Project Proposal For 5 Star Hotel

Project Proposal for 5-Star*
International Hotel
Owner: Juhar Osman Musa
Presented to: Dire Dawa Administration

Investment Bureau
September 2022
Project Proposal for 5-Star International Hotel Dire Dawa, 2022
Contents
0. EXECUTIVE SUMMARY ............................................................................. 3
1. BACKGROUND .......................................................................................... 4
1.1. PROJECT OBJECTIVES ..................................................................... 5
1.2. PROJECT LOCATION ........................................................................ 5
2. MARKET STUDY ...................................................................................... 6
2.1. TARGET MARKET ................................................................................. 6
2.2. DEMAND AND SUPPLY .......................................................................... 6
Table: Flow of Tourists ............................................................................ 7
Table: Demand Projection ........................................................................ 8
Table: Bedrooms Supply .......................................................................... 9
Table: Demand and Supply Gap ................................................................ 9
2.3. TARGET MARKET STRATEGY ............................................................... 10
2.4. PRICING ...................................................................................... 10
3. THE PROPOSED PROJECT ......................................................................... 10
3.1. GENERAL FEATURE ............................................................................ 10
3.2. SERVICE DESCRIPTION AND APPLICATION ........................................... 11
3.2.1. BED ROOMS ............................................................................... 11
3.2.2. FOOD SERVICES ......................................................................... 12
3.2.3. BEVERAGES (HOT & COLD) ........................................................... 12
3.2.5. JACUZZI..................................................................................... 12
3.2.6. SAUNA BATH .............................................................................. 13
3.2.7. STEAM BATH............................................................................... 13
3.2.8. MSSAGE SERVICE........................................................................ 13
3.2.9. MULTIPURPOSE HALL ................................................................... 13
3.2.10. BEAUTY SALON ......................................................................... 14
3.2.11. PLAYGROUND FOR KIDS ............................................................. 14
3.2.12 GYMNASIUM .............................................................................. 14
3.2.13. SWIMMING POOL ....................................................................... 14
4. THE HOTEL ............................................................................................ 15
4.1. MISSION .......................................................................................... 15
4.2. VISION ............................................................................................ 15
4.3. VALUES ........................................................................................... 15
5. BASIC INFORMATION OF THE HOTEL ......................................................... 16
1|Page By: Juhar Osman Musa

5.1. PROFILE OF THE OWNER .................................................................... 16

6. TECHNICAL ANALYSIS AND MAJOR EXPENSES ............................................ 17
6.1. BUILDINGS AND CIVIL WORKS ........................................................... 17
Table: Hotel Construction costs............................................................... 17
6.2. HOTEL FACILITIES AND EQUIPMENT .................................................... 17
Table: Suite Bed Room Equipment and Facilities ....................................... 17
Table: Twin Bed Room Equipment and Facilities ........................................ 18
Table: Hotel Machineries & Equipment ..................................................... 19
Table: Summary of Hotel facilities and equipment ..................................... 19
Table: Direct Cost of Sales ..................................................................... 20
6.3. UTILITIES ........................................................................................ 21
Table: Annual utilities requirement& estimated cost ................................... 21
Table: Manpower requirement and annual labor Cost ................................. 21
7. FINANCIAL ANALYSIS .............................................................................. 23
7.1 FIXED INVESTMENT AND DEPRECIATION COSTS .................................... 23
Table: Fixed investment ........................................................................ 23
Table: Depreciation ............................................................................... 23
Table: Repair and maintenances costs based on the standard rate ............... 23
7.2. OPERATING COSTS ........................................................................... 24
Table: Annual service production cost ...................................................... 24
7.3. WORKING CAPITAL ............................................................................ 24
Table: Working capital determination....................................................... 24
7.4. INVESTMENT COSTS .......................................................................... 24
Table: planned investment cost breakdown .............................................. 25
7.5 REVENUE FORECAST .......................................................................... 25
Table: Annual Revenue from Bed room services ........................................ 25
Table: Revenue from Health Spa Services ................................................ 25
Table: Revenue from other Services ........................................................ 26
Table: Total Revenue ............................................................................ 26
Table: Projected Revenue ...................................................................... 26
Table: Total Investment Fund and Sources of finance ................................ 26
Table: Loan Repayment Schedule ........................................................... 27
Table: Cash Flow Statement ................................................................... 28
Table: Balance Sheet Statement ............................................................. 29

0. EXECUTIVE SUMMARY
This project proposal is prepared with the objective of establishing a 5-star

International/Tourist Standard Hotel in Dire Dawa City. The design of the
hotel establishment includes 140 Bedrooms with Health Spa, Beauty Salons,
Tour & Travel Agency, Swimming Pool, Gymnasium, and Cafeteria,
Restaurant, Conference Hall, Supermarket and other services. Our market
Study shows that there seems to be a huge market for tourist standard hotel
services in Dire Dawa Administration.
The owner of the project, Mr. Juhar Osman Musa, is a young Entrepreneur,
with more than 15 years of experience in managing various related
Businesses in outside of the Country.
The total investment cost of the project is estimated at birr 501,623,481,

from which 30% (ETB 150,487,044) is financed by owner’s equity while the
remaining 70% (351,136,436) is expected to be financed by Bank loan. At
full capacity operation, the Hotel will create employment opportunities for
212 persons.
The project is financially viable with an internal rate of return (IRR) of 81%
and a net present value (NPV) of ETB 739,292,604, discounted at 11%. The
investment cost and income statement projection are used to project the
pay-back period, the project will fully recover the initial investment and
working capital within three years.
The major components of the project are:

 Construction of a G+12 building to serve project purposes
 Procurement and installing Hotel equipment, facilities and fixing
assets
 Recruiting and assigning man power
The proposed Hotel project is planned to be built on a 5 Hectare land located

at one of the major city corners of Dire Dawa town.

