Hotel Bussiness Project Proposal PDF Free

PROJECT PROPOSAL ON STAR HOTEL
Hotel Business
Feasibility study
Mr. Asrat Kahsay Tadesse
Hotel Project
P.O. Box: 2137, Code 1250

Phone: +251-(0)11-6672582
Fax: +251-(0)11-6672933
Mobile: +251 911 259300
E-mail: info@imageethiopia.com
Office 1: Bole Medhanialem, Harmony Hotel
Office 2: Africa Avenue, Mega bldg, 4th floor, #417
www.imageethiopia.com
Addis Ababa, Ethiopia
By: Innoteam Hospitality PLC
MAY, 2016
TABLE CONTENTS.............................................................................................................................................. 5
MAY, 2016 ABDDIS ABABA Page 1

1. EXECTIVE SAMMERY............................................................................................................................................. 4
2 . BACK GROUND…………………………………………………………………………………………………………………………………………6
3. PROJECT DESCRIPTION....................................................................................................................................... 12
4. MARKET ANALYSIS......................................................................................................................................... 15
5. THE DEMAND PROJECTION............................................................................................................................ 23
6. SUPPLY OF HOTELS........................................................................................................................................ 26
7. DEMAND AND SUPPLY GAP ANALYSIS............................................................................................................ 29
8. MANAGEMENT AND OPERATIONS................................................................................................................. 30
9. FINANCIAL PLAN............................................................................................................................................ 33
10. PROJECT RISK:/SENSITIVITY ANALYSES/..................................................................................................... 44
Table
Content of the table
Page
Table: Summary of annual foreign currency earnings by our company (EMAGE ETHIOPIA).
Facility Description

10
SERVISCE CAPACITY OF THE HOTEL
11
the level of project execution
12
Actual and Projected Tourist Arrivals and Room Night Demand
24
a Star level hotel in Addis Ababa
25
Hotels in the area
26
Hotel (Room Night) Supply
27
Project Annual Room Night Supply Forecast (2008-2027)
28
10
Demand Supply Gap

28
11
Projection of Tourist Arrival (projected and unsatisfied demand
29
12
Human Resources structure
30
13
Fund Structure
32
14
LIST AND COST OF ALL REQUIRED MACHINERY, EQUIPEMENT,
FURNITURE & FIXTURES
33
15
Market price set up from average price of the similar hotels
34
16
Forecasted covers for the year
40
17
Income and Loss statements projection

41
18
forecasted balance sheet
42
19
Working capital determination
42
20
NPV and IRR
43
21
Loan Amortization Schedule
45
1.1. EXECUTIVE SUMMARY
Ethiopia’s distinctive geography, its amazing variety of flora and fauna, a wide range of historical sights,
a unique mix of ethnicities, and many vibrant aspects of the beaten track make the country in the horn of
Africa a most interesting and fascinating travel destination!
At present, it can be safely concluded that the bulk of tourists visiting Ethiopia are those who are very
much interested in ancient history, business trip, international conference and relaxation are averse to
accept and/ or tolerate poor quality accommodation and services; it is only the state of accommodations
and services at international standards are able to increase the flow of tourists and stay night.

The hotel ideally located at Wello Sefer, Africa Avenue, behind Shoa Supermarket within a few
minutes’ drive to major places in Addis Ababa such as Bole International Air Port, Millennium Hall,
ECA, AU, EU, Embassies, shopping malls and many other places. This location advantage will make a
hotel of choice by tourists, business travelers, conference attendants and other potential customers. The
Location of the hotel has been selected carefully, through market and demand analysis.
The promoter, to Asrat Kahsay, has an immense experience in managing and running successful
business in the travel and tourism industry for the last 12 years and able to collect a foreign currency
from tourist service about an average of one million USD per annum and all the proceeds are formally
channeled to banks, for its high contribution in earnings of foreign currency to the country, the company
obtained a recognition and prized by government in 2013 GC and similar recognition is also received
from Wegagen Bank. (Annex 1)
The proceeds service export of the tour operation from foreign tourists is channeled to our account in the
form of foreign remittance, cash collection, credit cards and visa cards. For instance foreign currency
remittances which are collected through a SWIFT credited in to the company account shows large
amount of foreign incoming transfer. As the result the company committed to repay its loan from its
foreign currency proceeds and credit all its sales to CBE and can sign letter of undertaking to repay its
loans from foreign currency proceeds without fail. Moreover in collaboration with a Commercial Bank
of Ethiopia we dedicated to prompt your products in supporting the fulfillment of your objectives. As
our hotel is a tourist destination for tourists, common for an electronic banking for tourists, ATM, POS,
and VISA cards are necessary to transact money from their international account so we will make our
customers to use CBE ATMs for additional foreign collection, the company is proud to cooperate and
give a secured space area for installing your ATM machine for free.
Table: 1. Summary of annual foreign currency earnings by our company (EMAGE

ETHIOPIA).
Type and amount of hard currency
Origin of Change
Year
tourists USD GBP EURO in % age
Ending 2010 USA & Europe 562,709.89 16909.00 -
Ending 2012 USA & Europe 909,578.70 45,298.00 84,712.90 61.86%
Ending 2014 USA & Europe 1,324,798.73 3,880.92 16,481.52 68%
Ending 2015 USA & Europe 1,545,290.75 50,356.0 25,970.93 51%
Until March 2016 USA & Europe 532,261.59 67,454.00 7,056.00 NA

The trend shows increase in earnings of foreign currency and expects to increase by 60%. The foreign
remittance receipts are attached as annex 2
The project is undergoing as per the schedule, the building is already constructed and furnished with a
limited equipment and furniture, however, it has remained with a limited machineries and working
capital equivalent to Birr 7,835,310.310.00 (16%) of the project, the investment cost of this project was
estimated to reach Birr 48,523,817.00 out of which Birr 39,738,586 or 60% is raised by the promoter of
this project while the remain Birr 19,835,310.00 or 40% would be financed by the bank.
1.1. Relation Development with CBE

The company is in a need of relationship development with Commercial Bank of Ethiopia for a reason
of a win - win principles:
Besides of the reliability and capacity of the bank, the willingness and the objectives of CBE to support
developmental sectors will benefits our project financial needs.
The cost of capital (loan interest) is fair and attractive than private banks
The company is committed to collaborate with CBE for mutual benefits. We will direct our foreign
remittance proceeds from tour operation and hotel earnings to the Commercial Bank of Ethiopia and we
will repay our loan through foreign currency earnings as confirmed by our undertaking letter.
There will an ATM and POS machine installed in our hotel for free as the result the bank able to collect
tremendous foreign currency from our customers who want to spent money from their international
VISA cards.
2. BACKGROUND
2.1. Promoter’s Background

Mr. Asrat Kahsay Tadesse is Tour Operations graduate who has been working in the hotel and tourism
industry for the past 12 years. After working in different tour companies in the country promoting
different tourist attractions in the country and creating awareness among foreign tourists who used to
know the country from the negative point of view.
Mr. Asrat KahsayTadesse established a tour company called IMAGE ETHIOPIA TOURS in 2006 G.C.
which later became IMAGE ETHIOPIA TOUR & TRAVEL PLC. The reason for the establishment of

the tour company besides its business benefits is to change the negative Image of Ethiopia among
foreigners who recall Ethiopia as a place of famine and civil unrest. It can be said that Mr. Asrat Kahsay
is playing a significant role in promoting Ethiopia as a general, its historical places, the diverse culture of
its people, the flora and fauna and the beautiful landscape which is created by its ragged mountains and
gorges. Image Ethiopia Tour & Travel PLC lead by Mr. Asrat Kahsay is now one of the most successful
tour companies in the country which is generating lots of tourists from different parts of the globe mainly
from Europe and America. As a result, the company is generating significant amount of foreign cash to
the country and playing its part in developing the country’s economy, creating jobs and helping the
community. IETT PLC also operates as a ticket agent to issue both domestic and international flight
tickets, car hire hotel reservations and tour operations.
Mr. Asrat Kahsay has accumulated several years of experience in Hotel and Tourism business
development and operations. Since IETT PLC was established, it uses to generate about a million USD
per a year from foreign tourists who have been transferring the hard currency into IETT’s bank account.
IETT PLC is playing its role in generating foreign currency to banks. .Thus, IETT PLC has played and is
still playing a significant role in the development of the country through generating hard currencies.
The company’s head office is located in Addis Ababa on Namibia Street at Harmony Hotel, and its
branch office is in the LG building opposite the Harmony Hotel.
Mr. Asrat Kahsay is also the founder of Gogo Trading PLC which was established in 2013G.C or 2005
E.C.
GOGO TRADING Plc is an Information Technology business firm that renders a wide range of IT based
services to fully or partially support the process of a business firm automation.
Since its establishment in 2013, Gogo Trading PLC has supplied different IT and network solution and
demonstrated its ability to understand and deliver on the needs and objectives of all government and
non-government customers.
1) The main emphasis is on early project entry and the delivery of fully integrated IT solutions and
on maintaining awareness of IT industry trends and emerging technologies ensures our ability to
deliver the best possible result to our clients. Mr. Asrat Kahsay founded Gogo Trading PLC
able to run the business successfully, healthy and satisfactory profits.
Based on the above justification, it’s valid to conclude that Mr. Asrat has made his companies successful
and competent in the respective business areas. The healthy and successful business environment with

great working relationship with other parties such as hotels, local tour operators, NGOs, foreign
companies and tour operators created by Mr. Asrat Kahsay is a big bonus for the new hotel business to
be opened behind Africa Avenue/Bole road next to the Wello Sefer junction.
2.2. Background of Hotels and Tourism Ethiopia

According to the data obtained from World Hospitality Group, Ethiopia has only six internationally
branded hotels with just 990 rooms. Nigeria, for example, has 40 internationally branded hotels with
6614 rooms followed by Morocco which has 29 hotels and 4828 rooms. Out of the ten countries in the
list, Ethiopia is the ninth, second only to Senegal, which has five internationally branded hotels and 914
rooms.
Ethiopia’s overall growth and the continued progress in the tourism industry is forecast by the World
Travel & Tourism Council to be 4.8% per annum over the coming decade. Increasing the supply of high-
quality, top-end hotel accommodation through hotel construction is necessary for improved
competitiveness and the economic success of the sector.
Third only to Brussels and Washington DC, Addis Ababa is home to 118 diplomatic missions accredited
to both the government in Ethiopia, the AU and the UNECA. But it is a city which has only three
international chain and six internationally branded hotels. For the hotel industry in Ethiopia, the best is
yet to come.
The Addis Ababa City Investment Office, Addis Investment Bulletin for 2008 G.C., suggests that 555
hotel and restaurant development projects were issued investment permits from 1992 to 2008 both at the
federal and municipal level. However, 503 of the licensed investments are still at the pre-implementation
stage, 39 are being implemented and only 28 were reported operational. Given this low implementation
rate, capacity and quality is still an issue in the industry. Based on the same source, Addis Ababa issued
259 investment permits in the hotel and restaurant sectors between June 1993 and Jan 2008; of which
one is under construction, 257 are in the pre-implementation phase and only one is in operation.
More recently, there is anecdotal evidence of more hotels being developed along Africa Avenue.
However, the city still needs modern hospitality services which the promoter of this hotel project Mr.
Asrat Kahsay, founder and general manager of Image Ethiopia Tour and Travel PLC would like to
support the government’s policies in the sector are especially conducive in this respect.
2.3. THE OBJECTIVES OF THE PROJECT

