PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

PROJECT PROPOSAL ON
G+8 FIVE STAR INTERNATIONAL
DIASPORA INVESTMENT HOTEL

Project Location: - South west Region,

Bonga city Keya kella

:
Promoted by DIASPORA INVESTMENT GROUP
PHONE: 0911200920

BONGA-ETHIOPIA
March 2023

BY: SAFE DEVELOPMENT CONSULTANT AND TRAININ SERVICES PLC

1
, PHONE : 0913882511
 PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Contents
Basic Information....................................................................................................................... 4
1. EXECUTIVE SUMMARY .............................................................................................. 5
2. INTRODUCTION ............................................................................................................ 8
2.1. Investment in Ethiopia ................................................................................................ 8
2.2. Hotel and Tourism sector in Ethiopia.......................................................................... 9
2.3. Promoter Background ............................................................................................... 10
2.4. Ambition of creating the hotel project ...................................................................... 10
2.5. Purpose and Amount of Loan .................................................................................... 11
3. The Project ...................................................................................................................... 12
3.1. Project description and Justification.......................................................................... 12
3.2. Project Objective ....................................................................................................... 12
3.3. Project location and justification ............................................................................... 14
3.3.1. Location ............................................................................................................. 14
3.3.2. Climate ............................................................................................................... 14
3.3.3. Demographics: ................................................................................................... 15
3.3.4. Infrastructure and economic status .................................................................... 15
4. MARKET STUDY ......................................................................................................... 18
4.1. General Overview ..................................................................................................... 18
4.2. Present supply in Addis Ababa ................................................................................. 19
4.3. Demand for hotel services ......................................................................................... 21
4.4. Demands Evaluation Mechanism .............................................................................. 23
4.5. Pricing .................................................................................................................. 25
4.6. Capacity and service programme ............................................................................. 25
4.6.1. Capacity ........................................................................................................ 25
4.6.2. Service Programme ...................................................................................... 26
4.7. Marketing strategy..................................................................................................... 26
4.8. Competitors Overview .............................................................................................. 27
5. TECHNICAL STUDY ................................................................................................... 28
5.1. Design and particulars ............................................................................................... 28
5.2. Physical appearance .................................................................................................. 28
5.3. Core facilities ............................................................................................................ 28
5.4. Hotel Furniture and Equipment’s .............................................................................. 33
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

5.5. Inputs/ raw materials and utilities ............................................................................. 34

5.5.1. Raw Material cost .............................................................................................. 34
5.2.2. Utilities ................................................................................................................... 34
5.6. Machinery and equipment ......................................................................................... 35
5.7. Land, Building and civil work................................................................................... 43
5.7.1. Land lease .......................................................................................................... 43
5.8. Environmental impact assessment ............................................................................ 44
5.9. Implementation Schedule .......................................................................................... 45
6. ORGANIZATIONS AND MANAGEMENT ................................................................ 46
6.1. Organizational Structure ........................................................................................... 46
6.2. Management .............................................................................................................. 47
6.3. Manpower Requirement ............................................................................................ 47
6.4. Training Requirement................................................................................................ 48
7. FINANCIAL STUDY ..................................................................................................... 49
7.1. Classified Investment cost ......................................................................................... 49
7.1.1. Fixed costs ......................................................................................................... 49
7.1.2. Operational cost costs ........................................................................................ 51
Summary of Operational cost........................................................................................... 53
7.2. Project Capital and financing .................................................................................... 54
7.2.1. Project Capital .................................................................................................... 54
7.2.2. Financing............................................................................................................ 54
7.3. Revenue projection .................................................................................................... 57
7.4. Financial statements .................................................................................................. 58
7.4.1. Projected Profit/loss statement ............................................................................... 58
7.4.2. Projected cash flow statement ............................................................................... 59
7.4.3. Balance sheet ..................................................................................................... 60
7.5.3. Viability and other measurement ....................................................................... 61
8. SENSITIVITY ANALYSIS ........................................................................................... 63
9. RISK ANALYSIS ........................................................................................................... 63
10. MONITORING AND EVALUATION .......................................................................... 65
11. CONCLUSION AND RECOMMENDATION .............................................................. 65
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Basic Information

