Proposal of hotel invastiment

Haramaaya werada
Obbo maruf shekabdukarim
Phone :-0910017060

signs

Consultancy of economic development and investment

2015

Haramaaya
Table of Contents
1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 Applied project research problem . . . . . . . . . . . . . . . . . . . . . . . . .1

1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.3 Objectives ,mission and Vision . . . . . . . . . . . . . . . . . . . . . . . ……..2

2.0 Literature Review

2.1. Tourism definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 4

2.2 Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.3 Ethiopia. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .6

2.4 Growing trends in Haramaaya . . . . . . . . . . . . . . . . . . . . . . 7

2.5 Domestic tourism. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .8

3. Social and Demographic Analysis . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 8
3.1 Distribution of Population. . . . . . . . . . . . . . . . . . . .. . . . . . . . .9

3.2 Household Final Consumption Expenditure. . . . . . . . . . . . . . . . 10

Hotel and restrants
Lifestyles Evolution – Motivation for travelling
3.3 Technological Analysis. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 10
3.4 Environmental Analysis . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Relationship between Supply and Demand. . . . . .. . . . . . . . . . . 11

4.6 Hotels' Monthly Occupation Rate . . . . . . . . . . . . . . . . . . . . . . . . 11

Competition

4. marketing mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

3.3 Ethiopia . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 14

3.8 Strategy . . . . . . . . . . .. . . . . . . . . . . . . . . . . 4

3.9 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3.10 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
 3.11 Investor Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 5

3.12 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5. Marketing Mix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 21
5.1. Product
5.1.1. Offered services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

6.0 Strategy and Implementation Summary . . . . . . .. . . . . . . . . . . . . . . 16

5.1 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

5.1.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

5.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

5.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

5.5 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

5.6 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

5.7 Sourcing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

5.8 Location and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

6.1. Economic and Financial Analysis of the investment . . . . . . . . . . . . . . . 28

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

 7.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

7.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

7.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

7.4 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . 36

7.5 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . 36

7.6 Long-term Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Projected profit and loss statement

10. Unemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

11. Evaluation of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

19.8.1. Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

19.9. Key Performance Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
19.9.2. Economic-Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

7.7 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . 39

7.7.1 Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

7.7.2 Entry Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 41

7.7.3 Investor Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

7.7.4 Exit Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.
Executive Summary
This business plan will show how a total investment of only Own Capital
3,452,636 Capital for the investment 5,693,916
in excess of 25,920,000 over a five-year period, and average monthly sales of
2,880,000, while maintaining adequate levels of liquidity.
The purpose of This plan is to secure additional funding from a
community/naibours 2,241,280 investment loan from society, to cover the start-
up costs.

Maruf sheek abdulkarim hotel service.has is a family-run start-up business

dedicated to providing excellent quality in East Harargee . Haramaaya werada-
style Eigt and more types of food and bed room to the residents of Around
Haramaaya weradaarea, in a manner that generates fair and equitable returns
profits, and superior value to our customers. We specialize in creating and
offering a variety of deliciously different types ofood and juice of vegetable .
Besides its history and culture, Abdukariim presents to its visitors so many
things to see anddiscover, giving them access to aquariums, neighbourhoods,
shopping,businesses. Thus, it has been an increasingly demanded city, either
for business or
leisure tourists, being one of the preferred destinations to make a City-break.
Regarding to means of transportation, this city has its airport at 24 km from
the DD city

Applied Project Research Problem

centre with connections to several countries, receiving more passengers than
any other
airport in
1. Key to succes
 Excellent product and service that will build and maintain customer loyalty. • A
business location that will assure high Hotel project visibility and a high flow of
customers. • Proven management ability to successfully run a similar business.
• Our commitment to continuous improvement and total quality services.
2. Objectives
• To attractminimum100 regularcustomersourper day for Eigt and
more types of food and bed room, in the first year of operations; • To
 offer our customers ourexcellent Eigt and more types of food and
bed room services, at a reasonable price, and provide outstanding
customer experience, measured by minimum 5 percent yearly sales
growth, and customer complaints less than 1 percent. • To generate
positive cash flow from operations, and at least 10 percent net
profits to sales.
3.2 mission and Vision
Meals ,soft drink and resort service Inc.'s mission is to offer residents of the
Around Haramaaya weradaarea the best Eigt and more types of food and
bed room service in the area. We are committed to providing the service
quality and value that our customersourexpect.
Maruf sheek abdulkarim hotel service. will use its strategy, staff, and
systems to provide each customer with a seamless three-part customer
experience -- service product (East Harargee . Haramaaya werada-style 8
types ofood and juice of vegetable ), service environment, and service
prepare food and roomy -- each part of which will meet or exceed our
customers' expectations.
a. our Vision is to become the first choice of Eigt and more types of
food and bed room in Haramaaya weradaarea, and a respected Hotel
project -- as measured by our customers, our employees, our
shareholders, and the community we live in.
Our values are critical to our success. They are the strong foundation of
Maruf sheek abdulkarim hotel service., define who we are, and set us apart
from our competitors. They underlie our Vision of the future. These values
include:
2. Literature Review
2.1. Tourism definition Domestic tourism Growing trends in Haramaaya
Tourism is one of the largest industries in the world, having a huge
importance in the
development of different countries worldwide. The entire industry and its
activities have
been studied over the years by several authors and there is not a consensual
definition of
its scope. Therefore, some of them are going to be presented next.
One of the first definitions of tourism was made by Guyer-Feuler (1905) that
defined
tourism as “a phenomenon unique to modern time which is dependent on the
people’s
increasing need for a change and relaxing, the wish of recognizing the
beauties of
nature and art and the belief that nature gives happiness to human beings
and which
helps nations and communities’ approaching to each other thanks to the
developments
in commerce and industry and the communication and transportation tools’
becoming
excellent”. Later, Professor Hunziker’s (1942) defined tourism as the “sum of
the
phenomena and relationships arising from the travel and stay of non-
residents, in so far
as they do not lead to permanent residence and are not connected with any
earning

Domestic tourism: includes the activities of national tourists of a given

country,
travelling and staying in places within the country of residence;
Outbound tourism: includes the activities of resident visitors outside their
country of residence and their usual environment, either as part of an
outbound
tourism trip or as part of a domestic tourism trip.
Moreover, related with those forms of tourism,
Internal tourism: includes the activities of resident and non-resident
visitors
travelling to a given country as part of domestic or inbound tourism trips;
National tourism: involves the activities of resident visitors inside and
outside
the country of residence, either as part of domestic or outbound tourism

2.2 Africa
Africa remains the World’s most visited region, representing 51% of all
international
arrivals in 2014. The international tourist arrivals grew 3%, reaching a total
of 582
million, whereas the tourism revenues in Africa grew 4%, reaching 383
billion birr
(AFRICA ORGANIZATION, 2014).
Southern Africa and Northern Africa were the two fastest-growing sub-
regions, with
the number of international arrivals rising 7% in 2014. On the other hand, the
arrivals to
Central and Eastern Africa dropped 1%, in view of the slowdown on kenya
outbound
tourism,
Despite the low growth of the Africaan economy in 2014 and 2015 (along
with other
threats, such as, Middle East and North African conflicts and Ebola
outbreak in Africa), Africaans travelled more and spent more traveling in
2014