The general aim of the study is examining the feasibility study of star hotel project at Wolo Sefer -
Addis Ababa on Bole road is to offer excellence hotel service for a domestic and internationals tourists
and business persons and people as a whole by earning a normal profit.
To accommodate a hotel service for clients who come to stay in the Hotel through the sister company
Image Ethiopia Tour & Travel PLC, and to local tour operators who have a good working relationship
with the promoter.
The primary objective of this project is to offer a quality and package service for the tourists who come
to visit Ethiopia through our company Image Ethiopia Tour & Travel PLC, to offer a high quality service
to residents, people who come for conferences and meetings and domestic tourists. The area where the
hotel is located is emerging as an upscale business district of the city. The area is convenient for hotel
investment because of its ideal location advantage, which is not far from Bole international airport,
tourist attraction sites in the city, the African Union headquarters, Economic Commission for Africa,
United Nations offices, government offices other important sites or places of interest.
2.4. PROJECT RATIONALE

Ethiopia, inaccurately renowned as a famine-stricken desert country, has massive green mountains,
unique birds and animals, and stunning landscapes. The Abbay gorge at the upper Nile basin, the
monasteries of Lake Tana, the 17th-Century castles of Gonder, the rock-hewn churches of Lalibela, and
the archeological sites at Axum, overshadow nature and other stone churches and the rich undiluted
Ethiopian cultures are all world class attractions.
Endowed with striking natural beauty and perched on a high plateau in a region known as the horn of
Africa, Ethiopia has culture and traditions which date back over 3000 years. Ethiopia both breathtaking
and extraordinary is one of the few African nations whose culture is intact due to historical isolation.
Aside from a brief period of Italian occupation under Mussolini (which the Ethiopians fiercely resisted),
the country was never colonized. The rich history dating back to the Queen of Sheba is visible today in
ancient tombs; rock-hewn churches and colorful festivals.
Tourism can bring in sustainable income and can genuinely help Ethiopia in a way that any other sector
cannot. In addition to abundant natural and historic attractions, Ethiopia’s culture is unique, ancient, and
dazzling, with music, food, drink, and religious ceremonies that is seen nowhere else on earth.
Fortunately, the secret of Ethiopia’s tourist potentials is starting to leak out. It’s recently been featured in
both “Transitions Abroad” and in the UK’s “Wanderlust” magazine: A trickle of intrepid backpackers,

en route from Cairo to Cape Town have led the charge, and more and more tour companies are
introducing small-group trips to Ethiopia.
The hotel project among others has the following rational.

 To help the shortage of quality hotel services in the capital city by providing quality accommodation.
 To help the long term plan of the Ethiopian Ministry of Culture and Tourism which is to increase the
flow of tourists into the country by providing tourist standard accommodation.
 To tap into an ever growing market for accommodation among regular visitors to Addis Ababa and
tourists to the country.
 To use good government policies that supports the establishment of such investments.
3. PROJECT DESCRIPTION
The project which is located in Addis Ababa, Kirkos sub city, Wereda 02 House number 041, 260 meters
from the Africa Avenue and specifically the Wello-Sefer round about or junction has a Basement +
Ground + 4+ Terrace story building which was designed by the well-known architect Fasil Ghiorgis who
shared our plans to include some of the Ethiopian architectures from the Axumites, Lalibela, Gondar and
Harar. The total built up area is 1540 square meters; the functional outlay is as follows:
Table: 2, Facility Description
Floors/place Type of Facility
Basement Floor main Kitchen, laundry, food store, Generator, IT room, GYM, Staff changing room
Ground Floor Front office or reception, lobby Bar and restaurant and Offices, Internet and information desk.
Public Toilets’, additional kitchen and Coffee ceremony area
First Floor Meeting Hall (100 PAX Capacity),Public Toilets, One double bed room, One Twin bed room,
TV & CCTV control rooms
Second Floor Three double bed rooms and Three Twin bed rooms
Third Floor: One double bed room, Three Twin bed rooms and One Suite executive room
Fourth Floor: Two double bed rooms, Two Twin bed room, and One executive suite room
Fifth Floor: One suit Room, Terrace bar & barbeque area Steam and sauna
Compound Garden coffee shop
3.1. The Services of the hotel

The hotel has a total of 19 internationally standard luxury rooms which can accommodate around 38
people at a time. It also has a restaurant which will provide both traditional and European dishes, a lobby
bar, terrace bar, garden coffee shop and pastry. It will also have a steam and sauna and GYM plus other
services.
Table 3. SERVISCE CAPACITY OF THE HOTEL

N
Type of service Accommodation capacity
o.
1. Bed room
 Single rooms  4 rooms
 Double rooms  5 rooms
 Twin rooms  8 rooms
 Suite rooms  2 rooms
2. Restaurant
 Tables  20 Tables
 Chairs  80 Chairs for 80 persons
3. Bar
3.1 Lobby bar
 Tables 6
 Chairs  12 for 12 persons
 Sofa set  5 sofa sets with a capacity of 5 person on
each: Total 25 persons
Bar/stool chairs 11 stool chairs for 11 persons
3.2 Terrace bar
 Tables  20 ps
 Chairs  80 chairs for 80 persons
 Terrace hammock bed  3 for 3 persons
4. Garden cafeteria
 Tables 6 tables
 Chairs  24 chairs for 24 persons
5. Steam  One steam for persons
Sauna One Sauna for 5 persons
6. Meeting hall
 Meeting Table  1 conference tables
 Chairs  30 Chairs
 Projector  1 ps
 Automatic projecting screen  1 ps
 Sound system  4 ps
 Microphones  20 per each chair
 Speakers  4 ps
7  GYM  30 people at a time
3.2. STATUS OF THE PROJECT.

The project had five phases construction stages, most of them are accomplished successfullof
Table 4. the level of project execution
Project phase Status
1st phase: building of the structure, it is executed 100 %
2nd phase electrical, sanitation works and paintings of all rooms, The building elevator which convey
8 persons/630 kg capacity passenger lift, 1.0 M/s, 6/6/6 brand RICH from Hangzhou Rich
Intelligence elevator co, Ltd at a total cost (includes transport& installation) of ETB
962,000.00.
3rd phase: fitting of all doors and windows, tiles, Gibson works is completed
4th phase: recruitment hotel equipment, furniture and machines- beds for all rooms , tables and chairs
are imported, however, the basement floor (mainly kitchen area) partially equipped, lobby
bar partially equipped, small restaurant partially equipped, the hotel has purchased a
stand by GENERATOR with ATS. The generator is of the best quality Perkins generator
made in the United Kingdom with a capacity of 135 KVA imported with a total cost
(including transport) of ETB 492, 128.
5th phase to recruit employees and hotel supplies- the 5th phase of the project is not completed
but under going
4. MARKET ANALYSIS
Ethiopia’s distinctive geography, its amazing variety of flora and fauna, a wide range of historical sights,
a unique mix of ethnicities, and many vibrant aspects off the beaten track make the country in the horn
of Africa a most interesting and fascinating travel destination! To explore all those areas, foreign tourists
who are knowing the country for the right reasons are starting to realize that it is one of the most
fascinating travel destinations. As a result, the flow of tourists who are coming to visit Ethiopia is
growing from time to time. In addition to the foreign nationals, the Ethiopian diaspora are also returning
home to be involved in different investments and to visit families. Though the domestic tourism in
Ethiopia is not a well-developed one and many Ethiopians haven’t started touring their country, there are
international and regional conferences and meetings which require quality hotel services in the city.
Generally when the overall tourist flow into Ethiopia is assessed, the market is growing from time to
time and it is attractive to investors who want to invest in the hospitality industry. According to the
recent statistical data from the Ministry of Culture and Tourism, the target markets to the Ethiopian
tourism are: Ethiopians residing abroad, Ethiopian residents of medium to high income, Europeans,
Americans, Middle East countries, the emerging market of Asians such as Japan, China, South Korea &
India, Africans and Foreign nationals residing in neighboring countries.
If the Ethiopian Tourism is properly promoted and developed, it will have a direct effect on the growth
of the standard and number of hotels in Ethiopia. It is as a result of high hotel accommodation demand

that the Ministry of Culture and Tourism as per its agreement with the World Tourism Organization is
working on the standardization procedure and star rating. Currently 112 hotels are standardized and
given the star rating (see from the table below)
Despite the immense potentials of Ethiopia’s historical, natural and cultural attractions, the hospitality
industry in general and the hotel services in particular have not been developed. The contribution of
hotels and allied tourist facilities such as dinning and sporting activities towards the expansion of
tourism particularly in the capital city, Addis Ababa is at best minimal. Viewed from the stand point
Ethiopia hosting the third largest diplomatic community, the largest continental and regional
conferences, meetings and workshops demanding large international standard hotels, the deficiency is
even more prominent especially in Addis Ababa.
Current growth trends of tourism industry and the priority the government placed in developing the
industry are clear indicators that the future of the hotel and resort industry in Ethiopia is truly bright.
Governmental strategic plans aiming at making Ethiopia one of the top 10 tourist destinations in Africa
are strong motivations for the promoters of this project to build international standard hotel business.
This becomes more imperative when considering the need to satisfy existing demand and/or capture
future market.
The key market segment to be served by this project includes tourists, international guests, high-income
groups, the diplomatic community, expatriates and foreigners residing in Ethiopia, and of course anyone
who has the capacity and interest to use services provided there.
4.1. DEMAND DETERMINETS

The demand for the project’s services are investigated, identified and defined on the basis of demand
determinants. It includes the flow of tourists in relation to the willingness to pay, need of service,
availability and taste preferences. Moreover, socio-economics, environment, culture, alternatives, and
other subjective parameters are known to influence demand at the individual or macro-level.
Trend analysis of the historical data can indicate the level of demand, providing a set of package as tour
and hotel accommodation as one stop shopping will be considered to create an economic scale to
customers for maximizing satisfaction. All of the above mentioned demand analysis has been performed
for this project.
The impact of location on the demand and quality service has impact on demand for the hotel. The
Project is located at Africa Avenue which is suitable to tourists, it is trendy commercial district of city, It
is lined on either side with buildings and shops offering all manner of goods and services. It’s a draw for

many foreign visitors because of it has a well maintained pedestrian walkway and is very safe. And since
the road leads to the airport it’s usually the first avenue that most visitors encounter when they arrive in
Addis Ababa. However, the market for hotel services isn’t entirely saturated and there is still room for
more hospitality providers at present.
The road is slowly being flanked by high-rise buildings as per the city master plan. It’s only appropriate
that a luxury hotel features in this important part of the city. The location of the hotels approved by the
city administration doesn’t include many hospitality providers in the mentioned locality so a new star
hotel will be a welcome addition and in keeping with the area’s standard. The huge investment cost and
prolonged payback time of three-star hotels has dissuaded many investors. Demand for high quality
accommodation is still strong and currently outstrips available supply in the city. This is a clear
indication that the market is still underdeveloped and there is a potential demand for the service.
4.2. TARGET CUSTOMERS
The identification of target customers is fundamental to marketing management. All subsequent

decisions about project investment depend upon prior identification of target customers, and the target
customers for this hotel are as follows:
 Foreign nationals who come to visit Ethiopia through the sister company Image Ethiopia Tour &
Travel PLC and other tour operators with whom the tour company has a healthy working
relationship.
 Foreign nationals residing in the country who travel for business and pleasure
 Foreign nationals who work for different international organizations
 Foreign nationals who come to Addis for conferences and meetings
 Ethiopian nationals traveling to Addis for business and pleasure
 Ethiopian diaspora who return to Addis for business, family and pleasure
 Ethiopian nationals who work for different government and non-government in the city
The proposed hotel capitalizes on offering personalized service and total service model based on
evolving requirements of guests so that it can create demand from diverse segments. The product
concept includes package of services that make the offering unique. Yet, we have identified primary
market segments for its business each with own characteristics and product focus.
4.3. CHARACTERISTICS AND TASTE OF THE TARGET GROUP

The principal task of marketing managers is to influence demand. If marketers understand the who,
what, where, when, how and why of consumer behavior, then the probability of marketing success is
enhanced - there is less waste in the marketing budget, products are developed to satisfy well-researched
needs and execution is tailored to maximize consumer satisfaction.
Hotel guests are dynamic, eclectic and never fit into neat categories. However, most star rated
accommodations providers focus their marketing effort to understanding consumer behavior.
Understanding of consumer behavior entails the study of customers personal characteristics such as
involvement, decision making, information processing, learning, personality, needs, values and attitudes
to products and the understanding of social influences includes reference groups, family, social class and
origination. Thus, studying consumer behavior helps improve customer service, if they are selectively
employed.
The project is going provide a package of services with quality, considering the customers work hard for
their money and do not enjoy spending it. Exemplary service is required to build a sustainable business
that has a loyal customer base.
The Addis Ababa City Investment Office, Addis Investment Bulletin for 2008 G.C., suggests that 555
hotel and restaurant development projects were issued investment permits from 1992 to 2008 both at the
federal and municipal level. Recently with the growth of conference tourism and high flow of tourists,
several local and foreign investors are being attracted to the sector.
4.4. MARKET OBJECTIVES

The following are some of the market objectives of the subject hotel.
 Finding or creating a satisfied group of customers.

