besides, the growth Commercial sector in Ethiopia has stimulated
increased tourism supply capacity and higher levels of investment in
infrastructure, human capital and technologies to manage and efficiently
transact higher levels of Marketing activity .Hence, investment activities in
Commercial Complex include Bar and Restaurant, Banking Service, raining
centers, Cafeteria, Guest house can support and propel the sector, particularly
in developing countries (like Ethiopia) where domestic resources are limited

Moreover, the current investment flow and market in these areas are very
promising that imitates many investors to engaged in. Furthermore, the
government of Ethiopia has conducive investment policies and regulation that
further attract the private sectors involvement in economic development of the
nation through the various investment and business activities.

In this regard, the promoter of the Commercial Complex Center Oftana plc is
planned to establish Marketing Mall in Gelan Town. The result of the study is
very sound and promising for the owner to start the project in this town.

The promoter is very dedicated to commence the project. Hence, the company
expects to get the necessary support from the regional and local governments
for the project implementation.

5
1.2. Profile of the Promoter

The owners of this envisaged project OFTANA PLC is an Ethiopian business

man who has a good business experiences and very ambitious to establish
huge Commercial Complex Center by expecting a good support and facilitation
from the regional government as well the town administration. In addition the
promoter hopes this project to be the first among many other developmental
projects to follow as they look forward to share the responsibility of fighting
poverty, reducing unemployment here in Ethiopia .The promoter accumulated
diversified skills in the area and also adopted working with many people. Thus,
it is these experiences which primarily motivated this investor to develop the
inception of this project idea.

1.3. Purpose of the Document

The objective of this project study is primarily to facilitate potential
entrepreneurships in project identification for investment. The project study
may form the basis of an important investment decision and in order to serve
this objective; the document/study covers various aspects of project concept
development, start-up, production, marketing, and finance and business
management. The document also provides pectoral information and brief on
Government policies and international scenario, which have some bearing on
the project itself. This particular project study is regarding the Commercial
Building to be established in Gelan town.

1.4. Project Justification

Ethiopia is one of the ancient African counties with rich cultural diversity,
heritage and natural tourist attraction areas. Besides, it is the seat for head
quarter of Africa union and other international organizations that based in the
capital, Addis Ababa

Currently, the overall Ethiopian economy has been witnessing substantive

economic growth. Since 2003/04 growth has been sustained, recording more
than 11% average growth. This growth is complemented by a strong

6
performance in the Agriculture, Industry (construction and manufacturing)
and service sectors with an average growth rate of 10%, 10% and 13.2%,
respectively.

When there exist rapid economic growth, the demand for of tertiary/service
sector is very high that result from the change of people lifestyle, consumption
pattern and income growth. Hence, the development and market linkage of this
sector with other sectors like agriculture and industry is very vital.
Furthermore, the Commercial growth has a potential to develop the sector
more.

As one part of tertiary (service) sector, Commercial centers are generating most
of their business from domestic and local traders, business persons, business
men, guests and leisure travelers etc. The services given by these centers
should be better quality and facilitates to their customers. Beside, the
development of Service sector further necessity the development of the
recreation, Hotel and Marketing. Nevertheless, the development of this sector is
not enough compare with the demand and potential of the Country.

In addition to the above facts, the following points taken by the promoters for
the project justifications.

 The government of Ethiopia promising the second five year growth and
transformation development plan (2014/15-2019/2020), that will bring
prosperity to its citizens with collaboration with private sector investment
actions
 The regional government conducive investment packages for development
and poverty reduction

1.5. Objective of the project

The overall objective is to develop a chain of ecologically friendly Commercial

world class building with full-fledged facilities to provide all the amenities
required for the promotion of each particular area or locality.

7
The specific objectives are to:
 Create new Commercial facilities for sustainable trade development

 Protect and conserve the ecology in the proposed project areas

 Attract tourists without affecting the natural resources
 Contribute to the national economy by generating additional foreign
currency earnings and alleviate the poverty of the local people
 Protect the remaining natural forest and work in close cooperation with
the surrounding communities to the mutual benefit of all involved.

With this project, ecologies would like to create a business that reaps benefits
to itself. The immediate culture and society surrounding the Hotel and to the
country as a whole As such, every aspect of this venture will be based on these
criteria.

1.6. Description of the Project

Commercial Complex is a relatively not new concept in the Commercial

industry. It sets out to promote a more responsible type of tourism, which
conserves the immediate environment and eco-system and there by insures
sustainable Economic development and growth. The development of this type of
Investment is not geared toward attracting visitors and maximizes revenue
only, but also in conserving to accomplish these objectives, the projects are
designed to be located in isolated areas where the foreign Investors will enjoy
the natural beauty of the particular region and its culture, history, flora, fauna,
wildlife, etc.

