PROJECT PROPOSAL FOR HOTEL

LOCATED IN WEST HARARGHE ZONE, CHIRO CITY

Project Owner: ELEMO ALI & HIS FAMILIES

JUNE 2024

Promoter:- Elemo Ali

 2024

EXECUTIVE SUMMERY ----------------------------------------------------------------------------------------- 1

INTRODUCTION --------------------------------------------------------------------------------------------------- 2

BRIEF DESCRIPTION THE PROJECT ----------------------------------------------------------------------- 3

MARKET STUDY-------------------------------------------------------------------------------------------------- 14

CAPACITY AND SERVICE PROGRAMME ---------------------------------------------------------------- 24

TECNOLOGY------------------------------------------------------------------------------------------------------- 25

ORGANIZATON AND MAN POWER ----------------------------------------------------------------------- 27

FINANCIAL STUDY ---------------------------------------------------------------------------------------------- 29

FINANCIAL EVALUATION ------------------------------------------------------------------------------------ 39

PROJECT IMPLMENTATIO SCHEDULE ------------------------------------------------------------------ 42

ENVIRONMENT IMPACT ASSESSMENT ----------------------------------------------- 43

CONCLUSION AND RECOMMEDATION ------------------------------------------------------------------ 43

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1. EXECUTIVE SUMMARY

1 Project Name Hotel and Restaurant

2 Project Owner Elemo Ali
3 Nationality Ethiopian
4 Project Location West Hararge Zone, Chiro City.

5 Product capacity Diversified type of services provided by project is Hotel,

recreation Centre, shopping center,
6 Land Requirement 5,000m2
7Construction period 2 years
8Total initial capital The total investment capital of the project is estimated at birr 73,571,629
of which:- Birr 47,797,310 (65%) is for fixed investment cost Birr
25,774,318 (35%) will be assign for working capital, • Source of finance:
The total investment capital of the project is to be financed from the
promoter’s equity and bank loan. Birr 22,071,488(30%) is contributed by the
promoter (Elemo Ali and his family) Birr 51,500,140 (70%) is to be financed
by local banks

9Employment creation Man power requirement: 300 employees will be benefited within
this project, out of which 125 permanent (100 skilled & 25
unskilled 8th grade) and 175 casual workers during construction
phase
1Production programme Start operation at 75% of its installed capacity, which will grow to
85% in the 2nd year. Full capacity production will attain in 3rd
year.
1Project Action plane Land acquisition and civil construction… 1st 6 month,
Mobilization… second 6 month & 2nd year, production at full
capacity…3rd year
1Benefits of the project Supply of quality services, source of revenue, employment
for the region/country opportunity, save/generate the country foreign exchange from
tourist, benefit for the local community, stimulate the local
economy and technology transfer

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

2. INTRODUCTION

Ethiopia in one of least developed countries in the world. The economic policy
of the previous government has changed the structure of trade and industry
resulting in the decline of production and commerce. The liberalization policies
of the present political system, however, are widely believed to bring about
growth in economic development. If not best, the situation is now better on
matters related to hotel and tourist, conservation and manufacturing industry.
In fact, until now land cannot be hold privately but can acquire through a lease
system.

The existing system encourages private investments and as the result,

economic growth has been apparent in industrial, agricultural and is other
sectors of the economy. This on its turn has demanded for the establishment
of hotel and tourism industries that provides different types of hotel services
and other related. Taking note of this scenario the objectives of the study is to
look into the possibilities and situations under which the promoters would get
into the business of Hotel and tourism industry including Fueling Station
business.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

3. BRIEF DESCRIPTION THE PROJECT

3.1Beneficiaries of the project

The project is intended to achieve multiple benefits to multi-stakeholders.

Primarily the project will benefit the promoter, employees, their families and
the government from revenues that will be obtained from the proceeds.
However, the project further benefits the community at large by being a point
of reference for new technology, management information and experience.

1.1 MISSION STATEMENT

Based on, the present conductive investment policy of the country the
promoter of the project seeks to contribute to the economic development of
the nation, encourage and support the Motel and Tourism sector and the
individual and users to attain their business objectives and satisfy their needs
respectively by providing efficient and states of the art Motel service.

1.2 OBJECTIVE OF THE PROJECT PROPOSAL

This Hotel to be one of the best hotel and other service render in the area in
terms of market share and long term profitability, it should strive for one of
its objective that is maximizing its revenue by promoting the modern &
efficient hotel determined by diversifying its activates and it will be timelier to
introduce a business reform which the requires.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

Therefore, the main objective of this project proposal is to assess the

commercial viability of construction mixed use building mainly for hotel
services in Oromia region West Hararge Zone Chiro City.
Hence, based on the above facts and experience as well as to effectively
Utilize the available finance and human resources at hand, the following
fundamental objectives were established:-
 To carry out and undertake the hotel service business.
 To construct multipurpose building and furnishing of the Hotel.
 Availing modern & efficient hotel and related service.

 Provide efficient and effective services and satisfying the

customer at large.
 To create employment opportunities services and contribute to
the national economy.
 To promote the transfer of the technical knowhow in the
individual to improve their capabilities to earn additional income.
/establishing, maintaining and enhancing the long term customer
relationship.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1.3 PROJECT PROPOSAL RATIONAL

1. Strategic Location
Chiro City is strategically positioned along the main trade routes that
connect the Oromia Region with other parts of Ethiopia. Its accessibility via
major roads enhances its connectivity and makes it a convenient stopover
for travelers and traders. This strategic location is pivotal in attracting a
steady flow of guests, including business travelers, tourists, and transport
operators.
2. Economic Growth and Development
The West Hararghe Zone, including Chiro City, has been experiencing
notable economic growth driven by agricultural activities, trade, and small-
scale industries. The region is known for its production of coffee, khat, and
other cash crops, which contribute to its economic vibrancy. This economic
growth has spurred the need for improved infrastructure and services,
including quality accommodation facilities.
3. Cultural and Historical Significance
Chiro City and its surroundings boast a rich cultural and historical heritage.
The presence of traditional Oromo culture, historical sites, and local
festivals attract tourists and researchers. A well-established hotel can cater
to these cultural tourists, offering them comfortable accommodation and an
authentic experience of the local culture.
4. Increasing Demand for Hospitality Services
With the ongoing development in the region, there is a rising demand for
hospitality services. Currently, Chiro City has limited high-standard
accommodation options, creating a significant market gap. Investing in a
modern hotel with amenities such as conference rooms, restaurants, and
recreational facilities will meet the growing needs of business travelers,
tourists, and local visitors.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