 Designing a product or service to satisfy their wants.
 Selling it at a price the consumers are willing to pay.
 Making it conveniently accessible.
 Identifying and defining a project’s strategic marketing constraints and Problems.
 Identifying and measuring the market and demand potential.
 Assessing and identifying project target markets and their behaviors.
 Making the project marketing strategies, concepts and directions transparent to all project
stakeholders.

In Ethiopia, the service sector is a consistently strong component of economic growth recently. The
hospitality industry is thus a rapidly growing sub-sector of the economy. To contribute to this positive
development, this hotel will utilize a marketing strategy and competition mechanism that fits its
organizational arrangement and its objectives. The basic decisions are: a) how to use resources and b)
how to interact effectively with the existing hotel business environment.
4.5. MARKET STRATEGY

This hotel project has a very unique location which is just behind the Africa Avenue which runs from
Bole international airport to the city center at Meskel square. The area is one of the best locations for a
hotel project moreover,
 An excel quality service will be offered increase spending of tourists

 Its owner Mr. Asrat Kahsay has a well-established and successful tour company. Hence, tourists who
come to visit Ethiopia through the tour company will use its services.
 The owner has a wide range of experience in the hospitality industry and connection with other local
tour operators to work with.
 Collaboration with competitors, working with stake holders of the industry, with big hotels, tour
organizations, international conference arrangements, ministry of foreign affairs, international NGOs
even taxi drivers at airport.
 The hotel rooms and other parts of the hotel are carefully furnished with double-glass windows, 5
star beds and mattresses with 25 years warranty from the suppliers in Dubai.
 We are located close to Bole International airport
 It is very close to the tourist attraction sites in the city
 It is away from any noise which is created by religious places, road, nightclub and others.
 It is a couple of miles drive from the headquarters of the African Union, ECA, Embassies,
international NGOs and government offices
 It is a couple of hundred meters (just over 200 meters) from the Wello Sefer round about on the
Africa avenue/Bole road
Moreover, this hotel project has a very unique exterior and interior designs which are from the Axumite
architecture, Churches of Lalibela, the Castles of Gondar, the walled city of Harar and the well-known
Ethiopian embroiders from different part s of the country. It can be concluded that international tourists,
Ethiopian diaspora and local residents who appreciate the Ethiopian architecture would love to use its
services.
Focusing on the unique aspects of the products and exceptional service theme, a mix of marketing
vehicles will be created to convey the hotel presence, image, message and reputation.

The marketing and sales departments will create special events and solicit print and broadcast coverage,
especially for opening day.
4.6. Marketing Effort

1. Pre-opening– potential customers, prominent governmental and private institutions, important
business groups and individuals will be invited to experience our products and services free of charge
before we open
2. Opening -- An advanced notice (press release) will be sent out by the marketing department to all
media and printed announcement ads will be placed in key places.
3. Ongoing -- A flexible campaign (using the above media), assessed regularly for effectiveness.
4. Point of sale -- A well-trained staff will increase the average check as well as enhancing the
customer's overall experience. Word-of-mouth referral is very important in building a customer base.
4.7. MARKETING MIX
The marketing mix is a term used to denote the range of instruments and tools that marketer uses to
influence demand. As prospective hoteliers, IETT PLC will employ the four P’s marketing combination:
 Product: the hotel will take into consideration tangible features such as quality; and intangibles such
as a satisfaction.
 Price: product and service rates will be differentiated according to demand and market
circumstances
 Advertising and Promotion: the hotel will promote its services through direct contact, online,
public medium, posters, and other forms of advertisement
 Place: site of hotel and infrastructure to support access to the location
Finally, the hotel will be distinguished by its emphasis on its customers and responding to their needs to
ensure repeated customers.
The promoters of this hotel will market its hotel primarily through their own marketing representatives.
A full-time marketing manager will be hired and will be in charge of the sole responsibility of
identifying market potentials and developing effective marketing tools. Publications with large
readerships and websites typically catering to tourists have been selected for collaboration and
advertisement. Strong relationships will be formed with the sizeable international and diplomatic
community existing in Addis Ababa. A close business relationship will be forged not only with local but
also with popular tour operators in Europe, the United States, the Middle East and Africa. They will
maintain intense direct and indirect communication by mail, phone and via e-mail. The promoters will
also devise cross-promotional programs and work with travel agents and international hotels, large

hotels in Addis Ababa such as the Sheraton, Hilton and Ghion Hotels, etc and event organizers, online
booking agents such as www.hotels.com, www.expedia.com etc.
4.8. COMPETITION
The hotel under consideration may not face significant competition because it has its own customers
hosted by its tour operation from its international tour agents, by providing international quality service
package it renders. We belief our compotators can be our collaborators, as the number and quality hotels
increases, we also improve our service quality ultimately the number of tourists visiting the country
caused by good hotel accommodation will increase as the result the sales of our service will increase.
A particular form of price discrimination is discounting. In discounting, a lower price with high quality
is offered to customers who fulfill certain qualifiers.
For instance:
 Seasonal discounts where prices vary according to demand cycles–normal, high and
low season.
 Volume discount is offered to two types of customers- regular patrons and group
bookings accordingly. Business travelers may obtain special corporate rates of up to 15 % off normal
rates. Whereas a group bookings will also apply to tour operators who can negotiate for a 15% to 25%
discount according to season. To qualify for the corporate rates, guests need to be repeat
4.9. PROMOTIONAL PLANS
In order to ensure good market penetration and maintain core customer base, the General Manger, with
assistance from Marketing & Sales departments, shall personally conduct initial marketing and
promotional works. Simultaneously, the Marketing Manager will be developing brochures, flyers and
other marketing tools describing distinctive characteristics of the hotel their natural environment and
surrounding and the service packages offered at the facility. The brochures will be broadly distributed to
national and international tour operators, cross-promotional major hotels in Addis Ababa, and will be
placed in rooms, restaurants, Spas and other facilities of the hotel itself. Parallel to other marketing
efforts, nicely designed and well-built websites will be sent out to all major search engines and links will
be placed on popular websites frequented by foreign tourists and the large Diaspora population living in
the United States, Europe, Canada and the Middle East.

By launching aggressive marketing campaign to promote the hotel the international community in Addis
Ababa and prominent individuals will be lobbied intensively and will be offered generously discounted
corporate packages.
Employees will receive updated information and special trainings to promote the hotel. Each of them
will be knowledgeable sales persons able to answer any a questions pertaining to products and services
at all facilities. Special training programs will be offered at various times and sites by marketing
manager and other staff to prepare our employees adequately.
An aggressive media comparing will be launched through on-site press conferences and press releases
that precede the opening of every new facility to herald the arrival of yet the new hotel. Members of the
press are given unrestricted access to all rooms, facilities and services so that they can spread the news.
Such extensive media exposure will certainly generate several favorable articles in major international
and national publications. In order to make the media comparing as successful as possible, a sizable
budget of up to 5% of sales will be allocated.
The company will use TV, Internet, exhibitions presentation, brochures, and print media such as
magazines & newspapers to promote its services. Some of these publications include the Ethiopian
Airlines in-flight Magazine- Selamta, and local English and Amharic newspapers.
4.10. MARKET PENETRATION
Entry into the market should not be a problem we were supplying hotels of our own tourists now retain
them as a package. The location has high visibility with heavy foot traffic all day long. The local
residents and visitors always support new establishments and the tourists do not have fixed preferences.
In addition, significant amount of money will be budgeted for a pre-opening advertising and public
relations campaign. Potential customers will be offered complimentary free preopening service to
experience the hotel offerings.
5. The Demand Projection
5.1. Factors Affecting Demand in t
Demand for lodging facilities in Ethiopia is mainly driven by the number of tourist arrivals: the more the
influx, the greater will be social economic and political situation of the country. Consequently, the size
of the demand depends on how the country is favorable for tourist’s desirability. However, this does not

mean that the only source of hotel demand is tourist, but it can give proximate indication of the demand
pattern.
The Ministry of Culture and Tourism has forecasted the arrival number of international tourists based on
the historical data and other parameters. According to this linear forecast made by Ethiopian Tourism
Commission (2010), international arrivals will reach 931,522 by the by year 2020 with an average
increase of 7.89%. The 7.89 %growth rate is set taking in to consideration data and trends in years before
1999 where tourism growth was very minimal (especially during the Ethio-Eriterian war period).With
the same rate of growth, the number of tourists will reach 1,361,755 by the year 2025. However, taking
the growth rate of 10.7% for the last decade, forecast for tourists will reach 1,789,685 by the year 2020
and 3,400,783 by the year 2025. The International Tourism Association’s growth forecast (13%) is
about the same with that of last decade growth rate of 13.7%.
The following points are considered as the basis for the projections of assumed growth rate of
future room night demand:
A. Air Traffic Flow: Addis Ababa Bole International Airport is one of the busiest airports in
Africa; at the present it gives service up to 150 aircrafts a day and 34 aircrafts at a time. The number
of passengers using this airport is growing by more than 20% every year. In 2012, expansion work is
being undertaken which will enable the airport to accommodate 44 aircrafts at a time. In 2014,
6,497,847 passengers were recorded. By 2011, the airport had become the third busiest traffic by
cargo traffic, registering 2,420,997 tons. In its global aviation outlook for 2012, the International Air
Transport Association (IATA) said that the passenger market has performed well in the face of weak
business confidence in western economies. Demand is expected to grow by 5.3% over the course of
2012. African carriers have benefited from the strong growth of many African economies, boosted in
some cases by investment and trade links with china and some by strong oil revenues. As part of its
vision 2025, Ethiopian Airlines plans to operate more than 120 airplanes flying to 90 plus
destinations internationally, carrying over 18 million passengers and 710,000 tons of cargo per
annum while employing more than 17,000 people.
B. Global Trends in Tourism Demand: Tourism is widely regarded as one of the fastest growing
economic sectors in the world. By 2008, there were 924 million international tourist arrivals. United
Nations World Tourism Organization (UNWTO) estimates that tourism contributes 30% of world
exports of services, 6% of all exports and 5% of world GDP. UNWTO estimated that tourism
generated US$1.1 trillion in 2009 or US$3 billion a day. Spending per unit Tourist arrival has
increased almost 20% over the period 2004-2008, from US$818 in 2004 to US$1,020 in 2008. Sub

Saharan Africa share of international tourist arrivals increased from 6.7 million in 1990 to 29.7
million in 2009. Between 2006 and 2007, tourist arrivals increased by 9.1%- the highest regional
growth rate in the world. According to UNWTO, Africa was the only region to have seen growth in
tourist arrivals despite the global economic crisis in 2008. UNWTO expected that sub Saharan
Africa’s travel and tourism industry is to achieve an annual growth rate of 5.5% over the period from
2010 to 2020.
A. Economic Growth and Investment: United Nations Report on Global Economic Situation and
Prospects 2012 estimated that Ethiopian’s economy could see an 8% growth rate in Gross Domestic
product in 2012 and 2013. The Ethiopian Government expects 11% growth rate during the same
period. Ethiopia has been registering some of the fastest GDP growth rates in the world over recent
years. Improved governance and macroeconomic management have supported this economic
development.
B. Foreign Direct Investment: The Foreign Direct Investment net (Net Balance of Payment, BOP in
US dollar) in Ethiopia was last reported at US$288,271,568.25 in 2010. (World Bank, 2012)
All the above parameters suggest that a very conservative estimate of 7% increase in hotel
demand is to be expected – which is directly related to trends in international travel, and to
the growth in the economy. This conservative estimate will be used for further analysis in
this document.
5.2. Comparative advantage the hotel
 The hotel is ideally located behind Africa Avenue on the Wello Sefer junction and behind
Shoa supermarket
 Its distance from Bole international airport is only 2.4 kms or 5-7 minute drive
 It is very close to all the tourist attractions of the city of Addis Ababa
 It is ideally located for Embassies, NGO and governmental offices
 Though it is only 260 meters from Africa Avenue or Bole road, it is away from the noise of
the traffic and it is away from the noise of religious places such as mosques and Churches.
 The hotel has a very unique Ethiopian design on its interior and exterior parts and foreign
nationals would want to feel in Ethiopia when they stay in a hotel in Addis
 The furniture and fittings in the hotel are of a high quality with mattresses and toppers of
the highest 5 star quality with 25YEARS warranty.
 It has a small garden and terrace which will make clients relax and feel at home
 It already has a well-established sister company in the name Image Ethiopia Tour & Travel
which will be the source of tourists together with other local tour operators.

