5 Star Resort Kabode Bishooftu

“Five Star Resort”
PROJECT TO BE IMPLEMENTED IN BISHOFTU TOWN,
EAST SHEWA ZONE, OROMIA REGION STATE
MARCH, 2022
Addis Ababa, Ethiopia
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TABLE OF CONTENTS
I. EXECUTIVE SUMMARY
1. INTRODUCTION………...................................................................................................…..4
2. Background…………………..……………………………………………………………..…5
2.1 The Industry of the Project……………………………………………………..……........5
2.2 The project Sites..................................................................................................................6
2.3 Project Benefits/Project Justification………………………………………………..….…9
2.4 The Promoter…………………………………………………..………………….…......10
3. General Description of the Area………………………………………………………...…...10
3.1 Location…………………………………………………………..……………………...10
3.2 Topography…………………………………………………………………..…...……...10
3.3 Soil Type…………………………………………………………………..……………..11
3.4 Economic Activity………………………………………………………………......…...11
4. The project description……………………………………………………………………....11
4.2 Object of the Project…………………………………………………………………......11
4.3 Technology and Techniques to be used……………………………………………….....12
4.4 Service Provision capacity and capacity Utilization…………………………………......13
5. Market study and plant capacity
5.1 International and Domestic demand for Hotel services………………………………….13
6. Land use plan and action plan……………………………………………………………..…15
6.1 Land Use Plan……………………………………………………………...…….………15
7. Organization and management………………………………………………………...….…16
7.1 Organizational structure …………………………………………………………………16
8. Financial study………………………………………………………………………….……19
8.1 Project capital and sources of finances…………………………………………..………19
8.2 Initial working capital estimation of the project …………………………………...……22
8.3 Estimated costs of salary expense…………………………………………………...…...22
8.4 Revenue and Revenue projection…………………………………………………..……24
8.5 Depreciation of the Fixed Assets……………………………………………………...…25
8.6 Basic Assumption’s ……………………………………………………………...…...…26
9. Financial Analysis……………………………………………………………………………27
10. Brief Environmental Impact Assessment (EIA) …………………………………………….28
Anne x I: 4-Star International Hotel Project Action Plan/ Gantt chart………………………29
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EXECUTIVE SUMMARY
1. Project title – Five Star International Standard Resort

2. Promoter –Kaboad University
3. Project Location:
 Oromia Regional State

 East Shewa Zone
 Bishoftu town
 By the side of Addis –Adama road
4. Total Proposed Land Area (M2) = 10,000m2
5. Total Capital = Br. 76,000,000
a. Working Capital = Br. 41,800,000
b. Fixed Capital = Br. 26,600,000
c. Contingency (Lump sum) 10% = Br. 7,600,000
6. Source Fund
a. Own Equity (30%) = Br. 22,800,000
b. Bank loan (70%) =Br. 53,200,000
7. Planned Employment of the creation of the project: The total manpower requirement
for the plant will be 134 employees at full capacity.
a. Permanent Workers: - 54
i. Skilled 20 and Unskilled 34
b. Temporary Workers: - 80
i. Skilled 30 and Unskilled 50
Hence, the project is feasible and important to be undertaken being the first of its kind in the sub-
urban area of the country having international quality and standard. Furthermore, the project would
contribute immensely to the development of tourism industry in particular and the country in
general.
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1. Introduction
I
n history of mankind and in no measure a particular country or society subdue itself to a
humiliating and grinding poverty as poverty is the indication of deprivation of basic
necessities. Ethiopia, the country with immense natural resource potential, is always cited as
one of the home of the people on the face of the earth stricken with famine, drought and poverty.
What so ever the past and whether it was desecrate or blessing, the existing situations in this
country is the most important one. Today in Ethiopia the gleaming hope for development is quite
encouraging, the government policies concerning the private investments are invigorating and to
indicate some major steps taken the country in private investment policy endeavors;
Capital goods and building materials may be imported duty-free by star designated hotels and
international standard restaurants.
Buses for tourist use may be imported duty free.
Four-wheel-drive passenger vehicles of the Land Cruiser type may be imported duty-free
subject to the conditions that Five brand new vehicles must be purchased within a period of
one year in a maximum of two consignments.
Any investor may employ duly qualified expatriate experts required for the operation of the
business and so on. Furthermore, to some extent the living standards of country’s citizens are
improving. In line with social changes people are trying to pull out themselves from primary
economic activities to civilized activities and improving their income. As income increases
many people start to change their living habits and tastes: with social changes facilities and
type of social services should be changed and modernized. One of the modern versions of
social services is the development of modern hotels and tourism sector. But due to known
reasons there is no or very few hotels in many medium and small towns of the country in
general and the region in particular. A few existing ones are with backward or poor facilities
which are nuisance to customers and undesirable for country’s image. Owing to this realities
and the increasing demand for such facilities, this project is proposed to be established in the
area where there is no such hotel at all.
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2. Background
2.1. The Industry (Hotel and Tourism sector)
The development of hotel and tourism can be categorized in the third stage of traditional economic
development of a particular country. But today the existing situations are changing as a number of
countries in the world are holistically the whole economic growth endeavors at the same time not
necessarily giving focus to a particular sector of the economy for achieving fast and sustainable
economic growth.
Thought, Ethiopia’s economic policy is ‘agriculture led industrialization’; the country is working
on all strategic areas including the tourisms sector and the income being earned from the sector is
increasing from time to time. Furthermore, as the country has able to make register nine historical
and natural world heritage centers by UNESCO, the hotel and tourism sector is becoming one of
the focus areas for achieving the five year GTP of the country.
2.1.1. Justifications of the Industry:
As explained by Roe, Ashley, Page & Meyer (2004, the following points are deserving attention
for justifying what the sector for poor countries mean;
 Tourism is generally labor-intensive – although less than agriculture – and therefore can impact
on a large number of lives through the labor market;
 Tourism has considerable potential linkage, especially with agriculture and fisheries, which
can minimize the ‘leakage’ effect. Due to the high income elasticity of demand for
international tourism, it can offer a relatively rapidly growing market;
 Tourism provides opportunities for off-farm diversification, particularly in areas that do not
attract other types of development options;
 Tourism can provide poor countries with significant export opportunities where few other
options are viable;
 It may create initial demand for a good or service that can itself develop into a growth sector;
 Tourism products can generate demand for assets such as natural resources and culture, to
which the poor often have access;
 Tourism delivers consumers to the product rather than the other way around; and
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 Infrastructure including hotels associated with tourism development can provide essential
services for local communities.
2.2. The project
The envisaged project is the development of hotel services in Bishoftu Town, East shewa zone of
Oromia regional State. The development of resort in the country is now gaining momentum as
more focuses are being given to the sector. Beyond the envisaged perceptions, development of
standard resort facilities in all towns of the country in general and the region in particular would
enhance the development of domestic and foreign tourist flow in all areas of the country as the
country is endowed with numerous historical and natural tourist attraction sites.
2.2.1. Expected Standards of Five Star Hotels