1. BACKGROUND
Dire Dawa by virtue of its geo-physical location is acting as the trade center
for Harrari, Oromiya, Somali Regional States and the neighboring State of
Djibouti.
What makes Dire Dawa the ideal industrial and business center of Eastern
Ethiopia is its convenient location, situated close to Djibouti port and the
new railway station which has recently started operation. The investor that
establishes his industry or service-providing firm in the city is bound to be
overwhelmed by the sheer size of the demand he/she has to meet.
In terms of tourism, Dire Dawa Administration has a rich wealth of pre-

historic cave paintings some of which have achieved international
recognition through the efforts of the French and American Geologists that
have studied them several times in the last 75 years, while there are still
other caves that have never been studied so far.
 Lega Oda Pre-historic Cave

 Pork Epic Cave
 Gode Agawa
 Enkufetu Cave
 Memorial Burial Place for African Soldiers
 The Ancient Railway Station
 Kefira – a Traditional Market Place
 Italian Mosque
 Catholic Church of Awale
St. Michel’s Catholic Church was built over 115 years ago, and is
located 26 kilometers from the city near a place called Beyo Awale.

In view of the above mentioned tourist sites within the City Administration
and in view of the strategic location of the city in relation with the other
places of great tourist attraction in Eastern Ethiopia; that is, Eastern and
Western Hararghe zones of Oromiya, Harari, and Ethiopian Somali National
Regional States, the city can become an integral part of the well-developed
tourist industry in the areas mentioned above by taking the correct steps to
strengthen its promising tourist potential.
Despite the above mentioned potential, Hotel service is one of the untapped
investment areas in Dire Dawa Administration. Although Dire Dawa is the
ageist town next to Addis, hotel, tourism and Hotel development is lagging
behind the youngest towns like Hawassa and others in the southern region.
However, recently so many investors have shown interest to invest in the
hotel industry.
1.1. PROJECT OBJECTIVES

The following, in addition to the major motive of profit making, represent the
objectives of the project:
 To be of model in the Developmental Private Investment Sectors,
 To provide employment opportunity to the growing labor force, and
 To serve as demonstrative investment venture in the Eastern part of
Ethiopia and contribute toward the development of Tourism sector in
Dire Dawa Administration.
1.2. PROJECT LOCATION

The proposed Hotel project is planned to be built on a 5 Hectares land
located at one of the major city corners of Dire Dawa town.

2. MARKET STUDY
2.1. TARGET MARKET
Generally, the tendency of tourists’ visiting destinations in developing
countries is increasing from time to time. The advance of infrastructures has
also contributed towards such increment.
The target market of the project can generally be described as singles and
couples, families with children, foreign and domestic tourists, travelers,
NGO, and governmental officials. Geographically, the target market includes
domestic and international tourists, business people, and others who come
to the city of Dire Dawa.
In addition to domestic customers, the Hotel will also target on tourists

coming from all parts of the world, especially those who come from Djibouti
in order to spend their hot seasons. Moreover, the target also includes
worshipers who come to Dire Dawa, twice a year, for the pilgrimage of
kulubi St. Gebriel Church.
2.2. DEMAND AND SUPPLY
The project has targeted to render services to tourists (both domestic and
foreign). It is, therefore, assumed that tourists who come to Dire Dawa will
demand bed room services. Demand projection is calculated by taking as a
basis, the recently available domestic and foreign tourists flow data for the
years 2006 up to 2011 (no data is obtained for the year 2012).
Accordingly, data on both local and international tourists’ flow during the
past few years is shown in the table below.

Table: Flow of Tourists
Country/ Year (E.C.)

No.
Continent
2006 2007 2008 2009 2010 2011
1 Djiboutian 8,001 1,127 16,451 11,015 29,377 29,392
2 Ethiopians 13,187 34,912 30,543 41,408 43,795 48,203
3 Other Africans 1,009 1,109 1,100 614 1,086 459
4 Europeans 2,029 1,624 2,153 1,768 1,105 1,477
North and South 861 1,020 1,415 1,394 1,538 536
5
Americans
Asians and the 856 1,054 745 1,283 1,689 1,028
6
Middle East
7 Australians 166 52 121 78 38 20
Total 26,109 40,898 52,528 57,560 78,628 81,115
Local Tourists 13,187 34,912 30,543 41,408 43,795 48,203
Foreign 12,922 5,986 21,985 16,152 34,833 32,912
Tourists
Growth rate 56.64% 28.44% 9.58% 36.60% 3.16%
Average growth
rate 26.88%
Source: Dire Dawa Administration Culture and Tourism Department
During the period under reference (2006 – 2011), growth rate of tourists’
flow exhibit substantial fluctuations from year to year averaging at 26.88%.
Given, the considerable fluctuations, the average annual growth rate for the
years 2006 to 2011 is assumed to approximate the actual growth in the year
2012. Accordingly, the present flow of tourists to Dire Dawa in year 2012 is
estimated to be 130,583.
Thus, we learn that the average annual tourists flow growth rate is 26.88%.
Based on this, the number of Ethiopian tourists and Foreigners who came to
Dire Dawa in year 2012 is estimated to be 130,583.

Using the average growth rate, the number of foreign tourists coming to the
city of Dire Dawa for the number of bed nights that they would demand for
the next 10 years (2012- 2021 EC) is forecasted. The average number of
days that tourists would stay is assumed to be 10 days.
Accordingly, the demand projection for a Hotel service is presented in the

table below.
Table: Demand Projection
No. of Tourists Arrival Demand

No. Year
Domestic Foreign Total (Bed Night)
1
2012 77,600 52,983 130,583 1,305,830
2
2013 98,459 67,225 165,684 1,656,840
3
2014 124,924 85,296 210,220 2,102,200
4
2015 158,504 108,223 266,727 2,667,270
5
2016 201,110 137,314 338,424 3,384,240
6
2017 255,168 174,223 429,391 4,293,910
7
2018 323,757 221,055 544,812 5,448,120
8
2019 410,783 280,474 691,257 6,912,570
9
2020 521,202 355,866 877,068 8,770,680
10
2021 661301.5 451523 1,112,824 11,128,245
According to the data obtained from Dire Dawa Administration culture and
tourism department, the total supply of bedrooms in the city looks like the
following.