So, the major potential customers of the hotel will be tourists who come to visit Ethiopia through the
sister company Image Ethiopia Tour & Travel, local tour operators, Ethiopian diaspora and expats.
Table: 5. Actual and Projected Tourist Arrivals and Room Night Demand
TOURIST
Year ROOM NIGHT DEMAND
ARRIVALS
2000 135,954 679,770
2001 148,438 742,190
2002 156,327 781,635
2003 179,910 899,550
2004 184,078 920,390
2005 227,398 1,136,990
2006 330,026 1,650,130
2007 357,841 1,789,205
2008 383,399 1,916,995
2009 422,870 2,114,350
2010 551,621 2,758,105
2011 592,781 2,963,905
2012 640,708 3,203,540
2013 691,724 3,458,620
2014 740,551 3,702,755
2015 785,578 3,927,890
2016 820,739 4,103,695
2017 847,702 4,238,510
2018 875,341 4,376,705
2019 903,430 4,517,150
2020 931,522 4,657,610
2021 1,005,019 5,025,095
2022 1,084,315 5,421,575
2023 1,169,868 5,849,340
2024 1,262,170 6,310,850
2025 1,361,755 6,808,775
Source: Ministry of culture and Tourism computation
6. SUPPLY OF HOTELS
6.1. CURRNT SUPPLY OF STAR HOTELS
According to the Ministry of Culture and Tourism there are 68 hotels that are certified as 5 star to 1 star
level among 123 hotels assessed in Addis Ababa as of 6, November 2015 The major rationales for the
star grading of the hotels are: certifying hotels by their safety and security, hygiene and sanitation to
maximize service quality and create competitive environment among the business so that the tourism
sector will greatly improve. In addition, the grading is meant to narrow the gap between the unequal
service provided by hotels and the cost paid by customers. In addition, the graded hotels have a

paramount importance to product standardization of the country on the basis of multidimensional
economic and social benefits of the nation, nationality and peoples.
Table 6, a Star level hotel in Addis Ababa
Star
No. Name of Hotel No. Name of Hotel Star Rate
Rate
1 Sheraton Addis Hotel 5 35 Cyan City Hotel 3
2 Elilly International Hotel 5 36 Cedar Hotel 3
3 Capital Hotel 5 37 Ararat Hotel 3
4 Radisson Blue Hotel 5 38 Global Hotel 3
5 Intercontinental Addis Hotel 4 39 Addis View Hotel 3
6 Harmony Hotel 4 40 Kaleb Hotel 3
7 Dream line Hotel 4 41 Panorama Hotel 3
8 Jupiter Hotel (Cazanchis) 4 42 Solotie Hotel 3
9 Saromaria Hotel 4 43 Trinity Hotel 2
10 DebreDamo Hotel 4 44 Homage Hotel 2
11 Nazra Hotel 4 45 Dassalegn Hotel 2
12 Friendship Hotel 4 46 RasAmba Hotel 2
13 Nexus Hotel 4 47 Pacific Hotel 2
14 Washington Hotel 4 48 Empire Hotel 2
15 Sarem International Hotel 4 49 Churchill Hotel 2
16 Jupiter Hotel (Bole) 4 50 Grand Yordanos Hotel 2
17 Tegen Hotel 4 51 K-Z Hotel 2
18 The Resident Hotel 3 52 Aksum Hotel 2
19 Umma Hotel 3 53 Gihon Hotel 2
20 Hilton Addis Hotel 3 54 Nigiste Saba Hotel 2
21 Siyonat Hotel 3 55 Kennenisa Hotel 2
22 Beer garden Inn 3 56 Damu Hotel 2
23 Addis Regency Hotel 3 57 SoraAbma Hotel 2
24 Embilta Hotel 3 58 Astra Hotel 2
25 Aphrodite Hotel 3 59 Haimay Apartment 2
Hotel
26 Kings Hotel 3 60 Edna Addis Hotel 2
27 Wassamar Hotel 3 61 Destiny Hotel 2
28 Caravan Hotel 3 62 AG Palace Hotel 1
29 Beshale Hotel 3 63 Semen Hotel 1
30 Monarch Hotel 3 64 Ethiopia Hotel 1
31 Addisinya Hotel 3 65 Nardan Hotel 1
32 Top Ten Hotel 3 66 MN International Hotel 1
33 Crown Hotel 3 67 Paramount 1
International Hotel
34 Ambassador Hotel 3 68 3 Days International 1
Hotel
6.2. HOTELS IN THE AREA

There are some hotels in the area which can create a healthy competition and collaboration the hotels in the
area are:
Table 7. Hotels in the area
Name of the hotel Location Standard Remark
Jupiter Hotel Bole Bole behind Friendship 4star

supermarket
Washington Hotel On EU road near Atlas 4star
junction
Saro Maria Hotel On Namibia street 4star
Harmony Hotel On Namibia street 4star
Siyonat Hotel On Namibia street 3star
Ghion Hotel Meskel square 3star
The Residence Hotel Dembel 3star
Homage Hotel Dembel 3star
Monarch Hotel On Namibia street 3star
Table 8. Hotel (Room Night) Supply
Item 5 Star 4 star 3 star 2 star 1 star Total
National Capacity
No. of Hotels 3 16 30 42 21 112
Percentage 3% 14% 26% 38% 19% 100%
No.of Rooms 794 1073 1368 1527 695 5457
Percentage 15% 20% 25% 28% 13% 100%
No.of Beds 1264 1331 1872 2101 967 7535
Percentage 17% 18% 25% 28% 13% 100%
Addis Ababa Market
No.of Hotel 3 14 25 31 7 80
Market share 100% 88% 83% 74% 33% 71%
No.of Rooms 794 905 1093 1109 238 4139
Market share 100% 84% 80% 73% 34% 76%
No.of Beds 1264 1124 1358 1494 306 5546
Market share 100% 84% 73% 71% 32% 74%
At the national level, there were a total of 112 star designated hotels (in the country) in 2010. In a similar
tread, 14 of 16 four star hotels and all the 3 five star hotels, are located in the city, accounting for 84% and
100% of the total four and five star national room capacity (Ministry of culture and Tourism, 2010). Table
4.8 provides details on the national supply of hotel and the share of Addis Ababa. In addition, Table 4.9
shows the initial hotel room capacity in year 2008 and the growth in supply for four and five star hotels,
taking into account new expansions/development after year 2008. Accordingly, assuming that all the
expected new hotel development projects will proceed as planned, overall expected supply growth rate is
estimated to be 15%. Thus, if we take an average growth rate of hotel supply to be 15% per annum, we can
project the room night supply (number of rooms available multiplied by 365 days) as follows:

Table 9. Project Annual Room Night Supply Forecast (2008-2027)
Year Annual Room Night Year Annual Room
Supply Night supply
2008 620,135 2018 2,508,792
2009 713,155 2019 2,885,111
2010 820,129 2020 3,317,877
2011 943,148 2021 3,815,559
2012 1,084,620 2022 4,387,893
2013 1,247,313 2023 5,046,077
2014 1,434,410 2024 5,802,988
2015 1,649,571 2025 6,673,436
2016 1,897,077 2026 7674451.4
2017 2,181,558 2027 8825619.11
7. Demand and Supply Gap Analysis

The demand - _supply gap has been estimated on the basis of the demand projection and the supply of beds.
The number of hotel rooms in the country in 2009 was multiplied by the number of days in the year (365).
Then this figure was projected up to 2025 using an estimated annual average growth rate of night rooms of
15%. Meanwhile, the demand has been projected taking a very conservation annual average growth rate of
7.89%. As it is shown in the table below, the demand supply gap for bed nights is anticipated to be the
highest in 2015(2,278,319) and consistently declining to 135,339 in 2025. It should be noted here that the
projected decline in the demand-supply gap is based on the assumption that allthe hotel projects which are in
the pipeline will be completed as planned.
Table 10: Demand Supply Gap

Year Annual Room Night Annual Room Night Demand /Supply
Supply Demand Gap
2008 620,135 1,916,995 1,296,860
2009 713,155 2,114,350 1,401,195
2010 820,129 2,758,105 1,937,976
2011 943,148 2,963,905 2,020,757
2012 1,084,620 3,203,540 2,118,920
2013 1,247,313 3,458,620 2,211,307
2014 1,434,410 3,702,755 2,268,345
2015 1,649,571 3,927,890 2,278,319
2016 1,897,007 4,103,695 2,206,668
2017 2,181,558 4,238,510 2,056,952
2018 2,508,792 4,376,705 1,867,913
2019 2,885,111 4,517,150 1,632,039
2020 3,317,887 4,657,610 1,339,733
2021 3,815,559 5,025,095 1,209,536
2022 4,387,893 5,421,575 1,033,682
2023 5,046,077 5,849,340 803,263
2024 5,802,988 6,310,850 507,862
2025 6,673,436 6,808,775 135,339

Table 12. projection of Tourist Arrival (projected and unsatisfied demand)
Room Night
Year Projection of Tourist Arrivals Unsatisfied Demand
Demand
2015 758,039.00 3,032,156.00 1,253,876.00
2016 831,569.00 3,326,276.00 1,547,996.00
2017 912,231.00 3,648,924.00 1,870,644.00
2018 1,000,718.00 4,002,872.00 2,024,592.00
2019 1,097,787.00 4,391,148.00 2,612,868.00
2020 1,204,273.00 4,817,092.00 3,038,812.00
Source: Ministry of Culture and Tourism 2015
8. MANAGEMENT AND OPERATIONS
8.1. Structure
The project will accord employment opportunity for over 57 persons and will generate considerable financial
contribution to the government in the form of tax.
Successfully running this project will require a sound institutional framework and clearly defined working
procedures. Thus designing and developing an appropriate management culture is a crucial factor for the
project’s success.
The following management structure will be implemented for this development:
Executive: This comprises the general assembly and executives from IETT PLC. This is the top
management organ in the company and provides guidance on strategic planning, coordination and control.
Administration: These officials will manage the day-to-day running of the hotel. They will in turn be
answerable to their superiors for their respective departments
Human resources will be constantly trained to ensure employees are productive and Competitive.
Table 12. Human Resources structure

ASRAT KAHSAY TADESSE

(IMAGE ETHIOPIA TOUR AND TRAVEL P.L.C)
Hotel Project
MANAGING
DIRECTOR/OWNE
Hospitality
Auditor
Advisor
General Manager
Operations/HR
Sales
Engineenering &
& Kitchen F&B Service Security Front Office Housekeeping Finance
Maintenance
Marketing
8.2. MANPOWER REQUIREMENT AND TRAINING

The company will invest in its workers to ensure that they are productive, competitive and competent in their
professions. The staff on Food and Beverage Front Office, Housekeeping departments and other customer
contact employees will undergo professional training and take part in workshops organized to improve their
skills. The hotel will initially require at least 57 professional and supporting staff.
The promoter of the hotel, Mr. Asrat Kahsay is an entrepreneur with over 12 years of experience in travel
and tourism business. Currently his primary businesses are IMAGE ETHIOPIA TOUR AND TRAVEL
P.L.C and GoGo computer trading company. He is successful as entrepreneur in his current sector of
business and operations.
Therefore, the company believes to work with appropriate stake holders in developing the proposed Hotel.
The promoter recruits experts for the hotel development and has already accomplish the construction
remained to furnish with machines and equipment’s.
The hotel creates employment opportunity for 57 persons. Compliance with the National hotel grading
requirements is needed for the recruitment of the General Manager (GM). The GM shall possess BA in Hotel
management and a minimum of 5 years’ experience. At least 50% the rest of the team should have relevant
technical qualification and COC certification. The detail of the man power requirements, salary scales and

person specifications is presented below.