The Project will be fully equipped with complete accommodation, catering

services with fine cuisine, a restaurant, environmentally friendly power
generating systems, potable water and communication. It is also in the project
plan to protect and conserve the flora and fauna by planting more tress and
making the area environmentally attractive. Job opportunities for the local

8
community will be created. The company intends to recruit matured
consultants in the training of its staff in catering and commercial services.

The design, the services, and the management of the envisaged project will be
built to specific standards. The project will promote its brand internationally
and shall be affiliated to international organizations and associations for
booking and interagency affiliations. The promoter shall promote Gelan town
through national advertising in newspapers, magazines, posters, Postcards,
books, web sites, presentations to target groups, as well as through other
media.

1.7. Socio-Economic Advantage

One of the most pressing issues of modern time is the deteriorating

condition of our environment. At present, more and more people are
concerned about the continuing pollution of the environment. In the past,
the development of tourism was less concerned on conservation of
resources. It has therefore, contributed to the pollution of the environment
and the diluting of culture around the world.

In the last two decades, environmentally conscious tourism has

increasingly become popular by nature enthusiasts and conservationists.
In fact, there is a strong movement ad vocation against insensitive tourism
that does not benefit surrounding communities. To satisfy this demand
nature friendly tourism is today being development even in the most
advanced tourism destinations around the world.

Upon completion, this project is expected to have the following benefits;

 Offer high quality service standard throughout its chain;

 Offer tourists a real life experience of the particular locality though

9
 the distinct architecture displayed in the Hotel
 It offer the comforts and quality of services expected of a first class
Huge Commercial Mall;
 Attract tourists who seek environmentally responsible experiences;
 Conserve and ameliorate the eco-system of project area;
 Contribute to the national economy by generating additional foreign
currency;

 And contribute to the region's economy by voluntarily pledging and

sharing an officially declared amount (percentage) from the proceeds of
each site towards social project in that particular locality;

 Create employment opportunities for the surrounding community, which

in turn will improve the quality of life within the host community;
 Transfer of know-how on efficient usage of energy, waste reduction and
other conservation practices;
 Serve as a prototype for future development of eco-tourism throughout
the country.

1.8. Location and Premises Required

A. Project Location
The envisioned Commercial building is planned to be constructed in Gelan

town, which is located approximately at a distance of 38km from Capital City

to the East direction. One of the favorable condition of the project area in terms

of the topographic aspect is its' flatness, which in effect, make the construction

process easier and cost effective.

Climate- Ethiopia is situated within the tropics and therefore is subject to

comparatively small seasonal variations in temperature, but experiences

considerable during temperature fluctuation. However, the project area shows

10
great seasonal variation in rainfall and humidity. Most of the annual rainfall

occurs between late June and mid-September. The driest time of the year is

usually the months of November to May.

The main justifications behind the selection of this location are:

 Geographical proximity to Addis Ababa and the center for Oromia and
South region.
 Relatively advanced development in infrastructure (Power, Water, Telephone
road etc.)
 Environmentally favorable for Commercial business.

B. Premises Required

For the proposed set up of the entire Commercial Mall Is, a total of 5000
square meters is required.

No Description Land Requirement in M2

The total Construction area Bar, Restaurant 3300
1
& bed rooms)
1000
2 Outdoor recreation area
7 Security room 200

8 Parking and green area 500

Total 5000

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2. MARKET STUDY AND SERVICE CAPACITY
2.1. Market Analysis

Ethiopia with its huge potential in the travel and tourism market is now
gearing towards a point where it can make a significant contribution to its
economic development. "Ethiopia - 13 months of sunshine" is the most popular
tourism slogan that is being used to promote the sector, which draws lots of
tourists to the country every year, thereby, boosting the hospitality industry of
the country.

The beautiful attractions, warm people and the services have also been
contributing in boosting tourist flow to the country. The country's unique
culture and history, diverse and exotic flora and fauna as well as the
magnificent scenery and archaeological sites are also among the major tourist
attractions which draw the attention of local and foreign tourists.

This nation has been seen as an important and real destination for a number
of visitors. A rich array of historical and ecological sites set it apart from most
of its neighbors. It has combined spectacular culture, history, ethnic diversity,
nature and traditions dating back to 3000 years which are major sources of
attraction and income.

Both local and overseas tourists flocking every year to visit the tourist
attractions of the country indisputably deserve the standard services they
require. This would have not only a momentous role in attracting additional
tourists to the sites every year but also boost the country's foreign currency
earnings gripping tourists to extend their stay.

Although there were only one thousand Hotel rooms in the whole nation two
decades ago, a remarkable improvement has been witnessed in the sector

12
particularly over the past 15 years. Currently, the number of Hotel rooms has
reached above 7000 in Addis Ababa alone. According to the Ministry of Culture
and Tourism, this number would jump to 10,000.