As a Five star Resort is the lowest level of international standard Resort , expectations at this level
include a degree of luxury as well as quality in the furnishings, decor and equipment, in every area
of the Resort. Bedrooms will also usually offer more space than at the lower star levels, and well
designed, coordinated furnishings and decor. The en-suite bathrooms will have both bath and fixed
shower. There will be a high enough ratio of staff to guests to provide services like porter age, 24-
hour room service, laundry and dry-cleaning. The restaurant will demonstrate a serious approach to
its cuisine.
2.2.2. Required notifications in Five star designated hotels

The following notifications required due attentions in Five star designated Resort.
 Restricted Service
Some Resort operate a restricted service during less busy months. This may be a reduction of the
restaurant service, or some leisure facilities may be unavailable. Please check when booking.
 No Dogs
No dogs allowed in bedrooms. Guide dogs for the blind may be accepted as an exception to this
rule. However, even where hotels allow dogs, they may exclude some breeds, and may exclude
dogs from certain areas of the hotel, especially the dining room. It is essential to check the
conditions before booking.
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 Night Porter
At some hotels, the night porter may be there only between certain hours or on certain nights .
However, four- and five-star Resort s must have a night porter always on duty.
 Entertainment
This indicates that entertainment should be available at least once a week throughout the year.
However, some hotels may provide entertainment in the summer season or at other specified times.
 No children
This indicates that children cannot be accommodated. A minimum age may be specified (e.g. No
children 4yrs - no children under four years old). If this does not appear in the entry, it means that
the hotel will accommodate children, but may have no special facilities for them (e.g. no cots or
high chairs). It is essential to check when booking.
 Special Facilities for Children

This shows that establishments with special facilities for children, which will include baby
intercom or possibly baby-sitting, playroom or playground, laundry facilities, drying and ironing
facilities, cots, high chairs and special meals.
 Conference Facilities
This denotes that conference facilities are available with maximum numbers that can be
accommodated theatre style; classroom style; boardroom style and the minimum overnight
delegate rate.
 Facilities for Travelers with Disabilities

Intending guests with any form of disability should notify proprietors in advance so that
arrangements can be made to minimize difficulties, particularly in the event of an emergency.
 Meals
Details of the style of food, last dinner orders, and likely price range are given. If there is a fixed-
price menu or menus, this is the price range quoted. V meals indicates that a choice of vegetarian
dishes is normally available.
In some parts of Britain, particularly in Scotland, high tea (i.e., a savory dish, followed by bread
and butter, scones, cake, etc.), is served in the early evening instead of dinner. However, the
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alternative of dinner may be available on request. The last time at which high tea or dinner may be
ordered is shown, but there may be some variation at weekends. On Sunday some hotels serve the
main meal at lunch time, and only a cold supper in the evening.
 Morning Coffee/Afternoon Tea

Indicates that morning coffee and/or afternoon tea are served to chance callers. All four and five
star Resort s serve morning coffee and, normally, afternoon tea to resident guests.
 Credit and Charge Cards Other Payment

