Final Harkiso Proposal

PROJECT PROPOSAL
ONE STAR INTERNATIONAL

HOTEL
Project Location: - Wolaita, Areka
Promoted by: Harkiso Hajano
May, 2023
Areka
Contents
Basic Information..................................................................................................................4
1. EXECUTIVE SUMMARY................................................................................................5
2. INTRODUCTION.............................................................................................................8
2.1. Investment in Ethiopia.............................................................................................8
2.2. Hotel and Tourism sector in Ethiopia.......................................................................9
2.3. Promoter Background............................................................................................10
2.4. Ambition of creating the hotel project....................................................................10
2.5. Purpose and Amount of Loan................................................................................ 11
3. The Project.......................................................................................................................12
3.1. Project description and Justification.......................................................................12
3.2. Project Objective....................................................................................................12
3.3. Project location and justification.............................................................................14
3.3.1. Location..........................................................................................................14
3.3.2. Climate:..........................................................................................................14
3.3.3. Demographics:................................................................................................15
3.3.4. Infrastructure and economic status.................................................................. 15
4. MARKET STUDY.......................................................................................................... 18
4.1. General Overview..................................................................................................18
4.2. Present supply in Areka town................................................................................ 19
4.3. Demand for hotel services..................................................................................... 21
4.4. Demands Evaluation Mechanism............................................................................ 23
4.5. Pricing....................................................................................................................25
4.6. Capacity and service programme........................................................................... 25
4.6.1. Capacity..........................................................................................................25
4.6.2. Service Programme:....................................................................................... 26
4.7. Marketing strategy.................................................................................................26
4.8. Competitors Overview........................................................................................... 27
5. TECHNICAL STUDY......................................................................................................28
5.1. Design and particulars............................................................................................ 28
5.2. Physical appearance...............................................................................................28
5.3. Core facilities.........................................................................................................28
5.4. Hotel Furniture and Equipment’s............................................................................33
Page 2
5.5. Inputs/ raw materials and utilities...........................................................................34
5.5.1. Raw Material cost...........................................................................................34
5.2.2. Utilities...............................................................................................................34
5.6. Machinery and equipment...................................................................................... 35
5.7. Land, Building and civil work............................................................................... 43
5.7.1. Land lease.......................................................................................................43
5.8. Environmental impact assessment.......................................................................... 44
5.9. Implementation Schedule....................................................................................... 45
6. ORGANIZATIONS AND MANAGEMENT...................................................................46
6.1. Organizational Structure........................................................................................ 46
6.2. Management.......................................................................................................... 47
6.3. Manpower Requirement.........................................................................................47
6.4. Training Requirement............................................................................................48
7. FINANCIAL STUDY.......................................................................................................49
7.1. Classified Investment cost..................................................................................... 49
7.1.1. Fixed costs......................................................................................................49
7.1.2. Operational cost costs..................................................................................... 51
Summary of Operational cost.......................................................................................53
7.2. Project Capital and financing..................................................................................54
7.2.1. Project Capital................................................................................................54
7.2.2. Financing........................................................................................................54
7.3. Revenue projection................................................................................................57
7.4. Financial statements...............................................................................................58
7.4.1. Projected Profit/loss statement............................................................................. 58
7.4.2. Projected cash flow statement.............................................................................59
7.4.3. Balance sheet.................................................................................................. 60
7.5.3. Viability and other measurement..................................................................... 61
8. SENSITIVITY ANALYSIS.............................................................................................63
9. RISK ANALYSIS............................................................................................................ 63
10. MONITORING AND EVALUATION.........................................................................65
11. CONCLUSION AND RECOMMENDATION............................................................65
Page 3
Basic Information
 Name of the Promoter: Harkiso Hajano
Contact Address: +251910070432
 Type of the Project: One star International Hotel
 Type of Business: Sole proprietor ship
 Project Location: Wolaita, Areka
 Project capital: The total investment capital of the project is
estimated at birr 73,571,629 of which:-
Birr 47,797,310 (65%) is for fixed investment cost
Birr 25,774,318 (35%) will be assign for working capital
 Source of finance: The total investment capital of the project is to be
financed from the promoter’s equity and bank loan
Birr 22,071,488(30%) is contributed by the promoter(Harkiso

• Hajano
)
Birr 51,500,140 (70%) is to be financed by local banks.

•
Man power requirement: 250 employees will be benefited within this project,
out of which 100 permanent (75 skilled & 25 unskilled 8 grade) and 150
casual workers during construction phase .
Land requirement: The total area of 925 m2 of land is required for the project
1. EXECUTIVE SUMMARY
The project feasibility study proposed on1(one) star international

hotel investments has been promoted by Harkiso Hajano in Wolaita zone Areka town mehal
sub city.
Project justification: International standard hotel is high class hotel where

services like standard bedroom, catering, conference hole, Spa (Hot Spring),
gymnasium, sauna and massage, table tennis and children playground, night club
with dancing to live music or discotheque or cabaret etc.
The demand and supply of hotels and its bed rooms service in Areka tow has
high gab the supply of Areka has no a quality hotels
In this profile study a one star international standard hotel is considered to

following provides:-
7 King size luxury rooms, 20 standard double bed rooms and 30
single standard bed rooms totally 80 standard bed rooms services

International and national service
•
Standard bar and cafeteria
Standard massage and sauna bathe service
•
fitness room
•
hole and others important needs
•
The total area of the one star international hotel investment
is about 925 meter square The area covered and develop the following infrastructures
such as main building (g+3) hotel service and, store, gourd house, , parking area and
other necessaries facilities
The total investment capital of the project is estimated at birr 73,571,629 of

which birr 47,797,310 (65%) is for fixed investment cost
of which 65 % of the fixed cost is need foreign currency while the remaining balance of
birr 25,774,318 (35%) will be working capital.
Profitability: The financial analysis of the envisaged project is carried out for the
following ten years. Based on the 10 years financial projections using the income
statement, cash flow statement and financial internal rate of return (FIRR), the
following results are obtained.
Income statement: According to the projected income statement, the project will
generate profit beginning from the first year of operation. Based on the 10 years financial
projections the projects average annual net profit after payment of bank
interest, depreciation and tax amounts to birr 13,593,732
Cash flow statement: The cash flow statement also shows a substantial amount of
cash surplus right from the first year of project operation life. The cash balance
grows from birr 21,685,936 in the first year to cumulative balance of birr
384,396,352 during the 10 year of operation indicating the capacity of the project to
finance itself and generate cash surplus for further investments.
FIRR Computation: The computation of the project FIRR shows that the project
will profitably generate reasonable return on investment. Before tax
financial internalrate of return is calculated to be 33.9%. This indicates the
project is financially viable with an internal rate of return (IRR) of 33.9 % and
net present value (NPV) 102.2 million at discount rate 35 %.
Socio economic benefits: The socio economic benefit of the project is
also very high. The project will provide:- 100 permanent employs,
Generate revenue to government in the form of taxes, Facilitate and give a
good service for local and international tourists
Conclusion and recommendation:

The Project is found to be
Operationally profitable, viable & has significant socio-economic benefits. We
recommended that according to this attractive financial and economic benefit of the
project all concerned offices & financial institutions should give their support to
facilitate the implementation of this plan.

2. INTRODUCTION
2.1. Investment in Ethiopia
Ethiopia is now becoming more and more investment friendly country. The
Government is creating favorable condition that would highly encourage the
private Sector to be engaged in almost all areas of the economy. The country
with population of come 80 million offers significant domestic market for
locally for Locally produced goods and service the country is also a member
of the common Market for eastern and southern Africa Comesa offering
huge benefit of Exporting commodities in preferential tariff rates to a wider
regional market.
Privet investment should be encouraged to increase form year to year and
Investment constraints have to be alleviated in order to pave development ways
so That investment sector happens to be determinant about factor of economic
development of the country like Ethiopia.
it is usually considered as the engine of the economy .both private and
government Bodies in many ways have commonly agreed this idea
.economic development in Any case needs both efforts of the privet as
well as the public sector. There are Investments that could not be
undertaken by privet sector due to its difficult nature I .e high initial
capital and long gestation period.
However, the passed command economy system and the lack of experience
Between both sides have made it so hard for a private sector to flourish .
But now a day as Ethiopia follows free market economy ‘the roll of private
sector for the achievement of the economy policy. Accordingly, the Ethiopia
federal democratic government is encouraging investors to invest their records to
contribute to the development of the country in all sectors by avoiding all barriers
and facilitating all the mince for the investment
2.2. Hotel and Tourism sector in Ethiopia
Ethiopia has vast potential for development of various economic sectors. Although
agriculture is the mainstay of the country’s economy the opportunity to invest in
other sectors especially in Hotel, Tourism and various recreation activities are
there.
Although Ethiopia is endowed with many natural and manmade tourist attractions,
these resources have not been sufficiently exploited. The country’s geographical
location and the remarkable physical features and climate have endorsed it with
rich and varied natural heritages. Despite considerable demand, tourism sector
remains at relatively low stage of development.
The Hotel and recreation service facilities in Ethiopia have been found at a lower
level of development. The number of Hotel service establishments in the country
has remained insignificant to respond to the customer’s demand. Only few
Hotels have the capacity or quality to provide good accommodation and catering
facilities to fulfill tourists need. There are only few hotels in the capital, Addis
Ababa, and other big towns of the region states that organized on international
standard to fulfill the consumer’s needs.
The government of Ethiopia has devised a long term strategy that gives due regard to
the preservation, development and promotion of the country’s tourist attraction.
This includes plan for expansion of tourist facilities and the necessary
infrastructure.
Indeed in the wider sense the country has a good potential for the
development of high standard hotels, recreation and market center and there
is a growing realization that this sector holds a significant
development perspective, which should be fully exploited in the planned and controlled
manner.
In adopting a planned and regulated approach the country is in a position to expand its
hotel and tourism sector in a way that emphasizes environmental conservation and
enhances the quality of the overall tourist experience. This will contribute
substantially towards improving the standard of living and the quality of life of the
population.
The past trend shows that most of the high standard hotels and recreation centers
are concentrated in the capital, Addis Ababa. The number of hotels and recreation
service facilities in other regions of the country has remained insignificant to
respond to the customers demand. Only few hotels and recreation centers out
of Addis Ababa have the capacity to provide accommodation for mid or
high-class guests.
By taking this encouraging as an opportunity the promoter project plan to establish