Oromia is endowed with several natural and cultural tourist attraction

resources. The region is bounded with numerous lakes, mountain trekking,
Natural Cave, Hot springs and others. In addition to tourists and guests from
other places, there are many residential and other potential customers in the
area Including government officials, and NGOs. This makes the area most
suitable site to develop Commercial Mall in order to provide service like, Hotel
café, and restaurant Guest House and other commercial Businesses. The
services including, house hold items bed/accommodation, wedding ceremony,
hot drinks, soft drinks, juice and food services. Also it is important to note that
raw materials for cafe and restaurant services are readily available in the area.

Nowadays, the lodge and recreation demand is very high in the country, the
reasons that the population number has been increasing and the people
income level is also improving as well. So, many people want recreation places
and household items need are increasing day to day.

It is obvious; there are few competitors in the area particularly in Hotel service
and Guest house but which are unable to satisfy the increasing demand. So,
this remains in the area where anybody with some capital can start these
services. The added advantage is that the land for such services is available.

The market demand for commercial service starts with People wants to enjoy
outdoor amenities with their children. Adults want to take different physical
exercises and their children want to play with different playing materials. That
is why there are many and large amusement and recreation resort parks in all
cities in developed countries.

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2.2. Demand and Supply Gap

Gelan townis found at the border of southwest Oromia special zone

surrounding finfinne zone. The town is situated 20 Km from the capital Addis
to the east direction. The town is also a major business center and commercial
route that attracts thousands of business travelers. These are also the most
important groups of potential customers that include both the local and foreign
tourists and the modern business community who choose services that range
from economic to high class standards. These groups would also choose a
healthy comfortable climate that combines a more traditional type with that of
modern bedrooms restaurants and cafeterias. Even though when compared
with similar towns in the region. BISHOFTU seems to have no developed
huge Commercial Complex buildings and the existing supply is far behind the
growing demand for standard service. Hence, the project will solve the serous
demand problem in the town.

2.3. Demand factors for Commercial Complex

There exist many demand factors for modern Commercial complex or

Marketing Mall in Oromia as well as in Gelan town. The main factors are:

 Fast Economic Growth & economic growth/activity of the district

 Population growth and density,
 Tourism
 Geographical significance of the town

2.3.1. Fast Economy Growth

The Ethiopian economy has been experiencing dynamic and double digit
growth that experienced annual average growth of 11.4% in past 8 years.
According to Ministry of Finance and Economic Development (MoFED), the
forecasted economic growth the economic growth (GDP at constant basic
price) for 2011/2012 is estimated to be 10.4 %. As per the estimates, annual
growth rates of the major sectors, i.e. Agriculture, industry and service were

14
7.6 %, 10.6 % and 13.0 %; respectively and their shares out of the total GDP
were 42%, 13% and 45 %, respectively. This continuous and a-two-digit high
growth would place Ethiopia among the fast growing countries in the world.

As sectors of the economy, the agriculture and construction sector also grows
with double digit with the average annual growth 10.31 % and 12%
respectively in the past 8 years. As shown in the table below the growth of the
sectors directly related with the economy as parts of the economy.

Major Economic Indicators Trends in Performance of the Economy: Growth

Rates (%)
2002/0 2003/0 2004/0 2005/0 2007/0 2008/0 2009/1
Item 2006/07
3 4 5 6 8 9 0
GDP in
1999/00
Prices -2.1 11.7 12.6 11.5 11.5 11.6 10 10.4
Agriculture -10.5 16.9 13.5 10.9 9.4 7.5 6.4 7.6
Industry 6.5 11.6 9.4 10.2 10.2 10.4
O/w:
Manufacturi 0.8 6.6 12.8 10.6 8.3 7.1
ng
Construction 13.6 19.5 7.5 10.5 10.9 11.3 11.7 10.9
Services 6 6.3 12.8 13.3 14.3 17
O/w:
Banking and
Insurance 10.8 19.7 24.2 28.7 15.1 24.9 16.5 13.7
Distributive
services 5.5 6.4 14.7 14.2 16 15.2
Other
services real
GDP PER
CAPITA 6.5 6.1 10.9 12.5 13.1 14.2
PER capita
GDP -4.6 10.7 9 8 7.5 7.6

Inflation 15.1 8.6 6.1 10.6 15.8 25.3

Source: MOFEO & NBE
This fast growth of these sectors resulted from different bodies like government,
non government and private activities in Ethiopia is growing in the fastest rate.
Moreover, the current five years Ethiopian Growth and transformation plan will
expand the economic growth paramount level by harnessing the resource and
expanding industrialization.

15
2.3.2. Population and Population Growth (Demography)

The rate of urban population growth is increasing from year to year. The latest
report of the population estimation revealed that Ethiopia’s population has
reached 100 million, which puts Ethiopia as the second most populous country
in Africa. According to the Central Statistics Authority (CSA), current
population growth is estimated to be 2.8% per annum, and the growth rate is
expected to remain above 2% for the next 20 years. Rural population is growing
at about 3.0% while the urban population is growing at about 4.3%. Total
population is projected to reach 129 million by 2030. In Ethiopia, of the total
population, about 16.0% is estimated to reside in the urban areas. The trend
suggests that the size of urban population is likely to continue to grow at a
high speed in the future. The share of urban population will rise from 16.0% in
2005 to about 23% by 2030. Nearly 30 million of the total 129 million will live
in cities and towns by 2030. In this regard Addis Ababa has the largest
population in the nation (which is estimated to be more than 3.5 million).