5. Government Support and Incentives

The Ethiopian government and regional authorities are keen on promoting
tourism and hospitality investments. They offer various incentives, including
tax breaks, simplified licensing procedures, and infrastructure development
support. Investing in Chiro City aligns with government priorities and can
benefit from these supportive measures.
6. Competitive Advantage
A new hotel in Chiro City can gain a competitive edge by offering superior
services and facilities that are currently lacking in the area. By incorporating
modern amenities, professional service, and marketing strategies that
highlight the unique attractions of Chiro City, the hotel can establish itself
as a preferred choice for visitors.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1.4 TOURISM SECTOR IN ETHIOPIA

Domestically the sector has created 783,638 jobs over the last four years of
the GTP period achieving more than 90% of the plan as the ministry of
culture and tourism underlined the massive expansion of standard hotels
cafeterias restaurant souvenir gift shops; recreation centers ,socioeconomic
service at tourist attraction sites had catalyzed for the creation of job
opportunities coupled with the skill upgrade training provided to 1.5 million
people working in the tourism sector and in 110 professions of truism
sector.

This is merely the beginning a transformational expansion of the sector is

expected the prospect of Ethiopian tourism is brighter and promising as
several national and international institutions attested though it’s still very
low profile to most of the world, Ethiopia is on its way toward becoming a
major travel destination though it has been hidden behind avail for decades
and is virtually unknown to the world Ethiopia Has major attractions for
travelers.

Ethiopia s, government has begun to make good strategic moves towards

bringing its attractions to the attention of the world. The whole process will
take years, but the country may get some attraction this year’
Generally there was lack of marketing and promotional strategy as well as
low awareness of tourism by local communities. In addition, the limited
share of tourism earnings reaching the local community is affecting the
sustainability of the sector and is having a negative impact on the
contribution of tourism towards poverty alleviation.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

According to the Nations world Tourism Organization (UNWTO) data,

Ethiopia registered and average annual growth in international tourist
arrivals of 5.6 percent for the period 1990-2000, and 15.4 percent during
the period 2000-2005. The sector further expanded in the half of the last
decade with the implementation of the PASDEP (The plan for Accelerated
and Sustained Development to end Poverty), from 2005 to 2010, and the
consecutive double-digit growth.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

In light of all these, the government planned to make Ethiopia one of the
top ten tourist destinations in Africa by the year 2020 within an emphasis
on maximizing the poverty reducing impacts of tourism and change the
international image and positioning of the country.
The sector should be planned in a comprehensive way to faster the
contribution of tourism on the general economic development of the
country. The Tourism Commission was upgraded to the Ministry of /culture
and/ tourism (MoCT) in 2005. MoCT has, at the same time, the
responsibility for cultural issues, which were taken care of by the ministry of
Youth and sports previously.

Two new entities, the Tourism Transaction Council and Ethiopian Tourism
Organization, have been launched with the objective of transforming the
industry and based on the necessity to coordinate the activities of various
stakeholders in the industry. In particular, the Tourism Transformation
council established with the mandate to raise the standards of the industry
to higher level.

The Council is drawn from members of various institutions as well as

prominent personalities. In addition, tourist infrastructures in various
national parks are being upgraded and renovation work on roads linking the
parks with major

Recent data show that the sector’s progress under the GTP. In 2012 GC,
52.3 million tourists visited Africa, out of which only 596.341 reached
Ethiopia. In the first half of the last Ethiopian budget year, 2013-2014, the
ministry of culture and Tourism reported that the number of tourists
showed an increase of 36% over the same period of the previous year.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1.5 PROFILE OF PROMOTER

The promoter of the project is Elemo Ali. The promoter has finance and

Marketing capacity and necessary experience for the business.

The promoter has an initial vision, readiness and deep assessment of
the situation to implement the project, the purposes of this business
plan is to obtain required land and investment certificate for the
realization of the project objective.
1.6 Premises required
For the proposed Hotel setup, a total of 4500 m2 lands is required. This
land includes space for Hotel building, multipurpose field and Fueling
Station faculties including parking and green area.
Table 1:- project Land requirement

Project location and its profile

Chiro, also known as Asebe Teferi, is a city in the West Hararghe Zone of the Oromia
Region in Ethiopia, located about 326 kilometers east of Addis Ababa at an elevation of
1826 meters. It serves as the administrative center for the zone and has an economy
primarily based on agriculture, including crops like sorghum, maize, and coffee. The
city features basic infrastructure, schools, and healthcare facilities, and is culturally
rich with a predominantly Oromo population. Challenges such as poverty and limited
access to clean water persist, but ongoing efforts aim to improve living conditions.
Chiro's natural landscapes and cultural heritage offer potential for eco-tourism and
cultural exploration.

The main justifications behind the selection of this location are fluffiness of
infrastructure. Also there is availability of enough labor force, Conductive investment
policy and governance. The proposal presented for this project requires the
consideration not only of technical commercial and finance factors only but also of
social & environmental following factors must be considered infrastructure service
existing industrial infrastructure economic and social infrastructure& intuitional frame
work urbanization Ecological and environmental impact of the project.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1.7 Justification why these business plan is proposed

Using the favorable and conductive investment policy of the number and
capital of investment projects have grown steadily for the last three years
investments on manufacturing electricity and water supply real estate
agriculture construction and restaurants appeared to dominate in terms of
approved investment comitial. Such a rapid expansion and growth of the
investment especially manufacturing real estate construction and hotel and
restaurants show the need of the market to enter in the business

Socio economic indicators: - Ethiopia is a country which a high population

number with a high growth rate and will result the following with respect to our
business.

 Abundance of skilled and unskilled labor supply

 Additional demand creation mainly through the urbanization process

The additional demand created though urbanization process mainly creates

high demand for Hotel services. Resultant entrances to the hotel business in
turn call for the competition of investors to deliver high Quality and well
differentiated Motel services the company is committed to enter in to
business by differentiating Hotel services the company is committed to enter in
to the business by differencing the Motel s standard through quality packages.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

1.1 MARKETING STRATEGES

Our basic marketing strategy is to work with customers on a one-to-one basis

to ensure their supply needs are being met and help develop unique marketing
programs for each of them. We intend to prioritize customer service and make
it key component of our marketing programs. We believe that providing our
customers with what they want, when and how they want it, is the key to
repeat business and positive word-of-mouth advertising. Because we want to
develop close working relationships with our customers, we want to establish
accounts in as personable a way as possible. It is for this reason that we will
overwhelmingly emphasize in-person sales calls to build accounts. To support
our marketing initiatives and product knowledge, we will attend as many area
conventions and trade shows as possible to ensure we are offering the most
up-to-date market trend information; we will continuously develop associations
with the world travel, business and tourist organizations and expect these
alliances to further enhance our reputation as a quality destination.