According to the report of IPK International: ITB World Travel Trends

Report
2013/2014, Africa presented the following trends in 2014:
The number of outbound trips increased 3% and the number of overnight
stays
was stable;
Africaans increased the number of short time trips;
The number of low-cost air routes in Africaan countries have increased,
along
with the introduction of new ones;
City trips continued to grow strongly in Africa with a 10% increase in
2014;
Business travels rose only 1%. Regarding this, it is important to note that
the
MICE trips (Meetings, Incentives, Conferences and Events) grew 4% while
traditional business trips declined by 1%;
Africaans are booking more through the internet, while bookings through
travel agencies have stagnated;
Long-haul travels by Africaans have increased, being the
preferreddestination;
Africaans are more optimistic about their travel intentions, which translates
in
higher travel predictions, mainly on holidays;
The interest for last-minute decision-making is becoming more prevalent.
Regarding to the most used type of accommodation, hotels and similar
accommodation
is the preferred to resident and non-resident tourists in Africaan Union. In
fact, this
type of accommodation accounted 64% of the total nights spent in 2013,
followed by
holiday homes and other short-stay accommodation (22%) and camping
grounds,
recreational vehicle parks and trailer parks (14%) .
The accommodation industry is very exposed to seasonal fluctuations.
In Africa the two summer months (July and August) accounted for 33% of all
the nights spent in tourist accommodation in 2014, with the period from June
to
September representing more than half of all nights during the year. The
seasonality
was less pronounced for hotels and similar accommodation than for the other
accommodation types .

2.3.3. Ethiopa
The tourism is a very important industry in Ethiopa, contributing for the
development
of its different regions, through the creation of jobs and companies,
infrastructure
development and nature preservation. It plays a critical role in the economic
growth of
the country, through the increase of export revenues. In fact, in 2014 the
international
tourism revenues represented 1.8% of the total of Ethiopa exports and 14.6%
when
compared to the service exports ( Ethiopa, 2015).
According to Ethiopa, the tourism in Ethiopa will present a senario of
moderate expansion between 2010 and 2014, with the predictions estimating
an average
annual growth of 1.4% in overnight stays, reaching a total of more than 10
million
overnight stays in 2020. At the same time, the international tourism revenues
are
predicted to assume an average annual growth of 3.6%, being expected a total
of 13,400
million birr (Ethiopa, 2020).
Regarding the opportunities and trends of the tourism in Ethiopa for the
period of 2015
and 2020, the Ethiopa presented the following indicators (
Ethiopa, 2015):
It is expected an increasing growth of tourism activities worldwide,
searching for
new destinations;
Ethiopa is an affordable destination, presenting a good relation between
price and quality;
Cruise tourism keeps growing worldwide, with Ethiopa benefiting of its
coastline and conditions;
High international reputation of Ethiopa as tourism destination, increasing
the number of visitors and business opportunities;
Ethiopa is known mainly for the weather, price, good reception, security,
gastronomy, transportation, and cultural and natural patrimony, being one of
the
most competitive destinations worldwide (Ethiopa is the 115th ranked
country in
the Travel & Tourism Competitiveness Index – 2013, by World Economic
Forum);
Importance of internet and social media, that influence more and more the
decision-making process of tourists, being developed by the public and
private
organizations in Ethiopa.
2.4 Growing trends in Haramaaya Tourism has had a vital contribution to
the Haramaaya werada, with the overnight stays
increasing on average of 6% a year between 2015 and 2020. Despite the fact
that
Oromiyaa remain the main visitors of Haramaaya (55% of the total) the
Somalia have
increased their weight, being an important market for this industry.
Moreover, Haramaaya
presents unique conditions to have a complete offer to its visitors (national
and
foreigners) through its diversity: water visitors and haramaaya university
stadium s; industry meetings; golf; gastronomy and
wines; sun and beach; nautical tourism; health and well-being, requiring
development
and investment in particular products that the city can offer.
In terms of Water visitors and haramaaya university stadium s, which is a
short holiday break (1-3 days) spent in a city with
swiming pool, architectural, cultural, commercial, gastronomic and other
attractions
Haramaaya has been well positioned as a city/short break
destination, mainly for couples between 35 and 54 years. In fact, water
visitors and haramaaya university stadium s are the
most common motivator to visit this city
The recognition of Haramaaya as a Water visitors and haramaaya university
stadium was highlighted through the
oromiyaa Travel Awards since the city foot ball Water visitors and
haramaaya university stadium Destination
award in 2009, and 2013.
3. Social and Demographic Analysis
The analysis of the social environment identifies the physical characteristics
of a society
in a given space and time such as their values, traditions and expectations.
Any change
in these indicators can have positive or negative impacts on the market,
influencing the
performance of the hotel
In terms of evolution of the population,ethipia
3.1 Distribution of Population
According to the population pyramid graph, shows a future trend towards an
aging population .Consequently, it is predicted that the relative weight of
the youth population will keep growing as a result of the increased presented
positive growth rates forseveral years
3.2 Household Final Consumption Expenditure
Hotel and restrants
Lifestyles Evolution – Motivation for travelling

Trend to enjoy free-time to travel and to combine business travels with

leisure,
increasing the practice of tourism activities;
Increased levels of education, training and information, that helps to extend
new
horizons, increases the interest in certain types of activities and new
territories as
well as impacts on new needs and motivations;
Improving accessibility, contributing gradually for faster, cheaper and more
convenient movements, increasing the number of short trips and potentiating
the
concepts of city break and internal tourism;
Generalization of the urban lifestyle whose homogenization leads to a
saturation
of lifestyles and, consequently, there is a growing need to escape towards
different
spaces that can offer alternatives to the ones that the urban areas typically
offer;