➢ Name of the Promoter: Diaspora investment group

Contact Address: 0911200929

➢ Type of the Project: G+8 ,5 Star International Tourist Hotel

➢ Type of Business: Sole proprietor ship

➢ Project Location: south west Region, Kaffa zone, Bonga city

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

estimated at birr 106,571,628of which:-

• Birr 68,793,341.76 (65%) is for fixed investment cost

• Birr 37,042,568.64 (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 32,071,488(30%) is contributed by the promoter (Diaspora

investment group)

• Birr 74,500,140 (70%) is to be financed by local banks.

➢ 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 .

➢ Land requirement: The total area of 974 m2 of land is required for the

project.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

1. EXECUTIVE SUMMARY

The project feasibility study proposed on 5 star international tourist hotel

investments has been promoted by Diaspora investment group in south
west Ethiopia Bonga city ,Keya kella . Bonga is a fast growing regional
economic center and the capital of Ethiopia. It is home to the coffee Arebica and
sit of Regional government, Due to its regional political status Bonga is often
referred as the political capital of South west Ethiopia. Ethiopian Airlines has
become one of the Transportation choice after few months due to having its one
new building aviation center at Bong city, servicing 101 destinations from Bole
International Airport. Economic growth is further increasing demand at +8%
per annum thisis therefore Diaspora investment hotel will be founded its
base on it.

Project justification: International standard tourist hotel is high class hotel

where services like standard bedroom, catering, conference hole, Spa (Hot
Spring), gymnasium, sauna and massage, other sports facilities like tennis or
squash court, min-golf or badminton, bowling, table tennis and children
playground, night club with dancing to live music or discotheque or cabaret etc.

The demand and supply of hotels and its bed rooms service in Bonga city has
high gab the supply of Bonga has a quality 3 hotels and a total of 90 bed rooms
currently in the market, giving an average number of 30 rooms per hotel.
Branded supply is very low; due to this demand and supply analysis Aster Dereje
hotel wants to participate and minimizes the gab of demand and supply
standard hotel in Addis Ababa.
In this profile study a Five star international tourist standard hotel is
considered to following provides:-
• 10 King size luxury rooms, 20 standard double bed rooms and 50
single standard bed rooms totally 80 standard bed rooms
services
• International and national restaurant service
• Standard bar and cafeteria
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

• Standard massage and sauna bathe service

• Physical fitness room
• Conference hole and others important needs

The total area of the 5 star international tourist hotel investment

is about 974 meter square The area covered and develop the following
infrastructures such as main building (g+8) hotel service and, store,
gourd house, , parking area and other necessaries facilities

The total investment capital of the project is estimated at birr

106,571,628of which birr 68,793,341.76 (65%) is for fixed investment cost

of which 65 % of the fixed cost is need foreign currency while the

remaining balance of birr 37,042,568.64 (35%) will be working capital.

Profitability: The financial analysis of the envisaged project is carried

out for the following ten years. Based on the 10 years financial

projections using the income statement, cash flow statement and

financial internal rate of return (FIRR), the following results are

obtained.

▪ Income statement: According to the projected income statement, the

project will generate profit beginning from the first year of operation.

Based on the 10 years financial projections the projects average annual

net profit after payment of bank interest, depreciation and tax

amounts to birr 16,593,732

▪ Cash flow statement: The cash flow statement also shows a

substantial amount of cash surplus right from the first year of
project operation life. The cash balance grows from birr
27,685,936 in the first year to cumulative balance of birr,
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

394,396,352 during the 10th year of operation indicating the

capacity of the project to finance itself and generate cash surplus
for further investments.