Our main strategy is to position ourselves at the top of the quality scale,
featuring our combination of superb technology and fine old-fashioned
woodworking, for the buyer who wants the best quality regardless of price.

It is for this reason that we will overwhelmingly emphasize in-Person sales

calls to build accounts. To support our marketing initiatives and product
knowledge, we will attend as many area conventions and trade shows as
possible to ensure we are offering the most up-to date market trend
information.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

A. MARKET SEGMENTATION

The market segmentation for the hotel is tourists travel to the area, and travel
to the east part of the country in which there were a number of tourist
attraction places and others pass through the town and stay there for
business or other purposes who can afford the price, and conferences and
meetings held there by zone Administration.

As indicated in the supply and demand analysis, the service rendering

companies in the town are small comparing to the population and the ever
rising demand for the service. Besides these, the envisage project has its
market strategy to differentiate its service from the competitors. The
strategies categorized the customer as follows.

Prospects (those who call or email to express interest), will, when

appropriate, be offered smaller rooms at the lower end of the price spectrum
so that they feel lesser commitment when they come to stay. Customers
(those who have visited the hotel once) will be offered package deals for
multiple night stays, such as one night free after a three night stay.

Promoter:- ELEMO ALI & HIS FAMLIES

 2024

Premium customers (those who have stayed at the hotel more than once) will
be offered access to the penthouse suite, an option that cannot be purchased
by those who have only stayed at the hotel once.

Champions (those who have stayed at the hotel more than twice) well be
invited for a free weekend if they take part in a focus group session to discuss
the hotel.

Beyond the room offerings, a wide range of additional services and amenities
will be offered, some with extra charge and some free with room rental. These
include:

 In room dining
 Complementary gourmet continental breakfast and coffee
 Valet parking
 Wireless internet (free throughout the hotel)
 Restaurant and lounge

All of these services and amenities are available to all visitors at the hotel.

Promoter:- ELEMO ALI & HIS FAMLIES

 Project Proposal for Hotel and Restaurant Service 2024

2. ORGANIZATION AND MANAGEMENT

2.1 MANPOWER REQUIREMENT
The organizational structure of the business was designed based on
the functions of the overall business towards the achievements of the
setting objectives and selecting the best way of managing the
organizations resources (human resource, capital, information and
technology) effectively and efficiently. In addition to the above
mentioned bases of the organization structure design, the intentions of
the business and the external economic situations of the area taken in
to account. By considering all of the above, the skeleton of the
organizational structure is shown in Fig 8 below.

Fig 7.1:- Organizational Structure

General Manager

Secretory

Operation and Customer service head Finance and Administration

Promoter:- Elemo Ali

2.2 THE MANAGEMENT TEAM

The management teams of the Hotel are the General Manager,

Operation and Customer Service Head and Finance & Administration
Head. The General Manager has the responsibility of managing the
overall function of the Hotel and also the head of the team.

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

3.Raw Material cost

The annual cost and list of raw materials are indicated in Table 5.1.

Table 5.1 Annual requirements of raw and auxiliary materials

Raw materials Qua co per year
ntity per st per
month month
Food materials raw costs lamp sum 500,000.0 6,000,000.00
0
d/t type Beverage raw lamp sum 500,000.0 6,000,000.00
costs 0
massage, sauna bath and lamp sum 15,000.00
other related cost 180,000.00
Cleaning materials and lamp sum 15,000.00
other miscellaneous uses 180,000.00
Total 12,360,000.00

Utilities

Annual requirement of electricity, water and fuel is estimated at 2,367,000 birr from which, 500,000
kwh, 300,000 m3 and 2000 liters, are electricity, water and fuel respectively. The total costs of
utilities are, therefore, about Birr 2,367,000 per annum.
Table 5.2 utilities
Description Qty. Cost per year
unit cost
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 2000 16 32000
Diesel, lt 20000 18 360000
Total 2367000

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Machinery and equipment
Machinery and equipment required for jute bags manufacturing plant are given in Table

Table 5.3 list of machinery and equipment

Furniture and equipment's required for Suit bed rooms (10 )

S/n Description Quantity Unit price Total (birr)

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

Furniture and equipment's required for double bedrooms (20)

S/n Description Quantity Unit price Total (birr)

1 Sofa single 40 2,500 100,000
3 TV 21” 20 8,000 160,000
4 Telephone stand 20 500 10,000
5 Telephone apparatus 20 750 15,000
6 Refrigerators 20 4,000 80,000
7 Standing lump 20 1,000 20,000
8 Coffee table 20 1,500 30,000
9 French Bed (120 x 180cm) 40 12,000 480,000
10 Cupboard built in 20 5,000 100,000
11 Head lump 20 1,000 20,000
12 Writing table with chair 20 2,500 50,000
13 Chest drawer 20 1,500 30,000
14 Spring mattress 40 5,000 200,000
Bed made wood 80 20,000 1,600,000
15 Bed sheets 80 500 40,000
16 Bed cover 80 800 64,000
18 Pillow 80 250 20,000
Total 3,019,000

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Furniture and equipment's required for single bedrooms

S/n Description Quantity Unit price Total (birr)

1 Sofa single 100 2,500 250,000
2 TV stand 50 2,000 100,000
3 TV 21” 50 5,000 250,000
4 Telephone stand 50 500 25,000
5 Telephone apparatus 50 750 37,500
6 Refrigerators 50 4,000 200,000
7 Standing lump 50 1,000 50,000
8 Coffee table 50 1,500 75,000
9 French Bed (150 x 180cm) 50 20,000 1,000,000
10 Cupboard built in 50 5,000 250,000
11 Head lump 50 1,000 50,000
12 Writing table with chair 50 2,500 125,000
13 Chest drawer 50 1,500 75,000
14 Spring mattress 50 3,000 150,000
15 Bed sheets 100 250 25,000
16 Bed cover 100 500 50,000
17 Blanket 100 1,000 100,000
18 Pillow 100 100 10,000
Total - - 2,822,500

Furniture and equipment's required for office, reception, leisure and others

S/n Description Quantity Unit price Total (birr)