In general having a huge population is a potential for business especially for

Hotel business since people naturally demands for cafe, restaurant, bar bed
rooms and recreational center services.

2.3.3. Tourism

Ethiopia is a land of wonder and enchantment, a country with one of the

richest histories on the African continent, a land of contrasts and surprises, of
remote and wild places, home to cultured and friendly people who are
descended from some of the world's oldest civilizations. The country is endowed
with unique combination of natural and cultural heritage, impressive scenery,
suitable climate, rich flora and fauna and recognized archaeological sites.
There exists many kinds of flora and wild life and more than 800 species of
birds reside in Ethiopia of which 23 are endemic to the country.

There are more than 100 mammals species, of which seven of the big mammals

16
are unique to Ethiopia. Ethiopia's many national parks enable the visitor to
enjoy the country's scenery and its wildlife, conserved in natural habitats, and
offer opportunities for travel adventure unparalleled in Africa.

All these could be enough to make Ethiopia fascinating place to visit and travel
through, but Ethiopia has so much to offer. Generally speaking, the improved
political, social and economic climate observed in recent years has created
favorable conditions for development of tourism in the country. This can be
evident from the trend that tourist arrived for different purposes has shown an
increment over recent years.

2.3.4. Geographical Significance of the Area

The project area has adjacent to finfinne, Gelan town which encourages
people to visit the town in weekends and holidays that creates a demand for
the envisioned Commercial Mall.

2.4. Competitors
The envisioned Marketing Mall will have a competition from few commercial
centers and recreational centers developed in the town. However, the project
will have its own marketing strategy and utilize its competitive advantages to
be successful.

2.5. Target Customers

The target customers for the envisioned project will be new visitors travelling
to the area local or foreigner, local community, middle and upper income
bracket, returning visitors to the area, business needing to hold small
overnight planning, strategy sessions, wedding parties/couples.

2.6. Marketing Promotion and strategy

To reach customers different marketing ways will be used. Among the different
marketing strategies and tools for promotion controlling the market:

 Printed and non printed forms of advertising, Electronic etc

 Sponsorship of key government activities and public support

17
 mechanism.
 Seasonal discount pricing for bed rooms and different other customer
centric marketing strategies will be used by the promoter.
The project under discussion will have diversified marketing strategies that
could enable it come up with the different competitors in the market.
Moreover, best quality and customer satisfaction will be the key marketing
strategy of the project.

2.7. Service Capacity and Service Delivery Program

The program is scheduled based on the consideration that the envisaged Mall
will give service 360 days that means the non-operational days are for
maintenance only. During the first year of operation the project will operate at
60 percent capacity and then it grows to 80 percent in the 2nd year.

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Service capacity of the Mall at full capacity in third year of operation
SN Description Measure Daily Monthly Annual
ment Service Service Services
Capacit Capacity
1. Hotel Service

1.1 Coffee & Sypris Cup 300 9000 108,000

1.2 Tea Cup Cup 350 10500

1.3 Milk Cup Cup 300 9000
1.4 Macchiato Cup 300 9000 108000
1.5 Soft Drink Bottle Bottle 400
1.6 Juices Cup Cup 200 6000
1.7 Cake No. No. 200 6000
1.8 Different Food Items No. 400 12000
1.9 Fast Food No. 300 9000
2 Bar Service
2.1 Beer & Beverage Bottle 600 18,000.00
2.2 Different Alcoholic Bottle 20 2,000.00
Drink
3 Guest house
3.1 Single Bed Bed 20 2,400.00 28,800.00
3.2 Double Bed Bed 10 1,500.00 18,000.00
3.3 Suit Bed Bed 5 60 1,800.00
3.4 Family Bed Bed 10 900 10,800.00
4 Assembly Hall service
Assembly Hall service1
4.1 Day/Seat 1/2000 1/1000 1/1000
4.2 Assembly Hall service2 Day/Seat 1/1500 1/500 1/500
5 Gymnasium & Fitness Person/ 100 100 100
center month
6 Children Game Game 300 9000 108,000
Spa, Massage, Sauna &
7 Beauty Salon Person - 20 600 7200
8 Tennis or Basket court Game - 100 360

19
The capacity will grow to 100 percent starting from the 3 rd year that is the full
capacity of the Mall. This consideration is developed based on the assumption
that market and logistics barriers would be eliminated gradually within the
first two years of operation.