1(One) star international Hotel service in Wolaita zone Areka town Mehal Sub city
for the benefit of the promoter, the district community
as well as the country as a whole.
2.3. Promoter Background
The promoter, Harkiso Hajano has a work experience in hotel and management
business activities. During this time, the promoter gained a vast knowledge and
skill. With this reliable experience, Harkiso Hajano knows how to manage and lead
any organization to profit and also know how to handle different challenges in the
working environment. Moreover Harkiso Hajano has a very good reputation with banks and
different financial organizations.
2.4. Ambition of creating the hotel project
According to the preliminary market research, the demand for hotel service is very
high and yet the supply is limited leaving a huge service gap to the customer.
Unfortunately there is no saturated standard hotel (3 stars) in the area. Although
one international type hotels have already working in
the area, but still huge gap is there in between demand and supply in the town.
The service (3 star hotels) is will widely accepted iAn reka town,
Government employees, Private employees, Tourists, local customers, and to some
extent even in rich house-holds. So there is good scope for establishing the units for
establishing and maintain 3 star standard /international hotel service in Areka
town as well as in the country. Due to this, it
has become imperative to build and maintain 3 star standard hotels service for the
mankind in prevailing conditions.
2.5. Purpose and Amount of Loan
Purpose and amount of loan requested: The purpose of the loan is to import
machineries and purchasing steel for building construction. Beside this the
promoter believes that, the loan will strengthen the relationship between the
investor and the bank. Furthermore, the investor gets strength to advance to
various viable economy sectors in the country.
The source of the project finance is from the promoter’s equity and bank loan. Out
of the total investment capital of birr 73,571,629 birr 25,774,318 (30%) is to be
contributed by the promoter (Harkiso Hajano) while the remaining balance of
47,571,629 (70%) is to be covered by the local bank
3. The Project
3.1. Project description and Justification
International standard tourist hotel is high class hotel (from three to five- star
level) where services like bedroom, catering, meeting rooms,
multipurpose assembly hall, swimming pool, Spa (Hot Spring), gymnasium, sauna
and massage, other sports facilities like tennis or squash court, min- golf or
badminton, bowling, table tennis and children playground, night club with dancing to
live music or discotheque or cabaret etc.
A hotel is an establishment that provides paid lodging on a short-term basis.

Facilities provided may range from a modest-quality mattress in a small room
to large suites with bigger, higher-quality beds, a dresser, a
refrigerator and other kitchen facilities, upholstered chairs, a flat screen
television and en-suite bathrooms. Small, lower-priced hotels may offer only the
most basic guest services and facilities. Larger, higher-priced hotels may provide
additional guest facilities such as a swimming pool, business center (with computers,
printers and other office equipment), childcare, conference and event facilities,
tennis or basketball courts, gymnasium, restaurants, day spa and social function
services. Hotel rooms are usually numbered (or named in some smaller hotels and
B&Bs) to allow guests to identify their room. Some boutique, high-end hotels have
custom decorated rooms. Some hotels offer meals as part of a room and board
arrangement. In the United Kingdom, a hotel is required by law to serve food and
drinks to all guests within certain stated hours. In Japan, capsule hotels provide a
tiny room suitable only for sleeping and shared bathroom facilities.
3.2. Project Objective
The main objective of the project is aimed at to maximize the return on invested
capital in the form of profit for the promoter. However, its implementation will
benefit the employee, the consumer society and the government at different levels.
In this respect the project is aimed to promote the following objectives:-
To maximize the return on invested capital through modern Hotel
•
services
To raise the significance and importance of the sector and thereby
•
raising its contribution to the national economic development
To give quality and standard hotel service
•
Effectively use local inputs and strengthening the linkage between
•
agriculture and other sectors of the economy
To provide gainful employment to a large segment of the population of
•
the project area and augment earning capacity at the grassroots level,
Increase government revenue through the different forms of taxes,
•
which in turn used to facilitate social and economic development.
In general, the project is believed to have significant social and economic benefits
that accrue to the society, the region and the country beyond the financial returns to
its owner.3.4. Mission and goal
Mission
 Mission of the particular project is to expand the standard star hotel
system and to give quality service.
 To prove to other people that struggle for a better life and economic
independences can do business and bring change and can make a difference
if opportunities are given.
 To become financially liquid and guaranteed more than ever.
Goal
Objectives are the goals toward which activities of the business are directed and
one of the most important functions the business owner must perform is setting
objectives. This important aims of this sole proprietorship business among others
include the following highly interrelated general goals with each other.
To create employment opportunities for 125 permanent and 175
•
causal
To achieve standard tourist hotel and give quality service.
•
3.3. Project location and justification
3.3.1. Location
The proposed project of 3 star International hotel will planned to be located in

Areka Town. Areka is the capital
of northern wolaita. It is the passway of the Hossana and W/sodo. According to
the 2007 population census, the city has a total population of 89,000 inhabitants.
The total land size the promoter requesting for the
implementation of the project is estimated at 1500 square meters, which will been
obtained from investment commission of Wolaita z
administration Hence the owners select Areka for proposed project by
looking every aspects of business integrity tourist area.
3.3.2. Climate:
Areka has a tropical dry climate. The city has a complex mix
of temprate climate zones, with temperature differences of up to 20.48 °C
(68.86 °F), depending on elevation and prevailing wind patterns. The high
elevation moderates temperatures year-round, and the town position near
the equator means that temperatures are very constant from month to month. As
such the climate would be maritime if its elevation was not taken into account, as no
month is above 22 °C (72 °F) in mean temperatures.
Geography: Areka lies at an elevation of 1,200 metres (7,200 ft) and

is a grassland biome, located at 9°1′48″N 38°44′24″ECoordinates: 9°1′48″N
38°44′24″E.
3.3.3. Demographics:
As of the latest 2007 population census conducted by the Ethiopian national
statistics authorities, Addis Ababa has a total population of 89,000 urban and
rural inhabitants. For the capital city 10,000 households were counted living in
10,000 housing units, which results in an average of 5.3 persons to a
household. Although all Ethiopian ethnic groups are
represented in Addis Ababa because it is the capital of the country, the largest
groups include all nation nationality
3.3.4. Infrastructure and economic status
Economy: The economic activities in Areka are diverse. According to official

statistics from the regional government, some people in the city are
engaged in trade and commerce; in manufacturing and
industry; Homemakers of different variety; in civil
administration; in transport and communication; in
education, health and social services; in hotel and catering services;
and 16,602 in agriculture. In addition to the residents of rural parts of Addis
Ababa, the city dwellers also participate in animal husbandry and
cultivation of gardens. 177 hectares (670 acres) of land is irrigated
annually, on which 29,880 quintals of vegetables are cultivated.
needed] It is a relatively clean and safe city, with the most common crimes being
pickpocketing, scams and minor burglary. The city has recently

been in a construction boom with tall buildings rising in many places.
Various luxury services have also become available and the construction of shopping
malls has recently increased.
Tourism: Tourism is a growing industry within Areka town and Ethiopia as a
whole. The country has seen a 10% increase in tourism over the last decade,
subsequently bringing an influx of tourists to Areka town. In 2015, the European
Council on Tourism and Trade named Ethiopia the #1 tourist spot in the world
Development: The city hosts the different zonal and regional events. Center that
provides children with a higher standard of living.
Page 16
Road: The construction of the Addis Ababa to Arbaminch road played significant Roal in
development of the town. The
Coabble Road initiated by ULDPI was now covered the several part of the town
Page 17
4. MARKET STUDY
4.1. General Overview
The hotel industry consists of many different services, including accommodation,

restaurants, cafes and catering. The market for the hotel industry, especially
classified hotels in a developing country like Ethiopia, is closely linked to the
tourism industry, because a majority of consumers for the sector services come
from international tourists.
According to the United Nations Statistical Commission, Tourism

comprises the activities of persons traveling to and staying in places outside
their usual environment for not more than one consecutive year and staying at
least 24 hours in the country visited.
The total number of international tourists arriving in Ethiopia is steadily

increasing. The highest number of tourist arrival is in 2005 i.e. 227.4 thousand.
As can be seen from Table 3.3, during the period 1991-2005 except for the
decline observed in year 1998, the number of tourists visiting the country was
consistently growing. The growth rate registered varies from year to year; the
lowest was in 1992 (2%) and the highest in 1997 (27.7%). However, on average
during the period under consideration tourist arrivals have been increasing by
about 8 % per annum.
Table 4.1 Total Tourist arrivals in Ethiopia
Year Number Growth Rate

1991 81,581 -
1992 83,213 2
1993 93,072 11.9
1994 98,070 5.4
1995 103,336 5.4
1996 108,885 5.4
1997 139,000 27.7
1998 112,000 -19.4
1999 115,000 2.7
2000 135,954 18.2
Page 18
2001 148,438 9.2
2002 156,327 5.3
2003 179,910 15.1
2004 184,079 2.3
2005 227,398 23.5
Source: - Ethiopian Tourism Communion.
During the same period (1991- 2005), on average about 17% of the total number
of tourists that have visited the country were for vacation purpose while those who
visited the country for business account 22% of the total. Regarding the others,
transit accounts for 18%, visiting relative 9%,
conference 11% and those who did not stated their purpose account for 22% of the
total.
4.2. Present supply in Areka town
According to Current 2023 Information Areka town has no quality supply of hotels
and a total of keys 157 bed rooms currently in the market, giving
an average number of 100 rooms per hotel.
Table 4.2 hotels in Areka town
S/N Name of Hotels Areka Number of