▪ FIRR Computation: The computation of the project FIRR shows that

the project will profitably generate reasonable return on investment.
Before tax financial internal rate of return is calculated to be 33.9%.
This indicates the project is financially viable with an internal rate of
return (IRR) of 33.9 % and net present value (NPV) 102.2 million at
discount rate 35 %.
▪ Socio economic benefits: The socio economic benefit of the project is also

very high. The project will provide:- 125 permanent employs, Generate

revenue to government in the form of taxes, Facilitate and give a good

service for local and international tourists

▪ Conclusion and recommendation: The Project is found to be

operationally profitable, viable & has significant socio-economic

benefits. We recommended that according to this attractive financial

and economic benefit of the project all concerned offices & financial

institutions should give their support to facilitate the implementation

of this plan.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

2. INTRODUCTION

2.1. Investment in Ethiopia

Ethiopia is now becoming more and more investment friendly country. The
Government is creating favorable condition that would highly encourage the
private Sector to be engaged in almost all areas of the economy. The country
with population of come 80 million offers significant domestic market for
locally for Locally produced goods and service the country is also a
member of the common Market for eastern and southern Africa Comesa
offering huge benefit of Exporting commodities in preferential tariff rates to
a wider regional market.
Privet investment should be encouraged to increase form year to year and
Investment constraints have to be alleviated in order to pave development ways
so That investment sector happens to be determinant about factor of
economic development of the country like Ethiopia.
it is usually considered as the engine of the economy .both private and
government Bodies in many ways have commonly agreed this idea
.economic development in Any case needs both efforts of the privet as well
as the public sector. There are Investments that could not be undertaken by
privet sector due to its difficult nature I. e high initial capital and long
gestation period.

However, the passed command economy system and the lack ofexperience
Between both sides have made it so h a r d for a private sector to flourish.
But now a day as Ethiopia follows free market economy ‘the roll of private
sector for the achievement of the economy policy. Accordingly, the Ethiopia
federal democratic government is encouraging investors to invest their records
to contribute to the development of the country in all sectorsby avoiding all
barriers and facilitating all the mince for the investment
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

2.2. Hotel and Tourism sector in Ethiopia

Ethiopia has vast potential for development of various economic sectors.

Although agriculture is the mainstay of the country’s economy theopportunity
to invest in other sectors especially in Hotel, Tourism and various recreation
activities are there.

Although Ethiopia is endowed with many natural and manmade tourist

attractions, these resources have not been sufficiently exploited. The country’s
geographical location and the remarkable physical features and climate have
endorsed it with rich and varied natural heritages. Despite considerable demand,
tourism sector remains at relatively low stage ofdevelopment.

The Hotel and recreation service facilities in Ethiopia have been found at a
lower level of development. The number of Hotel service establishments inthe
country has remained insignificant to respond to the customer’s demand.
Only few Hotels have the capacity or quality to provide good accommodation and
catering facilities to fulfill tourists need. There are only few hotels in the
capital, Addis Ababa, and other big towns of the region states that organized
on international standard to fulfill the consumer’s needs.

The government of Ethiopia has devised a long term strategy that gives due
regard to the preservation, development and promotion of the country’s tourist
attraction. This includes plan for expansion of tourist facilities and the
necessary infrastructure.

Indeed in the wider sense the country has a good potential for the development
of high standard hotels, recreation and market center and there is a growing
realization that this sector holds a significant development perspective, which
should be fully exploited in the planned and controlled manner.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

In adopting a planned and regulated approach the country is in a position to

expand its hotel and tourism sector in a way that emphasizes environmental
conservation and enhances the quality of the overall tourist experience. This will
contribute substantially towards improving the standard of living and the quality
of life of the population.

The past trend shows that no any high standard hotels and recreation centers
are concentrated in the Bonga city. The number of hotels and recreation
service facilities in other regions of the country has remained insignificant to
respond to the customer’s demand. Only few hotels and recreation centers
out of Addis Ababa have the capacity to provide accommodation for mid or
high-class guests.