2.8. Pricing

Based on the market price of similar project in Gelan town, the envisioned
Mall set the following fair price for its services as indicated below;
SN Description Measurement Unit Price in Br.
With VAT
1. Hotel Service
1.1 coffee Cup 20
1.2 Tea Cup 10
1.3 Milk Cup 20
1.4 Macchiato Cup 17
1.5 Soft Drink Bottle 20
1.6 Juices Cup 40
1.7 Cake No. 36
1.8 Different Food Items No. 140
1.9 Fast Food No. 50
2 Bar Service
2.1 Beer & Beverage Bottle 30
2.2 Different Alcoholic Drink Bottle 2100
3 Bed Service
3.1 Single Bed Bed 500
3.2 Double Bed Bed 1000
3.3 Suit Bed Bed 800
3.4 Family Bed Bed 1200
4 Assembly Hall service
4.1 Assembly Hall 1 Day/Seat 5000
4.2 Assembly Hall 2 Day/Seat 1500
4.3 Assembly Hall 3 Day/Seat 2,200
5 Gymnasium ^ Fitness center Person /month 1,000
Children Game Game 20
Spa, Massage, Sauna & Beauty
Person 300
Salon
Swimming Service Person 50

20
Weeding Ceremony Wedding 2500

21
 3. ORGANIZATION AND MANAGEMENT
3.1. Organizational structure

An organization is an entity established to organize activities, resources and

manpower so as to achieve the intended objectives in a given time.
Organizational structure is a tool designed to allocate the planned activities,
responsibilities and accountabilities to man power of the organization based on
their qualification and experiences. Hence the following organization structure
is designed for the proposed project management depending up on services in
Commercial and main section in Marketing industry.

General Manager

As General Manager

Room division Dep’t Supportive Dep’t Food & Beverage Dep’t

Front Office section Security Personnel marketing section

House Keeping section Food & Beverage service
Food & Beverage production

 Support Dept includes security, Marketing &sales, engineering &

Hotel Maintenance, finance and accounts, purchase and general
store and personnel sections

22
A. The General Manager's

Duties and Responsibilities

 He/she will plan, organize, direct and control the overall activities of the
Hotel.
 He/she will devise policies and strategies that will enable the Hotel to be
profitable.
 He/she will incorporate modern technological innovation that will facilitate
the service delivery of the restaurant and bars, bed rooms, assembly hall
and gymnasium services that will increase customer's satisfaction.
 He/she will plan, organize, direct and control the human and non-human
resources of the Hotel so as to achieve the short and long run objectives of
the organization.

B .Assistant G. Manager

 He represents the General Manager.

 He leads the technical department.
 He leads supportive Department.
 He operates Additional work from G.
Manager.
 Submit reports to G. manager.

c. Finance & accounts section manager

The Admin & Finance Department of the Hotel IS responsible for undertaking
the following activities:

 Will manage non human resources of the Mall, which include: effective
handling of the different inventories of the Hotel, and devise strategies of
controlling against fraud and damage.

 Will provide the right material or inventory to the center with right price at

23
 the right time.

 Will plan, organize direct and control the financial transaction of the
building by using all the necessary documents.

 Accountant and cashers that will collect money from the customers.
 Will develop sound financial control system by developing modern financial
control systems.

 Will prepare the annual financial statements and prepare condensed reports
for both the General Manager and other concerned government body.

D. Food and beverages Service Manager

 Coordinate Food & beverage service sections (Bars, restaurants, banquets,

room service, garden or roof top restaurants).
 Evaluate and support food and beverage operation
 Plan & implement to bring superior customer
service
 Submit operational report for Ass. General
manager

E. Food and Beverage production section manager (Executive Chef)

 Coordinate food and beverage production sections

 Support and control food and beverage operation
 Plan and implement for quality operation of food & beverages
 Submit on time request about inputs for production
 Provide on job Training staffs for better performance

F. The Marketing and sales section manager

 Will handle the overall marketing activities of the organization which

include planning, organizing, directing, and controlling.

24
 Will develop the marketing strategies.
 Will develop effective customer handling strategies
 Plan and execute the promotion mix

G. House Keeping section Manager (Executive house keeper)

 Coordinate all housekeeping operation.

 Support and control on site housekeeping operation
 Plan and implement strategies for better housekeeping performance.
 Submit input request on time for housekeeping operation
 Submit report for top leader

4.2. Man Power

The total manpower required for the plant will be 120 employees at full
capacity.