Beds
1 Rufael Hotel 45
2 Sentral Hotel 0
3 Ajora fall Hotel 15
4 Tesema Hotel 7
5 Hidota Hotel 0
6 Andinet pension 15
7 Abaya Hotel 10
8 Adey abeba Hotel 20
9 WIZME Hotel 0
Page 19
10 Yeabsira Hotel 0
11 Saron Hotel - Kasanches 0
12 Fikreselam Hotel 25
13 EELT Hotel 20
14 Fikr Hotel 0
Page 20
Source: - Field observation.
Accordingly, assuming 365 working days, currently international

standard hotels in Ethiopia have a total of 597,140 per annum tourist
night room capacity. Based on discussion with various private hotel
managers and other knowledgeable persons the average stay of tourists in a hotel is
assumed to be 4 days.
In order to project tourist arrival in to Ethiopia, the past trend in tourist

arrival is considered. During the period 1991-2005, the total tourist
arrival in the country has registered an 8.2% average growth rate. Accordingly,
assuming that this growth rate will continue in the future and taking year
2005 figure (227,398) as a base, tourist arrival is forecasted.
Moreover, in order to compute the unsatisfied demand
the total annual capacity of international standard hotels in Addis Ababa,
which computed to be 597,140 rooms per annum is taken as the existing
capacity. The projected tourist room requirement, which is
calculated by taking the projected tourist arrival and multiplying it by the average
hotel stay of tourists (4 days), the unsatisfied demand is shown in Table 4.3.
Table 4.3.existing hotel capacities, projectedandunsatisfied demand
Projection of Room Night Existing Hotels Un

Year Tourist Arrival Demand Annual Satisfied
Capacity Demand
2008 286,456 716140 597,140 119,000
2009 309,372 773430 597,140 282,283
2010 334,122 835305 597,140 381,283
2011 360,852 902130 597,140 488,203
2012 389,720 974300 597,140 603,675
2013 420,898 1052245 597,140 728,387
2014 454,570 1136425 597,140 863,075
2015 490,935 1227338 597,140 1,008,535
2016 530,210 1325525 597,140 1,165,635
2017 572,627 1431568 597,140 1,335,303
2018 618,437 1546093 597,140 1,518,543
2019 667,912 1669780 597,140 1,716,443
2020 721,345 1803363 597,140 1,930,175
Accordingly, based on the market study and other considerations a three star
hotel with room capacity of 75 to 100 is recommended.
4.3. Demand for hotel services
The feasibility study conducted for this project deals with the demand and supply
analysis for the hotel project to be established in the area by taking the number of
international and national tourist, investors, employers and government directly
related with the level of development of the economy in general and the tourism
sector in particular. It is a function of the number of both domestic and foreign
tourist travelers in the area, travelers for the commercial or business purposes,
travelers for conference and other assembly purposes, residents in the area (in fact
it depends up on the standard of the hotel and the living status of the residents)
etc.
•
•
•
.
Hotel supply and its growth
Ethiopia is poised to undergo a high level of supply growth during the next five
years with a total of 2,375 rooms (76%) having been announced.
We anticipate that 50% of this supply (1,188 rooms) to be completed, with cash
flow constraints, low access to debt funding and a shortage of foreign currency
holding back further supply growth. Promotors with stronger balance sheets,
technical support and access to foreign currency have a higher likelihood of
completing their developments. The result of this is a more measured and
appropriate supply pipeline of new hotels. New supply is increasingly branded with
this growing
4.4. Demands Evaluation Mechanism
The following are some of the methods which can be used to evaluate the demand of
the services. By use of Customers feedback follow up form
High GDP growth and increasing corporate entry is driving hotel demand in the
business and conference segment. The aid and diplomatic segments continue to
provide the majority of the market demand in Addis Ababa. Ethiopia has a strong
domestic economy which is driving demand growth in the mid-market.
Performance
Areka achieved an occupancy of 28% at an average daily rate of

USD 220 in 2015*. We estimate market wide occupancy at 65% at an ADR of USD
135. Once the locally branded quality supply is included.
Investment
Areka has received significant investment into the hotel sector in

recent years, with a number of successful local entrepreneurs investing in hotels.
This has largely shaped the type of supply in the market, with few of these
investors having turned to global brands to manage their properties. The extensive
list of branded hotels that has been announced, is evidence that this trend has
changed. The easier access to finance and technical service expertise associated
with having a brand are driving this change.
Outlook
Corporate demand growth prospects are positive with strong GDP forecasts and
growing regional demand, complimenting the significant and well
established aid and diplomatic markets that are already present in the town.
Performance will be shaped by the extensive supply pipeline of hotels across
the city during the coming years. Many of these projects have stalled,
the expectation of further delays and projects being put on hold, is likely to offer
existing players in the market some respite. On the whole we are positive about
the performance outlook, yet caution against potential oversupply.
Areka town Hotel Market Trends
What drives Areka demand?
market, aid and diplomatic markets. The corporate market is primarily

domestically driven, with a limited presence of international companies despite
the high growth in the economy. This segment typically uses 3-star unbranded
hotels. There are signs that the Ethiopian economy is opening up and although
this trend is anticipated to be gradual, it will ultimately increase corporate entry
into the market and subsequently hotel demand from the international corporate
market. We are already starting to see this happen with the number of regional and
business travelers to the market growing steadily. The 3-star markets are in turn
primarily driven by
the aid and diplomatic markets.
4.5. Pricing
The pricing of hotel services depends considerably on the quality of service

rendered and its location. The relatively high standard hotels in Addis Ababa
charge a price, which ranges from USD 110(Ellili Hotel) to USD 255(Sheraton
Addis) for a single night per single room. Other hotels charge prices that fall in
this range. For this envisaged project a price of Birr 1000, for single bed, 1400
for double bed room and 1800 for suit king size hotel per room per single night is
proposed.
The hotel service will also earn revenues from the sale of food and drinks and other
hotel services. The total revenue earned from this service is estimated at 35 per cent
of the revenue obtained from room rents.
4.6. Capacity and service programme
4.6.1. Capacity
From the market study, it is observed that there is a great demand gap
between the demand and supply of international tourist standard hotel service.
Therefore, taking in to account the market study and economic scale of
service provision the envisaged international tourist standard hotel will have
capacities as shown below:
Table 4.4 service capacity ofthe envisaged internationaltourist standardhotel
Sr. No. Type of Service Feasible Service Capacity
1 Bedroom 80 rooms, 20 will be double

rooms, 50 single rooms and 10 suits.
2 Bar and Restaurant

• Restaurant (Modern 200 at a time each
and traditional
• Coffee Shop 10- 15 seats at a time
3 Sauna and steam bath 20 heads/day
4 Gymnasium 20 heads/day
5 Swimming pool (Big and small pools) 45 Heads/day and 20
head/day
6 Meeting room 50x3 seats
7 Night club 300 at a time
4.6.2. Service Programme:
At the initial stage of the service provision period, the hotel would require some
years to penetrate into the market and capture a significant market share.
Therefore, in the first and second year of service the capacity utilization rate
will be 75% and 90%, respectively. Full service provision
shall be attained in the third year and then after. The proposed service provision
program is shown in Table 4.7.
Table 4.5 service provision programe
Sr. Service Service Year

No.
1 2 3- 10
1 Service provision rate (%) 75 90 100
4.7. Marketing strategy
As discussed earlier the major target groups of hotel sector are tourists who arrives
the country for business, leisure, conference and other purposes. Providing
quality services and consistently improving with the changing situations should
be the promoters’ objective. Hence, according to the feasibility study, the
promoter has the following marketing strategies:
Contacting government and private agencies affiliated with tourism on

•
a regular basis, informing them of any corporate rate, discount
programs, availability of services, etc.
Emphasizing the access of the proposed hotel to support client’s
•
attractions, as well as the services and amenities available,
Special effort will be made to emphasize the price-value relationship of
•
the service available,
Actively marketing the hotel prior to the completion and opening,
•
An aggressive local marketing effort and promotion of the hotel market
•
to enable the hotel to capture a more than proportionate share of support
within the market,
Working with local people to establish a competitive amenity package
•
responsive to specific requirements.
4.8. Competitors Overview
Three are no three star hotel in areka town but still three is a huge gab but
our hotel service is do quality and clean services.
In addition to the above, the failure stories that I have observed from others and the
comments collected from my customers will help me to win my competitors.
In conclusion, my service compared to the competitors looks like:
 I keep the promise I make
 Quality service is my motto
 Transparent price setting and fair price will be bases to win the
competion
5. TECHNICAL STUDY
5.1. Design and particulars
The project owner interest, as regards to how the overall building design looks like
and the level of service to be rendered by the envisaged project, is dependent on the
area at which the buildings to be placed. The owner has already decided to commit
himself to construct a three star hotel having the full knowledge what is required
by the national and international standard of Hotels in Ethiopia. The standard by the
way its exhaustiveness as well as being explicitly specific on the level of the
service expected under the selected category, determines also the physical and
financial requirement of the project. Hence, in effect the contents of project
components to be described below are the derivatives of the requirements mentioned
above.
5.2. Physical appearance
The hotel would have G + 4 building placed on an area of 1500 m . The

architecture of the buildings are influenced by the modern design setting holding
the characters of attracting customers from out ward and allowing the maximum
comfort it can provide from service point of view. Apart from the need to add a new
look within the locality, exterior of the building will be dominated by a glass panel
at the strategic corners to provide a maximum opportunity for guest to have, a look
at the important land escape/scenery of the area.
The outer space is allocated to have an open garden, children’s playing ground,
parking area, fountains and inter campus paving with a medium size swimming
pool adjoining the front side of the buildings.
5.3. Core facilities
The envisaged hotel should have sufficient and comfortable space to

accommodate the core services as per the requirements of the three star hotel.
Actually this has been considered seriously at the design stage of the
building along with the allocation of appropriate area and placement of each
components with the building accordingly. On the other hand, it is also
important to figure out the layout of each component not only from the
perspective of having compliance for the standard but for the benefit exploring
possibilities of bringing complementary services under the same location and allow
maximum convenience in the work processes.
The size (area) of each service, which will be explained below, determine the holding
capacity of guests as it determines the level and quality of service. Other than the
critical factors mentioned above the market aspect i.e. customers need and resource
availability are considered in which case they are the determinants to give the final set
up of the facilities.
(a) Bed rooms