Table: Bedrooms Supply
No. of No. of Bed No. of Bed

No. Description
Hotels Rooms Nights
1 Operating Hotels 68 1,491 544,215
2 Hotels under construction 9 334 121,910

Total 77 1,825 666,125
NB: A detailed list of the Hotels with their respective information is attached with
this report.
Based on the above demand and supply data, the demand and supply gap is
indicated in the following table. A 10% increase in total annual supply is
assumed in projecting unsatisfied demand.
Table: Demand and Supply Gap
Year Demand Supply Unsatisfied

Demand
2012 1,305,833 666,125 639,708
2013 1,656,840 732,738 924,103
2014 2,102,199 806,011 1,296,188
2015 2,667,270 886,612 1,780,658
2016 3,384,233 975,274 2,408,959
2017 4,293,914 1,072,801 3,221,113
2018 5,448,118 1,180,081 4,268,037
2019 6,912,573 1,298,089 5,614,483
2020 8,770,672 1,427,898 7,342,774
Therefore, there is big unsatisfied demand for additional Hotel services in the
city.

2.3. TARGET MARKET STRATEGY
In general, competition among fellow Hotels in the City is small. Particularly,

we feel that the absence of such starred Hotels in about 2km radius from our
location and the huge market potential from more than 10,000 communities
of Dire Dawa University ensures our success.
Our strategy for a successful startup is based on quickly creating a high

profile and name recognition within the local community through promotion,
and print advertising. Signs will be posted in strategic places to help assure
customers’ comfort in finding our location.
2.4. PRICING
The pricing of hotel services depends considerably on the quality of service
rendered and its location. To establish affordable price at the beginning of
the operation of these luxury hotel service, prices of similar hotel services in
Dire Dawa are taken as bench marks to fix the prices of the proposed
services.
Hotels in Dire Dawa, with equivalent standards to ours, charge customers

with a price ranging from Birr 700 to Birr 800. For instance, Ras Hotel
charges Birr 750 for a single night per single room. Other similar hotels also
charge prices that fall in this range. Thus, for the envisaged project, a price
of Birr 750, Birr 1,200 and Birr 1,400 per room per single night is proposed
for the single, twin and suite bedrooms respectively.
3. THE PROPOSED PROJECT
3.1. GENERAL FEATURE
The proposed Hotel project is designed to provide high quality bedroom

services with a capacity of 140 bedrooms. Additional services include: Health
10 | P a g e By: Juhar Osman Musa

Spa, Beauty Salons, Tour & Travel Agency, Swimming Pool, Gymnasium, and
Cafeteria, Restaurant and other services.
Besides the construction, the project has sub components which include
procuring facilities, equipment and furniture for each rooms of the building.
3.2. SERVICE DESCRIPTION AND APPLICATION
People coming in to Dire Dawa from different corner of the country for
private or public business and tourists (both domestic and foreign) will be
the major customers of the services to be rendered by proposed project.
The maximum capacity of the hotel as measured against major capacity

determinants like number of bed-rooms, restaurant space and number of
chairs, café space and number of café chairs and others will be:
 Bed rooms-40 per night.

 Restaurant-60 seats at a time. On a seat it is assumed that two meals
can be served on lunch and dinner and only one meal can be served
on a seat for breakfast.
 Café-60 customers at a time.
 It is assumed that the hotel will operate at 70% of its operational
capacity in the first year and then increase to 85% and 100% in the
second and third years respectively.
3.2.1. BED ROOMS

The proposed Hotel will have 40 bed rooms which are well furnished and
equipped with full bed room facilities. The bed rooms have three identified
grade levels based on their room sizes and facilities. In this regard, there will
be 93 single, 28 twin and19 suite bedrooms on the main G+12 Building. It is

assumed that the bed rooms are fully occupied for 5 days every week or 260
days in one year period.
3.2.2. FOOD SERVICES
Regarding food services, the hotel can daily serve 60 dishes on breakfast, 80
dishes on lunch and 80 dishes on dinner on which it will charge Birr 120 for
breakfast and Birr 150 for lunch and dinner.
3.2.3. BEVERAGES (HOT & COLD)
This is planned taking the hotel’s capacity of serving dishes. It is obvious

that at least one dish goes with a beverage and hence the number of
beverages is planned equal to the number of dishes. It is expected that at
least 70% of restaurant customers will consume hot drinks. Average price
for beverage and hot drinks is planned at Birr 30 per unit.
3.2.5. JACUZZI
Jacuzzi service will be given in two separate classes. Each class will have 8
seats for female users and 8 seats for male users at a time. This service will
stay open all days throughout the week for 16 hours. However, it is assumed
that every client will use the facility for a period of two hours and out of 16
hours; the facilities will be occupied for 10hours for 2days every week.

3.2.6. SAUNA BATH

Sauna bath will be offered by the hotel for male and female users
separately. Each class will have four seats separately for male and female
users at a time. However, it is assumed that every client will use the facility
for a period of two hours, and out of 16 hours the facilities will be occupied
for 10hours for 2days every week.
3.2.7. STEAM BATH

The other new service to be operational for both female and male clients will
be separate steam bath. In similar fashion, this service is envisaged to be
rendered for two service seekers at a time. However, it is assumed that
every client will use the facility for a period two hours, and out of 16 hours
the facilities will be occupied for 10hours for 2days every week.
3.2.8. MSSAGE SERVICE

Massage service will also be opened for clients when the hotel is operational.
The hotel will have service facilities to serve four clients at time in separate
class room. In this regard, it is expected to serve four people per two hours
and as the result within 10 hours services some 20 clients will get the
service every day. However, it is assumed that the facility will be fully
occupied for 2 days every week.
3.2.9. MULTIPURPOSE HALL

Provision of standard multipurpose hall, which will be equipped with modern
audio-visual facilities, is one other service to be offered for the market. The
halls will have 150-175 seats which are suitable for conducting any public
meeting and to conduct party, weeding ceremony, concert and any other
similar events. It is assumed that the halls will be fully occupied for 4 days
every week.