1 Executive double redistill desk 2 20,000 40,000
2 Executive swivel arm chair 2 5,000 10,000
3 Double pedestal desk 5 4,000 20,000
4 Servile admin chair 5 3,500 17,500
5 Secretarial desk 2 3,500 7,000
6 Guest chairs 8 600 4,800
7 Safe box 4 4,000 16,000
8 Shelf 4 3,000 12,000
9 Reception desk 2 40,000 80,000
10 Sofa box 2 15,000 30,000
11 Cash register with stand 2 7,500 15,000
12 Telephone apparatus box 2 20,000 40,000
13 Telephone apparatus 10 300 3,000
Promoter:- Elemo Ali
 Project Proposal for Hotel and Restaurant Service 2024
14 Fax machine with stand 2 30,000 60,000
15 Pc with printer and stand 10 15,000 150,000
16 Single sofa high based 4 5,000 20,000
17 Coffee tables 4 2,000 8,000
18 Standing lump 6 2,000 12,000
19 Recreation facilities Ls - 150,000
21 Emergency power generator 2 300,000 600,000
Total - - 1,295,300

Furniture and equipment's required for bar and cafe

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

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Furniture and equipment's required for dinning/restaurant room
S/n Description Quantity Unit price Total (birr)
1 Tables 50 2,500 125,000
2 Chairs 200 750 150,000
3 Long drawer (Balcony) 2 30,000 60,000
5 TV stand 2 2,000 4,000
6 TV set 27” 2 7,500 15,000
7 Stools (high chairs) 2 1,500 3,000
8 Refrigerator big for beer 2 20,000 40,000
9 Refrigerator medium for soft drank 2 12,500 25,000
10 Coffee roaster 2 7,500 15,000
11 Ice maker 2 5,000 10,000
12 Draft beer machine 1 15,000 15,000
13 water glass 200 12 2,400
14 draft glass 200 60 12,000
15 service tree 50 30 1,500
16 30-34 sauce pot 10 20 200
17 Sauce-medium 40 30 1,200
18 Soup pot 40 50 2,000
19 Medium 4 45 180
20 Large – round hot pot 10 80 800
21 Medium – round hot pot 10 57 570
22 Small – round hot pot 10 30 300
23 High rim flat 10 70 700
24 Flat rim round 12 50 600
25 Normal alloy 20 45 900
26 Non stick normal 20 20 400
Total 485,750
Furniture and equipment's required for Conference rooms
S/n Description Quantity Unit price Total (birr)
1 Tables 100 2,500 250,000
2 Chairs 1000 750 750,000
3 Buffet stand 5 20,000 100,000
4 Speaker (big) 5 5,000 25,000
5 Amplifier 3 20,000 60,000
6 Wireless microphone 5 750 3,750
7 Table microphone 20 350 7,000
8 LCD projector 5 30,000 150,000
9 Slid board 5 5,000 25,000
10 Satellite dish with receiver 5 2,500 12,500
11 TV stand 5 2,000 10,000
12 TV set 27” 5 15,000 75,000
Total - - 1,468,250

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Kitchen Materials
S/n Description Quantity Unit price Total (birr)
1 Stove 5 45,000.00 225,000.00
2 Toaster 5 15,000.00 75,000.00
3 Oven 5 40,000.00 200,000.00
4 Aluminum tables 8 4,000.00 32,000.00
5 Grill (electrical) 5 15,000.00 75,000.00
6 Washer sink 5 5,000.00 25,000.00
7 Refrigerator 5 20,000.00 100,000.00
8 Clip fryer 5 5,000.00 25,000.00
9 Pastries formwork 5 5,000.00 25,000.00
10 Petra 10 2,500.00 25,000.00
11 Cupboard 3 7,500.00 22,500.00
12 Shelf 3 5,000.00 15,000.00
13 Grill bench top 5 11,887.00 59,435.00
14 Deep friend double 6 4,218.00 25,308.00
15 Micro wave grill 5 3,250.00 16,250.00
16 Mincer meat 5 12,999.60 64,998.00
17 Brad oven 5 47,999.85 239,999.25
18 Pizza claye oven 5 29,841.00 149,205.00
19 mixer 15 KG capacity 5 37,999.45 189,997.25
20 Range commercial 5 38,745.00 193,725.00
21 Range linear 3 14,995.00 44,985.00
22 Fruit blender 3 3,585.00 10,755.00
23 Potato chopper 3 41,999.30 125,997.90
24 Onion peeler /chopper 3 15,780.00 47,340.00
25 Blender small 3 3,185.00 9,555.00
26 Deep refrigerator 6 9,450.00 56,700.00
27 refrigerator 10 9,960.00 99,600.00
28 Digital scale (35k.g) 3 1,800.00 5,400.00

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
29 Waiting scale (220 K.g) 3 4,700.00 14,100.00
30 Kitchen hood 5 29,745.00 148,725.00
31 Kitchen cabin with double Sink 5 31,488.00 157,440.00
32 Kitchen cabin 5 27,488.00 137,440.00
33 Kitchen top -stainless steel 8 8,195.00 65,560.00
34 Kitchen top -stainless steel -large 8 13,195.00 105,560.00
35 Chaffing dish -silver 25 9,499.00 237,475.00
36 Spaghetti plate 50 712.2 35,610.00
37 Dinner plate 50 720 36,000.00
38 Dessert plate 50 720 36,000.00
39 Table fork 10 163.8 1,638.00
40 Table knife 10 136.8 1,368.00
41 Chopper knife 10 62.1 621.00
42 Table spoon 15 163.8 2,457.00
43 Kitchen Pan 10 499 4,990.00
44 Food Box 5 220 1,100.00
45 soup bowl 3 336 1,008.00
46 Cook pot large 10 693.2 6,932.00
47 Cook pot big 38 10 3,054.00 30,540.00
48 Cook pot medium 20 581.4 11,628.00
49 Cook pot small 20 469.6 9,392.00
50 restaurant Table w/ 4 Chair 50 9,246.00 462,300.00
51 cafe table 20 1,455.00 29,100.00
52 Restaurant chair- sheraton Type 100 2,510.00 251,000.00
53 cafe chair 100 964.5 96,450.00
54 Open generator-24 KV 3 389,748.00 1,169,244.00
sub total 5,237,428.40