The payment policies of hotels should be made clear to patrons on the point of booking. Not all
hotels will accept travelers’ cheques, even those from leading banks and agencies. If a hotel
accepts credit or charge cards, the information is shown in its entry. It is advisable to publish and
notify customer the policy regarding the use of credit cards.
 Booking and cancellation procedures

These should be noted to all customers, inclusive of confirmation numbers. The cancellation
policies of the facility also have to be clearly stated.
 Complaints
A crisis management procedure is a must especially in the case of guest complaints. Fire and bad
weather
 Smoking Regulations
Hotel should state clearly its policy on smoking. Ensure that where smoking is allowed there are
designated areas for non-smokers inclusive of rooms away from smokers.
 License to Serve Alcohol

Most Hotels and Resort s other accommodations with bars are licensed to serve alcohol. On many
properties this permission is clearly stated on entry to the bar area. Where there are exclusions for
minors under 18 or 21 this should be pointed out to the relevant patrons.
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2.3. Project Benefits/Project justification/
The envisaged project can be justified by the benefits it delivers to the country, the promoter and
the local communities. The main justifying points are explained as follows;
The project will contribute immensely to the tourism industry in particular and changing of
country’s image in general by creating internationally accepted standard facilities,
The investment will benefit the country in generating hard currencies and in boosting the GTP
program,
The project will benefit the local communities through creating job opportunities and markets
for their products to be supplied for the hotel.
Increase investment with multiplier effect to the national economy,
2.4. The promoter

The promoter of the project, Kaboad University is an JV from many years. Now he has decided
to contribute in his country’s development endeavors by investing in hotel and resort the sector he
selected. His vision is to make the country one of the best tourist destinations in the world through
promoting the country’s tourism industry by being linked with tour operators elsewhere.
3. General description of project area

3.1. Location
The envisaged Five star Resort service project is to be located in the Oromia regional state, East
Shewa zone, in Bishoftu town. The envisaged town is one of the growing towns in the region and
is found adjacent to Addis Ababa, the Federal Capital of Ethiopia from the north side. Currently
the town is known for its real-estate development and future establishment of industrial city.
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3.2. Topography
As the town is found bordering the Addis Ababa city, the topography of the town is almost similar
to that of Addis Ababa. Hence, its is found at the high altitude of the country having an altitude
2200-2400. The area experiences high rainfall having an annual mean rainfall of 1500-1800mm.
Whereas, its mean annual temperature ranges between 12 and 22C 0 . The scene of the area is
beautiful having a cukala mountain from the north-west direction and is so attractive for tourists
and visitors.
3.3. Soil type
Soils found around Addis special from the north-east side are characterized with their black-verty,
brownish and scantly red colors. Obviously the black and brownish soils are having workability
problems during rainy and dry seasons alike but the red soils are best for any agricultural and
construction activities as they do not show any expansiveness and shrinkage characteristics with
weather conditions.
3.4. Economic activity
The livelihood of the local community is primarily dependent on agricultural activities like crop
farming and animal husbandry. But now the investment activities are being expanded and hence,
many young people are employed as employee in investment projects or starting their own
businesses through organizing themselves in micro and small Enterprises. As the town is adjacent
of Addis Ababa city, many people are linking their livelihood with the city's trade activities.
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4. The project
4.1. Project description
As mentioned above, the envisaged project is to establish 5-star international standard Resort in
Bishoftu town on 10,000m2 of land to be secured from regional Investment Board.
4.2. Objectives
The primary objective of the project has many folds, but targeting at the promotion of the
country’s tourism industry through modern families and contribute in making the country one of
the best tourist destinations in the world and encourage other Diasporas invest in their country.
The common objectives are;
To establish and run modern a Five star Resort
To help develop the tourism sector of the region/country
To generate profit from invested capital
To create job opportunities for local community
To generate revenues for the country in the forms of taxations and rents.
4.3. Technology and Techniques to be used
Obviously, as this is 5-star designated Resort services, the project will utilize Five star standard
hotel industry’s technologies as indicated in the background of this project and techniques in
serving the customer. Hence, the following activity flow, technologies and techniques are common
in hotel construction and services operations.
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Preparation Resource
Start Site clearing
of design mobiliation
Supper Sub
Roofing
structure structure Excavation
works
works works
Doors, windows
Plastering Painting
works works
and other Finish
fininishing works
Start
Recruitment Furnish
operations
Fig1. Work process flow for hotel construction and service provisions
4.4. Service Provision capacity and Capacity utilization