3.2.10. BEAUTY SALON

Beauty salon service will be rendering for both genders separately. These
salons will be furnished with modern facilities and will give services for four
service users at time. It is assumed that four people will be served every
two hours for 10 hours and the salons will be fully occupied for 2 days every
week.
3.2.11. PLAYGROUND FOR KIDS

The hotel will provide playing ground for children. The playing ground will
have full facilities to entertain kids with provision artificial cave to play in and
electric cares. The playing ground will a capacity of supplying 6 electric cars
at a time and one artificial cave which has accommodation capacity of 5 kids
at a time play in the facility. The facilities will give 10hour services, however
for practical reason it is assumed that the playing ground will fully occupy 2
days every week.
Other services which are going to be served will be laundry and provision of
processed chips. Laundry service will be given to customers coming to hotel
to use bed room service and processed chip will be served complementing
food served at hotel restaurant. It is assumed that the laundry will wash 20
suits every day for 365 days.
3.2.12 GYMNASIUM
The envisaged gymnasium will composed of one machine room (200sq. mt),
one Aerobics studio (100 sq. mt)
3.2.13. SWIMMING POOL

A swimming pool of having bigger size (50 m long x 25 m width x 1 m to 4
m slopping depth) for male and female and small size (20m long x 10 m
width x 30 cm to 80 cm slopping depth) for children shall be constructed.

The swimming pool service will be provided to customer from guest room or
from outside. Lockers are provided for customers for clothing and other
belongings. The lockers require a coin to be inserted as deposit or payment.
Showers are also ready for customers (male and female), before and after
swimming. Other service requirements (deserts, hot and cold drinks) are
also provided to customers.
4. THE HOTEL
4.1. MISSION
To be an exceptional operator of Hotel services and create value in every

encounter with guests and associates who demand quality bed room
services.
4.2. VISION
To provide exceptional and personalized service, exceeding expectations,

and inspiring a connection to our Hotel brand.
4.3. VALUES
At its core, the proposed Hotel establishment holds the following values and
beliefs:
Exceptional Service - We understand that the value can be created with

every encounter and this is reflected in our superior standard of service.
Integrity - We are honest and straightforward in our interactions with our

guests, and the communities in which we operate.
Respect - We respect the values of our guests, and the cultural difference in

the locations that we operate.
Continuous Improvement - We are innovative and utilize best practices to

continually improve our management techniques, and the quality of our
services.
5. BASIC INFORMATION OF THE HOTEL

Business Type: International/Tourist Standard Service
Grade: 5 Star
Location: Dire Dawa City Administration
5.1. PROFILE OF THE OWNER
Name: Juhar Osman Musa

Place of Birth: Dire Dawa City, Ethiopia
Current Address: Region/City- Dire Dawa City
Cell Phone: +251-924-625-890
Juhar Osman Musa is the owner of the envisaged project. He has got a very
good entrepreneurial skills and long years of experience doing independent
businesses in Ethiopia and other Countries.
He is an energetic, innovative and dynamic businessman with proven track

record, successfully managing highly commercial operations, working as an
independent Contractor.
He has now determined to apply his accumulated knowledge, experiences

and wealth by investing on the development of a new 5-starred tourist
standard international Hotel in his home town of Dire Dawa City.

6. TECHNICAL ANALYSIS AND MAJOR EXPENSES
6.1. BUILDINGS AND CIVIL WORKS
As already been mentioned above, the project includes construction of a

G+12 building to be rested on 14,000 meter squared land. The total land
area required by the project is 5 Hectares. The remaining areas are left for
green area, parking lot, children play ground, swimming pool garden,
construction of generator house, guard house, shops and walk ways.
Table: Hotel Construction costs

No Building Value (Birr)
1 Hotel building
2 Swimming pool, parking and recreation center, 439,754,206
3 Green areas, walk ways and etc
Total 439,754,206
6.2. HOTEL FACILITIES AND EQUIPMENT
The Hotel needs to be furnished with standard and quality machinery,

furniture and equipment in order to provide efficient service.
Table: Suite Bed Room Equipment and Facilities

No Items Unit Quantity Unit price Total Cost
1 Bed (1.83m) wiith two sides No
table 19 23,000.00 437,000.00
2 Dressing table No 19 2,400.00 45,600.00
3 Dressing chair No 19 1,600.00 30,400.00
4 Luggage cabin No 19 4,000.00 76,000.00
5 TV Wall Holder No 19 2,900.00 55,100.00
6 Tv 42inch with reciever No
19 27,800.00 528,200.00
7 Bed room lamps N0 19 2,000.00 38,000.00
8 Toilet lamp1 No 19 800.00 15,200.00
9 Toilet lamp2 No 19 600.00 11,400.00
10 Bedside lump N0 19 700 9800
11 Phone No 19 900.00 17,100.00
12 Mirror No 19 2,500.00 47,500.00

13 Coffee Table with two chars No

19 10,000.00 190,000.00
14 Cupboard (3 doors) No 19 25,800.00 490,200.00
14 Refrigrator No 19 16,000.00 304,000.00
15 Air conditioner 24mkv No 19 43,570.00 827,830.00
16 Fan No 19 2,600.00 49,400.00
17 Boiler No 19 8,400.00 159,600.00
Total 0 3,332,330.00
Table: Twin Bed Room Equipment and Facilities