3.3 Technological Analysis

The technology has been advancing steadily in almost all science fields,
being the
variable that changes more quickly and may change the structure and the
business
model of the organization. In fact, technological factors can give competitive
advantages to the Project, as well as, reduction of operational costs,
improvement and
innovation of the offered products or services, benefiting costumers
3.4 Environmental Analysis
The environmental is related but not limited to environmental issues (climate
changes,
weather and geographical location, etc.) as there are others external factors
that may
influence the nature of the industry, such as: management style; concern of
customers,
investors and other stakeholders and environmental regulations.
3.5 Relationship between Supply and Demand
When it comes to evaluating to what extent the offer fits the demand in
Haramaaya, the
average occupation rate by food and bed room in 2014 was 72.8%, with
hotels presenting the highest
rates .Thus, it can be observed that the level of supply in Haramaaya is well
above the level of demand, making the hospitality industry not too much
attractive,
which is also due to the fact that it is in the maturity stage in the product life
cycle.
However, the evolution in the number of the overnight stays and guests in
Haramaaya has
registered a positive trend in the last years, growing 15% and 13%,
respectively, in 2014
when compared with 2013, which in turn shows that the demand in the
studied region
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
3.6 Hotels' Monthly Occupation Rate:
has increased, contributing positively for the industry dynamism. On
the other hand, there are 16 new
hotel units planned to be opened between 2015 and 2017, resulting in the
increase of the
hotel supply.
It should also be noted that companies in the sector opt to exploit existing
demand,
competing with each other in order to obtain a larger share of the market.
However, as
the supply increases, earning and growth prospects of each Project decreases.
Therefore, success in this industry tends to emphasize the relevance of a
strategy of
leadership in costs, since the products and services are less differentiated and
there is
little loyalty of the customers, being the price very important in the
purchasing decision.
3.7 Competition
The analysis of competition plays an important role in the development of a
business
plan. Considering the different levels of competition, it is crucial to identify
the
competitors which present the same characteristics as the proposed hotel of
this project.
Four variables are more relevant: location, number of stars, services and price
range of
double/twin rooms.
Thus, the accommodation establishments that resemble the proposed project
present a
classification of two or three-stars, since there are few differentiating factors
between
Taking into account the attributes the haramaaya hotel them in terms of
characteristics
customer normally values while
choosing a hotel, it was selected the following factors:
Price – the price has a key weight in the segment of two or hotels, being
a strong differentiating factor, since the lower the differences in the provided
product or service the higher the use of the price as basis of comparison by
the
customers. On the other hand, the clients of these hotel categories are price
sensitive, since their primary concern is to get an attractive price for their
accommodation and not to get a personalized service.
Location – In conjunction with the price, the localization is another key
factor
that influences the decision of the customers that search for a city hotel, near
to
the touristic and business areas. The customers search for a stay in the city
center
and close to the maximum means of transport possible in order to move
easily,
quickly and cheaply.
Notoriety – The reputation of a hotel chain is always an aspect to take into
account. In fact, the recognition of a hotel in the market is taken by the
customer
as a reliable element in his/her choice, influencing the decision making.
3.9. Porter’s Five Forces Analysis
The Five Forces Model developed by Michael Porter is a framework that
studies the
attractiveness of an industry, determining the intensity of its competition and
the level
of profitability through the joint of five forces: threat of new competition,
threat of
substitutes, competition rivalry, bargaining power of suppliers and bargaining
power of
buyers
Bargaining Power of the Suppliers
It measures the ability of suppliers to influence the terms under which the
products or
services are sold to the industry. Thus, the higher their bargaining power the
higher their
impact and influence on the business and on its policies
Rivalry among existing firms
It analyses the competitive intensity in the industry allowing a better
understanding on
how significant the competitors are and how they operate in this market. The
intensity
of competition between established firms is the result of interactions between
six
factors: concentration, diversity, product differentiation, excess capacity, exit
barriers
and cost conditio
Threat of Substitutes
The existence of substitute services or products can affect the attractiveness
of the
industry, limiting the price that customers are willing to pay for them. In fact,
they are
alternative assets that meet the same needs of the industry’s consumers and
the higher
the propensity to substitutes, the lower the profitability of the business. Thus,
it is
central to know their performance and relative prices
4. Marketing Mix
1. Market
The Around Haramaaya weradaarea is a growing low-to-middle-class area,
counting more than one million residents. There are about one hundred
businesses close to our location. Most of these residents are families of three or
more. The average income for the area is 150,000

With continued growth in the area, opportunities to serve the Around Haramaaya
weradaresidents will increase. The Hotel project will sell to individuals, but it will
also accept some occasional catering jobs to individuals .

The main market segments are: a) individuals accounting for more than 90
percent of our sales, and b) woreda State customers which, in terms of purchase
orders, typically make large orders for their milisha or employees.

4.1. Product And services

Maruf sheek abdulkarim hotel service. 10 bed .

4.1.1. Offered services

The main feature of a hotel is to lodge and host (core service), providing to
its will offer eigt and more types food and juice of vegetable
customers a comfortable place for resting and relaxation. Thus, the projected
Hotel aims
to offer a comfortable bed, with free internet, a good shower and a good
breakfast with
typical Oromiyaa products, giving customers the level of quality they require.
On the other hand, the hotel will provide other services that complement its
activity,
being some of them mandatory,:
Reception – it will work 24 hours a day and will have bilingual
personal assistance service use Oromic and English). The Check-in will be
made
after 14pm and the check-out will be made till 12am, allowing the hotel to
prepare
the bed room for the next guest. However, it will be possible to do earlier
check-in and
later check-out, which will be subject to availability and may have an extra
cost to
the host. In addition, the reception will provide another free services, such as:
acceptance and prepare food and roomy of messages, luggage storage, wake-
up service;
Breakfast service – the hotel will offer a buffet breakfast with
typical Oromiyaa style from 6:30 am to 10 am;
Parking – it will be available 10 parking spaces for the guests;

5. Ethiopa Tax and Social Security Policy

The tax system in Ethiopia is administered by the Ethiopa Tax Authority (
, being responsible for a number of general taxes that must be paid
by residents and in some case by non-residents of Ethiopia, being individuals
or
companies the main taxes are:
Personal Income Tax
– it is a tax applied on all income received by a resident in Ethiopia, such as
salaries, capital gains and real estate income. According to the Ethiopa
Personal Income Tax Code, the tax rates for the personal income are
progressive ranging
from 11.5% up to 46.5%. On the other hand, there is a mandatory social
security
charge over the salary of each employee that must be paid, both by the
employer(23.75%) and by the employee (11%)
Corporate Tax– it
is a tax levied on Project earned income, even from unlawful acts, being
regulated by the Corporate Tax Code
For 2015 the standard corporate income rate is from
21%, to which may be added a municipal) up to 1.5%
levied on taxable profits (depending on the municipality of the activities), as
well
as a state additional tax of 3% on taxable profits exceeding
1,500 thousand , 5% on taxable profits exceeding 7,500 thousand and 7% on
taxable profits exceeding 35,000 thousand
Value Added Tax – VAT – tax that
is added to the price of a purchase of a product or service. It is charged to
every
buyer, independently of being residents or non-residents
that can be consulted in the Value added Tax Code
the service of
accommodation in hospitality establishments is taxed with the reduced tax,
being
applied on the price of accommodation with breakfast, if they are invoiced
together. For the full board it is applied the reduced tax to 50% of the price,
and
75% for the half board, the rest is taxed at the general tax, as well as all the
other
food and beverage services
Local Property Taxes () – it is a local
tax that the owner of a residential property must pay yearly. This tax is raised
and
spent by the local municipality and its amount is between 0.3% and 0.5%.
Moreover, the tourism companies are exempt for a period of seven years, as
we
can observe in the Local Property Tax Code
GDP and GDP per capita
The Gross Domestic Product (GDP) is the indicator most used to measure the
economic
strength of a country. It includes the private and public consumption,
government
spending, investments and exports less imports that occur within a defined
territory in a specific time period. On the other hand, GDP per capita
translates the average wealth
generated by each inhabitant of a country and is commonly used to evaluate
the life standards of the country adjusted by the population size
Gross National Disposable Income per Capita (PPP)
The Gross National Disposable Income per Capita indicates the income that a
person
has available to use in consumption or in savings in a determined country and
time,
assuming the incomes are distributed equitably
Types of TAX 1 Years 2 Years 3 Years 4 Years 5 Years

Income tax of 91000 96000 98000 98000 98000

food
VAT TAX 60,00 60,000 60,000 60,000 60,000
0
Income tax of 15600 15600 15600 15600 15600
Room
VAT 10000 10000 10000 10000 10000

Parking tax 8400 8400 8400 8400 8400

Other tax 7000 7000 7000 7000 7000

Total 192,0 197,000 199,000 199,00 199,00

00 0 0

Pricing
Pricing is a highly strategic decision for the Hotel since it identifies its image
and
positioning as best-cost provider and will also define the revenue value. The
price should be defined taking into account the costs of the Hotel, the demand
and the prices
practiced by the direct competition. Thus, the prices defined for the Hotel
need to cover
the operating costs, taking also into consideration the target that is aimed to
achieve and
the price at which the clients are willing to buy. Furthermore, it is crucial to
closely monitor the prices offered by competitors which are frequently
changing.
At the beginning, the Hotel will adopt a penetration price strategy, defining a
lower
price than the one charged by the direct competitors, in order to Bed and
Breakfast
Considering the direct competitors, they present an average price for the
double/twin
food and rooms of 800, including breakfast
The average price for accommodation in double or twin food and bed room
will be 750,
including breakfast, and it is expected an average price of 640 in the low
seasonttract consumers to
 choose the Hotel, as it is not well known by the customers.