The production capacity of the project is estimated based on the services the envisaged hotel is
going to provide and these are indicated in the following table.
Table1. Service Provision capacity of resort service project
No Main services Unit Full capacity operation
1 Bed rooms pcs 100
Bar
1. Alcoholic beverages Lit 2000
2 2. None alcoholic beverages Lit 5000
3. Hot beverages Cups 30000
4. Foods Dish 80000
Other services
3 1. Meeting /conference service Occasion 12(once a month on average)
2. Weeding service “ 24(twice a month on average)
The project will utilize 50% of its capacity in the first year of operation, 75% its capacity in the
second year and 100% in the third year of operations.
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5. Market prospect
Marketing opportunities for hotel services are directly linked with the level of the
country’s/regional/ economic and tourism development. As the region’/Country’s economy
develops, the citizens’ income improves and as income of the citizens improves they certainly start
looking for knowing their surrounding and their whole nation historical and natural attraction
hence the domestic tourist travelling culture will be developed. Similarly, as the country’s
infrastructure developed and its stability and security issues are insured, international tourist will
develop interests in travelling in the country visiting its historical and natural attractions.
Currently, the country’s economic and social development is on the right track and the future of
this nation is shimmering and the hotel and tourism market development will also do the same.
5.1. International and Domestic demand for Hotel services

5.1.1. International Demand for Ethiopian Hotel and Tourism
As aforementioned, Ethiopia is home for nine world historical and natural heritage sites and these
sites are to be visited by tourists coming from all-over the world. Based on the current
information on tourism market in the country, the demand for Ethiopian tourism market has been
increased by more than double as compared to the last ten years demands. This is because of;
1. Infrastructural development including quality hotels
2. Peaceful conditions of the country
3. Identification and promotion of more tourists attraction sites
4. Development of domestic tourists and so on. It is believed that this trend will continue for the
years to come and hence no marketing problems for Ethiopian tourism industry as long as
strong promotion works will continue for complete changing of the country’s image.
For example as study showed that the Inbound Tourist Arrivals in Ethiopia continued to grow from
76,844 in 1989, to 115,000 in 1999, 184,078 in 2004, 427,286 in 2009 and reaching 523,438 in
2011. During the year 2011, Ethiopia witnessed a positive tourist growth of 11.8 % over 2010. The
compound annual growth rate in Inbound Tourist Arrivals in Ethiopia during 1989 to 2011 was
9.7%. Table 1 indicates the trends of tourist flows into the country and the growth rates over the
period (1989-2011).
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According to Ministry of Culture and Tourism (MOCT) Tourism Statistics Bulletin of 2009, the
total number of hotels in Ethiopia in the year 2009 was 426. Recent data on the number of hotels in
the country was unavailable. As a result, to estimate the total number of hotels taking 20% growth
rate, it can be estimated as 511 hotels in 2012, and 613 hotels in 2013 the country. This number
includes all five stars, four stars, Five stars, two stars, one star and not classified categories of
hotels. Though it is clear as can be seen from an annual growth of 20% in hotel industry, there
are still a lot is to go at least to compute with some African countries who are equally or less
resource endowed as compared to Ethiopia. If we see only Kenya and Morocco, we notice a big
difference in number. According to The Embassy of Japan in Ethiopia (2008), even by 2004 data
the hotel stock amounted to more than 140,000 in Egypt, in Morocco 80,000 and more than 65,000
in Kenya. Even though the international hotel classification system is adopted in Ethiopia and
hotels are classified into categories with stars from one to five and hotels without stars as other
countries do.
It is possible to see the number of hotels, the rooms they have and the number of beds they
constitute in the following table.
Table2: Existing Hotels in Ethiopia
No of No of Average Room/Bed
No Category of Hotels No of Hotels Rooms Beds per hotel category
1 Five Star 3 794 1264 265Rooms & 422beds

2 Four Star 13 921 1197 71Rooms & 92beds
3 Five Star 37 1691 2314 46 Rooms & 63beds
4 Two Star 40 1465 1898 37 Rooms & 47beds
5 One Star 23 698 941 31 Rooms & 41beds
6 Not Classified 310 8549 10322 28 Rooms & 32beds
Total 426 14118 17936
Source: MoTC magazine

5.1.2. Domestic Demand For Ethiopian Hotel and Tourism
The domestic market for tourism industry is untouched and not promoted as required. In the
country with more 80 million populations, there are less than 5000 domestic tourist coming to the
industry in a year. Hence, this trend should be changed through strong promotion works by
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concerned organs and by the same token, the infrastructures form domestic tourists like reasonably
priced hotels and accommodations, tour guide with adjusted domestic tours and strong
collaborations among tour guides and the hotel systems should be tantamount for the development
of this industry and increase in domestic market demand for the industry.
6. Land use plan and action plan

6.1. Land use plan
The envisaged project is considered to be established on an area covering 10,000m2. This land
size will be distributed as per international resort standard and be utilized for main building of
resort services and other accessory works. Hence, the following land use pattern is proposed for
the project.
Table3: Land use Plan for Resort Project
No Types of Land Use Proposed land size (m2)
1 Building Hall areas 3,000

2 Children play ground 2,467
3 Parking, Loading/ unloading area 1,000
4 Storage for resort services 1,100
5 Cozy conference hall 1,233
6 Generator room 300
7 Incinerator 300
8 Guard/Janitor room 300
Green area 300
Total 10000
*Please see Annex I for action plan
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7. Organization and management