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
steam and sauna bath
S/N Qty Unit cost Total Cost
Description
1 sauna electric heater 16 12000 192,000
2 sauna bucket 16 6000 96,000
3 sauna ladle 10 400 4,000
4 sauna thermometer 16 300 4,800
5 electric sauna timer 12 270 3,240
6 sauna hygrometer 16 950 15,200
7 steam generator 2 35000 70,000
8 cloth hunger 17 250 4,250
9 foldable rest 24 400 9,600
10 wall mirrer 12 850 10,200
11 soffa guest chair 16 350 5,600
12 wall mirror 12 4000 48,000
13 wall mounted 10 2500 25,000
14 reception table 2 2200 4,400
15 swivel chair 2 1000 2,000
16 satellite dish with color 2 10000 20,000
17 public addressing system 2 6000 12,000
18 wall watch 2 200 400
total 526,690

S/N Aerobics and physical fitness Qty Unit cost Total Cost
1 Public addressing system 3 15,000 45,000
2 Aerobics dumbbell 10 3,500 35,000
3 Stepping rocks(assoried) 120 250 30,000
4 Wall mounted mirror 30 200 6,000
5 Bike Proms 9 5,500 49,500
6 Track tread mills(electrical) 2 22,000 44,000
7 Track tread mills(manual) 6 4,000 24,000
8 heart rate monitors and pedometers 6 2,500 15,000

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
9 body solid endurance up right 2 11,000 22,000
10 muscular dynamics 2 13,000 26,000
11 simplex II series 2 16,000 32,000

12 portable massage tables with tools and

accessories 2 17,000 34,000
13 massage body work tools 6 4,000 24,000
14 massage chairs with tools and accessories 2 11,000 22,000
15 massage store heater 2 1,500 3,000
16 massage table electric warming pad 4 3,000 12,000
17 flece message table pad 12 1,000 12,000
18 massage table and video kit 2 6,000 12,000
19 pillows/body support/back care 16 4,500 72,000
20 cleaner and sanitizers 8 2,500 20,000
21 wall mirror(1.5 -2 ml) 6 400 2,400
22 sofa guest chair(three set) 10 4,500 45,000
23 Wall maound lockers 20 2,500 50,000
24 receptionist table 2 2,200 4,400
25 swivel chair 4 2,000 8,000
26 satellite dish with color 2 10,000 20,000
27 public addressing system 2 6,000 12,000
28 wall watch 2 400 800
Total 682,100

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Garden recreation center
S/N Qty Unit cost Total Cost
Garden recreation center
1 Lawnmower 5 2000 10000
2 wheelbarrow 10 500 5000
3 Metal scraper 10 100 1000
4 Coffee machine 2 10000 20000
5 plastic chair 40 150 6000
6 Oval shaped plastic table 20 800 16000
7 umbrella 20 400 8000
8 juice glass 40 50 2000
9 tea spoon 50 5 250
10 coffee spoon 50 5 250
11 juice stranner 2 150 300
12 water glass 30 20 600
13 coffee cups with saucer 20 100 2000
14 tea cups with saucer 20 60 1200
15 ice-cream box 1 5000 5000
16 water sprinkless 30 40 1200
17 water house nylon rope 4 500 2000
18 Gardner's kits 2 100 200
Total 81,000

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000
For double bed room (20) 3,019,000
Single bed room (50) 2,822,500
2 Furniture and equipment for office and reception area 1,295,300
3 Furniture and equipment for bar and cafeteria 1,232,900
4 Furniture and equipment for restaurant and dining room 485,750
5 Furniture and equipment for conference room 1,468,250
6 Furniture and equipment for kitchen materials 5,237,428
7 Sauna and steam bath materials 526,690
8 Aerobics and physical fitness 682,100
9 Massage service materials 300,000
10 Mini market shop establish costs 200,000
11 Garden and creation area 81,000
Total 17,069,918
Land, Building and civil work
5.7.1. Land lease
The overall land required is about 974 square meters. Land lease cost at the rate of Birr 45 per m2
average and for 99 years land holding is estimated to be Birr 4.3 million. Thus, the total land &
construction cost assuming that the total land lease cost will be paid in advance (5%) amounts to Birr
433,917 government has following significances the remaining amount paid within 40 years per year .
Land use plan of the project
A properly designed building construction starting in last year before and insures smooth functioning
of all operations. The building will have well-ventilated appropriate international Hotel service area the
structure includes separate services and other different activates the detail as follows.

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Table 5.4. Description of Land use plan
No Description Quty Unit Price (Br) Total Price (Br)
1 Main Building G+8 500 5,000 20,000,000
2 Gust room
3 Manager office
4 Mini market shops
5 Bar and restaurant
6 Bed room (80 rooms,20 will be
double rooms, 50 single rooms and
10 suits.)
7 Meeting room
8 Sauna and steam bath
9 Gymnasium physical fitness
10 Store service 250 5,000 1,000,000
11 Parking area 150 1,000,000
12 Generator house 44 500,000
13 Guard house 30 643,475
Total 974.00 - 23,143,475

Environmental impact assessment

The project will seriously involve itself protecting conserving and developing the natural and flora of
the project area in line with the millennium development goal. To this to will play a vital role in
participating the varies organization and the community around the project area to from an
environmental commute in charge of all environmental issues to be handled in accordance to varies
environmental and water policies of 97/99. The owner of the project believes to undertake several
environmental issues for the conservation development and creation of sustainable environmental
around the project area.

Implementation Schedule
The actual implementation of the International 5 star hotel is planned to begin on the May 2018. The
major activities envisaged are processing of land preparation, construction and delivery, installation
and commissioning of the factory line. Undertaking of civil design works and execution of
construction works which will be carried out by side which opening and processing of L/C will take 3
months. The FOB delivery of plant machinery and equipment will take 4 months. Allowing additional
one month for sea freight and clearing, the delivery of plant of project site and thus commencement of
installation work requires 5 month. Plant installation and commissioning will take place for 4 months.

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
The provision of infrastructural facilities such as Electric Power and water will be carried out in the
course of project implementation schedule. Other activities such us man power recruitment and
training, system development, and procurement of raw and other supplies will also be duty performed
to ensure that everything is in place by the time the plant is ready for operation. All in all the project is
expected to take 12 months for completion as per the below detailed implementation schedule.
Manpower Requirement
For smooth and efficient operation of the organization, it has been anticipated that
each units will have adequate number of qualified and experienced manpower. The labor component of
the International 5 star hotel Service G/manager will hire qualified and experienced in management
whose main responsibility is to coordinate the overall activity of the project. The distinct units have
their own operational teams under them. To fill in all these work units with the required manpower The
project will provide 300 employees, 125 permanent (100 skilled & 25unskilled)and 175 casual
skilled and unskilled workers. For smooth operation of the project, employees will be given on job
training, clear duties and responsibilities under the direct supervision of their respective units.
Table 6.1: Manpower Requirement

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

Fixed cost that include Land development, Building and civil work, machinery equipment and vehicles
and office furniture estimated birr 47,797,310.which is 65 % of the total project.