Total number of employees required is 57 their total yearly salary expense will be Birr 1,336,800 birr per a
year and incremental salary may increase by 10%
At hotel level the structure provides for a flat structure that enables the GM to have a direct communication
with core and support departments and sections in the hotel. The organizational structure of the subject hotel
is as follows.
It has established a system to work closely with renowned local and international steak holder sin stages of
hotel development and operation. This enable the promoter accomplish successfully the development stage
of the hotel and we have confidence in our marketing strategy for a success of the hotel operation.
9. FINANCIAL PLAN
9.1. DEVELOPMENT COST

The Investment cost for the acquisition of the land has already been covered. The construction of the hotel
building has finalized and installation furniture, fixtures and equipment is going well underway.
The total cost of the Hotel is birr 48,523,817(Forty eight Million five hundred twenty three thousand eight
hundred seventeen). The following table illustrates summary of the development/ Investment cost u of the
project.
Table 13. Fund Structure
Contribution
CBE
Total cost in Work
Description Owners’ Creditors Required
No birr executed
equity Finance Finance
1 Land 6,118,000 6,118,000 6,118,000

2 Building 28,375,586 28,375,586 16,375,588 12million 12,000,000
Kitchen Exhaust fans, Ice maker,
3 burner, steam & sauna 451,500 451,500 451,500
4 Transformer 400,000 400,000 400,000
Water heaters and generator
5 580,500 580,500 580,500
exhaust
6 kitchen machines 1,200,000 1,200,000 1,200,000
7 Furniture and equipment 5,520,000 4,045,000 4,045,000 1,475,000 1,475,000
8 Vehicles 1,500,000 1,500,000
9 Office equipment 180,000 180,000
10 Working capital 3,248,,310 294,583 2,953,727 3,248,310
11 grace period interest 949,921 949,921
48,523,817 39,738,586 28,688,509 - 19,835,310
work executed 83% Remaining 17 %
owners’ equity 60%
creditors equity 40%

14. LIST AND COST OF ALL REQUIRED MACHINERY, EQUIPEMENT,
FURNITURE & FIXTURES
No. Description Unit of Qty Unit Price Total Price Remark
Measure (Birr) (Birr)
1 Bed rooms
1.1 Arm Chairs Pcs 38 2200 83,600
1.2 Coffee tables Pcs 19 1800 34,200
1.3 Bed side table Pcs 46 2240 103,040
1.4 Laptop table Pcs 19 3,700 70,300
1.5 Chair for laptop table Pcs 19 2,900 55,100
1.6 Dressing table Pcs 19 4,600 87,400
1.7 Desk Chair for dressing table Pcs 19 2,700 51,300
1.8 Dressing mirror Pcs 19 2,300 43,700
1.9 Safe Deposit box Pcs 21 3,500 73,500
1.10 Framed pictures for room décor Pcs 57 3,300 188,100
1.11 Terrace bar display Set 1 43,000.00 43,000.00
1.12 Terrace bar chairs Pcs 20 2,300 46,000
1.13 Terrace pergola cover/shade Pcs 2 49,500.00 99,000
1.14 X-ray security machine for luggage Set 1 292,000 359,000
1.15 Walk through machine for persons Set 1 152,000 152,000
1.16 Hand held body checking machines Pcs 4 5,600 22,400
Sub-Total 1 1,511,640
2 Kitchen
2.1 Kitchen Exhaust fan for main kitchen Set 1 240,000 240,000
2.2 Kitchen Exhaust fan for small kitchen Set 1 90,000 90,000
2.3 Ice maker Pcs 2 26,880 53,760
2.4 Gas and electric burner oven 0.90x 1.60m Pcs 2 22,500 45,000
2.5 Electric stove for suite rooms Pcs 3 4,900 14,700
2.6 Steam and Sauna Set 2 63,500 127,000
Sub Total 2 570,460
3 Water Heat pumps with 1500 ltr each Pcs 8 56,250 450,000
4 Water booster pumps Pcs 2 31,500 53,000
5 Generator stand and exhaust fan Set 1 82,000 82,000
Sub Total 3 585,000
6 Vehicles
6.1 Hyundai H1 2016 8seater van for shuttle and Pcs 1 652,000 652,000
staff service
6.2 Toyota Hiace 2016 15seater van for shuttle Pcs 1 852,000 852,000
services of big groups
Sub Total 4 1,504,000
7 Office Equipment
7.1 Computers for cashiers Pcs 1 13,000.00 52,000.00
7.2 Printers for bookings Pcs 4 7,000.00 28,000.00
Sub Total 5 80,000
TOTAL REQUIRED AMOUNT 4,251,100
9.2. CAPACITY PLANNING, COSTS, AND COSTS FORECAST

The project has the capacity of providing services to 2,000 customers/Year. The project generates money
from the services in the form accommodation, conference, weeding, business center, laundry, sauna bath etc.
(For the details, see Sales projection).
9.3. SALS PRISE SET-UP OF OUR PROJECT

Price for bed rooms and food and beverage is taken average of market price of same star hotels
Table 15. Market price set up from average price of the similar hotels
Type of service Our hotel Average Remark

price in ETB competitors’
price in Birr
Single room 1926.00 2568.00

Double/Twin room 2568.00 2996.00
Suite room 2996.00 4500.00
F&B
Roasted Chicken 130.00 180.00
Beef 115.00 165.00
Fish 90.00 140.00
Traditional food Beyaynetu 80.00 130.00
Beers 28.00 35.00
Soft drinks 20.00 30.00
Whisky, Black Label 2,200.00 2650.00
Grey Goose Vodka 2100.00 2300.00
Tea/coffee 15.00 25.00
Wine local 334.00 380.00
Fresh Juice 30.00 40.00
Conference room per head 100 100-200
Wedding (Hall & Meal) 400 400-500
Steam/ Sauna 300 300-500
Note;- Our hotel price in ETB is an average price based on the price of similar hotels
The price is taken an average price of similar star hotels in Addis Ababa and also based on the product
characteristics and uniqueness of the hotel, the hotel will have a rack rate including breakfast, some
complimentary services, for the rooms are:
 Prices of Food & Beverages are aligned with those of the rooms. 3-course menu including
water and hot beverages.
The package price for the including two coffee breaks and buffet lunch is priced
9.4. FINANCIAL PROJECTION ASSUMPTIONS

9.4.1. Assumption for the Income

The financial projections of the proposed hotel consider a number of assumptions and estimations of
business performance based on the market study, hotel characteristics, other operating considerations and
other industry standards. The main ones are also discussed below.
 Capacity utilization 70% in the 1st year ,80% in the 2nd year, 90% in the 3rd year then after 100 %
 Number of bed is 19 : standard double 8, twin room 8, and executive 3
The hotel will offer accommodation of varying size and specification. The room rates will reflect this
diversity and occupancy rate. The proposed room rates and average reference price are stated below:
Type of Room Quantity Proposed Room Rate

Standard Double 8 90 USD/day or Birr 1,926.00
Twin Room 8 120 USD/day or Birr 2,568.00
Executive Suite Room 3 140 USD/day or Birr 2,996.00
Total Rooms 19
Average Room Rate 110.50 USD/day or Birr 2,364.70
The occupancy Rate assumed to be 90% and 50% from October to March and April to September,
respectively as the result the annual average occupancy rate would be 70%.
 CONFERENCE HALL:-The hotel will provide conference halls for weddings, national and
international meetings, workshops and other functions which demand such services. The charge of
course varies with season and conditions as well as overall demand. But for project income
determination purposes income from conference hall related services is assumed to be 10% of the
income from accommodation.
 FOOD AND BEVERAGE OUTLETS: -In addition to complementing the sales of accommodation
the hotels food and beverage outlets are expected to provide services both to in-house guest as well as
any visitors. Breakfast will be complementary to the room and revenue generated from the sales of
food and beverage services is assumed to be a function of the room sales and therefore, for the
purpose of this projection, total income from food and beverage sales is assumed to be 20 % of total
accommodation room revenue.
 LAUNDRY INCOME: the Laundry assumed to render a service to internal and external customers
income is assumed to be 5% of total accommodation room revenue
 OTHER INCOMES:-Income from other revenue centers (beauty salon, cosmetics, shopping
materials) is assumed to be 5% of the total room sales.

 Annual working days 365
 Working hours per day 16
 Exchange rate is 21.40 Birr and increased by 0.5 % per annum
 The project financial analysis lifespan is seven years
 The income tax of 35% of net operating profit
 Loan interest rate 9.5%
 In order to combat the prevailing day to day price increment of operational cost of the hotel due to
inflation rate and the revenues will increase by 5% per annual
 Other operating incomes include minor operating revenues such as retail, laundry and other business
center and rental services assumed to be 5% of accommodation income.
9.4.2. Assumptions on Expenses
 Salary expense will increase by 10% per annual.