7.1. 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 manpower of the organization based on their qualifications and experiences.
Hence, the following organizational structure is designed for the proposed project management.
Fig2. Organizational Structure for Resort Project
General Manager
Reception
Hotel manger Administration &

Finance
Marketing manager Human resources

Catering
Accountant
Accomodation Procurement
and sales
Hotel Security
7.2. Manpower requirement with qualification & level of education
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Based on the volume and weight of the job to be assigned the following manpower with relevant
qualification is proposed.
Table4: Manpower and specific qualifications Resort
Description of Level of Required Annual

No Required qualification Unit
manpower education Number salary (Br.)
BA &
1 General Manager Management above
No 2 70,000
2 Hotel manager Hotel management BA. “ 3 90,000
3 Receptionist Reception Dip. “ 3 30,000

Admin.& Finance
4 Management BA 8 120,000
head
Human resource
5 Personnel management Dip. :” 8 68,000
officer
6 Accountant Accounting or Business Dip. “ 5 40,000
Marketing
7 Hotel management BA “ 10 1,500,000
manager
8 Cashier Accounting/Business Dip. “ 5 22,500
Hotel/bar
9 Catering Level III “ 5 1,800,000
operators
Maintenance
10 TVET Level III “ 5 250,000
workers
11 Security workers Literate 8th “ 10 67,500
Logistic and
12 Procurement TVET Dip. “ 5 237,500
workers
13 Store keeper TVET Level I “ 5 64,000
14 Cleaner/Janitor Literate 4th “ 5 292,500

15 Driver Literate 8thand> " 15 120,000
Health
16 Nursing/ HO Dip/Bsc " 20 120,000
Professional
Laundry and
17 Literate 4th and > " 20 250,000
salon worker
Total 134 5142000.00
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NB:- No of manpower is estimated considering two shift (24hrs) services as it is star designated hotel
8. Financial study
8.1. Project capital and sources of finances
The project capital estimations are done based on procurements, building and civil works, and
routine operating expenses. The fixed costs are estimated from machineries and equipment
procurement and buildings and civil works and variable costs (working capitals) are estimated
from routine day to day activities of the project. Both costs are estimated in the following sub-
sections.
8.1.1. Fixed costs
As mentioned above, fixed capital is estimated from machineries and equipment procurements and
building and civil works and hence estimated in the following tables.
8.1.1.1. Machinery and equipment of the project
 The major costs for star designated hotel are purchase of world class utensils, equipment
and furniture. These are estimated in the following table.
 The first and major expenses of the investor will be construction of esthetically attractive world
class 4 story building. In fact this will be given to contractor and experienced consulting firm
having rich experiences and exposure in the area. These costs are estimated in the next table
below.
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A. Table 1 Summary/Total Investment Cost
No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 21,280,000 0.00
1.2 Machines and Equipment’s 16,720,000 0.00
1.3 Vehicles and Motors 2,280,000 0.00
1.4 Office Furniture and Equipment 1,520,000 0.00
Total Fixed Investment Cost 41,800,000 0.00
2 Operating Expense 0.00
2.1 Raw Materials Purchase and Products 15,200,000 0.00
2.2 Salary Expense 7,600,000 0.00
2.3 Other Operating Expense 2,280,000 0.00
2.4 Pre-operating Expense 1,520,000 0.00
Total Operating Expense 26,600,000 0.00
Contingency (Lump sum) 10% 7,600,000
Total Investment Cost 76,000,000 0.00
B. Table2: Building and Civil works for resort d
Unit cost Estimated total cost

No Particulars Unit
(Br.) (Br.)
1 Main Hotel G+4 building 4,000 14,880,000
Parking, Loading/
2 “ 1,500 1,000,000
unloading area
3 Cozy conference hall “ 3,000 3,000,000
4 Storage “ 1,200 360,000
Other accessory
5 “ 1,500 550,000
buildings
6 Generator room “ 500 25,000
7 Incinerator “ 2,000 160,000
8 Area to be taken by fence “ 350 35,000
9 Guard/Janitor room “ 900 63,000
10 Green area development “ 400 600,000
11 Deep well drilling “ 35,000 35,000
12 Purchase of water tanks “ 100,000 100,000
13 Intra-road construction km 800,000 40,000
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14 Power/ water installation Ls 350,000 350,000