 Permanent workers 80
 Skilled 60
 Unskilled 20
 Temporary workers 40
 Skilled 10
 Unskilled 30

Sr. No of Monthly Annual

Job Title Qualification Job
No salary Salary
titles
A Permanent
Employees
1 General Manager
1 22,000 264,000
1.1 Secretary BA in secretary
Since/Office Mgt 1 3,000 36,000
2 As General MA. In Marketing
Manager Mgt 1 18,000 216,000
3 Room division BA/MA in
Dep’t marketing Mgt 1 13,000 156,000
3.1 Front Office BA/MA in Bus. Mgt
section 6 10,000 720,000
3.2 House Keeping BA/MA in Hotel Mgt
section 2 10,000 240,000

25
Sr. No of Monthly Annual
Job Title Qualification Job
No salary Salary
titles
4 Supportive Dep’t BA/MA in Hotel Mgt
1 15,000 180,000
4.1 security Military science
training 5 3,000 180,000
4.2 Marketing &sales BA. In Marketing
&sales Mgt 6 10,000 720,000
4.3 Engineering & BSC/MSC in Civil
Hotel Maintenance Engineering 4 15,000 720,000
4.3.1 Sanitary level III in sanitary
technician 3 8,000 288,000
4.3.2 Electrician level III in electricity
3 8,000 288,000
4.3.3 carpentry level III in carpentry
3 8,000 288,000
4.3.4 construction level III in
technician construction 2 8,000 192,000
4.4 finance and BA/MA in finance
accounts and accounting
4 10,000 480,000
4.5 purchase and BA/MA in Supplies
general store Mgt 4 10,000 480,000
4.6 personnel sections BA/MA in HRM
6 10,000 720,000
5 Food & Beverage BSC in Food &
Dep’t Beverage
preparation 1 15,000 180,000
5.1 Food & Beverage level III in Food &
production Beverage
preparation 8 10,000 960,000
5.2 Food & Beverage level III in Hotel
service service 18 10,000 2,160,000
21
80 6,000 9,468,000
B Casual Employees
-
Architecture BSC/MSC in
Architectural
7 Engineering 1 10,000 120,000
Civil Engineer BSC/MSC in Civil
8 Engineering 1 10,000 120,000
Construction BSC/MSC in
Management Construction
9 Management 1 10,000 120,000
Electrical Engineer BSC/MSC in
Electrical
10 Engineering 1 10,000 120,000
Sanitary Engineer BSC/MSC in
Sanitary
11 Engineering 2 12,000 288,000

26
Sr. No of Monthly Annual
Job Title Qualification Job
No salary Salary
titles
Land Scape BSC/MSC in Land
12 Engineer Scape Engineering 2 12,000 288,000
laborers
13 32 3,000 1,152,000
Casual total 40 2,208,000
Grand Total 120
11,676,000

27
4. FINANCIAL REQUIRMENT AND ANALYSIS

The Financial analysis include insight to the total capital outlay required for
the project which would consist of total fixed investment cost, and pre-
production costs; the source of finance for the total planned initial investment
cost requirement and other parameter of feasibility analysis including
projection of profit/loss statement, cash flow statement and payback analysis.
Hence, the total initial investment cost for implementing this project is
estimated at ETB 40,000,000. Out of the total budget of the project 30% or
ETB 12,000,000 will be covered by the owner equity; while the rest 70% Eth
birr 28,000,000 will be covered by financial institutions.

Table Summary of Total initial Investment cost

SN Description Cost in Birr
8,000,000
1 Land, Building & Construction
4,000,000
2 Machines & Equipments
4,000,000
3 Vehicles
531,687
4 Office Equipment
16,531,687
- Total Fixed Investment Cost
300,000
5 Pre service Expense
3,260,000
6 Raw materials(Six Month Cost)
11,676,000
7 Salary
4,595,949
8 Operating Expense
19,831,949
Total Working capital
36,363,636
Total
3,636,364
Contingency (10%)

40,000,000
Total Initial Investment Capital

28
4.1. Fixed Investment

The fixed investment cost of the project consists of land acquisition and
development, construction costs of building and civil works, costs for purchase
of plant machinery and equipment, cost of purchase of vehicles, purchase of
other fixed asset and other pre production capital expenditure. Accordingly the
fixed investment cost constitutes the resource required for land acquisition,
site preparation and development, design and engineering cost, building
construction cost, civil works (service facilities), purchase of Hotel machinery
and equipment, purchase of transportation vehicles, purchase of office
furniture and equipment and capital costs required for other fixed assets.

A. Building &
Construction

SN DESCRIPTION Total Cost in Br

Hotel Building (bed rooms, bar ,

restaurant , cafeteria and gym, assembly
1 halls) 5,332,000
2 Wedding Shade & Gardening 930,000
3 Generator House 60,500
4 Parking & green area 300,000
5 Open recreation area 751,500
6 Children Play Ground 326,000
7 Design and Supervision 300,000

29
 Total 8,000,000

B. Machinery and equipment’s

Unit
Total Price
SN Description Measurement Qty Price in
in Br
Br
Hotel Service
Machineries
equipment
1 Laundry Machine with No 2 200 4
all accessories ,000 00,000
2 Bar table No 20 1
5,000 00,000
3 Bar chare No 50 1
2,500 25,000
4 Dining Tables No 50 2
4,400 20,000
5 Dining Chairs No 50 1
2,230 11,500
6 Coffee Tables with Set 80 2
chairs 2,500 00,000
7 Bed with all No 15 3 4
accessories for Family 0,000 50,000
Room
8 Bed with all No 20 2 5
accessories for Double 5,000 00,000
Room
9 Bed with all No 10 1 1
accessories for Suit 7,500 75,000
Room
10 Beds with all No 20 1 3
accessories for Single 5,000 00,000
room
11 Comfort Chair(sofa) for No 1 2
reception 5,000 25,000
12 LCD 32” TV for Bed Unit 25 1 3
room 5,000 75,000
13 LCD 60” TV for Unit 3 3