S.N Items Unit Quantity Unit price Total Cost
1 Bed (1.5m) with 2 sides table No
28 23,000.00 644,000.00
4 Luggage cabin No 14 4,000.00 56,000.00
5 TV Wall Holder No 14 2,900.00 40,600.00
6 Tv 32 inch No 14 16,800.00 235,200.00
7 Bed room lamps N0 14 2,000.00 28,000.00
8 Toilet lamp1 No 14 800.00 11,200.00
9 Toilet lamp2 No 14 600.00 8,400.00
10 Bedside lump N0 14 700.00 9,800.00
11 Phone No 14 900.00 12,600.00
12 Mirror No 14 2,500.00 35,000.00
13 Coffee Table with two chars set
14 10,000.00 140,000.00
14 Cupboard 2 doors No 14 17,400.00 243,600.00
14 Air conditioner 18mkv No
14 33578 470,092.00
15 Fan No 14 2,600.00 36,400.00
16 Boiler No 14 8400 117,600.00
Total 2,144,492
Table: Single Bed Room Equipment and Facilities

S.N Items Unit Quantity Unit price Total Cost
1 Bed (1.5m) with 2 sides table No
93 46,000.00 4,278,000.00
4 Luggage cabin No 93 4,000.00 372,000.00
5 TV Wall Holder No 93 5,800.00 539,400.00
6 Tv 32 inch No 93 33,600.00 3,124,800.00
7 Bed room lamps N0 93 2,000.00 186,000.00
8 Toilet lamp1 No 93 800.00 74,400.00
9 Toilet lamp2 No 93 600.00 55,800.00
10 Bedside lump N0 93 700.00 65,100.00
11 Phone No 93 900.00 83,700.00
12 Mirror No 93 2,500.00 232,500.00

13 Coffee Table with two chars set

93 10,000.00 930,000.00
14 Cupboard No 93 34,800.00 3,236,400.00
14 Fan No 93 2,700.00 251,100.00
15 Boiler No 93 16800 1,562,400.00
Total 15,363,600.00
Table: Hotel Machineries & Equipment

Items Qty Unit Unit price Cost (Birr)
Office Table with keyboard 4 Pieces 11,848.00 47,392.00
Link chair with scater 8 Pieces 14472 115,776.00
Filing cabinet 8 Pieces 15616 124,928.00
Medium back swivel chair 4 Pieces 7788 31,152.00
Guest seats 4 Set 40,000.00 160,000.00
Desktop Computer 4 Set 56,000.00 224,000.00
Printer 4 Set 12,000.00 48,000.00
Panasonic PBX for Telephone 4 Set 560,000.00 2,240,000.00
Star Refridgerator 540 liter 8 Set 67980 543,840.00
Ocean chest Refrigrator 8 Set 60564 484,512.00
Coffee machine 4 Set 279542 1,118,168.00
Ampliier 4 Set 31,600.00 126,400.00
TV 32 inch 4 Set 33,600.00 134,400.00
TV Wall Holder 4 Set 5,800.00 23,200.00
Coridor Lumps 48 Set 1,800.00 86,400.00
Verendah Lamps 72 Set 1,920.00 138,240.00
Hotel Lamps 28 Set 10,000.00 280,000.00
Jacuzzi 8 Set 368,000.00 2,944,000.00
Sauna bath 8 Set 172,000.00 1,376,000.00
Steam bath 8 Set 132,000.00 1,056,000.00
Massage bed 24 Set 56,000.00 1,344,000.00
Female beauty salon cask and
8 644,000.00 5,152,000.00
facilities Pieces
Male beauty salon equipment and
8 364,000.00 2,912,000.00
facilities Pieces
Total 20,710,408.00
Table: Summary of Hotel facilities and equipment

S.N Description Total Cost (Birr)
1 Machinery & Equipment 20,710,408.00
2 Facilities for suite bed rooms 1,401,760.00

3 Facilities for twin bed rooms 612,712
4 Facilities for single bed rooms 4,625,600
5 Gymnasium equipment & machinery 4,000,000

6 Swimming pool 2,000,000

7 Conference Hall equipment 2,500,000

8 Generator 20 kva 423,000.00
9 Laundry Machine 35 kg 775,000.00

10 Drier 670,000.00
Total 37,718,480
Table: Direct Cost of Sales

Unit price in
S.N Description Unit Qty. Birr Total Cost
Raw material for bed room
I services
Matress No 108 5200 561600
Pillow No 216 312.5 67500
Blanket No 216 1,200.00 259,200.00
Bed sheet No 432 707 305,424.00
Towels ( big) No 432 150 64,800.00
Towels (small) No 432 25 10,800.00
Tissue paper No 51,840.00 10 518,400.00
Hotel soap No 51,840.00 5 259,200.00
Liquid hotel shampoo No 51,840.00 5 259,200.00
Toilet chemical Bottle 5,616.00 35 196,560.00
Liquid detergent Bottle 8,212.50 35 287,437.50
Air fresh and insect killer Bottle 4,680.00 30 140,400.00
Loundry detergent for bed
sheets Bottle 5,616.00 35 196,560.00
Subtotal 3,127,081.50
II Raw materials for Health Spa Service
Towels No 960.00 100 96,000.00
Massage cream No 8,640.00 10 86,400.00
Hotel soap No 56,160.00 5 280,800.00
Liquid hotel shampoo No 56,160.00 5 280,800.00
Air cream No 56,160.00 5 280,800.00
Laundry chemicals Bottle 2,190.00 120 262,800.00
Sub total 1,287,600.00
III Raw material for beauty salon
Alcohol Bottle 72.00 90 6,480.00
Shampoo Bottle 72.00 150 10,800.00
Hair cream Bottle 72.00 85 6,120.00
Perfume Bottle 72.00 150 10,800.00
Towels No 60.00 150 9,000.00
Sub total 43,200.00
Total cost 4,457,881.50

6.3. UTILITIES
The major utilities required by the facilities are electricity, water, internet
and telephone.
Table: Annual utilities requirement& estimated cost