A total of 80 classes are allotted for room services with options to avail two
different types of
accommodations. In the interest of
following the trend in the industry
single and double
bedrooms. Actually the
standard requiresallowing
maximum 30% from the total
while the rest can remain with big
double bed rooms or any
other smaller rooms. On the bases of the above considerations under this
component, the hotel will have 50 single ,20 double and 10 suit king bed rooms
(b) Bars
Standard 3 star hotels must have at least one bars with a superior comfort and
service quality. The furniture and equipment’s, as being the basic sources of
customer’s attractions, need to be fashionable of higher quality commensurate
with the expectation of guests who happen to prefer
this class. Therefore, the envisaged hotel, having the requirements considered too,
will have one main bar at the ground floor adjoining the reception area. Another bar
preferably with smaller space but furnished with cozy furniture will be placed at top
floor of the building. This is just to add another attractive look for the hotel as it will
be placed at a strategic location for customer to have a panoramic view of the area.
The minimum carrying capacity of the bars is estimated 200 persons per day.
(c) Main restaurant

Technically a hotel to be classified under 3 stars of as such this one must have at
least two dining places having the size proportional to the guests who have
checked in as normally customers do not prefer to worry about going out once
they have settled. The area determination has to take into account this. Hence, the
hotel must provide the maximum range of varieties at all times.
The hotel will have the capacity entertaining 200 guests and allow maximum
efficiency in the service by having the restaurant located nearer to the main
kitchen.
(d) Banquet/Conference hall

A hotel with 3 stars needs to have a conference/banquet hall of larger area
which can be used for banquet or conference interchangeably. This project
considers this component as the second important function next to the room
services as this area has a higher potential for such services. The holding capacity
of the main conference hall will be 500 persons.
Business center(mini market shop)
A 3 star hotel needs to have also a business center with the service that would the
customers need. For such a service, the envisaged project will allocate a relatively
bigger area preferably separate rooms at the ground floor. Rooms are allocated
to secretarial service, executive rooms for business meeting and shopping
corners. The secretarial service will be furnished with all the machines and
equipment to handle any business enquiry that may be raised by hotel guests.
The shopping corner also accommodates mini boutique, cosmetics and d/t type
of shop
(e) Supports
Kitchen
Two kitchens, with the processes of multiple varieties of food preparation and a
proportional capacity to handle the maximum guests to be served in the main
restaurant as well as in banquet hall, is the critical requirement for the proposed
hotel. It should be large enough also to accommodate the working areas of cold
and hot meals on the one hand and pastries and bakery on the other.
In order to allow reasonable space for workers to move around as well as to avoid the
possibility of contamination and spoilage, the pastries and bakery
will be placed at the nearest door joining the main buffet at the gate of the
restaurant. On the other hand, the kitchen should be provided with a space to add a
small store with a flexible structure to contain butchery and cold rooms. These are
critical for easy facilitation of cooking’s. Moreover, the kitchen will have a well-
connected washing corner with at most margin of clearance to make the area safe
and clean.
Power House
For the service of the hotel to continue uninterrupted, a power house is already
planned to be placed in the underground or back to the building. Hence, the
power house will be supplied with a gener r planned to be fixed for emergency
service.
Store
Alike the capacity projection made on the kitchen, the envisaged project
requires a store as big as the varieties of items that are needed to be kept as stock.
The store will need to have a systematic management for stocks properly
placed and identified at the time of delivery and inventory. Hence, it is the
required procedure to organize the stock items in separate sections so that the
proper handling of stocks shall be maintained. In view of this, the hotel requires a
number of stores with sections for food items, beverage, glass wares, silver wares,
soft furnishings, cleaning and sanitary materials, stationery materials all placed
according to their physical appearances. The store will be placed in locations
nearer to kitchen or leisure service.
Car Parking
The hotel must provide the service of car parking with 24 hours protection at least
for those customers who have checked in. Again, it should be large enough to
accommodate as many vehicles as the hotel is going to entertain a large crowd. In
view of this, a parking space for about 17 vehicles is planned to be allocated with
the standard width and height of the drive in routes.
5.4. Hotel Furniture and Equipment’s
Furniture and equipment required to furnish the envisaged hotel depend on the
space to be available as well as on the quality and volume of service to be
rendered. Normally the quantity required will also depend on the standard of
the hotel i.e. 3 star hotel. To the extent that the engineering design of the building
align with the requirements of the standard, the projection of furniture and
equipment’s has to be consistent with the size and number of rooms, bars,
restaurants and leisure center. However, one has to be realistic in the sense that
the forecasting trend to link with the technical feasibility particularly with that of
the envisaged service capacity. Moreover, the balance to be between image
building and income generation capacity has the same level of influence as said
above.
Therefore, for this particular category of forecasting two levels of

considerations are taken into account. One, by the fact that the design of building
directly determines the space available for every item, size will be governed by this
and again the quality required furniture will determine base on the kinds of
facilities available. In any case the required quantities are forecasted based on the
components stated below:
 80bed rooms,
o 10 king size luxury bed rooms
o 20 standard Double bedrooms
o 50 standard Single bed rooms
 Special Bar and cafeteria
 Traditional and international restaurant
 conference rooms,
 Massage room
 Sauna and steam bath room
 Physical fitness room
 Night club (dancing area)
 Indoor and outdoor game facilities,
 Management office and store,
 Other civil works including land escaping, parking area, fountains and
inter campus paving.
Secondly, in order to fulfill the basic requirements of hotel service, the
quantities forecasted for the above facilities have to be reviewed against the national
standard. Such consideration gives the benefit of consciously sorting out what
item goes with what kind of facility or service. Once this is determined the forecast
of quantity will follow accordingly. The project detail design work has already been
undertaken and the planned facilities of the project and the required quantities are
forecasted in section 5.
5.5. Inputs/ raw materials and utilities
5.5.1. Raw Material cost

The annual cost and list of raw materials are indicated in Table 5.1.
Table 5.1 Annual requirements of raw and auxiliary materials
S/N Raw materials Quantity per cost per per year

month month
Food materials raw costs lamp sum 500,000.00 6,000,000.00
d/t type Beverage raw costs lamp sum 500,000.00 6,000,000.00
massage, sauna bath and other lamp sum 15,000.00
related cost 180,000.00
Cleaning materials and other lamp sum 15,000.00
miscellaneous uses 180,000.00
Total 12,360,000.00
5.2.2. Utilities
Annual requirement of electricity, water and fuel is estimated at 2,367,000 birr
from which, 500,000 kwh, 300,000 m and 2000 liters, are
electricity, water and fuel respectively. The total costs of utilities are,
therefore, about Birr 2,367,000 per annum.
Table 5.2 utilities
Description Qty. Cost per

unit cost year
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 571 56 32000
Diesel, lt 6206 58 360000
Total 2367000
5.6. Machinery and equipment
Machinery and equipment required for jute bags manufacturing plant are
given in Table Table 5.3 list of machinery and equipment
Furniture and equipment's required for Suit bed rooms (10 )
S/n Description Quantity Unit price Total (birr)
1 Sofa single 20 2,500 50,000

3 TV 29” 10 8,000 80,000
4 Telephone stand 10 500 5,000
5 Telephone apparatus 10 750 7,500
6 small Refrigerators 10 4,000 40,000
8 Coffee table 20 1,500 30,000
9 French Bed (120 x 180cm) 10 20,000 200,000
10 Cupboard built in 20 5,000 100,000
11 Head lump 20 1,000 20,000
12 Writing table with chair set 20 2,500 50,000
13 Chest drawer 20 1,500 30,000
14 Spring mattress 10 5,000 50,000
16 Bed sheets 20 500 10,000
17 Bed cover 10 800 8,000
18 Pillow 30 250 7,500
Total - 688,000
Furniture and equipment's required for double bedrooms (20)
1 Sofa single 40 2,500 100,000

3 TV 21” 20 8,000 160,000
6 Refrigerators 20 4,000 80,000
7 Standing lump 20 1,000 20,000
8 Coffee table 20 1,500 30,000
9 French Bed (120 x 180cm) 40 12,000 480,000
11 Head lump 20 1,000 20,000
12 Writing table with chair 20 2,500 50,000
13 Chest drawer 20 1,500 30,000
Bed made wood 80 20,000 1,600,000
15 Bed sheets 80 500 40,000
16 Bed cover 80 800 64,000
18 Pillow 80 250 20,000
Total 3,019,000
Furniture and equipment's required for single bedrooms
1 Sofa single 100 2,500 250,000

2 TV stand 50 2,000 100,000
3 TV 21” 50 5,000 250,000
6 Refrigerators 50 4,000 200,000
7 Standing lump 50 1,000 50,000
8 Coffee table 50 1,500 75,000
9 French Bed (150 x 180cm) 50 20,000 1,000,000
11 Head lump 50 1,000 50,000
12 Writing table with chair 50 2,500 125,000
13 Chest drawer 50 1,500 75,000
15 Bed sheets 100 250 25,000
16 Bed cover 100 500 50,000
17 Blanket 100 1,000 100,000
18 Pillow 100 100 10,000
Total - - 2,822,500
Furniture and equipment's required for office, reception, leisure and others
1 Executive double redistill desk 2 20,000 40,000