 Electric power, Fuel and Lubricant 10 % of total Revenue.
 Cleaning materials and supplies 1% of total revenue.
 Transport and Travel at Birr 5,000/month and increased by 5%.
 Marketing and promotion at Birr 10,000/month increased by 5% per annum.
 Repair and Maintenance 0.5 %for the first year then after doubled each of the proceeding years of
cost of fixed assets except land.
 Utility Expense, at Birr 10,000/month for first year and increased by 5% per annum.
 Uniform expense at Birr 400 per an employee there will be 40 employees require using uniform and
the purchase price assumed to be increased by 5% per annum.
 Stationery and Related printed materials at Birr 2,500/month. And assumed to be increased by 5%
per annum.
 Insurance Expense at 1% of original cost of fixed Assets.
 Cost of goods sold of food/beverage/other input 90% of food and beverage revenue.
 Deprecation- straight line method 5% for building, 10 % for equipment, fixture& machineries and
20% for vehicles.
 Return on capital employed assumed to be 15%.
FOOD AND BEVERAGE
Jul Au Ma
Breakfast y g Sep Oct Nov Dec Jan Feb r Apr May Jun Total

Sleepers 450 450 450 450 450 450 450 450 450 450 450 450 5,400
Walk ins B,Fast 5 5 5 5 5 5 5 5 5 5 5 5 60
Total 455 455 455 455 455 455 455 455 455 455 455 455 5,460
Walk in Lunch-Cultural
Restaurant 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Walk In Dinner- Cultural
Restaurant 450 450 450 450 450 450 450 450 450 450 450 450 5,400
Walk in Top Bar &
Restaurant 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Walk in Lobby Bar 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Room Service 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Source: Assumption and other hotels’ experience
Cultural Restaurant
Breakfast revenue
Number of sleepers for the year multiplied by breakfast allocation. (cost)
Breakfast average spend is ETB 111 = (5*22.18)
Comp B .Fast ETB 88. @ 5,400 = ETB 475,200
B. Fast Revenue (Walk in) Unit price ETB195
ETB 88 @60 = ETB 5,300
Total ETB 480,500
Lunch
10% of sleepers used our Cultural Restaurants to have their lunch.
The Average Food and Beverage price is proposed to be ETB 150 and 30 respectively and
Sleepers are 5460
Lunch cover = Walk in + 15% sleepers
Food 3600 + 819 = 4419 X ETB 119= ETB 525,861
Beverage = 4419 X ETB 24 = ETB 106,000
Total ETB 631,861
Dinner
5% of sleepers used our restaurants to have their Dinner. The Average Food and Beverage
price is proposed to be ETB 150 and 30 respectively.
Dinner cover = Walk in + 5% sleepers (5460)
Food 5400 +273= 5,673 X ETB 119 = ETB 675,000
Beverage = 5,673 x ETB 24 = ETB 136,152
Total ETB 811,152
Top Bar
Food and Beverage cover = Walk in + 10% sleepers

Assumed average spending per cover is ETB 150 for food & 41 beverages.
Food 6,000 + 546 = 6546 X ETB 119 = ETB 778,974
Beverage = 6456 X ETB 24= ETB 154,944
Total ETB 933, 918
Lobby Bar
Food and Beverage cover = Walk-in + 20% of sleepers
Assumed average spending of F&B is of ETB 80 per cover.
= {(6000) + (20%X 5460)} X ETB 63.00
= ETB 446,796
Food = .60 X ETB 446,796 = ETB 268,078
Beverage =.40 X ETB 446,796 = ETB 178,718
Total ETB 446,796
Room Service
Assumed covers shall be 3600 multiplied by average spend of ETB 100 per cover.
Food = .70 x 3600 x ETB 90 = ETB 226,800
Beverage =. .30 X 3600 X ETB 90 = ETB 97,200
Total ETB 324,000
Minibar
20% of sleepers may use the Minibar. Assumed average spending is of ETB 24 per cover
(net)
Budgeted Mini Bar revenue = 20% X 5460 X ETB 24 = ETB 26,208
Budgeted cost of sales percentage

Food
Budgeted food cost is 45% of budgeted food revenue
Beverage
Budgeted beverage cost is 35 % of budgeted beverage revenue
1. Restaurant and Bar revenue summary

Food 2,955,213
Beverage 673,014
Mini Bar 26,208

Total 3,654,435
2. Payroll and Related Expenses
 Budgeted salary for Kitchen ETB 120,000

 Budgeted salary for Bar and Rest. ETB 36,000
 Salary for Banquet coordinator and other staff ETB 60,000
Total ETB 156,000
3. Other operating costs

Cleaning and Chemicals ETB 10,000 per year
Cleaning chemical and dish washing detergents, sanitizing tablets, mops, cloths etc.
.Gas consumption for the year ETB 13,000
Budget for gas consumption in the Kitchen.
Supplies in Bar and Restaurant ETB 10,000
This is for paper napkins, toothpicks, coasters, napkins etc.
Power, utility and maintenance cost ETB 18,000 per year

Share of power, Utility and maintenance for kitchen, Bar and restaurant operation
Printing and stationeries ETB 10,000 per year

For supply of printings A4 paper, pens, paper clips etc., for F and B
Menu replacement cost ETB 10,000 per year
Cost of menu production
Pest Control ETB 5,000 per year
Allocation of cost of pest treatment and monthly inspection
Computer supplies 5,000ETB per year
Cost of repair and maintenance of computer and computer parts.
3. Other operating cost
Banqueting and conference supplies ETB 10,000 per year
This includes Pen, Note book, Flip chart, water and other stationary items. All items should be inventoried
and only consumption charged
Laundry Expenses ETB 10,000 per year
Budget for Table cloth, Napkin Skirt, Nephron etc

CONFRENCE AND BANQUETING

Table 16. Forecasted covers for the year are as follows:
Months cover Jul. Aug. Sept Oct. Nov Dec. Jan. Feb. Mar. April May June Total
conference 300 330 280 200 230 260 390 250 400 350 300 250 3,,540
Conference budget revenue

Average conference prices: Food ETB 300, and beverage 30
Food = ETB 237 X 3,540 = ETB 838,980
Beverage = ETB 24 x 3,540 = ETB 84,960
Total ETB 923,940
Table 17. Income and Loss statements projection
description initial year year 1 year 2 year 3 Year 4 year 5 year 6 Year 7
capacity 70% 80% 90% 100% 100% 100% 100%
Income
average bed rent per a
111 116.03 121.83 127.92 134.31 141.03 148.08 155.48
day
number of beds 19 19 19 19 19 19 19 19
occupancy rate 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
exchange rate 21.61 21.72 21.82 21.93 22.04 22.15 22.26 22.38
income per a night 31,755 33,510 35,361 37,315 39,377 41,552 43,848 46,271
bed year income 11,590,744 12,231,132 12,906,902 13,620,009 14,372,514 15,166,596 16,004,550 16,888,801
income from conference

1,159,074 1,223,113 1,290,690 1,362,001 1,437,251 1,516,660 1,600,455 1,688,880
hall
food and beverages 2,318,149 2,446,226 2,581,380 2,724,002 2,874,503 3,033,319 3,200,910 3,377,760
laundry 579,537 611,557 645,345 681,000 718,626 758,330 800,228 844,440
other income 579,537 611,557 645,345 681,000 718,626 758,330 800,228 844,440

total income 16,227,041 17,123,585 18,069,663 19,068,012 20,121,520 21,233,234 22,406,370 23,644,322
Expense:
salary expense 1,336,800.00 1,470,480 1,617,528 1,779,281 1,957,209 2,152,930 2,368,223 2,605,045
Electric power, Fuel
1,622,704 1,712,359 1,806,966 1,906,801 2,012,152 2,123,323 2,240,637 2,364,432
and Lubricant
Cleaning materials &
162,270 171,236 180,697 190,680 201,215 212,332 224,064 236,443
supplies
Transport and Travel
60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
expense
Marketing and
120,000 126,000 132,300 138,915 145,861 153,154 160,811 168,852
promotion
Repair and Maintenance
191,038 382,076 573,114 764,152 955,190 1,146,228 1,337,266
expense -
Utility Expense 120,000 126,000 132,300 138,915 145,861 153,154 160,811 168,852
Uniform expense 16,000 16,800 17,640 18,522 19,448 20,421 21,442 22,514
Stationery and Related
30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
printed materials
Insurance Expense 433,256 433,256 433,256 433,256 433,256 433,256 433,256 433,256
Miscellaneous expense 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
cost of goods sold of
food/beverage/other 2,086,334 2,201,604 2,323,242 2,451,602 2,587,053 2,729,987 2,880,819 3,039,984
input
Total operating cost 4,710,564 5,135,792 5,573,852 6,025,448 6,491,323 6,972,259 7,469,082 7,982,664
Deprecation 2,551,979 2,551,979 2,551,979 2,551,979 2,551,979 2,551,979 2,551,979 2,551,979
interest expense 1,740,320 1,541,589 1,323,295 1,083,513 820,128 530,815 888,310 213,022
total expense 9,002,863 9,229,360 9,449,127 9,660,941 9,863,430 10,055,053 10,909,372 10,747,666
gross profit 7,224,178 7,894,225 8,620,536 9,407,071 10,258,090 11,178,181 11,496,998 12,896,657
profit tax 2,528,462 2,762,979 3,017,188 3,292,475 3,590,332 3,912,363 4,023,949 4,513,830
Net profit 4,695,716 5,131,246 5,603,349 6,114,596 6,667,759 7,265,818 7,473,049 8,382,827
Forecasted balance sheet
Assets: year -1 year -2 year -3 year -4 year -5 year -6 year -7

Land 6,118,000 6,118,000 6,118,000 6,118,000 6,118,000 6,118,000 6,118,000
Building 28,375,586 28,375,586 28,375,586 28,375,586 28,375,586 28,375,586 28,375,586
Vehicles 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
equipment, furniture and
8,152,000 8,152,000 8,152,000 8,152,000 8,152,000 8,152,000 8,152,000
machineries
total fixed assets 44,145,586 44,145,586 44,145,586 44,145,586 44,145,586 44,145,586 44,145,586
less :accumulated depreciation 2,551,979 5,103,959 7,655,938 10,207,917 12,759,897 15,311,876 17,863,855
Book value of fixed assets 41,593,607 39,041,627 36,489,648 33,937,669 31,385,690 28,833,710 26,281,731
Stock 521,583 550,401 580,811 612,900 646,763 682,497 720,205
Supplies 40,568 42,809 45,174 47,670 50,304 53,083 56,016
Receivables 1,622,704 1,712,359 1,806,966 1,906,801 2,012,152 2,123,323 2,240,637
prepaid insurance 433,256 433,256 433,256 433,256 433,256 433,256 433,256
Cash 11,696,689 11,452,277 11,999,933 12,339,591 12,449,158 12,304,271 11,885,601
total current assets 14,314,800 14,191,102 14,866,140 15,340,218 15,591,633 15,596,430 15,335,715
total assets 55,908,406 53,232,729 51,355,788 49,277,887 46,977,323 44,430,140 41,617,446
long term liabilities
bank loan 16,267,996 16,267,996 13,598,182 10,663,397 7,437,343 3,891,112
short term liabilities
account payable 471,056 513,579 557,385 602,545 649,132 697,226 746,908
Long term loan matured 2,428,765 2,669,813 2,934,785 3,226,054 3,546,231 3,891,112
tax payable 2,818,228 2,716,926 2,979,099 3,263,202 3,570,818 3,903,653 4,263,710
total short term liabilities 5,718,049 5,900,318 6,471,269 7,091,801 7,766,182 8,491,990 5,010,618
owner's equity 33,922,361 33,734,229 34,221,122 34,748,742 35,320,029 35,938,150 36,606,828
paid up capital 28,688,509 28,688,509 28,688,509 28,688,509 28,688,509 28,688,509 28,688,509

retained earnings 5,233,852 5,045,719 5,532,612 6,060,233 6,631,520 7,249,640 7,918,318
total liability and capital 55,908,406 53,232,729 51,355,788 49,277,887 46,977,323 44,430,140 41,617,446
Table 19. Working capital determination
period to be financed
Description Annual required
coverage by the bank
salary expense six months 668,400 1,336,800.00
Electric power, Fuel and Lubricant 10 % of total Revenue six months 811,352 1,622,704.13
Cleaning materials & supplies six months 81,135 162,270.41
Transport and Travel at Birr 5,000/month six months 30,000 60,000.00
Marketing and promotion at Birr 10,000/month six months 60,000 120,000.00
Utility Expense, at Birr 10,000/month six months 60,000 20,000.00
Uniform expense at Birr 400/ 40 employees Year 16,000 16,000.00
Stationery and Related printed materials at Birr 2,500/month six months 15,000 30,000.00
Insurance Expense at 1% of original cost of fixed Assets Year 433,256 433,255.86
Miscellaneous expense at Birr 5,000/month six months 30,000 60,000.00
cost of goods sold of food/beverage/other input 90% of food and beverage
revenue six months 1,043,167 2,086,333.88
3,248,310 6,047,364
TABLE 20. NPV and IRR
Year Year
Description Year -2 Year -4 Year -6 Year -7
Table Year -1 -3 -5 for
Initial investment
NPV cost
(16,587,000) and
IRR Recoverable W.C (3,248,310) 3,248,310 from
the net income after 5,233,85 5,045,71 5,532,61 6,060,23 6,631,52 7,249,64 cash
7,918,318
tax 2 9 2 3 0 0
flow, 2,551,97 2,551,97 2,551,97 2,551,97 2,551,97 2,551,97 the
deprecation 2,551,979
NPV 9 9 9 9 9 9
7,597,69 8,084,59 8,612,21 9,183,49 9,801,62
(12,049,479) 13,718,608
8 1 2 9 0
213,08
NPV
7
66
IRR
%
should be positive and IRR greater than discount rate Note:-NPV= ∑ {Period Cash Flow / (1+R)^T} - Initial
Investment
Where R is the interest rate and T is the number of time periods. IRR is calculated using the
NPV formula by solving for R if the NPV equals zero.
Since project is profitable and shows a positive NPV of Birr 213,087 and large IRR 66% it is
bankable and can repay its debts periodically without fail.