30
 Restaurant café and 0,000 90,000
Bar
14 Kitchen Equipments LS
-
15 Refrigerator No 5 2 1
0,500 02,500
16 Balcony & alcohol Set 5 5 2
display 0,000 50,000
17 Satellite Dish No 2
9,250 18,500
18 Satellite Receiver No 157 3
Equipment /Decoder 2,500 92,500
19 Public addressing Unit 3 5 1
system of auditoria 5,000 65,000
type
Grand Total 4,00
0,000

A. Vehicles
Unit Total
SN Description Qty Remark
Price Price in Br
1 V8 or similar standard 1 1,600,0 1,600, Duty
car for General 00 000 free
manager
3 Double cup for 1 600,0 600, Duty
department heads 00 000 free
4 Min Bus Van 1 600,0 600, Duty
00 000 free
5 Mid Bus 1 1,200,0 1,200, Duty
00 000 free
Total 4,000,
000

D. Office Equipment
Unit Price Total
SN Description Measurement Qty
in Br Price in B
1 Office chairs Unit 30 2000 60,00
2 Office tables Unit 20 2,0003000
3000 0
60,00
3 Computer Unit 12 3,000
15000 0
180,00
4 Printer Unit 6 15,000
6000 0
36,00
6,000
5,0 0
60,00
Computer table 12
5 with chairs Set 00 0

Managerial Chair 8,0 48,00

6
6 with table Set 00 0

31
 7 File Cabinet Unit 5 4000 20,00
8 Office Shelves Unit 5 4,000
5000 0
25,00
9 Telephone Set Unit 10 5,000
7 0
7,68
68
3,5 0
35,00
Decoration 10
10 (Curtain carper) set 00 0
Total 531,687
531,680
E. Pre – Service Expense
SN Description Cost in Br.

1 Project proposal 15,000

2 Licensing fee and others 50,000
3 Environmental Assessment Impact 50,000
4 Staff Capacity Building 185,000
Total 300,000

4.2. Operating Expenses at Full Capacity

I. Raw materials
Cost per
Total Annual
SN Description Measurement Month in
cost Br.
Br
Raw Materials for 1,672,8 1,672,8
1 restaurant and Cafe LS 19 19
2 Raw materials for Bar LS 1,173,18 1,173,1
1 81
Other raw materials & 414,0 414,0
3 inputs LS 00 00
Total 3,260,0 3,260,00
00 0
NB. The cost of raw material is revolving budget throughout the year. Thus we
fill the monthly and annual budget the same figure.

II. Other Operating Expenses

Annual Cost Assumption Used
SN Description br.
1,048,59 1 % of fixed Investment
1 Property Insurance
0 54,00 Cost
2 Audit & Legal Fee 3000 per month
0 60,00
3 Uniforms 200*300 br.
0

32
 Telephone, fax and 26,81 2000 per month
4
postal 8 60,00
5 Cleaning goods 5000 per month
supplies 02,197,18
6 Repair and 2 % of the Fixed Cost
maintenance 1 500,00
7 Advertisement % of sales
0 18,00
8 Stationery and 1000 per month
supplies 0 94,00 0.47 br*200,000KWh per
9 Electricity
0 50,00 year
3*10,000 M3 per year
10 Water
0 257,60
11 Fuel 14000 lit*18.4 br
0 85,76
12 Oil and lubricant 10% of fuel cost per year
0 144,00
13 Miscellaneous 12,000 per month
Expense 0
4,595,94
Total
9
4.3. Underlying Assumption

The financial analysis of the envisioned Project is based on the data provided in
the Preceding sections and the following assumptions.

The total initial investment cost for implementing this project is estimated at
ETB 40,000,000. Out of the total budget of the project 30% or ETB
12,000,000 will be covered by the owner equity; while the rest 70% Eth birr
28,000,000 will be covered by financial institutions.
A. Construction and Finance
Construction period 2 years
Source of finance 30% equity and 70% loan
Bank interest rate 10%
Operation Costs and raw materials 5% after year 3
increase by
Salary and wages increase by 5% after year 3
Annual Sales revenue increased by 5% after year 3
B. Working Capital
Accounts receivable 30 days
Work in progress 5 days
Cash in hand 5 days

33
Account payable 30 days

4.4. Source of Capital

SN Description % share Amount (in Birr)

1 Owners Share 30 12,000,000

2 Bank Loan 70 28,000,000

Total 100 40,000,000

34
4.5. Loan Repayment Schedule
Principal Total Annual Remaining
Year Interest -10%
Payment Payment Balance