2 Executive swivel arm chair 2 5,000 10,000
3 Double pedestal desk 5 4,000 20,000
4 Servile admin chair 5 3,500 17,500
5 Secretarial desk 2 3,500 7,000
6 Guest chairs 8 600 4,800
7 Safe box 4 4,000 16,000
8 Shelf 4 3,000 12,000
9 Reception desk 2 40,000 80,000
10 Sofa box 2 15,000 30,000
11 Cash register with stand 2 7,500 15,000
12 Telephone apparatus box 2 20,000 40,000
14 Fax machine with stand 2 30,000 60,000
15 Pc with printer and stand 10 15,000 150,000
16 Single sofa high based 4 5,000 20,000
17 Coffee tables 4 2,000 8,000
18 Standing lump 6 2,000 12,000
19 Recreation facilities Ls - 150,000
21 Emergency power generator 2 300,000 600,000
Total - - 1,295,300
Furniture and equipment's required for bar and cafe
1 Tables 60 2,500 150,000

2 Chairs 300 750 225,000
3 Long drawer (Balcony) 2 30,000 60,000
5 TV stand 5 2,000 10,000
6 TV set 27” 5 15,000 75,000
7 Casher box 3 5,000 15,000
8 Stools (high chairs) 12 1,500 18,000
9 Coffee machine stand 2 50,000 100,000
10 Refrigerator big 2 20,000 40,000
11 Refrigerator medium 2 12,500 25,000
12 Coffee roaster 2 7,500 15,000
13 Ice maker 2 5,000 10,000
14 Pastries stand 2 15,000 30,000
15 Juice maker 2 5,000 10,000
16 Draft beer machine 2 15,000 30,000
18 Tape recorder 2 10,000 20,000
19 DVD player 2 1,200 2,400
20 Satellite dish with receiver 2 2,500 5,000
21 Shelf with drawer 2 20,000 40,000
22 tea cup 500 25 12,500
23 coffee cup 500 25 12,500
24 Milk cup 500 25 12,500
25 Makiyato cap 500 25 12,500
26 water glass 500 15 7,500
27 draft glass 500 60 30,000
28 wine glass 500 100 50,000
29 Whisky glass 400 100 40,000
30 local gen glass 500 50 25,000
31 service tree 1000 150 150,000
Total - - 1,232,900
Furniture and equipment's required for dinning/restaurant room
1 Tables 50 2,500 125,000

2 Chairs 200 750 150,000
3 Long drawer (Balcony) 2 30,000 60,000
5 TV stand 2 2,000 4,000
6 TV set 27” 2 7,500 15,000
7 Stools (high chairs) 2 1,500 3,000
8 Refrigerator big for beer 2 20,000 40,000
9 Refrigerator medium for soft drank 2 12,500 25,000
10 Coffee roaster 2 7,500 15,000
11 Ice maker 2 5,000 10,000
12 Draft beer machine 1 15,000 15,000
13 water glass 200 12 2,400
14 draft glass 200 60 12,000
15 service tree 50 30 1,500
16 30-34 sauce pot 10 20 200
17 Sauce-medium 40 30 1,200
18 Soup pot 40 50 2,000
19 Medium 4 45 180
20 Large – round hot pot 10 80 800
21 Medium – round hot pot 10 57 570
22 Small – round hot pot 10 30 300
23 High rim flat 10 70 700
24 Flat rim round 12 50 600
25 Normal alloy 20 45 900
26 Non stick normal 20 20 400
Total 485,750
Furniture and equipment's required for Conference rooms
1 Tables 100 2,500 250,000

2 Chairs 1000 750 750,000
3 Buffet stand 5 20,000 100,000
4 Speaker (big) 5 5,000 25,000
5 Amplifier 3 20,000 60,000
6 Wireless microphone 5 750 3,750
7 Table microphone 20 350 7,000
8 LCD projector 5 30,000 150,000
9 Slid board 5 5,000 25,000
10 Satellite dish with receiver 5 2,500 12,500
11 TV stand 5 2,000 10,000
12 TV set 27” 5 15,000 75,000
Total - - 1,468,250
kitchen materials
1 Stove 5 45,000.00 225,000.00
2 Toaster 5 15,000.00 75,000.00
3 Oven 5 40,000.00 200,000.00
4 Aluminum tables 8 4,000.00 32,000.00
5 Grill (electrical) 5 15,000.00 75,000.00
6 Washer sink 5 5,000.00 25,000.00
7 Refrigerator 5 20,000.00 100,000.00
8 Clip fryer 5 5,000.00 25,000.00
9 Pastries formwork 5 5,000.00 25,000.00
10 Petra 10 2,500.00 25,000.00
11 Cupboard 3 7,500.00 22,500.00
12 Shelf 3 5,000.00 15,000.00
13 Grill bench top 5 11,887.00 59,435.00
14 Deep friend double 6 4,218.00 25,308.00
15 Micro wave grill 5 3,250.00 16,250.00
16 Mincer meat 5 12,999.60 64,998.00
17 Brad oven 5 47,999.85 239,999.25
18 Pizza claye oven 5 29,841.00 149,205.00
19 mixer 15 KG capacity 5 37,999.45 189,997.25
20 Range commercial 5 38,745.00 193,725.00
21 Range linear 3 14,995.00 44,985.00
22 Fruit blender 3 3,585.00 10,755.00
23 Potato chopper 3 41,999.30 125,997.90
24 Onion peeler /chopper 3 15,780.00 47,340.00
25 Blender small 3 3,185.00 9,555.00
26 Deep refrigerator 6 9,450.00 56,700.00
27 refrigerator 10 9,960.00 99,600.00
28 Digital scale (35k.g) 3 1,800.00 5,400.00
29 Waiting scale (220 K.g) 3 4,700.00 14,100.00
30 Kitchen hood 5 29,745.00 148,725.00
31 Kitchen cabin with double Sink 5 31,488.00 157,440.00
32 Kitchen cabin 5 27,488.00 137,440.00
33 Kitchen top -stainless steel 8 8,195.00 65,560.00
34 Kitchen top -stainless steel -large 8 13,195.00 105,560.00
35 Chaffing dish -silver 25 9,499.00 237,475.00
36 Spaghetti plate 50 712.2 35,610.00
37 Dinner plate 50 720 36,000.00
38 Dessert plate 50 720 36,000.00
39 Table fork 10 163.8 1,638.00
40 Table knife 10 136.8 1,368.00
41 Chopper knife 10 62.1 621.00
42 Table spoon 15 163.8 2,457.00
43 Kitchen Pan 10 499 4,990.00
44 Food Box 5 220 1,100.00
45 soup bowl 3 336 1,008.00
46 Cook pot large 10 693.2 6,932.00
47 Cook pot big 38 10 3,054.00 30,540.00
48 Cook pot 20 581.4 11,628.00
49 Cook pot small 20 469.6 9,392.00
50 restaurant Table w/ 4 Chair 50 9,246.00 462,300.00
51 cafe table 20 1,455.00 29,100.00
52 Restaurant chair- sheraton Type 100 2,510.00 251,000.00
53 cafe chair 100 964.5 96,450.00
54 Open generator-24 KV 3 389,748.00 1,169,244.00
sub total 5,237,428.40
steam and sauna bath

S/N Description Qty Unit cost Total Cost
1 sauna electric heater 16 12000 192,000
2 sauna bucket 16 6000 96,000
3 sauna ladle 10 400 4,000
4 sauna thermometer 16 300 4,800
5 electric sauna timer 12 270 3,240
6 sauna hygrometer 16 950 15,200
7 steam generator 2 35000 70,000
8 cloth hunger 17 250 4,250
9 foldable rest 24 400 9,600
10 wall mirrer 12 850 10,200
11 soffa guest chair 16 350 5,600
12 wall mirror 12 4000 48,000
13 wall mounted 10 2500 25,000
14 reception table 2 2200 4,400
15 swivel chair 2 1000 2,000
16 satellite dish with color 2 10000 20,000
17 public addressing system 2 6000 12,000
18 wall watch 2 200 400
total 526,690
S/N Aerobics and physical fitness Qty Unit cost Total Cost
1 Public addressing system 3 15,000 45,000
2 Aerobics dumbbell 10 3,500 35,000
3 Stepping rocks(assoried) 120 250 30,000
4 Wall mounted mirror 30 200 6,000
5 Bike Proms 9 5,500 49,500
6 Track tread mills(electrical) 2 22,000 44,000
7 Track tread mills(manual) 6 4,000 24,000
8 heart rate monitors and pedometers 6 2,500 15,000
9 body solid endurance up right 2 11,000 22,000
10 muscular dynamics 2 13,000 26,000
11 simplex II series 2 16,000 32,000
portable massage tables with tools and
12
accessories 2 17,000 34,000
13 massage body work tools 6 4,000 24,000
14 massage chairs with tools and accessories 2 11,000 22,000
15 massage store heater 2 1,500 3,000
16 massage table electric warming pad 4 3,000 12,000
17 flece message table pad 12 1,000 12,000
18 massage table and video kit 2 6,000 12,000
19 pillows/body support/back care 16 4,500 72,000
20 cleaner and sanitizers 8 2,500 20,000
21 wall mirror(1.5 -2 ml) 6 400 2,400
22 sofa guest chair(three set) 10 4,500 45,000
23 Wall maound lockers 20 2,500 50,000
24 receptionist table 2 2,200 4,400
25 swivel chair 4 2,000 8,000
26 satellite dish with color 2 10,000 20,000
27 public addressing system 2 6,000 12,000
28 wall watch 2 400 800
Total 682,100
Garden recreation center