Unit price
S.N. Description Unit (Birr) Existing
Qty. Cost ( Birr)
1 Electricity kWh 0.7 3,892 2,724
2 Water m3 3.5 973 3,406
Telephone
3 Expense Lump sum 12,000
4 Internet Wifi Lump sum 24,000
Total 42,130
Table: Manpower requirement and annual labor Cost

Sr. Description No. of Persons Monthly Annual Salary
No. I Salary (Birr) (Birr)
1 Bed Room
1.1 Bed rooms supervisor 1 10,000 120,000.00
1.2 Receptionist 3 7,500 270,000.00

1.3 Casher 3 7,500 270,000.00
1.4 Cleaner 6 5,000 360,000.00
1.5 Plumber 1 3000 36,000.00
1.6 Electrician 1 3000 36,000.00
1.7 Guard 3 6,000 216,000.00
22 Sauna /steam Bath
2.1 Sauna and Steam bath attendant 4 7,500 360,000.00
2.2 Cleaner 4 5,000 240,000.00

3 Massage 0.00
3.1 Massage expert 4 6,500 312,000.00
3.2 Physiotherapist 2 12,500 300,000.00
3.3 Receptionist 2 10,000 240,000.00
3.4 Cleaner 4 7,000 336,000.00
4 Multipurpose Assembly Hall 0.00
4.1 Assembly hall supervisor 1 5000 60,000.00
4.2 Film projector operator 3 6,000 216,000.00
4.3 Hall attendant 8 5,000 480,000.00

4.4 Casher 4 6,000 288,000.00
4.5 Cleaner 5 3500 210,000.00

4.6 Store keeper 2 5500 132,000.00

5 Pastry and Staff Cafeteria 0 0.00
5.1 Cafeteria supervisor 1 5,000 60,000.00

5.2 Waiter 6 5,000 360,000.00
5.3 Cook 6 10,000 720,000.00
5.4 Coffee machine operator 2 5,000 120,000.00
5.5 Cleaner 6 5,000 360,000.00

5.6 Pastry attendant 2 4500 108,000.00
6 Modern Hotel and Traditional 0 0.00
Restaurant
6.1 Supervisor 1 7,500 90,000.00

6.2 Purchaser 1 3500 42,000.00
6.3 Driver 2 4500 108,000.00
6.4 Cook 5 10,000 600,000.00
6.5 Waiter 10 5,000 600,000.00
6.6 Coffee ceremony attendant 4 7,000 336,000.00
6.7 Cleaner 10 5,000 600,000.00

7 Swimming Pool 0 0.00
7.1 Supervisor 1 4500 54,000.00
7.2 Waiter 10 5,000 600,000.00
7.4 Dessert attendant 2 4500 108,000.00

7.5 Life saver 4 10,000 480,000.00
7.6 Cleaner 4 7,000 336,000.00
7.7 Casher 4 10,000 480,000.00
7.8 Plumber 1 3000 36,000.00
7.9 Electrician 1 3000 36,000.00
7.1 Gardener 1 1750 21,000.00
7.11 Guard 3 6,000 216,000.00
8 Park and Recreation Center 0 0.00
8.1 Supervisor 1 4500 54,000.00

8.2 Waiter 6 5,000 360,000.00
8.4 Dessert attendant 2 4500 108,000.00

8.5 Children play-ground attendant 12 6,000 864,000.00
8.6 Cleaner 4 5,000 240,000.00

8.7 Casher 2 5,000 120,000.00
8.8 Gardener 1 3000 36,000.00
8.9 Guard 3 6,000 216,000.00
9 Guest Room 1 6000 72,000.00
9.1 Chief receptionist 1 3000 36,000.00

9.2 Receptionist 4 1500 72,000.00

9.3 Porter 5 1250 75,000.00
9.4 Door attendant 2 1400 33,600.00
9.5 Head housekeeper 1 2500 30,000.00
9.6 Guestroom attendant/ cleaner 4 1500 72,000.00
9.7 Public area cleaner 4 1250 60,000.00

9.8 Laundry supervisor 1 2000 24,000.00
9.9 Laundry attendant 6 1500 108,000.00
Total 212 13,773,600.00
Employees’ Benefit (20% of Salary) 2,754,720.00
Grand Total 16,528,320.00
7. FINANCIAL ANALYSIS
7.1 FIXED INVESTMENT AND DEPRECIATION COSTS
The total fixed investment cost of the project including cost of building and
civil works and purchase of machineries, facilities and equipment is
presented in the following table.
Table: Fixed investment

S.N. Cost Items Total
1 Building and Civil Work 439,754,206.22
2 Machinery & Equipment
51,918,830.00
3 Motor Vehicles 780,000.00
Total Fixed Investment cost 492,453,036.22
Table: Depreciation
Expected Original value Annual Dep.
NO Description life (Birr) (Birr)
1 Building & Construction 20 439,754,206.22 2,707,351.27
2 Machinery & Equipment 20 51,918,830.00 1,885,924.00
3 Vehicles 20 780,000.00 39,000.00
Total 492,453,036.22 4,632,275.27
Table: Repair and maintenances costs based on the standard rate

Total Repair & maintenance
Description Percentage investment costs
Building & Construction 3.00% 439,754,206.22 1,624,410.76
Machinery & Equipment 5.00% 51,918,830.00 1,885,924.00

Vehicle 2.00% 780,000.00 15,600.00

Total 492,453,036.22 3,525,934.76
7.2. OPERATING COSTS
Due to expected increase in prices of raw materials, total operating costs are
projected to increase by 5% every year until the fifth year and remain
constant.
Table: Annual service production cost

S.N Description Year 1 Year 2 Year 3 Year 4 Year 5
1 Depreciation 4,632,275.27 4,632,275.27 4,632,275.27 4,632,275.27 4,632,275.27
2 Utilities 42,130 44,236 46,448 48,771 51,209
Maintenance and
3 Repair 3,525,934.76 3,702,231.50 3,887,343.07 4,081,710.23 4,285,795.74
Manpower
Expenditures( Direct
4 labor) 16,528,320 17,354,736 18,222,473 19,133,596 20,090,276
promotion expenses
5 @1% of revenue 116,160 121,968 128,066 134,470 141,193
Total Operating Costs 24,844,819.85 25,855,447.08 26,916,605.67 28,030,822.19 29,200,749.54
7.3. WORKING CAPITAL
Table: Working capital determination

Months of Required working
Direct costs coverage capital
Raw & Auxiliary materials 4 2,971,921

Wage and Salaries 4 5,509,440
Promotional expenses 4 275,040
Utilities 4 14,043
Total required working capital 8,770,444
7.4. INVESTMENT COSTS
Investment cost components of the expansion project are the cost required
for the G+12 buildings, purchase of Hotel equipment, facilities and
machines, preproduction expenses and working capital to purchase the
required raw materials and auxiliary materials.