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

establish 5 star international/tourist Hotel service in Kaffa zone Bonga
city keya kella for the benefit of the promoter, the district community as well
as the country as a whole.

2.3. Promoter Background

The promoter, Diaspora investment group has a work experience in hotel

and management business activities. During this time, the promoter
gained a vast knowledge and skill. With this reliable experience, Aster
Dereje knows how to manage and lead any organization to profit and also
know how to handle different challenges in the working environment.
Moreover Diaspora investment group has a very good reputation with banks
and different financial organizations.

2.4. Ambition of creating the hotel project

According to the preliminary market research, the demand for hotel service
is very high and yet the supply is limited leaving a huge service gap to the
customer. Unfortunately there is no saturated standard hotel (5 stars) in the
area. Although few less than five star hotels have already working in
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

the area, but still huge gap is there in between demand and supply in the town.
The service (5 star hotels) is widely accepted in Addis Ababa, Government
employees, Private employees, Tourists, local customers, and to some extent
even in rich house-holds. So there is good scope for establishing the units for
establishing and maintain 5 star standard /international and tourist hotel
service in Addis Ababa as well as in the country. Due to this, it has become
imperative to build and maintain 5 star standard hotels service for the
mankind in prevailing conditions.
2.5. Purpose and Amount of Loan

Purpose and amount of loan requested: The purpose of the loan is to

import machineries and purchasing steel for building construction. Beside
this the promoter believes that, the loan will strengthen the relationship
between the investor and the bank. Furthermore, the investor gets strength
to advance to various viable economy sectors in the country.

The source of the project finance is from the promoter’s equity and bank loan.
Out of the total investment capital of birr 105,835,910.4 birr 32,071,488 (30%)
is to be contributed by the promoter ( Diaspora investment group) while the
remaining balance of 74,500,140, (70%) is to be covered by the local bank
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

3. The Project

3.1. Project description and Justification

International standard tourist hotel is high class hotel (from three to five- star
level) where services like bedroom, catering, meeting rooms, multipurpose
assembly hall, swimming pool, Spa (Hot Spring), gymnasium, sauna and
massage, other sports facilities like tennis or squash court, min- golf or
badminton, bowling, table tennis and children playground, night club with
dancing to live music or discotheque or cabaret etc.

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

Facilities provided may range from a modest-quality mattress in a small room
to large suites with bigger, higher-quality beds, a dresser, a refrigerator
and other kitchen facilities, upholstered chairs, a flat screentelevision and en-
suite bathrooms. Small, lower-priced hotels may offer only the most basic
guest services and facilities. Larger, higher-priced hotels may provide
additional guest facilities such as a swimming pool, business center (with
computers, printers and other office equipment), childcare, conference and
event facilities, tennis or basketball courts, gymnasium, restaurants,day spa
and social function services. Hotel rooms are usually numbered (or named in
some smaller hotels and B&Bs) to allow guests to identify their room. Some
boutique, high-end hotels have custom decorated rooms. Some hotels offer
meals as part of a room and board arrangement. In the United Kingdom, a
hotel is required by law to serve food and drinks to all guests within certain
stated hours. In Japan, capsule hotels provide a tiny room suitable only for
sleeping and shared bathroom facilities.

3.2. Project Objective

The main objective of the project is aimed at to maximize the return on invested
capital in the form of profit for the promoter. However, its implementation will
benefit the employee, the consumer society and the government at different
levels. In this respect the project is aimed to promote the following objectives:-
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

• To maximize the return on invested capital through modern Hotel

services
• To raise the significance and importance of the sector and thereby
raising its contribution to the national economic development
• To give quality and standard hotel service
• Effectively use local inputs and strengthening the linkage between
agriculture and other sectors of the economy
• To provide gainful employment to a large segment of the population of
the project area and augment earning capacity at the grassroots level,
• Increase government revenue through the different forms of taxes,
which in turn used to facilitate social and economic development.