Total 21,280,000.00
C. Table3: Estimated costs of Utensils, and Equipment furniture for
Unit cost
No Particulars Unit Qty Total cost (Br.)
(Br.)
I Equipment and Machines
1 Boiler Pcs 1 250,000 1,250,000.00
2 Assorted Kitchen utensils and - -
equipment 1,500,000.00
3 Beds and bed clothes Psc 100 40,000 1,000,000.00
4 Bar and restaurant furniture - - 600,000 600,000.00
5 Bed room chairs (2 in each) Pcs - 1,750 350,000.00
6 Bed room tables “ - 2,250 225,000.00
7 Lobby equipment “ - 375,000.00
8 Bathing room, Jacuzzi and psc -
swimming pool equipment 750,000.00
9 Sauna, steam bathing equipment 400,000.00
10 Massaging equipment 375,000.00
11 First aid equipment 250,000.00
12 Mini Refrigerator " 100 2,500 250,000.00
13 Communication apparatus " 100 1,250 125,000.00
14 Other related expenses “ - 500,000.00
15 Security equipment " 1,000,000.00
Sub. Total “ 7,950,000.00
II Vehicles and related machines
1 Van carrier pcs 2 375,000 750,000.00
2 Service midi bus for guests " 2 600,000 1,200,000.00
3 Service mini bus for workers " 1 600,000 600,000.00
4 Trolleys and Carts for luggage "
moving - 250,000.00
5 Generator (>200hp) " 1 250,000 250,000.00
6 Water pump(>120hp) " 1 125,000 125,000.00
7 Laundry machine set 1 250,000 250,000.00
8 Beauty salon equipment " 250,000 250,000.00
Sub Total 3,675,000.00
III Computers and Office furniture “ - 225,000.00
Sub Total 225,000.00
Total 16,720,000.00
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3. Working Capital determination

In calculation of most project working capital, it is customary to consider the first year operating
costs. Hence, these costs (capital) are determined in the following table.
A. Input expenses for resort
Descriptions Unit QTY Average Unit cost Total Cost
(Br.) (Br.)
Different Alcoholic Lit 1,360 2,500 3,400,000
beverages
None alcoholic “ 23,000 100 2,300,000
beverages (water,
soft drinks, juices
etc)
Ingredients for Hot Cup 30,000 50 1,500,000
beverages (Milk, s
coffee, tea, etc)
Ingredients for Dish 60,000 100 6,000,000
Foods (Cultural, fast,
and assorted)
Sanitary materials Ls 2,000,000
(Soaps, Shampoos,
conditioners etc)
Total 15200000
B. Salary of for resort

The total salary 7,600,000 birr calculated
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C. Operating cost
Operating costs are recurrent costs occurring every time and are calculated as follow;
Table10: Project operating costs for Resort

Years of Operations
Cost Component I II III-XI
 Input expenses 3,460,000 5,190,000 6,920,000
 Salary and wages 552,000 828,000 1,104,000
 Property insurance 936,180 1,404,270 1,872,360

 Repair and maintenance 4,851,700 7,277,550 9,703,400
 Utilities 40,000 60,000 80,000
 Stationery and postage 2,500 3,750 5,000
 Audit and license 7,500 11,250 15,000
 Uniform working clothes 15,000 22,500 30,000
 Expenses on fuel and lubricant 30,000 45,000 60,000
 Pension pay 49,680 74,520 99,360
 Miscellaneous 10,000 15,000 20,000
Total 154680 232020 309360
D. Working Capital Determination for Resort

Required minimum
Cost Component coverage time (month) Required amount
of WC (Br.)
 Input expenses 1 288,333
 Salary and wages 1 46,000
 Property insurance 6 468,090
 Repair and maintenance 6 2,425,850
 Utilities 1 3,333
 Stationery and postage 1 208
Page 22
 Audit and license 12 7,500
 Uniform working clothes 6 7,500
 Expenses on fuel and 1 2,500

lubricant
 Pension pay 1 4,140
 Miscellaneous 1 833
 Proposal and EIA 25,000
Total 51014
E. Financial structure
No Description % share Amount(in birr)
1 Owners Share 30 22,800,000
2 Bank Loan 70 53,200,000

Total 100 76,000,000
F. Bank Loan Repayment Amortization Resort

Principal Total Annual
Year Interest (10%) Remaining Balance
Payment Payment
0 0 0 0 53,200,000
1 5,320,000 5,320,000 10,640,000 47,880,000
2 5,320,000 4,788,000 10,108,000 42,560,000
3 5,320,000 4,256,000 9,576,000 37,240,000
4 5,320,000 3,724,000 9,044,000 31,920,000
5 5,320,000 3,192,000 8,512,000 26,600,000
6 5,320,000 2,660,000 7,980,000 21,280,000
7 5,320,000 2,128,000 7,448,000 15,960,000
8 5,320,000 1,596,000 6,916,000 10,640,000
9 5,320,000 1,064,000 6,384,000 5,320,000
10 5,320,000 532,000 5,852,000 0
Page 23
The wears and tears of capital assets are calculated as depreciation of capital assets and are
included in the expenses of the project as follows;
Depreciation of Capital Asset for Resort
S Original Value Depreciation rate Depreciation Per