10. PROJECT RISK:/sensitivity analyses/

The investment is already invested; no cost of materials for investment is changed, the sales price shows an
increasing trend however to ascertain a sales price is assumed to decrease at 10% while the NPV remains
positive and the IRR has no substantial change
10.1. Political risks:
If Political instability in the country and/or worldwide unrest exists a hotel industry would adversely affected. It
is evidenced by the occurrence of the causality and effect analysis based on other countries and our country
experiences. Taking a tourist inflow in Ethiopia for the last 15 years, the trend increases by an average 12.7 %
whereas at a period of national election in 1998 it reduced to -19.4 and in Etho -Eritrea conflict in 1992 it is
limited to grow by 2% .(Ethiopian tourism commission , 2005)
Instability arise due to international terrorist has an impact on tourist inflow for example take the bombardment
of Kenya West Get Mall in 2013 the number of tourists in the following year 2014 was radically decreased from
3% to 1.5 % or they loss 200, million dollars from tourism due to the cause (USA to day.com) and in Egypt due
to Arab Spring in 2010 the number of tourists are dropped or decreased by 8.4 %. And the occupancy rate bed
rooms of hotels was reduced to 15% (the economist, 2012)
10.2. Social and economic risks.
At time of world financial crises in in 2008, the amount of spending rate of tourists in tourism industry was
reduced, whereas in a resection period it starts to increase, the tourism industry is highly affected by world
economy especially tourist arrival countries like Europe. The impact was to reduce the spending rate of
tourists by 4.2 % compared to the previous period (MBF/eu.enfo, 2009)
A cyclical drought in Ethiopia is après in every 10 years; such negative images can reduce the flow of tourists
in the country.
10.3. Industrial Competitors
The hotel industry is still a growing industry, the taste of tourist is not yet satisfied, the number of hotels
in Addis Ababa did not accommodate the number and taste of tourists. However, such motives may boost
hotels in the given market size. Though the number of hotels and quality accommodation has also an
impact to attract tourists, in a short run the competition is high for a given market.
10.4. Mitigation factor
1. The building is situated around Wello sefrer which is ideal for hotel service, other business and
embassy residences. The hotel is also designed it lay out favorable for other sector of business and
the promoter can easily shift the business of hotel to other business. it can easily rented to embassy
purpose and it is also ideal for hospital.

2. We have a diversified business, we have another two business namely tour and travel (Image
Ethiopia) and computer business (Gogo Trading) to generate enough money which can be used for
recovery of the hotel and to pay its debts without selling its current assets or fixed assets.
3. Not like most hotels we are waiting customer but our strategy is to go to customers by providing
excellent package of service as strategy by connecting with our tour and travel image Ethiopia. At
present we are the major supplier to other hotels so we are to retain our customers and going to
promote the package service. In addition to the existing connections we will contact additional
agents connections in Europe and USA.
Loan Amortization Schedule RACE PERIOD 2 Q Loan summary

Loan amount 18,245,727 Scheduled payment 899,573.17
Annual interest rate 9.50 % Scheduled number of payments 28
Loan period in years 7 Actual number of payments 28
Number of payments per year 4 Total early payments 1,300,008.05
Start date of loan 2/28/2017 Total interest 6,942,321.86
Pm Payment Beginning ScheduleP Total Ending Cumulativ
Principal Interest
No Date Balance ayment Payment Balance e Interest
8/28/2016 8,245,727.00 433,336.02 433,336.02 18,245,727.00 433,336.02

11/28/2016 18,245,727.00 433,336.02 433,336.02 18,245,727.00 433,336.02
2/28/2017 18,245,727.00 433,336.02 433,336.02 18,245,727.00 433,336.02
1 5/28/2017 18,245,727.00 899,573.17 899,573.17 466,237.16 433,336.02 17,779,489.84 433,336.02
2 8/28/2017 17,779,489.84 899,573.17 899,573.17 477,310.29 422,262.88 17,302,179.55 855,598.90
3 11/28/2017 17,302,179.55 899,573.17 899,573.17 488,646.41 410,926.76 16,813,533.14 1,266,525.66
4 2/28/2018 16,813,533.14 899,573.17 899,573.17 500,251.76 399,321.41 16,313,281.38 1,665,847.08
5 5/28/2018 16,313,281.38 899,573.17 899,573.17 512,132.74 387,440.43 15,801,148.64 2,053,287.51
6 8/28/2018 15,801,148.64 899,573.17 899,573.17 524,295.89 375,277.28 15,276,852.75 2,428,564.79
7 11/28/2018 15,276,852.75 899,573.17 899,573.17 536,747.92 362,825.25 14,740,104.83 2,791,390.04
8 2/28/2019 14,740,104.83 899,573.17 899,573.17 549,495.68 350,077.49 14,190,609.14 3,141,467.53
9 5/28/2019 14,190,609.14 899,573.17 899,573.17 562,546.21 337,026.97 13,628,062.94 3,478,494.50
10 8/28/2019 13,628,062.94 899,573.17 899,573.17 575,906.68 323,666.49 13,052,156.26 3,802,160.99
11 11/28/2019 13,052,156.26 899,573.17 899,573.17 589,584.46 309,988.71 12,462,571.79 4,112,149.70
12 2/28/2020 12,462,571.79 899,573.17 899,573.17 603,587.09 295,986.08 11,858,984.70 4,408,135.79
13 5/28/2020 11,858,984.70 899,573.17 899,573.17 617,922.29 281,650.89 11,241,062.41 4,689,786.67
14 8/28/2020 11,241,062.41 899,573.17 899,573.17 632,597.94 266,975.23 10,608,464.47 4,956,761.90
15 11/28/2020 10,608,464.47 899,573.17 899,573.17 647,622.14 251,951.03 9,960,842.33 5,208,712.94
16 2/28/2021 9,960,842.33 899,573.17 899,573.17 663,003.17 236,570.01 9,297,839.16 5,445,282.94

17 5/28/2021 9,297,839.16 899,573.17 899,573.17 678,749.49 220,823.68 8,619,089.67 5,666,106.62
18 8/28/2021 8,619,089.67 899,573.17 899,573.17 694,869.79 204,703.38 7,924,219.87 5,870,810.00
19 11/28/2021 7,924,219.87 899,573.17 899,573.17 711,372.95 188,200.22 7,212,846.92 6,059,010.22
20 2/28/2022 7,212,846.92 899,573.17 899,573.17 728,268.06 171,305.11 6,484,578.86 6,230,315.34
21 5/28/2022 6,484,578.86 899,573.17 899,573.17 745,564.43 154,008.75 5,739,014.44 6,384,324.08
22 8/28/2022 5,739,014.44 899,573.17 899,573.17 763,271.58 136,301.59 4,975,742.86 6,520,625.68
23 11/28/2022 4,975,742.86 899,573.17 899,573.17 781,399.28 118,173.89 4,194,343.58 6,638,799.57
24 2/28/2023 4,194,343.58 899,573.17 899,573.17 799,957.51 99,615.66 3,394,386.06 6,738,415.23
25 5/28/2023 3,394,386.06 899,573.17 899,573.17 818,956.50 80,616.67 2,575,429.56 6,819,031.90
26 8/28/2023 2,575,429.56 899,573.17 899,573.17 838,406.72 61,166.45 1,737,022.84 6,880,198.35
27 11/28/2023 1,737,022.84 899,573.17 899,573.17 858,318.88 41,254.29 878,703.95 6,921,452.64
28 2/28/2024 878,703.95 899,573.17 878,703.95 857,834.74 20,869.22 - 6,942,321.86
11. Annex 5. STANDARDATIZATION OF STAR HOTLS VERSE THE PROJECT

According to the manual from the Ethiopian standard ES 3808-1: 2014 title Hotels-Grading requirements and
classification published by the Ethiopian Standards agency,
Hotel: It is a commercial establishment which provides rooms in which people can stay, especially to travellers and
permanent residents, and which also provides food, beverage, lodging and other related services for paying
guests.
Category and requirements:
A hotel shall have at least ten rooms

To be eligible for grading, premises shall first have satisfied all statutory regulation, requirements for health, safety
and security, fire, environmental services requirements for waste management
At least a bar and a restaurant shall be available for the service. All meals (breakfast, lunch and dinner) and
beverages shall be provided from outlets within the property
Servicing of rooms shall be 7 days in a week (this includes linen/towel change, removal of rubbish and cleaning)
Bathroom facilities shall be en-suite or adjacent to the room and dedicated for personal use
Formal reception area/desk shall be available for all stars hotels
On-site representative shall be contactable 24 hrs, 7 days a week
5.1.1. SPECIFIC REQUIREMENTS:

A. bed rooms
1) Building Exterior:
Required:- Lighting, functional draining system, signing is mandatory and the maximum points to be scored are if
the building exterior is modern building or good preservation of historical structures. High lighting and visible,

indicative, clear and attractive signage directing guests around the entire property, unique and attention grabbing
architectural features.
Actual:- The promoter of the hotel project Mr. Asrat Kahsay has a vast experience in the Ethiopian tourism
industry and understands the value of the historical Ethiopian architectures. That is why the exterior and
interior designs were done by the well-known Mr. FasilGhiorgis who is famous for his taste on the Ethiopian
architecture. The hotel building has some interesting designs such as the Axumite architecture, from Lalibela,
from the castles of Gondar, from the island monasteries on Lake Tana (the entrance to the building) and the
walled city of Harar. It also has interior designs from the Ethiopian embroideries on the cotton clothes and
others. The hotel also has some unique and indicative lighting system which is not too shinny and modern but
which goes with the Ethiopian design of the building. So, we can say that this hotel project will score maximum
points under this requirement.
2) Grounds and gardens:
Required Evidence of regular garden service throughout the year-Well-tended formal gardens or an attractive
“natural” environment tidy, even and well-lit pathways, driveway and entrance. No disorder or rubbish and no
evidence of litter. Provision of garden furniture or architectural features appropriate to the nature to the
establishment. Very impressive and high quality outdoor garden furniture made of weather resistant materials.
Actual The hotel promoter started planting some unique and indigenous trees while the finishing work of the
building was underway. At the moment, the garden of the hotel looks as if it has been there for years and one
can see some of the Ethiopian trees such as Kosso or Hygenia Abyssinica, coffee and others. The garden of the
hotel is a perfect place for the hotel residents and local people to come and have coffee while reading their
books. The garden has some weather resistant furniture which were imported from ACE company in Dubai. We
believe we can get a maximum score under this requirement.
3) Parking, access, signage, points of entry:
Required: Valet service and sufficient undercover parking bays in a secure environment close to accommodation.
Clear illuminated directional signage. Hard surfaced, well maintained and demarcated.
Actual: The hotel project has some parking space and the valet service with other services is yet to be organized.
Due to the high demand of hotels in the city and the source of market the promoter has, Mr. Asrat has applied
for an additional land for upgrade and parking space. The application letter together with the feasibility study
has been submitted to the city hall land administration office under acceptance code 999. We believe we will get
a sufficient score under the above requirement.
4) Safety and security:
Required All external public pathways must be well lit. Person responsible for safety and security available 24hrs a
day, emergency information, procedures for assistance clearly communicated in English, incorporating
pictograms. Intercom, lockable security doors and gates must be present.
Actual All the above details under safety and security are to be fulfilled before the hotel project is operational. Once
all done, a maximum score can be achieved for the hotel.
5) Decoration:

Required and actual According to the criteria for bedrooms, the hotel project was well painted using high quality
materials, with colors of paints chosen by the field experts and according to the interior design, with some
amazing interior wooden decorations on the wall which look like the embroideries on the traditional Ethiopian
clothes. A maximum score is expected.
6) Furniture:
Required and a would be All the hotel furniture has been carefully selected from some European companies such
as IKEA Sweden in Dubai. All are selected because of quality, design which goes with the building, comfort and
durability. Once we add the remaining hotel furniture, a maximum score can easily be achieved.
7) Electronic appliances:
Required and actual Flat screen, high definition, multi-channel television provided in all rooms.
According to the above requirement on TV, the hotel rooms have 32 & 48 inch Samsung flat screen multi channel
televisions. A maximum score under the above TV requirement can easily be achieved.
8) Wardrobe, hanging space, clothes:
Required and actual The hotel has high quality wooden built-in wardrobes specially ordered and made from a
factory in Sharjah, UAE. The wardrobes have enough room for clothes, mini bar refrigerator, Safe box, coat
hanger with hangers. A maximum score of points is expected.
9) Curtains and window covering:
Required Highest quality full well-lined curtains in working order. Or blinds or shutters of the highest quality and
in working order with all accessories and black out.
Actual Mr. AsratKahsay’s hotel has a very high quality curtains with chiffons and black outs in place. They were
specially ordered in Dubai and all the black outs are made to resist headlights of cars. A maximum score can
easily be achieved.
10) Flooring, ceiling, skirting and cornices:
Required and actual the hotel room floors are covered with high quality wooden colored ceramics which have a
rougher texture not to be slippers and they match the traditional designs. All ceilings, skirting and cornices are
properly done with professionals in the field and high quality materials. A maximum score can easily be
achieved.
11) Bedding and linen:
Required and actual All the bed linen, fitted sheet, flat sheet, duvet, duvet cover, pillow cover, blankets are
specially ordered in the UAE from materials which are very luxurious and which match with the bedroom décor.
The hotel bed rooms also have luxurious Cool tech Manhattan mattresses with have 25 years warranty. In
addition to this all hotel mattresses have toppers or luxurious cool tech memory foam which is of a 5 star hotel
quality. An easy maximum points can be achieved.
12) Form of bedding:

Required and actual All the bed sizes are according to the category and requirement set by the Ministry. We
have twin rooms with bed sizes 0.90 x 2.00 m, single rooms with bed sizes 1.50x2.00m, King size and suite
rooms with bed sizes of 1.80 m x 2.00m. An easy maximum points can be achieved.
12. Required and actual Mirrors, Accessories, Spaciousness and overall impression: All
the above requirements have been provided and maximum points can easily be
achieved.
13. Required and actual Access security: Peephole in door, Electronic key, Safety chain
on doors: The hotel doesn’t have peephole on doors, electic keys and safety chain on
doors. We have to fulfill these requirements in order to get points given for the access
security.
B. BASIC CRITERIA FOR BATHROOM:

Required Bathrooms to be adjacent to the bed rooms, with attractive flooring, Extra large spacious shower, quality
fixtures and fittings, hand basin, toilet and accessories such as brush, full range of towel sizes, exquisitely
designed and appointed lighting, luxury double ply toilet paper etc.
Actual The hotel project has a very high quality of the above requirements with additional extra towels and
accessories. A maximum points can be achieved easily.
C. BASIC CRITERIA FOR PUBLIC AREAS:
Require Separate smoking room or balcony, luxurious quality of highest intrinsic quality, floors and ceiling in
perfect condition, exquisitely designed with sufficient illumination and coverage across all areas, superb relaxing
and calming atmosphere, one guest lift for 6 adults, free airport shuttle:
Actual The hotel project has fulfilled the majority of the above except few such as free airport shuttle and when we
fulfill the remaining, we are confident of getting maximum points.
D. SPECIFIC CRITERIA FOR BAR AND DINNING FACILITIES:
Require Eye catching and high value materials of wall coverings, architectural features, extremely comfortable
dinning furniture, high value materials for flooring and ceiling, exquisitely designed and appointed lighting,
outstanding quality of crockery and cutlers, superb and relaxing atmosphere, exemplary presentation of food on
high quality plates, unique dishes, range of cold and hot food and bar area separate from dinning areas.
Actual We have fulfilled most of the above requirements but we have not started giving service yet. So, by the time
we start giving service mainly food and beverage, we are confident that our hotel will be unique with a high
quality service which allows us to get the maximum points in this section.
E. SPECIFIC CRITERIA FOR KITCHEN:
Require Design and lay out should be excellent, should be located next to restaurants, should be well equipped and
with exhaust.
Actual Our hotel has its main kitchen in the basement floor but an additional kitchen adjacent to the restaurant.
Once we get the kitchen well equipped, we expect to get average points in this section.

F. SPECIFIC CRITERIA FOR HOUSEKEEPING AND MAINTENANCE
Require Cleaning and maintenance activities scheduled to minimize guest disturbance, adequate safe storage of
cleaning materials, very high standard of thorough cleanliness, attention to hygiene and maintenance technician
on call 24/7.
Would be We plan to use professionals from the hospitality industry to select the hotel staff, give them training and
stay in the hotel supervising for about 6months until everything goes according the high standard we set for the
hotel.
G. SPECIFIC CRITERIA FOR GENERAL SERVICES
Require Welcome, friendliness, attitude of the staff, appearance of the staff, professional computerized reservation
system, regular porterage, availability of room service, laundry service, meal service, check-out efficiency,
tourist information, communication and facilities.
Actual The hotel project has the majority of equipment and with the help of the hospitality industry experts we plan
to contract, we plan to be a unique service providing hotel. Once the hotel staff are hired and trained, we expect
to score maximum points.
H. SPECIFIC CRITERIA FOR ADDITIONAL FACILITIES
Required Business conference, Leisure such as steam and sauna, luggage storage, Lost and found and others.
Would be By the time the hotel is functional, we are confident that it will fulfill the above requirements and get the
maximum points.
I.SPECIFIC CRITERIA FOR SUSTAINABILITY
Required Waste, water efficiency, central boiler, business practices such as supporting the local community
initiatives.
Actual The hotel project has all its sewerage system connected to the city drainage system as per the request of the
city water and sewerage authority, it has three water tanks with a total capacity of 35,000 m3 of water, it will
have central boilers or water heat pumps when operational and like its sister company Image Ethiopia Tour &
Travel PLC which is a company actively participating in community development projects (please see the
certificates of appreciation from the respected areas) the hotel project will be participating in community
initiatives.
J. SPECIFIC ARE.A FOR SAFETY AND SECURITY
Required Computerized luggage scanner machine, walk through scanner, 24hrs professional security guards,
security cameras, fire extinguishers, medical first air and clinic on call.
Actual Though the hotel project plans to have all the above machineries and services, at the moment it only has
(under installation) security cameras which are sufficient enough. By the time we fulfill the entire above luggage
and walk through machines, we expect to get maximum points.
K. SPECFIC CRITERIA FOR STAFF FACILITIES AND TRAINING

Required A general manager with relevant qualification and experience, 95% of the staff with more than one year
service who have gone formal training course, internal training program, external training program and employee
reward.
Actual The hotel project will fulfill all the above criteria as it is planning to use a professional licensed
hospitality company for hiring the staff, training and leading them to offer the required high standard services.
By the time the hospitality company finishes its work, we expect to score the maximum points and fulfill the
above criteria.
Generally, as the promoter of the company Mr. AsratKahsay is well aware of the sector, the hotel will satisfy
and fulfill the criteria of the hotels standard in Ethiopia which are based on the Exterior, Bedrooms,
Bathrooms, Public areas, Bar and dinning facilities, Kitchen, Housekeeping and maintenance, General
services, additional facilities, sustainability, Safety and security and staff facilities and training. The hotel
project has a huge potential of scoring more than 70% which will automatically grade it in the 4 star hotel
star rating.
14. Supply of raw materials:

Due to Ethiopia’s political and social stability, macroeconomic stability and rapidly growing economy, excellent
climate and fertile soil, friendly government towards investment, abundant and trainable labor force, access to
wide market and improving infrastructure, the country has attracted lots of foreign and local investment. As a
result, it can be said that there is a healthy competition of high quality hotel inputs for food, beverage and
other supplies. The hotel promoter Mr. Asra tKahsay through his company Image Ethiopia Tour and Travel
has a very strong working relationship with supermarkets, beverage suppliers, vegetable stores, farms and
others.

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PROJECT PROPOSAL ON STAR HOTEL

P.O. Box: 2137, Code 1250

By: Innoteam Hospitality PLC

MAY, 2016 ABDDIS ABABA Page 1

5. THE DEMAND PROJECTION............................................................................................................................ 23

7. DEMAND AND SUPPLY GAP ANALYSIS............................................................................................................ 29

8. MANAGEMENT AND OPERATIONS................................................................................................................. 30

10. PROJECT RISK:/SENSITIVITY ANALYSES/..................................................................................................... 44

Content of the table

MAY, 2016 ABDDIS ABABA Page 2

SERVISCE CAPACITY OF THE HOTEL

the level of project execution

Actual and Projected Tourist Arrivals and Room Night Demand

a Star level hotel in Addis Ababa

Hotels in the area

Hotel (Room Night) Supply

Project Annual Room Night Supply Forecast (2008-2027)

Demand Supply Gap

MAY, 2016 ABDDIS ABABA Page 3

Projection of Tourist Arrival (projected and unsatisfied demand

Human Resources structure

LIST AND COST OF ALL REQUIRED MACHINERY, EQUIPEMENT,

FURNITURE & FIXTURES

Market price set up from average price of the similar hotels

Forecasted covers for the year

Income and Loss statements projection

MAY, 2016 ABDDIS ABABA Page 4

forecasted balance sheet

Working capital determination

NPV and IRR

Loan Amortization Schedule

1.1. EXECUTIVE SUMMARY

MAY, 2016 ABDDIS ABABA Page 5

Table: 1. Summary of annual foreign currency earnings by our company (EMAGE

Ending 2010 USA & Europe 562,709.89 16909.00 -

Ending 2012 USA & Europe 909,578.70 45,298.00 84,712.90 61.86%

Ending 2014 USA & Europe 1,324,798.73 3,880.92 16,481.52 68%

Ending 2015 USA & Europe 1,545,290.75 50,356.0 25,970.93 51%

Until March 2016 USA & Europe 532,261.59 67,454.00 7,056.00 NA

MAY, 2016 ABDDIS ABABA Page 6

1.1. Relation Development with CBE

2.1. Promoter’s Background

MAY, 2016 ABDDIS ABABA Page 7

MAY, 2016 ABDDIS ABABA Page 8

2.2. Background of Hotels and Tourism Ethiopia

2.3. THE OBJECTIVES OF THE PROJECT

MAY, 2016 ABDDIS ABABA Page 9

2.4. PROJECT RATIONALE

MAY, 2016 ABDDIS ABABA Page 10

The hotel project among others has the following rational.

Table: 2, Facility Description

Floors/place Type of Facility

Compound Garden coffee shop

3.1. The Services of the hotel

MAY, 2016 ABDDIS ABABA Page 11

Table 3. SERVISCE CAPACITY OF THE HOTEL

3.2. STATUS OF THE PROJECT.

MAY, 2016 ABDDIS ABABA Page 12

MAY, 2016 ABDDIS ABABA Page 13

4.1. DEMAND DETERMINETS

MAY, 2016 ABDDIS ABABA Page 14

4.2. TARGET CUSTOMERS

The identification of target customers is fundamental to marketing management. All subsequent