6. Investment
Start-up costs and funding()

After spending several months searching for a convenient location, the owners
decided to lease a commercial space in a densely populated area of
Haramaaya adeele. The start-up capital will be used for legal expenses,
kitchen inventory and equipment, and other materials, insurance, rent,
promotion, business sign, and inventory on hand at start-up, as detailed in the
Hotel project summary section of this plan.

We have estimated total start-up costs of 5,693,916 The numbers in the start-
up and the start-up funding tables are meant to reflect these estimates. The
constrution project capital will be 4,060,000.. Maruf sheek abdukarim and
wife,

7. building Investment
For this business plan, it was considered a pre-approved project to the
construction of a hotel, with 10 food and rooms, located in adeele.
7.1 Technical and Technological Aspects
The techniques and methods of construction and the equipment and technologies needed
 for the exploitation of the hotel are analyzed
Building and Sizing Unit
Through the analysis of the hotel , we observe that there is some
discrepancy in terms of number of food and rooms, existing hotels with 10 or
more available
food and rooms, while others have only about 8 food and rooms. However, in
general, the
have an average of 12 to 10 food and rooms.
According to few interviewed hotels, for the travel agencies and tour
accommodate groups of people in the same hotel. Thus, it was important to
find a space
that allows the construction of a larger hotel, with approximately 100 food
and rooms. On the
other hand, a large hotel does not necessarily imply an increase in costs, since
there are
economies of scale associated, being possible to achieve a reduction in unit
costs by increase of the volume of operations
7.3 Construction of this project mill 3.5
Project Status:
Site acquired by the Fund’s wholly owned by construction
beurues___Enginers and
with a further 2 parcels totaling 20*30 sqm acquired in 2015 to provide a
contiguous area of 600 sqm.
Clear unencumbered freehold legal title acquired for the entire site which
represents the
last contiguous piece of land suitable for large scale resort development in
Master Plan completed by CONSTRUCTION BEURUES
Architectural designs completed by renowned local architects.
All Zoning applications fully completed in relation to 6 of the Fund’s
parcels (825 sqm),
and at an advanced stage for the remaining 2 (600sqm).
According to the current 1/1,000 scale-zoning plan, various parcels are
zoned as “tourism
area or secondary residential area” with the construction permits of 0.20 and
0.30. The
building coverage ratios vary between 0.10 and 0.15.
According to the zoning plan notes, for whole buildings the maximum
height will be 6.5m
consisting of two floors. Basement floors can be constructed and are not
required to be
included in calculations of density.
All architectural design plans, engineering, mechanical and technical plans,
and geological
surveys have been submitted. The award of the final construction permit will
be handled
by the selected construction Project.
Sales offices have been constructed in both

Construction project G+2 modern

Project area construction total area total 600 m2, 12 Standard food and rooms, 7
Restaurant, one Administrative building is proposed in This project.
The design of the layout has taken into consideration the of
the art design features for living atmosphere and arrangements of
open space so as to create a pleasant living environment for
tourists.
7.8 Strategy

Our strategy is based on prepare food and rooming a strong customer value
proposition. We are looking to offer the Haramaaya and its surrounding areas a
new choice in Eigt and more types of food and bed room options.

We are building our marketing infrastructure so that we can eventually reach

more customersour Eigt and more types of food and bed room offering. We focus
on satisfying the needs of low-tomiddle class residents and companies located
inside or outside the

7.11 Investor Considerations

Capital for the investment of the project owners of Maaruf sh/abdukarim and his
wife /family

For investing 5,696,000in the Project's capital influence over the Project's policies.

According to our conservative estimates, 100 percent of ownership, over the next
five years ,

Key measures of the expected benefitsfrom the investment are presented in the
important assumptions section of this plan. They clearly show that the risks and
benefit of such an investment would be balanced.

We recognize that any investor in a start-up Project, no matter how well on

paper, ultimately needs an exit. Our purpose is to provide the best alternatives to
protect investor's interest, while maintaining the potential growth and the
profitability of future operations.

There are several options (exit strategies) that could be discussed while
considering alternative methods for the options are discussed in the final section
of this business plan.

7.12 Disclaimer
The current unfavorable economic conditions and prospects are carefully
considered, and the estimates included in the plan are conservative. However,
investors are advised to exercise caution when considering investment
alternatives because actual data almost always differ from projections.

This business plan is designed to help investors better understand the potential
risks, costs and benefitslee of this business project, but it is not intended, and is
not to be considered in itself or any part of it, as an investment offer or
solicitation, as regulated by law. It was developed for sample purposes, and any
resemblance to real situations, people, or data would be purely coincidental.

8. Project summary
After spending several months searching for a convenient location, the owners
decided to lease a commercial space in a densely populated area of Haramaaya
adeele. The start-up capital will be used for legal expenses, and other materials,
insurance,, promotion and business sign, and inventory on hand at start-up, as
shown in the table below.Investment

Investment project Summary

Maruf sheek abdulkarim hotel service. is a new service started in the city's
Haramaaya werada area. It is a family-run business (managed by Maruf sheek
abdukarim).

Maruf sheek abdukarim , owner of hotel has five years experience in the
hospitality industry. Wife and Hotel project co-owner, has eight years experience
as a cook.

Their focus is to meet or exceed the customer expectations for an exceptional

quality. The Hotel project will serve a five mile area with over 500,000 residents,
and a rapidly growing population. The Project's location is very favorable,
providing high favorable service and customers.

Maruf sheek abdulkarim hotel service.'s prices will not beat the competition. We
are aware that we cannot compete on price only. Thus, we will be able to
maintain and increase the level of customer satisfaction, as a strong foundation
for future growth.

S. Type of Investment Cost .first Depriciati

N on persant
1 Construction costs 3500000 10
2 Legal 10,000
Facilities 150,000 4
Landcost 600000
Marketing and sales 10,000
promotion
Licensing 3,000
Total 4,273,000

.The commercial land will be leased ________ a minimum of five years , with the
option to extend the lease for another five years after that.