Description
N In Birr in % year
Construction and Civil
1 21,280,000 5 1,064,000
Work
Machines &
2 16,720,000 15 2,508,000
Equipment’s
3 Vehicles 2,280,000 20 456,000
4 Office Equipment 1,520,000 15 228,000
Total 41,800,000 4,256,000
 300 effective working days in a year and 24 effective working hours in a day are taken,
 11% of annual bank interest is assumed
 Bedroom classification
 Deluxe/Suit/--------------------------30 rooms
 Standard------------------------------40 rooms
 Economy------------------------------30 rooms
 Bedrooms will be rented for 300days per year
 Assumed service prices:
 Deluxe/Suit/ bedrooms per day---------------------------------Br. 2500
 Standard bedroom per day---------------------------------------Br,1800
 Economy bedroom per day---------------------------------------- -Br. 1400
 Average selling price of alcoholic beverages per liter---------- -Br.2500
 Average selling price of none alcoholic beverages per liter-- -Br. 80
Page 24
 Average selling price of hot beverages per unit----------------- --Br. 30

 Average selling price of foods per dish--------------------------- --Br. 150
 Meeting hall rental per meeting----------------------------------- --Br 3000
 Weeding service per weeding------------------------------------- --Br. 3500
Other overhead costs estimations

1. Land lease @ Br. 600/m2 (10,000m2)-----------------------= Br.6,000,000/year
2. Property insurance (2% of fixed capital) ------------------ = Br. 1,872,360/year
3. Utilities (water +power +phone) --------------------------- = Br. 80,000/year
4. Stationery and postage --------------------------------------- = Br. 5,000/year
5. Audit and license fee ----------------------------------------- = Br. 15,000/year
6. Uniform working clothes ------------------------------------ = Br. 30,000/year
7. Fuel, lubricants and oils--------------------------------------- = Br. 60,000/year
8. Pension pay (9% of basic salary)----------------------------=Br. 99,360/year
9. Miscellaneous expenses--------------------------------------=Br. 20,000/year
Page 25
i. Revenue and Revenue projection

Table14: Project Revenue and Revenue forecasting for Resort
Product/Service and Revenue forecast

Services Selling Revenue from sales (Br.)
No Particulars
YI YII YIII-XI price/Unit YI YII YIII-XI
-50% -75% -100% (Br.) -50% -75% -100%
1 Accommodations service
1. Deluxe/Suit/ rooms (No) 15 23 30 2500 11250000 16875000 22500000
2. Standard rooms(No) 20 30 40 1800 10800000 16200000 21600000
3. Economic rooms(No) 15 23 30 1400 6300000 9450000 12600000
Sub total 50 75 100 28350000 42,525,000 56,700,000
2 Hotel services
1. Alcoholic beverages (lit/year) 1000 1500 2000 2000 2000000 3000000 4000000
2. None alcoholic beverages (lit/year) 2500 3750 5000 50 125000 187500 250000
3. Hot beverages(lit/year) 15000 22500 30000 20 300000 450000 600000
4. Foods (Dish) 40000 60000 60000 120 4800000 7200000 7200000
Sub Total 7,225,000 10,837,500 12,050,000
Page 26
Other services
1. Meeting services (occasion) 6 9 12 3000 18,000 27,000 216,000

3
2. Weeding services(occasion) 12 18 24 2500 30,000 45,000 720,000
Sub Total 48,000 72,000 936,000
Total 35,623,000 53,434,500 69,686,000
Page 27
G.Financial Analysis
a. Financial statements
Balance Sheet
Asset
Current Asset
Cash 11,400,000
Inventory of raw materials and inputs 15,200,000
Total Current Asset 26,600,000
Fixed Asset
Land, Building and Construction 21,280,000
Machineries and Equipment’s 16,720,000
Office Equipment 1,520,000
Vehicles 2,280,000
Total fixed Asset 41,800,000
Total Asset
Liability
Account payable 53,200,000
Owners Equity 22,800,000
Capital
Total Liability & Owners’ Equity 76,000,000
Table16: Project Income Loss Statement
The cash flow statement of the project indicated that the project would yield sufficient
amount of money starting from the first year of perations. Hence, the project would not
face any cash flow problems in the short and long runs if implemented as scheduled in
this document.
Page 28
Income Loss Statement

Revenue Year 1 Year 2 Year 3-10
300,685,00 330,753,50
Sales 273,350,000
0 0
Sales expenses (5%)* 13,667,500 15,034,250 16,537,675
265,075,09 265,075,09
Purchase of Raw Material 15,200,000
5 5
Gross profit 258,150,000 35,609,905 65,678,405
Expenses
Salary Expense 7,600,000 7,980,000 8,379,000
Operating Expenses 2,280,000 2,394,000 2,513,700
Pre-operating Expense 1,520,000 1,596,000 1,675,800
Deprecation Building 1,064,000 1,064,000 1,064,000
Deprecation machine 2,508,000 2,508,000 2,508,000
Deprecation Vehicles 456,000 456,000 456,000
Deprecation office Equip 228,000 228,000 228,000
Lease Expense 1,000 1,000 1,000
Interest Expense 5,320,000 4,788,000 532,000
Total Expense 20,977,000 21,015,000 17,357,500
300,685,00 330,753,50
Profit Before Tax 273,350,000
0 0
Tax(30% ) 82,005,000 90,205,500 99,226,050
210,479,50 231,527,45
Net Profit 191,345,000
0 0
Page 29
Cash Flow
Statement
Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0
· Own equity 22,800,000
· Bank loan 53,200,000
· Depreciation 0 4,256,000 4,256,000 4,256,000
· Net profit 0 191,345,00 210,479,50 231,527,45
0 0 0
Total inflow 195,601,00 214,735,50 235,783,45
76,000,000 0 0 0
B. Cash outflow 0
· Fixed capital 41,800,000
· Working capital 26,600,000
. Contingency (Lump 7,600,000
sum) 10%
· Loan repayment 5,320,000 4,788,000 532,000
Total outflow 76,000,000 5,320,000 4,788,000 532,000
Net inflow (A-B) 190,281,00 209,947,50 235,251,45
0 0 0 0
Cumulative balance 190,281,00 209,947,50 235,251,45
0 0 0 0
H. Brief Environmental Impact Assessment (EIA)