S/N Garden recreation center Qty Unit cost Total Cost
1 Lawnmower 5 2000 10000
2 wheelbarrow 10 500 5000
3 Metal scraper 10 100 1000
4 Coffee machine 2 10000 20000
5 plastic chair 40 150 6000
6 Oval shaped plastic table 20 800 16000
7 umbrella 20 400 8000
8 juice glass 40 50 2000
9 tea spoon 50 5 250
10 coffee spoon 50 5 250
11 juice stranner 2 150 300
12 water glass 30 20 600
13 coffee cups with saucer 20 100 2000
14 tea cups with saucer 20 60 1200
15 ice-cream box 1 5000 5000
16 water sprinkless 30 40 1200
17 water house nylon rope 4 500 2000
18 Gardner's kits 2 100 200
Total 81,000
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000
For double bed room (20) 3,019,000
Single bed room (50) 2,822,500
2 Furniture and equipment for office and reception area 1,295,300
3 Furniture and equipment for bar and cafeteria 1,232,900
4 Furniture and equipment for restaurant and dining room 485,750
5 Furniture and equipment for conference room 1,468,250
6 Furniture and equipment for kitchen materials 5,237,428
7 Sauna and steam bath materials 526,690
8 Aerobics and physical 682,100
9 Massage service materials 300,000
11 Mini market shop establish costs 200,000
12 Garden and creation area 81,000
Total 17,069,918
5.7. Land, Building and civil work
5.7.1. Land lease
The overall land required is about 1500 square meters. Land lease cost at the rate of
Birr 800 per m2 average and for 40 years land holding is estimated to be Birr 1.2
million. Thus, the total land & construction cost assuming that the total land
lease cost will be paid in advance (5%) amounts to Birr 60,000 governments
has following significances the remaining amount paid within per year .
Land use plan of the project
A properly designed building construction starting in last year before and

insures smooth functioning of all operations. The building will have well-
ventilated appropriate international Hotel service area the structure includes separate
services and other different activates the detail as follows
Table 5.4. Description of Land use plan
S/n Description Qantity Unit Price Total Price

(Br) (Br)
1 Main Building G+4 900 22,222 20,000,000
Gust room
Manager office
Minimarket shops
Bar and restaurant
Bed room (80 rooms,20 will be
double rooms, 50 single rooms and
10 suits.)
Meeting room
Sauna and steam bath
Gymnasium physical fitness
4 Store service 300 3,333 1,000,000
8 Parking area 200 1,000,000
9 Generator house 50 500,000
10 Guard house 50 643,475
Total - 23,143,475
1500.00
5.8. Environmental impact assessment
The project will seriously involve itself protecting conserving and developing the
natural and flora of the project area in line with the millennium
development goal. To this to will play a vital role in participating the varies
organization and the community around the project area to from an
environmental commute in charge of all environmental issues to be handled in
accordance to varies environmental and water policies of 97/99.
The owner of the project believes to undertake several environmental issues for the
conservation development and creation of sustainable environmental around the
project area.
5.9. Implementation Schedule
The actual implementation of the International 3 star hotel is planned to begin

on the Oct 2023. The major activities envisaged are processing of land preparation,
construction and delivery, installation and commissioning of the factory line.
Undertaking of civil design works and execution of construction works
which will be carried out by side which opening and processing of L/C will
take 3 months. The FOB delivery of plant machinery and equipment will take 4
months. Allowing additional one month for sea freight and clearing, the
delivery of plant of project site and thus
commencement of installation work requires 5 month. Plant installation and
commissioning will take place for 4 months.
The provision of infrastructural facilities such as Electric Power and water will be
carried out in the course of project implementation schedule. Other activities such
us man power recruitment and training, system development, and procurement of
raw and other supplies will also be duty performed to ensure that everything is
in place by the time the plant is ready for operation. All in all the project is
expected to take 12 months for completion as per the below detailed
implementation schedule.
Table 5.5. Implementation schedule
(Months) in Gregorian Calendar

Description
5 6 7 8 9 10 11 12 1 2 3 4
Acquisition of Investment Land
(May 2018)
Opening & Processing of L/C x x x
Building Construction x x x x x x
Delivery of Plant machinery and x x x x x
Clearing
Installation and Commissioning x x x x
Recruitment of man power x x x x x x
arranging for other works
Customers, timely availability all the week including week end days,
customer care, and quick response to the feedback from clients.
6. ORGANIZATIONS AND MANAGEMENT
6.1. Organizational Structure
The organizational structure of the project is designed by including all the

necessary personal under the right division. At the top of the organizational
structure, there will be a general manager with the responsibility of supervising
the overall activity of plant. Depending up on the nature of the center and the
amount of work to be performs under each will be supervised by the unit head that
is accountability for general manager
CEO
Adviser G/Manager Internal Auditing

& Inspection
Coordinator
Manager/supervisor
Secretary
Sales & technical Marketing Admin &

Unit Unit finance Unit
As clearly shown the organizational structure, the integrated projected center has
CEO three Departments under the general manager, Addition and the internal
Auditing and inspection. The departments are the production Department, the
marketing department and the general service department under each department
there are different section which are undertaking different activities
6.2. Management
As to the management of the project is concerned the owner will be responsible

for the overall project planning, co-ordination and
implementation. After project implementation the promoter serves as a top
management body and frequently visits and supervises the organization.
Cattle fattening farm a business man who has a long year experience in managing
business activities. Therefore, the extensive experience he has enables him to
organize and properly manage the envisaged International 5 star hotel Service.
6.3. Manpower Requirement
For smooth and efficient operation of the organization, it has been

anticipated that each units will have adequate number of qualified and
experienced manpower. The labor component of the International 5 star hotel
Service G/manager will hire qualified and experienced in management whose main
responsibility is to coordinate the overall activity of the project.
The distinct units have their own operational teams under them. To fill in all these
work units with the required manpower The project will provide 300 employees,
125 permanent (100 skilled & 25unskilled) and 175 casual
skilled and unskilled workers. For smooth operation of the project,
employees will be given on job training, clear duties and responsibilities under
the direct supervision of their respective units.
Table 6.1: Manpower Requirement
Annual
S/n Description of Job Qualification No. Monthly Salary(Br)
1 General Manager BSc in Hotel management 1 10000 120000
2 Coordinator/supervisor BSc in Hotel management 5 6000 360000
1 Assistance Supervisor diploma in Hotel management 5 6,000 360000
2 Receptionist diploma in Accountant 5 5,000 300000
3 Pastry and Staff Cafeteria diploma in food preparation 5 7,000 420000
4 Cafeteria supervisor diploma in Hotel management 2 5,000 120000
5 Waiter diploma and Certificate 20 2,000 480000
6 Cooker diploma in food preparation 20 7,000 1680000
7 Coffee machine operator 12th complete 2 3,000 72000
9 Pastry attendant Certificate 5 5,000 300000
10 Coffee machine operator 12th complete 5 3,000 180000
11 Dessert attendant skill professional 4 1,500 72000
12 Massage expert Certificate 5 5,000 300000
13 Physiotherapist Certificate 5 5,000 300000
14 Sauna /steam Bath Certificate 5 5,000 300000
15 Sauna and Steam bath Certificate 5 5,000
attendant 300000
16 life saver Certificate 4 5,000 240000
17 Casher diploma in Accountant 4 2,500 120000
18 Cleaner vice 8th grade complete 10 1,500 180000
19 Plumber diploma in electrical 2 2,000
engineering 48000
20 Electrician diploma in electrical 2 2500
engineering 60000
21 Gardener skill professional 2 1000 24000
22 Guards gardener 8 1,000 96000
Total 125 - 6,432,000
6.4. Training Requirement
Since the machinery and equipment and services are easy to operate, a special
training arrangement is not needed. But operators, chemists, mechanics &
electricians need a two weeks training during erection, commissioning period on
the production process, raw material and product quality and operation and
maintenance of machinery and equipment by the expert of machinery supplier..
7. FINANCIAL STUDY
Financial analysis of the proposed project of Cattle fattening farm will be

projected to test the financial visibility if the investigated organization.
Quantifying both project cost and benefits over the assumed project life, which
is five years, made the project visible. Besides it has been tried to make a realistic
forecasting of costs and the benefits based in current
market price of all necessary materials. Once the anticipated cattle fattening
operation has been attained both projects cost and revenue is estimated to be
consumed to be compensated by increasing in sales revenue
7.1. Classified Investment cost
The cost of the project is classified as fixed incitement cost and initial working
capital. With regards to fixed investment cost of the project, the land lease,
building and civil works cost, machinery and equipment cost office furniture costs
and fuel costs will be required. As to working and operating cost a brief
illustration will be given as to utilities, salary expense, maintenance cost and
depreciation cost and the other related costs
7.1.1. Fixed costs

Fixed cost that include Land development, Building and civil work, machinery
equipment and vehicles and office furniture estimated birr 47,797,310.which is 65
% of the total project.
Table 7.1 land development
Description Qty Unit Price Total Price (Br)

S/N (Br)
1 Land clearing and leveling 1500 m2 667 1,000,000
2 Land lease (5%) 433,917
3 Canal work 1 600000 600,000
4 Water reservoirs 2 250,000 500,000
Total - - 2,533,917
Table 7.2 Building and civil works
S/n Description Qty Unit Total Price

Price (Br)
(Br)
1 Main Building G+4 900 22,222 20,000,000
Gust room
Manager office
Supermarket
Bar and restaurant
Bed room (80 rooms,20 will be double
rooms, 50 single rooms and 10 suits kings
room.)
Meeting room
Sauna and steam bath
Gymnasium
4 Store service 250 3,333 1,000,000
8 Parking area 200 1,000,000
9 Generator house 50 500,000
10 Guard house 50 643,475
Total - 23,143,475
150.00
N.B. out of the total cost of G+4 Building construction, steel metal is covered 50 % of the
cost therefore the promoter is must be import from foreign using duty free by the rule of
Investment initiation.
Table 7.3 List of summarized machinery and equipment’s and cost
S/n Description Total cost