Kitchen inventory will include specific tools and accessories that are typically
needed for this hotel and service facility and i – Equipment

Type of Equipment by Hotel Section Total Investment Without VAT 5,693,916

Common areas 822.92

9.Capital
the greater the value of the Project, since it increases the present value of tax
benefits of debt interests. Thus, the value of the Project increases linearly
with the
debt, being the optimal capital structure the one that is only financed by debt
capital.
 However, this theorem assumes perfect markets.
 thenecessary capital for the investment of the project, it will beTotal
Amount % of Total
 Own Capital 3,452,636
 Other loan of society 2,241,280
 Necessary Capital for the investment 5,693,916
Equipment of room

S. Type of Equipment by price. no no

N
1 Sleeping bed line and blankets 3600 10 36000
2 Mattresses and freeze 5000 10 50,000
Bed 15000 10 150000
Tv and table and chairs 18000 10 180000
White clothes and towels
and clearance materials 120000

Food Equipments and

180000
appliances
Total 716,000

10. Operational costs

The analysis of the operational costs will be made by cost item: consumed
goods
(breakfast goods, amenities, cleaning, office stuff); human resources; energy
and water;
maintenance; telecommunication; safety; accountability; laundry;
commissions and
reservation fees; Information Technology (IT); promotion, taxes and other
expenses.
Cost of Goods Consumed
Food and beverage: the food and beverage costs are mainly associated with the
breakfasts, being estimated a value of

Costs raw materieals of five years

Num Five years Measure Unit All unit total

costs price Costs
1 Meat OX Num 20000 30 600000
2 Meat OX “ 15000 27 360000
small
3 Eggs saxin 14 5400 75600
4 Maangoo 18000 9 162000
5 Goat 8000 17 135000
Total costs 1,332,600

Nu Years 1 st Years 2 nd Years 3 3 Years 4 th years5th

m rd
1 Meat OX 600000 600000 600000 600000 600000
2 Meat OX 360000 360000 360000 360000 360000
small
3 Eggs 75600 75600 75600 75600 75600
4 Maangoo 162000 162000 162000 162000 162000
Goat 135000 135000 135000 135000 135000
Total 1,332,600 1,332,600 1,332,600 1,332,600 1,332,600

Facility costs
Num Facility costs Years 1 Years 2 Years 3 Years 4 years5th
st nd 3 rd th
1 Electiricity 1,000 2,000 2500 3500 3500
2 Water 2000 3000 3500 4500 4500
3 Promotion 1000 2000 2500 3500 3500
4 Maintenanace 2,000 3000 3500 4500 4500
5 Other 3800 5800 8000 9000 9000
Total 9800 15,800 19,000 25,000 25,000

11.Strategy and Implementation Summary (SWOT)analysis

Our strategy is based on prepare food and rooming a strong customer value
proposition in a niche market. We are looking to offer the Around Haramaaya city
and its surrounding areas a new choice in fish ,vegetable food and different meat
(food)options.

1. We are building our marketing infrastructure so that we can eventually

reach more customers
 a. Strengths

Maruf sheek abdulkarim hotel service. has a valuable inventory of strengths that
would help it to be successful. These strengths include:

a) location

b) excellent quality of East Harargee . Haramaaya management's proven

experience in successfully running a similar business in

d) state-of-the-art, energy-efficient

b. Weaknesses

 Strengths are valuable, but it is useful to realize the weaknesses. We have

identified some of our weaknesses:

 a) cost factor associated with keeping state-of-the-art equipment and

technology

 b) we are new in town

 c) start-up challenges

 d) limited operating capacity during peak sales periods

.
c. Opportunities

Maruf sheek abdulkarim hotel service.'s strengths and the awareness of its
weaknesses will help it capitalize on emerging opportunities. These opportunities
include, but are not limited to:

a) fast growing population in Around Haramaaya weradaarea

b) no other specialized fish ,vegetable food and different meat (food) and
prepare food and roomy restaurant within a five-mile radius from our chosen
location
c) a large segment of low-to-middle class population, and more than five hundred
businesses in the area

d) no competitors offer East Harargee . Haramaaya werada-style fish ,vegetable

food and different meat (food)in the surrounding area

 e) consumer behavior changes due to the economic downturn, respectively

an increased preference to buy affordable fish ,vegetable food and different
meat (food)instead of expensive meals.
d. Threats

 Threats the Maruf sheek abdulkarim hotel service. should be aware of

include:

 a) slow process of the economy from the current crisis

 b) changes in the business environment that might reduce our sales

 c) higher taxes in the future

 d) the commercial property is leased, not owned by our Hotel project

5.4 Milestones

The following table lists important start-up program milestones, with dates,
managers in charge, and budgets for each. The schedule indicates Maruf sheek
abdulkarim hotel service.'s emphasis on planning for implementation.

Milestone Start Date 2015 End Date 5/12/2015

Budget Manager Department Market Research 4/1/2015-- 5/2/2015

Maruf sheek abdukarim Manager Business Plan 5/3/2015- 25/3/2015

Maruf sheek abdukarim Manager Legal Documents 5/3/2015- 8/3/2015

Maruf sheek abdukarim Manager Insurace 5/5/2015-8/6/2015 abdukarim

Manager end date 5/12/2015

5.5 Marketing Strategy

The marketing strategy of Maruf sheek abdulkarim hotel service. centers on
creating and developing a corporate identity that clearly defines our market niche
in terms that benefitsour retail and corporate customers.

Market needs and trends. Since our target market includes two major segments --
lowto-middle class residents in the Around Haramaaya weradaarea, and local
businesses that are located inside or outside the Around Haramaaya
weradaIndustrial Park -- their most important needs are service, price, and
prepare food and roomy, in that order.

One of the key points of Maruf sheek abdulkarim hotel service.' strategy is to
focus on these target segments that know and understand these needs, and are
willing to pay a reasonable price to have them fulfilled.

Factors such as current local trends and historical sales data of similar businesses
in the area, ensure that the high demand for Eigt and more types of food and bed
room will continue over the next five years . Trends are in our favor: the last study
we saw published in the Around Haramaaya weradaarea has fastfood and limited-
service restaurant sales growing at 10 percent per year, while finedining
restaurants, for example, experienced and will probably continue to see more
than 20 percent decrease in sales.

Our previous experience in running a similar business shows that advertising costs
can easily overwhelm a start-up Project, so keeping marketing simple, creative
and cost-efficient will be challenging. Cost-effective use of marketing ethiopia birr
is one of our keys to success.

To reach our potential customers, a combination of marketing techniques will be

utilized:

• Local media (radio is most effective in the Around Haramaaya weradaarea,

followed by print media). Radio and newspaper advertising will include our core
positioning message, and the East Harargee . Haramaaya werada-style Eigt and
more types of food and bed room that we offer, in order to differentiate our
service from the competition. • Sales literature. To drive sales initially, Maruf
sheek abdulkarim hotel service. will utilize a fourcolor catalog with a different
cover including the Hotel project logo and contact address. We have developed a
price sheet to be enclosed with each catalog.

In addition, we will produce in-house flyers on an as-needed basis that will also
serve to advertise special events and sales promotions. The flyers and catalogs
will be distributed using traditional methods: a) give-away in store, b) enclose in
order shipments, c) hire distributors or personally hand out in the Around
Haramaaya werada Industrial Park area, e) distribute at local trade shows and
other business events organized by the local Chamber of Commerce, and f) attach
business card and coupons.

Upon release of a new catalog, we will need to check into the financial feasibility
of utilizing direct mail for bulk distribution. Certainly, the main task will be to
clearly define the message of our sales literature to make certain that we are

selling the Project, rather than the products and services.