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Table 7.1 land development
Description Qty Total Price (Br)
Unit Price (Br)
S/N
1 Land clearing and leveling 97 2,500 1,000,000
4 m2
2 Land lease (5%) 433,917
3 Canal work 1 600000 600,000
4 Water reservoirs 2 250,000 500,000
Total - - 2,533,917

Table 7.2 Building and civil works

S/n Qty
Description Unit Price (Br) Total Price (Br)

1 Main Building G+8 500 5,000 20,000,000

Gust room
Manager office
Supermarket
Bar and restaurant
Bed room (80 rooms,20 will be double
rooms, 50 single rooms and 10 suits
kings
room.)
Meeting room
Sauna and steam bath
Gymnasium
4 Store service 250 5,000 1,000,000
8 Parking area 150 1,000,000
9 Generator house 44 500,000
10 Guard house 30 643,475
- 23,143,475
Total 974.00

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

Table 7.3 List of summarized machinery and equipment’s and cost

S/n Description Total cost

1 furniture and equipment for 90 Bed room

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

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

Table 7.4. Procurement of Vehicles and furniture’s

Type of Vehicles Unit Remark
S/N Qty Unit Price (Br)

1 Pick-up (4WD)/ No. 2 1,250,000 duty free

2 Mini bus No. 2 1,100,000 duty free
3 Bus service No. 2 1,800,000 duty free
4 Office furniture’s Ls - 400000 Local market
5 computer and accessories 500000 Local market
Total - - 5,050,000

Table 7.5 Summary of Fixed asset

S/n
Description Cost Estimate Remark
(Birr)

1 Land development 2,533,917 100% local market

2 Building & Constructions 23,143,475 50% duty free imported
3 Machinery and equipment 17,069,918 50 % duty free imported
4 Procurement of Vehicles & 5,050,000 90 % duty free imported
furniture’s
Total 47,797,310 49.7 % duty free

Operational cost costs

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

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Direct cost

Table 7.6.Raw materials

N Raw materials Cost/month per year
Quantit/month
N
1 Food materials raw costs Lamp sum 500,000.00 6,000,000.00
2 d/t type Beverage raw costs Lamp sum 500,000.00 6,000,000.00
3 massage, sauna bath and other Lamp sum 15,000.00 180,000.00
related cost
4 Cleaning materials and Lamp sum 15,000.00 180,000.00
other Miscellaneous uses
Total 12,360,000.00

Table 7.7 Utilities

Description Qty. unit cost Cost per year
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 2000 16 32000
Diesel, lt 20000 18 360000
Total 2367000
Administration cost
Employee benefits : It includes medical expense, uniform and other incentive package and
assumed to be 25% of annual salary expense = birr 1,608,000
Travel expense:It is assumed to be 10% of annual salary expense i.e. birr 643,200
Repair and maintenance
Cost estimate/ year
Item
% Price
Land development 2 50678.34
Building & Constructions 2 462869.5
Machinery and equipment 3 512097.552
Vehicles & furniture’s 5 151500
Total - 1,177,145.39

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Insurance:It is assumed to be 1% of fixed investment cost = birr 477,973
Office supplies: Including stationery and sanitary supplies annual cost of birr 100,000 is
considered.
Miscellaneous expense: It includes cost of land rent, telephone and postage, audit, legal and license
fees and other miscellaneous expenses. The total annual cost of these cost components is estimated to
be birr 150,000 /year.

Summary of Operational cost/ working capital

Table 7.8 Determination of Initial Working capital requirement

S/n
Cost item Annual cost
1 Raw materials
1.1 Direct coast 12,360,000
1.2 Utilities 2,367,000
Sub total 14,727,000
2 Administrative costs
2.1 Salary and wage 6,432,000
2.2 Employee benefits 1,608,000
2.3 Travel expense 643,200
2.4 Repair and maintenance 1,177,145
2.5 Insurance 477,973
2.6 Advertising expense 50,000
2.7 Telephone expense 365,000
2.8 Wi fi Internet service 60,000
2.9 Office supplies 100,000
2.1 Miscellaneous expense 150,000
Sub total 11,063,318
Initial W.C. requirement 25,790,318

Project Capital and financing

Project Capital

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

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

7.9. Project capital and source of income

Investment Source of Income Remark
S/n Description
capital (Br.)
1 Land development 2,533,917 Local Market
2 Building & 23,143,475 50% foreign currency Duty free
Constructions
3 Machinery and 17,069,918 45% foreign currency Duty free
equipment
4 vehicles and furniture 5,050,000 90% foreign currency Duty free
Sub total 47,797,310 49.7% foreign currency Duty free
5 Working Capital 25,790,318 Local market
32% need foreign Duty free
Total 73,587,629
currency

Financing
The total investment capital of the project is to be financed from the promoter’s equity and bank loan.
Out of the total capital birr 22,076,289 (30%) is contributed by the promoter, Elemo Ali PLC while
the remaining balance of birr 51,511,340 (70%) is to be financed by local banks. The bank loan
will be repaid based on the following terms and conditions:

Loan amount = birr 51,511,340

Installment period/ term = 10 years
Interest on loan (including service charge) = 11.5%
Table 7.10 Loan Repayment Schedule
Principal Interest Year ending
Year
Repayment Payment Balance
0 - - 51,511,340
1 5,151,134 5,923,804 46,360,206
2 5,151,134 5,331,424 41,209,072
3 5,151,134 4,739,043 36,057,938
4 5,151,134 4,146,663 30,906,804
5 5,151,134 3,554,282 25,755,670
6 5,151,134 2,961,902 20,604,536
7 5,151,134 2,369,522 15,453,402
8 5,151,134 1,777,141 10,302,268
9 5,151,134 1,184,761 5,151,134
10 5,151,134 592,380 0
Total 51,511,340 32,580,923