0 0 0 0 28,000,000
1 2,800,000 2,800,000 5,600,000 25,200,000
2 2,800,000 2,520,000 5,320,000 22,400,000
3 2,800,000 2,240,000 5,040,000 19,600,000
4 2,800,000 1,960,000 4,760,000 16,800,000
5 2,800,000 1,680,000 4,480,000 14,000,000
6 2,800,000 1,400,000 4,200,000 11,200,000
7 2,800,000 1,120,000 3,920,000 8,400,000
8 2,800,000 840,000 3,640,000 5,600,000
9 2,800,000 560,000 3,360,000 2,800,000
10 2,800,000 280,000 3,080,000 0

4.6. Depreciation Schedule

S Description Original Depreciation Deprecation

N Value in Birr rate in % Per year

1 Construction and Building 8,000,000 5 400,000.

00
2 Machines & Equipment’s 4,000,000 10 400,000.
00
3 Vehicle 4,000,000 20 800,000.
00
4 Office Equipment 531,687 10 53,168.
70
Total 16,531,687 1,653,169

35
4.7. Projected Revenue Schedules

Based on the production capacity of the envisioned Commercial Complex

center indicated in previous chapter, the total revenue of the project is
projected as indicated in the table below;

Annual Unit
Total price
SN Description UOM Service Price in
Capacity Sr.
in Sr.
1 Hotel Service
1.1 Coffee Cup 10,8 270,00
1.2 Tea Cup 00
12,6 25 189,000
1.3 Milk Cup 00
10,8 15 270,000
1.4 Macchiato Cup 00
10,8 25 216,000
1.5 Soft Drink Bottle 00
14,4 20 432,000
1.6 Juices Cup 00
7,2 30 288,000
1.7 Cake No. 00
7,2 40 259,200
1.8 Food No. 00
14,4 36
2 2,880,000
1.9 Fast Food No. 00
10,8 00 540,000
Sub Total 00 50 5,344,200 0
2 Bar Service
2.1 Beer Bottle 1,800 50 90,00
Beverage 0
2.2 Alcoholic Bottle 200 2500 500,-
Drink
Sub Total 000
590,000
3 Bed Service -
3.1 Single Bed Bed 2,800 800 2240000
3.2 Double Bed Bed 1,800 1500 2700000
3.3 Suit Bed Bed 2,160 1000 2160000
3.4 Family Bed Bed 1,080 1500 1620000
Sub Total 8,720,000
4 Assembly
service
4.1 Assembly Hall Day/Seat 360/100 5
4.2 1
Assembly Hall Day/Seat 360/150 3 500,000
,000
4.3 2
Assembly Hall Day/Seat 1/500 2 525,000
,500
3
Sub Total ,200 330,000
1,355,000
Person/ 1 100,
5 Gymnasium mont 100 ,000 000

36
 Annual Unit
Total price
SN Description UOM Service Price in
Capacity Sr.
Fitness center h
6 Weeding Wedding 360/52 2 900,
Ceremony ,500 000
Total 5,320,000

According to the projected income statement, the Mall will start generating
profit in the 1st year of operation. Important ratios such as profit to total sales,
net profit to equity.

Return on equity) and net profit plus interest on total investment (return on
total investment) show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the
project is viable.

4.8. Pay-Back Period

The investment cost and income statement projection are used to project the
pay-back period. The project's initial investment will be fully recovered within
eight years after the time of operation.

Every business undertakings be it large or small should have future

development plan. It is a plain fact that business activities are undertook in a
dynamic business nature and different environment. Therefore, the project will
have an expansion phase to include Cinema, and other additional services in
the future.

37
5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL

Economic: the potential source of revenue generated from commercial sector

will appear extremely attractive to local communities. It is hoped that the
ecotourism project will raise sufficient funds to convince local communities to
protect the reserve and that the funds will act as suitable compensation.

Environment: The project plays important roles in terms of the environmental

service that it provides. The conservation value and the area as enormous due
to its ability to stabilize the ecosystem, control soil erosion (by making terraces)
and water dynamics and provide vital resources. The owners will preserve the
remaining natural plants and provides refuge and breeding grounds for
creatures that encourage seed dispersal, pollination and control plant and
animal. The control of local climate condition is another important service that
would be lost through the destruction of the ecosystem.

Social: the project will ensure social development though employment and job
creation which is about 120 individuals get hired. The training of workers and
skill up grading programs will enable the local people fit or efficient
performance in their activities.

The Marketing Mall component is a new, exciting and potentially successful

method of generating funds for conservation and community development. The
project will promote the outstanding natural beauty of the area and encourage
further investment in projects of a similar nature around Oromia. The pilot
phase will allow us to draw up clear guiding principles for marketing business
development which can be applied widely elsewhere in order to take advantage
of Ethiopia's in particular Oromia's enormous tourism potential. Hence, the
Commercial Complex center opens new ground in pioneering the establishment
of a fully environmentally friendly project in the area.

38