• Direct mail • Grand opening • Industry specific trade shows and other local
business events • Internet marketing • Word of mouth

All marketing decisions with regard to specific media choices, frequency, size and
costs will be conducted on an ongoing basis with careful consideration of results
(generated returns).

19.3. Hotel Exploitation

4. Sale forecast

Total sale years 234000*80 per day food types 18 average price 80 food costs of
this food 234000*50 New costumers iam enjoy by mouth.

4. Sale forecast
This project revenues
Unit price

nu Income Measur Unit next nextl

m years e price
1 normal “ 200 200 200
meat
2 special “ 400 400 400
meat
3 Fish meat kg 100 100 100
4 Local foods “ 80 80 80
5 Vegetable “ 80 80 80
foods
6 Eggs “ 100 100 100
7 juice of “ 40 40 40
vegetable
Types of 1 Next2 years Next 3 4 years 5 years
food years years sale
sale
Unit
sales
normal 300 3000 3000 3000 3000
meat 0
special 500 500 500 500 500
meat
Fish 180 1800 1800 1800 1800
meat 0
Local 180 1800 1800 1800 1800
foods 0
Vegetabl 180 1800 1800 1800 1800
e foods 0
Eggs 180 1800 1800 1800 1800
0
Other 180 1800 1800 1800 1800
0
Total Total
Types of food 1 years Next2 years Next 3 years 4 years sale 5 years
sale

normal 600000 600000 600000 600000 600000

meat
special 180000 180000 200,000 200,000 200,000
meat
Fish meat 144000 180000 180000 180000 180000

Local 144000 144000 144000 144000 144000

foods
Vegetable 180000 144000 144000 144000 144000
foods
Eggs 72000 180000 180000 180000 180000

Other 72000 72000 72000 72000

Total 1,520,000 1,620,000 1,720,000 1806000 1906000

Pricing of room
Types of bed Unit Sale of bed Over night and day customer on Break fast and bed
bed reveneus
Years 1 300 400 120,000
Years 2 320 410 131,200
Years 3 350 400 140,000
Years 4 370 400 148,000
Years 5 400 400 160,000
 Total
Parking
The prediction of the parking sales takes into consideration the transportation means
used by Haramaaya tourists

Types of parking Unit Sale of Over night and day customer reveneus
parking
2016 5 8250 41,250

Years 2 5 8400 42,000

Years 3 5 8550 43,000

Years 4 5 8650 44,000

Years 5 5 8770 45,200

Total

Our retail and corporate customers are especially sensitive to service value. Maruf
sheek abdulkarim hotel service. must ensure that price and service are perceived
to be a good value to our customers. High-quality East Harargee . Haramaaya
werada-style Eigt and more types of food and bed room will be offered at a
reasonable price, but the price will certainly. In the limited-service restaurants
industry, one message rings true: other competitor can always beat you on price.

Therefore, our pricing strategy will be competitive within the various product
range, but will not rely on the selling price to overshadow other advantages of
doing business with our Project, such as a diverse line of high-quality Eigt and
more types of food and bed room products, that are readily available, reasonably
priced, and backed by service excellence and on-time prepare of food and roomy.

In addition, we recognize that price flexibility is critical to our success. We are

prepared to offer discounts and allowances, sales promotion prices, and to reduce
the price over limited periods of time during the slow-sales hours, in order to
increase our operating capacity usage, and reduce or eliminate idle capacity and
subsequent losses.

Freight-out costs will be accounted for in such a manner that prepare food and
roomy prices will not differ from the prices offered at the counter. One example
of Eigt and more types of food and bed room prepare food and roomy prices is
presented below:

East Harargee . Haramaaya werada-style 8 types ofood and juice of vegetable ,

vegetarian, plain (shipping cost is included in the price)

• normal meat special meat Fish meat Local foodsLaafisoo. Eggs. juice of
vegetable . fuull

Location
In order to achieve success in the development of a city hotel in Haramaaya, it is crucial to
take into account factors such as centrality and convenience. So the location appears as
one of its most important components.
For this analysis will be used the ELECTRE Method, which allows to compare and
relate several criteria of the different studied places (alternatives), choosing the best one
for the location of the hotel. This method was developed initially by Bernard Roy in
response to lacks of existing multi attribute decision making techniques, being used
when the decision-maker needs to relate many criteria of different alternatives The 14.1. Macro
Location
The definition of the location should take into account the needs and preferences of the
targeted market segment and therefore the flowing factors should be considered:
Means of transportation: the abundance and diversity of means of transportation
allow the customers to have greater access to the hotel and to move to the main
areas of their interest.

• Plenty of parking, garages, and additional storage area available • Excellent

central location with easy access to major destinations, freeways and other
transportation means • Short commute to major employers in Around Haramaaya
• High flow of pedestrians • A recent new commercial complex opening, just
across the street, that will attract many potential customers to our immediate
vicinity

• Strategically located on one of the busiest streets in downtown • High profile

area with easy access from all parts of town • Proximity to the business
community and the Around Haramaaya weradaIndustrial Park; there are more
than five hundred businesses in the area • Proximity to trendy, upscale
restaurants and recreational facilities • All utilities required for operating a
restaurant are available
All these characteristics of the location are consistent with Meals ,soft drink and
resort service's goal of providing excellent East Harargee . -style Eigt and more
types of food and bed room and prepare food and roomy services for the Around
Haramaaya weradacommunity.

As the Hotel project gains community recognition, and our Around Haramaaya
weradamarket is developed, further expansion to one or both of the neighboring
shopping malls will be considered as a possible second stage capital investment
option.

12.Management summary

Our management is expected to use resources wisely, operate profitably, pay

debts, and abide by laws and regulations. Our management philosophy is based
on team work, responsibility, and mutual respect. People who work at Maruf
sheek abdulkarim hotel service. would want to be part of our team because we
operate in an environment that encourages creativity, diversity, growth, and
performance.

Maruf sheek abdukarim will be the manager of Maruf sheek abdulkarim hotel
service., assisted by wife, . Both of them have successfully owned and operated a
similar business , they have more than seven years relevant experience in the
industry, and hold various degrees and certificates in management.

12.1 COSTS OF HUMAN FORCE

Num Name Experience and 1 years
ability for job Peyroll
months
1 manajers 9000 108,000
2 Maintenanace 1500 4500
3 Kitchen(2) 6000 18000
4 Receptionists 1500 4500
135,000
Cash flow Personal plan of five years

Num Personal plan Years 1 Years 2 Years 3 Years 4

st nd 3 rd th years5th
1 kitchen(3) 54,000 54,000 54,000 54,000 54,000
2 Maintenanace 18000 18000 18000 18000 18000
3 Receptionists 18000 18000 18000 18000 18000
4 managers 108,000 108,000 108,000 108,000 108,000
Total 198,000 198,000 198,000 198,000 198,000
12.2 Financial plan
a total capital investment of 5,691,000

According to our conservative estimates, Maruf sheek abdulkarim hotel service. is

expected to maintain a healthy financial position over the next five years . The
following plan outlines the financial development of our Project. The business will
be initially financed by a 5millfive-year term loan from society and a total capital
investment of 5,481,0003.10 Financials

According to our conservative estimates, Maruf sheek abdulkarim hotel service. is

expected to maintain a healthy financial position over the next five years . Our
Hotel project is expected to break even in the third month of operations.