Traditionally, tourism industry is considered to be environmentally friendly venture as it
is commonly called “smokeless industry”. But unfortunately one of the tourism facilities,
hotel, is not free from environmental pollutions as the hotel establishment pollutes the
environment during its construction and implementation phases.
1. Preconstruction phase: -In this phase most of the time the environmental and social
issues of the surround environs are not taken into considerations. And as a result the
probable pollutions of the surrounding surface and ground waters, vegetation, soils
and impacts on societal livelihoods are immense and unavoidable.
2. During construction phase: -In this phase the major part of the environmental
disturbances occur while excavations and construction of hotel structures. Dust
Page 30
emissions, water and soils pollutions are the major and unavoidable activities where
the incumbent investor would exercise maximum efforts to minimize negative
environmental and social impacts.
3. During operation phase:- This phase is the phase at which the hotel started
providing the intended hotel services. In providing hotel services, the major polluting
factors are the improper disposal of liquid and solid wastes, depletion of water, sound
pollution and others. Hence, the planned project should consider the proper drainage
systems that have alignment with the surrounding major drainage systems and
minimize the sound pollutions through construction of sound proofing structures for
building and partitions of building. In doing so such standardized hotel investment
would make immense contributions for the country’s tourism development in general.
Page 31

5 Star Resort Kabode Bishooftu

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5 Star Resort Kabode Bishooftu

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“Five Star Resort”

PROJECT TO BE IMPLEMENTED IN BISHOFTU TOWN,

EAST SHEWA ZONE, OROMIA REGION STATE

Addis Ababa, Ethiopia

1. Project title – Five Star International Standard Resort

 Oromia Regional State

2.2.1. Expected Standards of Five Star Hotels

2.2.2. Required notifications in Five star designated hotels

 Special Facilities for Children

 Facilities for Travelers with Disabilities

 Morning Coffee/Afternoon Tea

 Credit and Charge Cards Other Payment

 Booking and cancellation procedures

 License to Serve Alcohol

2.3. Project Benefits/Project justification/

Increase investment with multiplier effect to the national economy,

2.4. The promoter

3. General description of project area

4.4. Service Provision capacity and Capacity utilization

5.1. International and Domestic demand for Hotel services

No Category of Hotels No of Hotels Rooms Beds per hotel category

1 Five Star 3 794 1264 265Rooms & 422beds

Source: MoTC magazine

6. Land use plan and action plan

Table3: Land use Plan for Resort Project

No Types of Land Use Proposed land size (m2)

1 Building Hall areas 3,000

*Please see Annex I for action plan

7. Organization and management

Hotel manger Administration &

Marketing manager Human resources

7.2. Manpower requirement with qualification & level of education

Table4: Manpower and specific qualifications Resort

Description of Level of Required Annual

2 Hotel manager Hotel management BA. “ 3 90,000

3 Receptionist Reception Dip. “ 3 30,000

8 Cashier Accounting/Business Dip. “ 5 22,500

11 Security workers Literate 8th “ 10 67,500

13 Store keeper TVET Level I “ 5 64,000

14 Cleaner/Janitor Literate 4th “ 5 292,500

A. Table 1 Summary/Total Investment Cost

B. Table2: Building and Civil works for resort d

Unit cost Estimated total cost

14 Power/ water installation Ls 350,000 350,000

C. Table3: Estimated costs of Utensils, and Equipment furniture for

3. Working Capital determination

B. Salary of for resort

Table10: Project operating costs for Resort

 Salary and wages 552,000 828,000 1,104,000

 Property insurance 936,180 1,404,270 1,872,360

D. Working Capital Determination for Resort

 Salary and wages 1 46,000

 Property insurance 6 468,090

 Repair and maintenance 6 2,425,850

 Stationery and postage 1 208

 Audit and license 12 7,500

 Uniform working clothes 6 7,500

 Expenses on fuel and 1 2,500

 Proposal and EIA 25,000

No Description % share Amount(in birr)

1 Owners Share 30 22,800,000

2 Bank Loan 70 53,200,000

F. Bank Loan Repayment Amortization Resort