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

Depreciation of fixed investment items

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

Original Annual
S/n Item
Value Depreciation
% Amount (Br.)
1 Land development 2,533,917 10 253,392
2 Building & Constructions 23,143,475 10 2,314,348
3 Machinery and equipment 17,069,918 10 1,706,992
4 vehicles and furniture 5,050,000 10 505,000
Total 47,797,310 - 4,779,731

Table 7.12 Summary of project Annual production costs

Cost item Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Direct cost
Direct cost 12,360,000 12,978,000 13,626,900 14,308,245 15,023,657 15,774,840 16,563,582 17,391,761 18,261,349 19,174,417
Utilities 2,367,000 2,485,350 2,609,618 2,740,098 2,877,103 3,020,958 3,172,006 3,330,607 3,497,137 3,671,994
14,727,000 15,463,350 16,236,518 17,048,343 17,900,761 18,795,799 19,735,588 20,722,368 21,758,486 22,846,411
Admin costs
Salary &wage 6,432,000 6,753,600 7,091,280 7,445,844 7,818,136 8,209,043 8,619,495 9,050,470 9,502,993 9,978,143
Emplomt 1,608,000 1,688,400 1,772,820 1,861,461 1,954,534 2,052,261 2,154,874 2,262,617 2,375,748 2,494,536
Travel 643,200 675,360 709,128 744,584 781,814 820,904 861,950 905,047 950,299 997,814
expense
maintenance 1,177,145 1,236,003 1,297,803 1,362,693 1,430,828 1,502,369 1,577,487 1,656,362 1,739,180 1,826,139
Insurance 477,973 501,872 526,965 553,314 580,979 610,028 640,530 672,556 706,184 741,493
Advertising
expense 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
Telephone 365,000 383,250 402,413 422,533 443,660 465,843 489,135 513,592 539,271 566,235
expense
Wifi Internet 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080
service

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Office supplies 100,000 105,000 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133
Miscellaneous 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699
expense
11,063,318 11,616,484 12,197,309 12,807,174 13,447,533 14,119,909 14,825,905 15,567,200 16,345,560 17,162,838
25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249

Note: Production costs are assumed to increase by 5% annually.

Revenue projection
The project will collect its revenue from the customer service. The selling of food and beverage and rented rooms
has estimated based on the current market price and hotel standard of similar service provision in town. The annual
service program is formulated based on proposed plant capacity considered the following table
Table 7.13 Description of revenue projection
No of Price/day
S/N Bed room service per year
bed /night
rooms
1 King standard room 10 1800 4320000
2 Double bed room 20 1400 6720000
3 Single bed room 50 1000 12000000
Subtotal 23,040,000.00
S/N Raw materials Custome/day Cost/ month per year
1 Food service income 100 850,000.00 10,200,000.00
2 Beverage service income 200 850,000.00 10,200,000.00
3 income from Massage 40 360,000.00 4,320,000.00
service
4 20 180,000.00 2,160,000.00
Income from
Gymnasium

service

5 Income from sauna bath 45 472,500.00 5,670,000.00

6 Income from Meeting hole 20 150,000.0
service days/mon 0 1,800,000.00
th
Subtotal 34,350,000.00
Grand total 57,390,000.00
Promoter:- Elemo Ali
 Project Proposal for Hotel and Restaurant Service 2024

Financial statements
Projected Profit/loss statement
Table 7.14 Project Profit/loss statement

Projected profit/loss statement In ‘birr

Project Year
Description
1 2 3 4 5 6 7 8 9 10
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089 80,753,493 84,791,168 89,030,726

Less: 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249
Production
costs

Gross 31,599,682 33,179,666 34,838,649 36,580,581 38,409,610 40,330,091 42,346,595 44,463,925 46,687,121 49,021,478
Income
Less: 5,923,804 5,331,424 4,739,043 4,146,663 3,554,282 2,961,902 2,369,522 1,777,141 1,184,761 592,380
Interest on
loan

Less: 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Depreciatio
n
Profit 20,896,146 23,068,511 25,319,875 27,654,187 30,075,597 32,588,458 35,197,343 37,907,053 40,722,630 43,649,366
before tax
Less:Incom 7313651.2 8073978.7 8861956.0 9678965.5 10526458.9 11405960.2 12319069.9 13267468.5 14252920.3 15277278.1
e tax 2 9 8 8 0 2 6 2 6 3
(35%)
Net Profit 13,582,495 14,994,532 16,457,918 17,975,222 19,549,138 21,182,498 22,878,273 24,639,584 26,469,709 28,372,088

Note: Sales revenue is assumed to increase by 5% annually

Projected cash flow statement

Table 7.15 Project cash flow Statement

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Projected cash flow statement

Descriptio Project Year

n 0 1 2 3 4 5 6 7 8 9 10
Cash
Inflow 22,076,289 - - - - - - - - -

Equity 51,511,340
Bank loan

57,390,00 60,259,50 63,272,47 66,436,099 69,757,904 73,245,79 76,908,089 80,753,493 84,791,168 89,030,726
Revenue
0 0 5 9

4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731 4,779,731
Depreciatio
n

73,587,62 52,610,26 65,039,23 68,052,20 71,215,830 74,537,635 78,025,53 81,687,820 85,533,224 89,570,899 93,810,457
Total
9 9 1 6 0
Inflow

Cash Out
Flow
Fixed 47,797,31 - - - - - - - - -
Cost 0
Initial 25, 25, 27, 28, 29,8 31,3 32, 34,5 36,2 38,1 40,0
W.C 790,318 790,318 079,834 433,826 55,517 48,293 915,708 61,493 89,568 04,046 09,249
Loan 5,1 5,1 5,1 5,15 5,15 5, 5,15 5,15 5,15 5,15
Repayme 51,134 51,134 51,134 1,134 1,134 151,134 1,134 1,134 1,134 1,134
nt

Total 73, 30, 32, 33, 35,0 36,4 38, 39,7 41,4 43,2 45,1
Out 587,629 941,453 230,968 584,960 06,651 99,427 066,842 12,627 40,702 55,180 60,383
flow

- 21,668,81 32,808,26 34,467,24 36,209,178 38,038,207 39,958,68 41,975,192 44,092,522 46,315,718 48,650,075
Net Inflow
6 3 6 8

- 21, 54, 88, 125, 163, 203, 245, 289, 335, 384,
Cumulative
668,816 477,079 944,325 153,503 191,711 150,399 125,591 218,113 533,832 183,906
balance