We also expect to be profitable in the first year of operations, with profits

increasing over the next one years, as we establish and increase our customer
base.

Our main concern will be to have sufficient cash on hand to meet our payment
obligations and be prepared for unexpected needs of cash. Our conservative
projections indicate that our business is able to generate positive cash flows and
sufficient cash reserves.

The ratio analysis clearly shows that Maruf sheek abdulkarim hotel service.'s
financial position is expected to remain strong, as measured by its liquidity, long-
term solvency, and cash flow adequacy ratios.
The Project's profitability, as measured by its profitability ratios, is
excellent, and will gradually increase over the next five years . This
performance will probably be rewarded by a higher market price when
the Hotel project decides to go public

19. Economic and Financial Analysis of the investment

In order to analyse the investment project, it is essential to prepare some information
about the investment and the hotel exploitation, supported by some auxiliary maps. In
addition, we can analyse another essential maps: Cash Flow Map; Financial Plan;
Income Statement; Balance Sheet, which are crucial in order to obtain the necessary
information to evaluate the project and to make a decision.
The entire analysis was made taking into account the following general assumptions:
Time Horizon of Analysis: According to the Project Planning and
Implementation Analysis, the proposed Hot

13. Projected profit and loss statement

 14. Projected cashflow
Cost and years1 st years2 nd years3 rd years4 th years5 rd
income
Cash on hand 5.69mil =
l
Income sale 1,520,000 1,620,000 1,720,000 1806000 1906000

Parking income 41,250 42000 43000 44500 45000

Income of rent 120,000 131,200 140,000 148,000 160,000
Total income
Costs raw 1,332,600 295700 355400 415100 474800
aterials
Construction 2.5mil 500,000 25000 25000
costs
Facility costs 9800 15,800 19,000 25,000 25,000
Cost of 715,00
investment 0
Cost of personel 198,000 198,000 198,000 198,000 198,000
Indirect cost 42000 42000 42000 42000 42000
Start up cost 427300
0
Total costs 5.69
mill

15. income Inrecord sheet

nu Income of three Measur Unit All unit Income
m month e price total
1 normal meat “ 200 3000 600000
2 special meat “ 400 500 200,000
3 Fish meat kg 100 1800 180000
4 Local foods “ 80 1800 144000
5 Vegetable “ 80 1800 144000
foods
6 Eggs “ 100 1800 180000
7 Juice “ 40 1800 72000
 Income of Sale 1,520,000
food

16. Projected balance sheet Projected profit and loss

Cost and income One years

Income of sale 224640000

Construction costs 2.5mill

Cost of personel 126000*2
Other Cost 140,400,000
(production cost) 1.424,900
Benefits 81,488,000
Bank interest
Net profits 80,063,100
 Break even analysisi
Costs six month costs of utilities costs fixed costs income of sale 1.5mill costs
975000

Break even analysisi

Break even analysisi
¿

¿(585960 x 100)/975,000 =
Unemployment
The unemployment rate in Ethiopia increased steadily between 2008 and 2013, reaching
a rate of 16.2% in 2013 which was due, initially, to the financial crisis
irrupted at the end of 2010 and later, to the sovereign debt crises that forced the
intervention, in Ethiopia of the IMF
11. Evaluation of the Project
19.8.1. Discount Rate
In order to analyse the economic viability of the investment project it is
necessary to
discount all the Cash Flows to the same moment, applying a constant
discount rate in all
years.
The discount rate applied in the evaluation of the project was obtained
through the
Capital Asset Pricing Model (CAPM), which aggregates the time value of
money and
the risk for the investors. The risk premium of the project in terms of its
economic risk
is given by its unlevered beta,

19.9. Key Performance Indicators

The Hotels’ performance indicators are important to evaluate the success of the
company during a period of time. These indicators are divided according to the
following categories: economic and financial indicators; liquidity indicators and
operational indicators Evaluation Indicators (Equity Return Rate)
The business project was evaluated for a period of 20 years, according to the
following
The investment project presents a positive Net Present Value (NPV), showing
that it
allows the recovery of the investment. At the same time, it remunerates the
invested
capital and generates a surplus. Thus, based on this indicator the decision is
to accept
the project.
Furthermore, the Internal Rate of Return (IRR) of the project is higher than
the
considered discount rate (9.28% vs 8.25%), being the project economically
viable. The
Payback Period of the project is 16 years.
Weighted Average Cost of Capital (WACC)
In order to compute the WACC (4), firstly, it is necessary to find the return
on equity
rate (Re), taking into account the leverage risk of the project. The rate was
obtained
through the Capital Asset Pricing Model (CAPM) (2), aggregating the time
value of
money and the risk for the investors. The risk premium of the project in terms
of its
economic risk is given by its levered beta, since the investment is not entirely
financed
by equity. Thus, in order to calculate the levered beta (3) was used the
following
expression, assuming there is no risk associated to the debt:
βl = _βu_[1 + _1 − t !
Regarding to the Return on Debt (Rd) of the financing it was estimate an
interest rate of
Economic Indicators
Analyzing the operational efficiency of the Hotel, it shows that the revenues
are
sufficient to meet the operational expenses as well as its percentage value is
increasing
over time due to the growth on the occupation rate and on the bed and
breakfast prices.
When it comes to the attractiveness of the business, the EBITDA Margin is
between
44% and 63%. Regarding the Profit Margin, it is negative in the first five
years of
exploitation, since the sales revenues are not enough to meet all
the expenses of the Hotel. However, it can be observed that the sales
revenues are
positively contributing for a favorable profit evolution, since the Profit
Margin is
increasing over time.
19.9.2. Economic-Financial Indicators
Regarding the Return on Investment (ROI), it is negative in the first five
years of
exploitation, increasing over the years and achieving the 19% in the last year
of
evaluation. The Return on Assets (ROA) and the Return on Equity present a
negative
value in 2010, also increasing in the remaining years, presenting 24% and
26%,
respectively, in the last year.
Moreover, the Asset Turnover of the investment is always positive and
increases in all
the analyzed years, achieving 48% in the last years.
19.9.3. Financial Indicators
The Equity Ratio is used to analyze the overall financial strength of a Project,
showing the proportion of equity used to finance the Project’s assets. Thus,
the greater
its value, greater is the financial strength of the Hotel. This ratio increases
over the
years, showing the financial robustness of the project.
Regarding to the Project's Debt-to-Equity Ratio, it can be observed that it
decreases
over the analyzed years, according to the reduction of Hotel’s financial
obligations.
19.9.4. Liquidity Indicators
The Current Ratio measures the Project’s ability to pay back its current
liabilities with
its current assets. This ratio is lower than 100% only in the first year of
activity (2017),
being higher than 100% on the remaining years and showing that the Hotel
has capacity
to meet its short-term liabilities with its current assets.
19.9.5. Operational Indicators
Is should be considered some operational indicators in order to closely follow
the
evolution of the business and to compare the Hotel with similar industry and
competitors indicators in order to improve the level of quality and efficiency.
The most
also important to analyze some other operational indicators:
Sensitivity Analysis
In order to assess the robustness of the economic and financial viability of the
project it
is important to analyse the sensitivity of the project to changes in the most
relevant
variables. The chosen variables were the bed and breakfast price and the
hotel’s rate of
occupation, since they are the indicators with more impact to the results of
any hotel
and are variables highly influenced by the external environment. In addition,
mostly of
the operational cost varies according to an increase or decrease on the
occupation,
allowing to study this effect too. For the five first years it will be considered
the same
occupation and price values, since there are strongly supported by every
available
market analysis of the industry.
Regarding occupation, it was expected an increase of 1.5% a year on the
number of
occupied rooms between 2022 and 2036, resulting on an average occupation
rate of
78%. The table below presents the IRR and the NPV, using the WACC as
discount rate,
for reduced occupation rates:
17. Risks
Hotel project management is responsible for constantly evaluating risks and
taking corrective actions to provide adequate prevention, control and risk
reserves. We have identified several risks that are associated with our business
project.