Table: planned investment cost breakdown

Description Total
Building and Construction 439,754,206.22
Machineries , facilities and
Equipment 51,918,830.00
Motor Vehicles 780,000.00
Pre- production Expenses &
interest 400,000.00
Working Capital 8,770,444.28
Total 501,623,480.50
N.B* Pre-operation expenditure includes training costs, consulting and similar costs
7.5 REVENUE FORECAST
Due to expected increase in prices of services and number of people using

the Hotel services, total revenue is projected to increase by 10% every year
until the fifth year and then remains constant.
Table: Annual Revenue from Bed room services

Description Quantity (no. of price Days Clients served Revenue/year
classes) (birr/unit) occupied/year
Single 28 2200 240 22,320 49,104,000.00
Suite 4 3200 240 4,560 14,592,000.00
Twin 8 2800 240 6,720 18,816,000.00
Sub total 40 33,600 82,512,000.00
Table: Revenue from Health Spa Services

Description Revenue/year
Jacuzzi 1,996,800.00
Sauna bath 998,400.00
Steam bath 499,200.00
Massage 624,000.00
Sub total 4,118,400.00
Beauty Salon
Services 0.00
Male Beauty salon 156,000.00
Male Beauty salon 312,000.00
Sub total 468,000.00
Total 4,586,400.00

Table: Revenue from other Services

Description Revenue/year
Restaurant 25,200,000.00
Tour & Travel
services 18,000,000.00
Gymnasium 18,000,000.00
Beauty Salon 10,800,000.00
Swimming Pool 4,003,600.00
Conference Hall 17,800,000.00
Total 93,803,600.00
Table: Total Revenue

Description Total
Annual Revenue from Bed room services 82,512,000.00
Annual Revenue from other Services 93,803,600.00
Annual Revenue from Health spa & beauty
salon services 4,586,400.00
Total Revenue 180,902,000.00
Table: Projected Revenue

Description Year 1 Year 2 Year 3 Year 4 Year 5
Annual Revenue from
Bed room services 82,512,000.00 90,763,200.00 99,839,520.00 109,823,472.00 120,805,819.20
Annual Revenue from
other Services 93,803,600.00 103,183,960.00 113,502,356.00 124,852,591.60 137,337,850.76
Annual Revenue from
Health spa & beauty
salon services 4,586,400.00 5,045,040.00 5,549,544.00 6,104,498.40 6,714,948.24
Total Revenue 180,902,000.00 198,992,200.00 218,891,420.00 240,780,562.00 264,858,618.20
Table: Total Investment Fund and Sources of finance

Sr. Owners’ equity Bank Loan
No. Description Total Costs Amount % Amount %
1 Building & Construction 439,754,206 131,926,262 30.00 307,827,944 70.00
Machineries , facilities
2 and Equipment 51,918,830 15,575,649 30.00 36,343,181 70.00
3 Vehicle 780,000 234,000 30.00 546,000 70.00
Pre-operating Costs and
4 Interest 400,000 120,000 30.00 280,000 70.00
5 Total Basic Costs 492,853,036 147,855,911 30.00 344,997,125 70.00

Working Capital 8,770,444 2631133.283 30.00 6,139,311 70.00
6 Grand Total 501,623,481 150,487,044 30.00 351,136,436 70.00

Table: Loan Repayment Schedule

Outstanding
Loan Repayment Interest (9.5%)
Balance
351,136,436
35,113,644 33,357,961 316,022,793
35,113,644 30,022,165 280,909,149
35,113,644 26,686,369 245,795,505
35,113,644 23,350,573 210,681,862
35,113,644 20,014,777 175,568,218
35,113,644 16,678,981 140,454,575
35,113,644 13,343,185 105,340,931
35,113,644 10,007,388 70,227,287
35,113,644 6,671,592 35,113,644
35,113,644 3,335,796 0

Table: Profit and Loss Statement

Description Project Years
1 2 3 4 5
Sales 180,902,000 198,992,200 218,891,420 240,780,562 264,858,618
Direct cost of sales 8,915,763 9,361,551 9,829,629 10,321,110 10,837,166
Gross Profit 171,986,237 189,630,649 209,061,791 230,459,452 254,021,453
Operational expense 57,822,389 59,482,376 61,225,362 63,055,498 64,977,140
Profit before tax and interest 114,163,848 130,148,273 147,836,429 167,403,954 189,044,312
Depreciation 24,622,652 24,622,652 24,622,652 24,622,652 24,622,652
EBITDA (Earning before tax,
138,786,499 154,770,924 172,459,081 192,026,606 213,666,964
interest and depreciation)
Interest expense 33,357,961 35,113,644 35,113,644 35,113,644 35,113,644
Profit tax (35%) 0 0 0 46,301,609 53,875,734
Net profit 80,805,886 95,034,629 112,722,785 85,988,702 100,054,935
Table: Cash Flow Statement