1 furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000 Import from
Double bed room (20 rooms) 3,019,000 duty free
Single bed room (50 rooms) 2,822,500
2 furniture and equipment for office and reception area 1,295,300 Local market
3 furniture and equipment for bar and cafeteria 1,232,900 Local market
4 furniture and equipment for restaurant and dining room 485,750 Local market
5 furniture and equipment for conference room 1,468,250 Local market
6 furniture and equipment for kitchen materials 5,237,428 Local market
7 Sauna and steam bath materials 526,690 Duty free
8 Aerobics and physical 682,100 Duty free
9 Massage service materials 300,000 Duty free
11 Mini market shop establish costs 200,000 Local market
12 Garden and creation area 81,000 Local market
Total 17,069,918
Table 7.4. Procurement of Vehicles and furniture’s
Type of Vehicles Unit Qty Unit Price Remark

S/N
(Br)
1 Pick-up (4WD)/ No. 2 1,250,000 duty free
2 Mini bus No. 2 1,100,000 duty free
3 Bus service No. 2 1,800,000 duty free
4 Office furniture’s Ls - 400000 Local market
5 computer and accessories 500000 Local market
Total - - 5,050,000
Table 7.5 Summary of Fixed asset
S/n Description Cost Estimate Remark

(Birr)
1 Land development 2,533,917 100% local market
2 Building & Constructions 23,143,475 50% duty free imported
3 Machinery and equipment 17,069,918 50 % duty free imported
4 Procurement of Vehicles & furniture’s 5,050,000 90 % duty free imported
Total 47,797,310 49.7 % duty free
imported
7.1.2. Operational cost costs

Production cost of the project includes direct production and overhead costs. The
major cost item under this category includes cost of material and labour inputs,
fuel and lubricants, repair and maintenance, employee salary and benefits,
insurance, office supplies and other miscellaneous expenses; the total estimated
production cost is birr 6,732,310 million 20.8 % of the total project capital is.
Direct cost
Table 7.6.Raw materials
S/N Raw materials Quantity cost per per year

per month month
1 Food materials raw costs Lamp sum 500,000.00 6,000,000.00
2 d/t type Beverage raw costs Lamp sum 500,000.00 6,000,000.00
3 massage, sauna bath and other related Lamp sum 15,000.00
cost 180,000.00
4 Cleaning materials and other Lamp sum 15,000.00
Miscellaneous uses 180,000.00
Total 12,360,000.00
Table 7.7 Utilities
Description Qty. unit cost Cost per year
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 571 56 32000
Diesel, lt 6,206 58 360000
Total 2367000
Administration cost
uniform and other

•
incentive package and assumed to be 25% of annual salary expense = birr
1,608,000
expense:
• is assumed to be 10% of annual salary expense i.e. birr
643,200
maintenance
•
Cost estimate/ year
Item
% Price
Land development 2 50678.34
Building & Constructions 2 462869.5
Machinery and equipment 3 512097.552
Vehicles & furniture’s 5 151500
Total - 1,177,145.39
is assumed to be 1% of fixed investment cost = birr

•
477,973
Office supplies: Including stationery and sanitary supplies annual
•
cost of birr 100,000 is considered.
telephone and
•
postage, audit, legal and license fees and other miscellaneous
expenses. The total annual cost of these cost components is estimated to be
birr 150,000 /year.
Summary of Operational cost/ working capital
Table 7.8 Determination of Initial Working capital requirement
S/n Cost item Annual cost

1 Raw materials
1.1 Direct coast 12,360,000
1.2 Utilities 2,367,000
Sub total 14,727,000
2 Administrative costs
2.1 Salary and wage 6,432,000
2.2 Employee benefits 1,608,000
2.3 Travel expense 643,200
2.4 Repair and maintenance 1,177,145
2.5 Insurance 477,973
2.6 Advertising expense 50,000
2.7 Telephone expense 365,000
2.8 Wi fi Internet service 60,000
2.9 Office supplies 100,000
2.1 Miscellaneous expense 150,000
Initial W.C. requirement 25,790,318
7.2. Project Capital and financing
7.2.1. Project Capital

The total investment capital of the project is estimated at birr 73,587,629 of which
birr 47,797,310 (65%) is for fixed investment items while the
remaining balance of birr 25,790,318 (35%) will be initial working capital. The
detail of investment capital of the project is given below
7.9. Project capital and source of income
Investment Source of Income Remark

S/n Description
capital (Br.)
1 Land development 2,533,917 Local Market
2 Building & Constructions 23,143,475 50% foreign currency Duty free
3 Machinery and equipment 17,069,918 45% foreign currency Duty free
4 vehicles and furniture 5,050,000 90% foreign currency Duty free
Sub total 47,797,310 49.7% foreign currency Duty free
5 Working Capital 25,790,318 Local market
32% need foreign Duty free
Total 73,587,629
currency
7.2.2. Financing
The total investment capital of the project is to be financed from the promoter’s
equity and bank loan. Out of the total capital birr 22,076,289
(30%) is contributed by the promoter, Harkiso Hajano
while th
e
remaining balance of birr 51,511,340 (70%) is to be financed by local banks. The
bank loan will be repaid based on the following terms and conditions:
 Loan amount = birr 51,511,340
 Installment period/ term = 10 years
 Interest on loan (including service charge) = 11.5%
Page 54
Table 7.10 Loan Repayment Schedule
Principal Interest Year ending

Year
Repayment Payment Balance
0 - - 51,511,340
1 5,151,134 5,923,804 46,360,206
2 5,151,134 5,331,424 41,209,072
3 5,151,134 4,739,043 36,057,938
4 5,151,134 4,146,663 30,906,804
5 5,151,134 3,554,282 25,755,670
6 5,151,134 2,961,902 20,604,536
7 5,151,134 2,369,522 15,453,402
8 5,151,134 1,777,141 10,302,268
9 5,151,134 1,184,761 5,151,134
10 5,151,134 592,380 0
Total 51,511,340 32,580,923
Depreciation of fixed investment items

The straight-line method has been used to depreciate/amortize all fixed items of
the project. The depreciation rate applied for all fixed assets is given below:
Table 7.11 Depreciation Schedule
Original Annual Depreciation

S/n Item Value % Amount (Br.)
1 Land development 2,533,917 10 253,392
2 Building & Constructions 23,143,475 10 2,314,348
3 Machinery and equipment 17,069,918 10 1,706,992
4 vehicles and furniture 5,050,000 10 505,000
Total 47,797,310 - 4,779,731
Page 55
Table 7.12 Summary of project Annual production costs
S/n Cost item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
1 Direct cost
1.1 Direct cost 12,360,000 12,978,000 13,626,900 14,308,245 15,023,657 15,774,840
1.3 Utilities 2,367,000 2,485,350 2,609,618 2,740,098 2,877,103 3,020,958
Sub total 14,727,000 15,463,350 16,236,518 17,048,343 17,900,761 18,795,799
2 Administrative costs
2.1 Salary and wage 6,432,000 6,753,600 7,091,280 7,445,844 7,818,136 8,209,043
2.2 Employee benefits 1,608,000 1,688,400 1,772,820 1,861,461 1,954,534 2,052,261
2.3 Travel expense 643,200 675,360 709,128 744,584 781,814 820,904
Repair and
2.4 1,177,145 1,236,003 1,297,803 1,362,693 1,430,828 1,502,369
maintenance
2.5 Insurance 477,973 501,872 526,965 553,314 580,979 610,028
Advertising
2.6 50,000 52,500 55,125 57,881 60,775 63,814
expense
2.7 Telephone expense 365,000 383,250 402,413 422,533 443,660 465,843
Wi Internet
2.8 60,000 63,000 66,150 69,458 72,930 76,577
service
2.9 Office supplies 100,000 105,000 110,250 115,763 121,551 127,628
Miscellaneous
2.1 150,000 157,500 165,375 173,644 182,326 191,442
expense
Sub total 11,063,318 11,616,484 12,197,309 12,807,174 13,447,533 14,119,909
7.3. Revenue projection
The project will collect its revenue from the customer service. The selling of food and
beverage and rented rooms has estimated based on the current market price and
hotel standard of similar service provision in town. The annual service program
is formulated based on proposed plant capacity considered the following table
Table 7.13 Description of revenue projection
No of bed Price/day
S/N Bed room service per year
rooms /night
1 King standard room 10 1800 4320000
2 Double bed room 20 1400 6720000
3 Single bed room 50 1000 12000000
Subtotal 23,040,000.00
S/N Raw materials No of cost per per year
customer month
per day
1 Food service income 100 850,000.00 10,200,000.00
2 Beverage service income 200 850,000.00 10,200,000.00
3 income from Massage service 40 360,000.00 4,320,000.00
4 Income from Gymnasium 20 180,000.00
service 2,160,000.00
5 Income from sauna bath 45 472,500.00 5,670,000.00
6 Income from Meeting hole 20 150,000.00
service days/month 1,800,000.00
Subtotal 34,350,000.00
Grand total 57,390,000.00
Page 57
7.4. Financial statements
7.4.1. Projected Profit/loss statement
Harkiso Hajano
3 star international Hotel
Projected profit/loss statement
Table 7.14 Project Profit/loss statement
Project Year
Description 1 2 3 4 5 6 7
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089

Less: Production costs
25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493
Gross Income 31,599,682 33,179,666 34,838,649 36,580,581 38,409,610 40,330,091 42,346,595

Less: Interest on
5,923,804 5,331,424 4,739,043 4,146,663 3,554,282 2,961,902 2,369,522
loan
Less: Depreciation 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Profit before tax 20,896,146 23,068,511 25,319,875 27,654,187 30,075,597 32,588,458 35,197,343
Less: Income tax
(35%) 7313651.22 8073978.79 8861956.08 9678965.58 10526458.90 11405960.22 12319069.96
7.4.2. Projected cash flow statement
Harkiso Hajano
Projected cash flow statement
Table 7.15 Project cash flow Statement
Project Year
Description
0 1 2 3 4 5 6
Cash Inflow
Equity 22,076,289 - - - - -
Bank loan 51,511,340
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799
Depreciation 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Total Inflow 73,587,629 52,610,269 65,039,231 68,052,206 71,215,830 74,537,635 78,025,530
Cash Out Flow
Fixed Cost 47,797,310 - - - - -
Initial W.C 25,790,318 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708
Loan Repayment 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134
Total Out flow 73,587,629 30,941,453 32,230,968 33,584,960 35,006,651 36,499,427 38,066,842
Net - 21,668,816 32,808,263 34,467,246 36,209,178 38,038,207 39,958,68
7.4.3. Balance sheet
Current asset
Raw cost and utilities 12,360,000