There are many possible classifications of risks, but for the purposes of This plan,
we have chosen to group them as follows:

a) External Risks (These risks come from outside the Hotel project and are more
difficult to prevent and control.)

• Economic depression. Current trends indicate that the economic downturn is

reaching the bottom, and chances are that the process will begin soon. However,
it is likely to be a slow process, and it will probably take several years until
complete full growth are achieved. We assess the risk of a major depression to be
low. • Competition and buying patterns changes. There is a high risk that new
competitors will arrive in the relevant marketplace. Our continuous improvement
management strategy and cost control techniques will help us to stay on top of
customer preference. The Eigt and more types of food and bed room customer
buying patterns are not likely to significantly change over the next five years . In
addition, the population growth predicted in the area will increase the chances to
maintain and boost sales. • Suppliers. Our Project's purchases do not depend on a
single or a limited group of suppliers. There is a large supply of materials and
ingredients for Eigt and more types of food and bed room preparation, and other
specific products in the Around Haramaaya werada area. The risk to face supply
constrictions is low. • Technology. New and more efficient food preparation
equipment is expected to become available. However, by deciding to purchase
only state-of-the-art, energy-efficient equipment, we believe to have reduced This
risk over the next five years .

• Location. The chosen location will be leased for minimum five years , with the
possibility to extend the lease over another similar period. There are no other
construction developments foreseen in This highly dense population area of
Around Haramaaya werada that might affect our business location in the near
future.
• Inflation. According to expert estimates, the inflation rate is likely to remain
under control over the next five years . We have accounted for a 5 percent annual
inflation rate.

• Currency. All our operations are in Ethiopia birr, and both equipment and
materials are manufactured in the United States. No currency risk has been
accounted for.

• OROMIYAA taxation and economic policy changes. These changes are likely to
occur, and it is not clear how they might influence our financial performance. That
is another reason why our estimates are conservative. This risk is high.

b) Internal Risks (These risks come from inside the Hotel project and can be better
prevented or controlled.) • personality. There are many skilled food-service
employees in the Around Haramaaya werada area. We will be able to select the
best new staff members from a large number of valuable applicants. Our
personal planstrategy includes modern management techniques that will be
applied to select, hire, motivate, and reward the employees.

This strategy is expected to build and maintain employee loyalty, and increase
productivity. However, before hiring new employees, their background check will
be reviewed, to avoid possible employee theft, which is a frequent risk in the
restaurant industry.

• Cash flow deficiency. Our main concern will be to have sufficient cash on hand
to meet our payment obligations, and be prepared for unexpected needs of cash.
Our conservative projections indicate that our business is able to generate
positive cash flows and sufficient cash reserves to reduce the risk of cash flow

deficiency.

• Business continuity over the next five years . In the event something happens to
one of the Project's managers and co-owners (husband and wife), the other will
have the skills and experience required to take over and continue operations. In
addition, the Project's incorporation legal documents include special pro Visions
for protection in such cases.
• Management. Maruf sheek abdukarim and His wifehave proven experience in
successfully running a similar business inDD. They also have relevant skills and a
solid background in the food industry.

7.7.2 Entry Strategy

Maruf sheek abdulkarim hotel service. plans to issue 1 hasband and wife of 10 per
share common stock. The issued and outstanding par value common stock will be
5,960,000.

will exercise significant influence over the Project's policies.

The other co-owners, Maruf sheek abdukarim and His wife, will not take
dividends over the next five years . The reasons for This decision are: a) They will
receive all 100 %employment compensation and benefits, and b) the
undistributed dividends will increase the amount of retained earnings, as a
strategy to strengthen the Project's financial position for sustainable future
growth, to increase the Project's net worth, and subsequently the market value

when it goes public.

Key measures of the expected benefitsfrom the investment include:

Payback period (the minimum time to recover the initial investment) for the
investor's initial capital contribution of 2,566,000is very short, only one year five
months, computed as follows:

Initial Cash Investment

3000,000 Less initial investment Because the net present value is positive, the
investment would achieve at least the minimum rate of return of 16 percent, and
is expected to yield significant additional returns to the investor.

Internal rate of return (IRR) of 87 percent is computed as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Initial Investment (29,500) Returns17,892.

27,091. 37,213. 48,613. 56,809

Discount rate 16% IRR = 87%

The level of 87 percent measures the estimated performance of the capital
investment, and because it is higher than 16 percent minimum desirable return, it
might be considered as adequate to the investment risk.

Return on equity is one of the most important ratios because it is a common

measure of management performance. It exceeds 40 percent on average over the
five year period.

Dividends per share, computed as follows:

Common Stock Dividends / Common Hasband and wifeOutstanding

7.7.4 Exit Strategy

We recognize that any investor in a start-up Project, no matter how well on

paper, ultimately needs an exit vehicle. Our purpose is to provide the best
alternatives to protect investor's interest, while maintaining the potential growth
of our Project, the liquidity, and the profitability of future operations.

Typically, the fear of investors is that they will become locked into a Hotel project
that might show no sign of either going public or going bankrupt. To overcome
This potential threat, we are open to discuss with the investor several exit
alternatives, and include the best pro Visions in the agreements that are expected
be reached by the time of the incorporation.

There are several options that could be discussed while considering alternative
methods for the investor to turn illiquid securities into readily tradable securities
or cash. These options include, but are not limited to:

• IPO (Initial Public Offering) • Acquisition terms • Liquidation terms, certain

rights and liquidation preferences over common stock • Selling to a friendly buyer
• Preferred stock, redeemable at option of the holder • Convertible preferred
stock • Investor's right of first refusal in the next round of financing • Anti-dilution
measures • Buy-back after the initial five years

In addition, we believe that following negotiating terms are expected to increase

investor confidence, and improve management-investor communication:
• A board position and possible a consulting role of the investor • Good
communication between Project's management and the investor (For example:
quarterly reports, monthly updates, etc.) • Setting clear return Objectives for the
management (projected IRR, potential returns, sales projections, etc.) • Not
taking certain actions without investor's approval, such as: selling of the Project's
assets, or creating classes of stock with liquidation preferences or other rights
senior to the investor's class of security. • Stock price protection,
Conclusions
Tourism is one of the largest industries in the world, having a huge significance in the
development of different countries worldwide. In Ethiopia, this industry has a great
strategic importance due to its capacity for wealth-generation and job-creation,
presenting clear competitive advantages. This way, the government and tourism
stakeholders has been investing on its innovation and sustainable development.
The tourism in Haramaaya is currently experiencing a boom period, being one

References
Autoridade Tributária e Aduaneira, 2015. Portal das Finanças. [Online]
Master in Science of Business Administration