Cash in flow 0 1 2 3 4 5
Owners' equity 150,487,044
Existing Bank Loan 0
Additional Bank Loan 351,136,436
Net Profit 0 80,805,886 95,034,629 112,722,785 85,988,702 100,054,935
Depreciation 24,622,652 24,622,652 24,622,652 24,622,652 24,622,652
Total Cash in flow 501,623,481 105,428,538 119,657,281 137,345,437 110,611,353 124,677,586
Cash out flow
Replacement 0 0 0 0 0
loan repayment 35,113,644 35,113,644 35,113,644 35,113,644 35,113,644
Capital Expenditure 492,453,036 - - - - -
Working capital 8,770,444 - - - - -
Existing Working capital
Pre-operating expenses and interest 400,000
Total Cash out flow 501,623,481 35,113,644 35,113,644 35,113,644 35,113,644 35,113,644
Net Cash Flow 0 70,314,894 84,543,637 102,231,793 75,497,710 89,563,943
Cash balance 79,085,339 163,628,976 265,860,769 341,358,479 430,922,422

Table: Balance Sheet Statement

Balance Sheet Statement
Description Investment Production Year
ASSETS 0 1 2 3 4 5
Current Assets
Cash 8,770,444 79,085,339 163,628,976 265,860,769 341,358,479 430,922,422
Other Current Assets
0 0 0 0 0
Total Current Assets
8,770,444 79,085,339 163,628,976 265,860,769 341,358,479 430,922,422
Fixed Asset
Building and Civil Work 439,754,206.22 417,766,496 395,778,786 373,791,075 351,803,365 329,815,655
Machinery & Equipment
51,918,830.00 49,322,889 46,726,947 44,131,006 41,535,064 38,939,123
Motor Vehicles 780,000.00 741,000 702,000 663,000 624,000 585,000
Total Fixed Asset 492,453,036 467,830,384 443,207,733 418,585,081 393,962,429 369,339,777
Pre-operating Costs 400,000 360,000 320,000 280,000 240,000 200,000
Total Asset 501,223,481 546,915,723 606,836,708 684,445,850 735,320,908 800,262,199
LIABILITIES
Short term liability - - - - - -
Long term liability (Bank
Loan) 351,136,436 316,022,793 280,909,149 245,795,505 210,681,862 175,568,218
Sub Total 351,136,436 316,022,793 280,909,149 245,795,505 210,681,862 175,568,218
CAPITAL
Owner's Equity 150,487,044 150,487,044 150,487,044 150,487,044 150,487,044 150,487,044
Retained Earnings -400,000 80,405,886 175,440,515 288,163,300 374,152,002 474,206,937
Earnings 80,805,886 95,034,629 112,722,785 85,988,702 100,054,935
Sub Total 150,087,044 230,892,930 325,927,559 438,650,345 524,639,046 624,693,981
Total Liability & Capital 501,223,481 546,915,723 606,836,708 684,445,850 735,320,908 800,262,199
Net Worth 150,087,044 230,892,930 325,927,559 438,650,345 524,639,046 624,693,981


Project Proposal For 5 Star Hotel

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project Proposal For 5 Star Hotel

Uploaded by

Copyright:

Available Formats

Project Proposal for 5-Star*

Owner: Juhar Osman Musa

Presented to: Dire Dawa Administration

1|Page By: Juhar Osman Musa

5.1. PROFILE OF THE OWNER .................................................................... 16

2|Page By: Juhar Osman Musa

This project proposal is prepared with the objective of establishing a 5-star

The total investment cost of the project is estimated at birr 501,623,481,

The major components of the project are:

The proposed Hotel project is planned to be built on a 5 Hectare land located

3|Page By: Juhar Osman Musa

In terms of tourism, Dire Dawa Administration has a rich wealth of pre-

 Lega Oda Pre-historic Cave

4|Page By: Juhar Osman Musa

1.1. PROJECT OBJECTIVES

1.2. PROJECT LOCATION

5|Page By: Juhar Osman Musa

In addition to domestic customers, the Hotel will also target on tourists

2.2. DEMAND AND SUPPLY

6|Page By: Juhar Osman Musa

Table: Flow of Tourists

Country/ Year (E.C.)

Source: Dire Dawa Administration Culture and Tourism Department

7|Page By: Juhar Osman Musa

Accordingly, the demand projection for a Hotel service is presented in the

Table: Demand Projection

No. of Tourists Arrival Demand

8|Page By: Juhar Osman Musa

Table: Bedrooms Supply

No. of No. of Bed No. of Bed

2 Hotels under construction 9 334 121,910

Table: Demand and Supply Gap

Year Demand Supply Unsatisfied

9|Page By: Juhar Osman Musa

2.3. TARGET MARKET STRATEGY

In general, competition among fellow Hotels in the City is small. Particularly,

Our strategy for a successful startup is based on quickly creating a high

Hotels in Dire Dawa, with equivalent standards to ours, charge customers

3. THE PROPOSED PROJECT

3.1. GENERAL FEATURE

The proposed Hotel project is designed to provide high quality bedroom

10 | P a g e By: Juhar Osman Musa

3.2. SERVICE DESCRIPTION AND APPLICATION

The maximum capacity of the hotel as measured against major capacity

 Bed rooms-40 per night.

3.2.1. BED ROOMS

11 | P a g e By: Juhar Osman Musa

3.2.2. FOOD SERVICES

3.2.3. BEVERAGES (HOT & COLD)

This is planned taking the hotel’s capacity of serving dishes. It is obvious

12 | P a g e By: Juhar Osman Musa

3.2.6. SAUNA BATH

3.2.7. STEAM BATH

3.2.8. MSSAGE SERVICE

3.2.9. MULTIPURPOSE HALL

13 | P a g e By: Juhar Osman Musa

3.2.10. BEAUTY SALON

3.2.11. PLAYGROUND FOR KIDS

3.2.13. SWIMMING POOL

14 | P a g e By: Juhar Osman Musa

To be an exceptional operator of Hotel services and create value in every

To provide exceptional and personalized service, exceeding expectations,

Exceptional Service - We understand that the value can be created with