Utilities 2,367,000
Administrative costs
Salary and wage 6,432,000
Employee benefits 1,608,000
Travel expense 643,200
Repair and maintenance 1,177,145
Insurance 477,973
Advertising expense 50,000
Telephone expense 365,000
Wi fi Internet service 60,000
Office supplies 100,000
Miscellaneous expense 150,000
Fixed cost
Land development 2,533,917
Building & Constructions 23,143,475
Machinery and equipment 17,069,918
Procurement of Vehicles & furniture’s 5,050,000
Total fixed cost 47,797,310
Total asset 73,587,629
Liabilities
Bank loan 51,511,340.23
owners Capital 22,076,288.67
Total liabilities and capital 73,587,628.90
Page 60
7.5.3. Viability and other measurement
Harkiso Hajano
Financial IRR computation
Table 7.16 Financial IRR computation
Year 0 1 2 3 4 5 6
Gross income 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799
Total costs 73,587,629 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708
Gross profit -73,587,629 31,599,682 33,179,666 34,838,649 36,580,581 38,409,610 40,330,091
Less: Profit tax 11,059,889 11,612,883 12,193,527 12,803,203 13,443,364 14,115,532
After tax net benefit -73,587,629 20,539,793 13,478,615 13,976,013 14,503,150 15,061,512 14,873,630
DF at 35% rate 1 0.741 0.549 0.406 0.301 0.223 0.165
Present Value -73,587,629 42,525,990 33,082,466 25,688,625 19,997,266 15,556,013 12,085,557
Net present Value 102,212,186 - - - - - -
DF at 30% rate 1 0.769 0.592 0.455 0.35 0.269 0.207
Present Value -73,587,629 44132910.0 35673624.0 28788976.1 23252634.6 18764876.1 15161880.4
Net present Value 128,817,951 - - - - - -
NPV (Net Present Value)
It is a method of calculating the expected net gain or loss from project by

discounting rate of all expected future cash inflow and outflows to the present
point in time In the above table shoes that NPV at 30% and 35 % discount rate is
128.8 million and 102.2 million respectively, this figure is positive value or
NPV>0 it is indicate that accepted the project until 30 % and 35 % of discount
rate
Break-even Analysis
The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the
break-even point of the project including cost of finance when it starts to operate at full
capacity ( year 4) is estimated by using income statement projection.
BE = FixedCost = 23
% Sales – Variable Cost
Payback Period (PBP)
The payback period is the amount of time required for a firm to recover its initial
investment in a project, as calculate from cash inflow
The investment cost and income statement projection are used to project the
pay-back period
PBP = Initial investment Cost

Gross Profit + Depreciation
= 73,587,629
13,582,495 + 4,779,731
4=5Years
The payback period =4 is less than the maximum acceptable payback period (10)
therefore accept the project.
IRR
The internal rate of the project is the rate of discount that radios the present value of
the investigated project to zero. In calculating the IRR, the discount rate can be
adjusted until the NPV becomes Zero or at least as to zero.
Hence, the IRR of this project is calculated as follows After tax
IRR = 35 + 5 (102.2/128.8)
=33.9%
IRR=33.9% of the project returns its initial investment cost within its life
8. SENSITIVITY ANALYSIS
Sensitivity analysis is variant of scenario analysis in which each scenario represents a

change in only one variable, rather than a number of variables. For the proposed
project, the sensitivity of the project has been computed at 30% and 35% for sales
reduction, operating cost increase and investment cost increased accordingly, as
described in table 7.16 the result shows that IRR at 33.9% operating cost increase and
30 and 35% investment cost increase and 30% service sales reduction. Predicting
among these sales reduction is more sensitive to the project and it should further
expand after the project proposed life time because in this case NPV equal zero at
IRR=33.9
9. RISK ANALYSIS
The major risk of this project shall be high market price fluctuation and
turnover the skilled and trained man power. These risks can be mitigated. The high
staff turnover may be lessened by creating conductive working atmosphere and
providing some benefits. For this project, 25% benefit is proposed for the
permanent employees
Characteristic (Personal) Risk: This is the most important risk, which should be
seriously considered? As to this company, the promoter have sufficient years of work
experience in both government and private organization (leading private business by
engaging themselves), so personal risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable. The
demand- supply analysis exhibits the need of the service of the business
63
organization. According to the overall demand the effect of competitors in the
sector would not be an immediate alarming threat at least for the coming few
years. In additional to this Long year experience of the owner in the field will help
to react against any adverse situation in the business. However, the reaction of
competitors should be attended. In additional to an advanced promotional work
and sustainable goodwill development by creating new and best quality products
with good service deliveries
Collateral Risk: Since the owners of the project are engaged on different
related business, there is no any risk related to collateral. In this regard, the
proposed building and other proposed equipment and the business as a whole are
dependable securities. The experience and skill of the owner as well as the
manager and the other expertise add confidence to the lenders. Therefore, there is
no risk regarding collateral in general.
Construction Risk: Construction risk is one of the most important areas of

risk that need great consideration during project implementation. In the case of 3
star international hotel services, the construction work of the proposed building
will be made by phase with self-response supervision. Hence, there is no as such
serious risk related to construction work.
All the identified risks, which are related to the universally accepted lending
policy, are to the acceptable level that keeps the lender’s interest in safe position.
Furthermore, the quality of the assets of the company is dependable and the
projected finical reports show that the company will have a capacity to pay the
principal and interest without any problem with in short period of time.
64
10. MONITORING AND EVALUATION
Monitoring and Evaluation (M&E) has long been recognized as a vital aspect
of development projects generally and of industrial and services projects in
particular. The monitoring of project performance consists of the
tracking of human, physical and financial resources and the recording of how they
are converted into outputs (project goods and services), and in turn, outcomes and
impacts.
11. CONCLUSION AND RECOMMENDATION
Conclusion: The Project is found to be operationally profitable & has

significant socio-economic benefits. According to the projected income
statement, the envisaged project starts earning profit from the first year of
production. The income statement and other profitability indicators show that the
project is viable. The project is believed to have significant social and economic
benefits that accrue to the society beyond those financial returns to its owner. The
most remarkable social benefits can be expressed in terms of job creation that leads
to reduction in the level of unemployment.
Recommendation: The project directly employs 125 persons; therefore,

considering the attractive financial and economic benefits the project is to produce,
the promoter has made the necessary preparation hoping that all the concerned
offices & financial institutions should give their support to facilitate the
implementation of this plan.
65

Final Harkiso Proposal

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Harkiso Proposal

Uploaded by

Copyright:

Available Formats

PROJECT PROPOSAL

ONE STAR INTERNATIONAL

Project Location: - Wolaita, Areka

Promoted by: Harkiso Hajano

 Name of the Promoter: Harkiso Hajano

Contact Address: +251910070432

 Type of the Project: One star International Hotel

 Type of Business: Sole proprietor ship

 Project Location: Wolaita, Areka

 Project capital: The total investment capital of the project is

estimated at birr 73,571,629 of which:-

Birr 47,797,310 (65%) is for fixed investment cost

Birr 25,774,318 (35%) will be assign for working capital

 Source of finance: The total investment capital of the project is to be

financed from the promoter’s equity and bank loan

Birr 22,071,488(30%) is contributed by the promoter(Harkiso

Birr 51,500,140 (70%) is to be financed by local banks.

casual workers during construction phase .

The project feasibility study proposed on1(one) star international

Project justification: International standard hotel is high class hotel where

In this profile study a one star international standard hotel is considered to

single standard bed rooms totally 80 standard bed rooms services

The total investment capital of the project is estimated at birr 73,571,629 of

following results are obtained.

good service for local and international tourists

Conclusion and recommendation:

Operationally profitable, viable & has significant socio-economic benefits. We

facilitate the implementation of this plan.

2.1. Investment in Ethiopia

By taking this encouraging as an opportunity the promoter project plan to establish

2.3. Promoter Background

2.4. Ambition of creating the hotel project

3.1. Project description and Justification

A hotel is an establishment that provides paid lodging on a short-term basis.

3.2. Project Objective

The proposed project of 3 star International hotel will planned to be located in

Geography: Areka lies at an elevation of 1,200 metres (7,200 ft) and

Economy: The economic activities in Areka are diverse. According to official

pickpocketing, scams and minor burglary. The city has recently

4.1. General Overview

The hotel industry consists of many different services, including accommodation,

According to the United Nations Statistical Commission, Tourism

The total number of international tourists arriving in Ethiopia is steadily

Table 4.1 Total Tourist arrivals in Ethiopia

Year Number Growth Rate

4.2. Present supply in Areka town

Table 4.2 hotels in Areka town

S/N Name of Hotels Areka Number of

3 Ajora fall Hotel 15

8 Adey abeba Hotel 20

11 Saron Hotel - Kasanches 0

Accordingly, assuming 365 working days, currently international

In order to project tourist arrival in to Ethiopia, the past trend in tourist

Projection of Room Night Existing Hotels Un

4.3. Demand for hotel services

Areka achieved an occupancy of 28% at an average daily rate of

Areka has received significant investment into the hotel sector in

Areka town Hotel Market Trends

What drives Areka demand?

market, aid and diplomatic markets. The corporate market is primarily

The pricing of hotel services depends considerably on the quality of service

4.6. Capacity and service programme