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

Balance sheet

Current asset
Raw cost and utilities 12,360,000
utilities 2,367,000
Administrative costs
Salary and wage 6,432,000
Employee benefits 1,608,000
Travel expense 643,200
Repair and maintenance 1,177,145
Insurance 477,973
Advertising expense 50,000
Telephone expense 365,000
Wi fi Internet service 60,000
Office supplies 100,000
Miscellaneous expense 150,000
Sub total 11,063,318
Fixed cost
Land development 2,533,917
Building & Constructions 23,143,475
Machinery and equipment 17,069,918
Procurement of Vehicles & furniture’s 5,050,000
Total fixed cost 47,797,310
Total asset 73,587,629
Liabilities
Bank loan 51,511,340.23
owners Capital 22,076,288.67
Total liabilities and capital 73,587,628.90

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024

7.5.3. Viability and other measurement

Financial IRR computation

Table 7.16 Financial IRR computation In ' birr

Year 0 1 2 3 4 5 6 7 8 9 10
Gross 57,3 60,2 63,2 66,4 69,7 73,2 76,9 80,7 84,7 89,0
incom 90,000 59,500 72,475 36,099 57,904 45,799 08,089 53,493 91,168 30,726
e

Total 73,58 25,7 27,0 28,4 29,8 31,3 32,9 34,5 36,2 38,1 40,0
costs 7,629 90,318 79,834 33,826 55,517 48,293 15,708 61,493 89,568 04,046 09,249
Gross - 31,5 33,1 34,8 36,5 38,4 40,3 42,3 44,4 46,6 49,0
profit 73,587,629 99,682 79,666 38,649 80,581 09,610 30,091 46,595 63,925 87,121 21,478
Less: 11,0 11,6 12,1 12,8 13,4 14,1 14,8 15,5 16,3 904
Profit 59,889 12,883 93,527 03,203 43,364 15,532 21,308 62,374 40,493 9001.6
tax
After - 20,5 13,4 13,9 14,5 15,0 14,8 15,5 16,3 17,1 17,9
tax net 73,587,629 39,793 78,615 76,013 03,150 61,512 73,630 96,585 55,688 52,746 89,656
benefit
DF at 1 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.05
35%
rate
Present - 42,5 33,0 25,6 19,9 15,5 12,0 9,38 7,34 5,68 4,45
Value 73,587,629 25,990 82,466 88,625 97,266 56,013 85,557 2,787 8,568 1,008 1,536
Net 102,2 - - - - - - - - - -
present 12,186
Value
DF at 1 0.76 0.59 0.45 0.35 0.26 0.20 0.15 0.12 0.09 0.07
30% 9 2 5 9 7 9 3 4 3
rate
Present - 4413 3567 2878 2325 1876 1516 1222 993 797 649
Value 73,587,629 2910.0 3624.0 8976.1 2634.6 4876.1 1880.4 8386.1 2679.7 0369.8 9243.0
Net 128,8 - - - - - - - - - -
present 17,951
Value

NPV (Net Present Value)

It is a method of calculating the expected net gain or loss from project by discounting rate of all expected future
cash inflow and outflows to the present point in time In the above table shoes that NPV at 30% and 35 %
discount rate is 128.8 million and 102.2 million respectively, this figure is positive value or NPV>0 it is
indicate that accepted the project until 30 % and 35 % of discount rate
Break-even Analysis

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
The break-even analysis establishes a relationship between operation costs and revenues. It indicates the level
at which costs and revenue are in equilibrium. To this end, the break-even point of the project including cost
of finance when it starts to operate at full capacity ( year 4) is estimated by using income statement
projection. BE = FixedCost = 23 % Sales – Variable Cost

Payback Period (PBP)

The payback period is the amount of time required for a firm to recover its initial investment in a project, as
calculate from cash inflow
The investment cost and income statement projection are used to project the pay-back period
PBP = Initial investment Cost Gross Profit +

Depreciation= 73,587,629
13,582,495 + 4,779,731 4=5Years
The payback period =4 is less than the maximum acceptable payback period (10) therefore accept the project.
IRR

The internal rate of the project is the rate of discount that radios the present value of the investigated project to
zero. In calculating the IRR, the discount rate can be adjusted until the NPV becomes Zero or at least as to zero.
Hence, the IRR of this project is calculated as follows After tax IRR = 35 +
5 (102.2/128.8)
=33.9% IRR=33.9% of the project returns its initial investment cost within its life

SENSITIVITY ANALYSIS
Sensitivity analysis is variant of scenario analysis in which each scenario represents a change in only one
variable, rather than a number of variables. For the proposed project, the sensitivity of the project has been
computed at 30% and 35% for sales reduction, operating cost increase and investment cost increased
accordingly, as described in table 7.16 the result shows that IRR at 33.9% operating cost increase and 30 and
35% investment cost increase and 30% service sales reduction. Predicting among these sales reduction is more
sensitive to the project and it should further expand after the project proposed life time because in this case
NPV equal zero at IRR=33.9
RISK ANALYSIS
The major risk of this project shall be high market price fluctuation and turnover the skilled and trained man
power. These risks can be mitigated. The high staff turnover may be lessened by creating conductive working
atmosphere and providing some benefits. For this project, 25% benefit is proposed for the permanent
employees

Promoter:- Elemo Ali

 Project Proposal for Hotel and Restaurant Service 2024
Characteristic (Personal) Risk: This is the most important risk, which should be seriously considered? As to
this company, the promoter have sufficient years of work experience in both government and private
organization (leading private business by engaging themselves), so personal risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable. The demand- supply analysis
exhibits the need of the service of the business organization. According to the overall demand the effect of
competitors in the sector would not be an immediate alarming threat at least for the coming few years. In
additional to this Long year experience of the owner in the field will help to react against any adverse situation
in the business. However, the reaction of competitors should be attended. In additional to an advanced
promotional work and sustainable goodwill development by creating new and best quality products with good
service deliveries.
CONCLUSION AND RECOMMENDATION
Conclusion: The Project is found to be operationally profitable & has significant socio-economic benefits.
According to the projected income statement, the envisaged project starts earning profit from the first year of
production. The income statement and other profitability indicators show that the project is viable. The project is
believed to have significant social and economic benefits that accrue to the society beyond those financial
returns to its owner. The most remarkable social benefits can be expressed in terms of job creation that leads
to reduction in the level of unemployment.
Recommendation: The project directly employs 125 persons; therefore, considering the attractive financial and
economic benefits the project is to produce, the promoter has made the necessary preparation hoping that all the
concerned offices & financial institutions should give their support to facilitate the implementation of this plan.

Promoter:- Elemo Ali