In general, the project is believed to have significant social and economic

benefits that accrue to the society, the region and the country beyond the
financial returns to its owner.3.4. Mission and goal
Mission
▪ Mission of the particular project is to expand the standard star hotel
system and to give quality service.
▪ To prove to other people that struggle for a better life and economic
independences can do business and bring change and can make a
difference if opportunities are given.
▪ To become financially liquid and guaranteed more than ever.
Goal
Objectives are the goals toward which activities of the business are directed
and one of the most important functions the business owner must perform is
setting objectives. This important aims of this sole proprietorship business
among others include the following highly interrelated general goals with
each other.
• To create employment opportunities for 125 permanent and 175 causal
• To achieve standard tourist hotel and give quality service.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

3.3. Project location and justification

3.3.1. Location

The proposed project of 5 star International hotel will planned to be located

in South west Ethiopia Bonga city keya kella kebele. Bonga is the capitaland
largest city of Ethiopia. It is the seat of the Ethiopian federal government.
According to the 2007 population census, the city has a total population of
2,739,551 inhabitants. The total land size the promoter requesting for the
implementation of the project is estimated at 974 square meters, which will been
obtained from investment commission of Kaffa zone administration Hence the
owners select Bonga city for proposed project by looking every aspects of
business integrity tourist area.

As a chartered city (Bonga zurea Astedader), Bonga has the status of both a
city and a state. It is where the seat of south west regional organization and
south west government political center. It also hosts the headquarters of the
United Nations Economic Commission for Africa (ECA) and numerous other
continental and international organizations. Bonga is therefore often referred
to as "the political capital of south west Ethiopia for its historical, diplomatic
and political significance for the continent

3.3.2. Climate:
Addis Ababa has a subtropical highland climate. The city has a complex mix of
highland climate zones, with temperature differences of up to 10 °C (18
°F), depending on elevation and prevailing wind patterns. The high elevation
moderates temperatures year-round, and the city's position near the equator
means that temperatures are very constant from month to month. As such the
climate would be maritime if its elevation was not taken into account, as no
month is above 22 °C (72 °F) in mean temperatures.

Geography: Bonga lies at an elevation of 2,200 metres (7,200 ft) andis a

grassland biome, located at 7°14′13.25″N 36°15′40.49″ECoordinates: 7°1′48″N
36°44′24″E.[14] The city lies at the foot of Mount of zexegni semaniya and forms
part of the watershed for the Barta water fall shetta river.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

New coming Airport, at 2,326 meters (7,631 ft) above sea level in the southern
periphery,the city rises to over 3,000 meters (9,800 ft) in the Zexegni semaniya
Mountains to the north

3.3.3. Demographics:
As of the latest 2007 population census conducted by the Ethiopian national
statistics authorities, Kaffa has a total population of 2,739,551 urban and
rural inhabitants. For the capital city 662,728 households were counted living
in 628,984 housing units, which results in an average of 5.3 persons to a
household. Although all Ethiopian ethnic groups are represented in Bonga
because it is the capital of the country, thelargest groups include all nation
nationality
3.3.4. Infrastructure and economic status

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

statistics from the federal government, some 119,197 people in the city are
engaged in trade and commerce; 113,977 in manufacturing and industry;
80,391 Homemakers of different variety; 71,186 in civil administration;
50,538 in transport and communication; 42,514 in education, health and
social services; 32,685 in hotel and catering services; and 16,602 in
agriculture. In addition to the residents of rural parts of Addis Ababa, the city
dwellers also participate in animal husbandry and cultivation of gardens.
677 hectares (1,670 acres) of land is irrigated annually, on which 129,880
quintals of vegetables are cultivated. It is a relatively clean and safe city, with
the most common crimes being pickpocketing, scams and minor burglary.[37]
The city has recently been in a construction boom with tall buildings rising in
many places. Various luxury services have also become available and the
construction of shopping malls has recently increased. According to Tia
Goldenberg of IOL, area spa professionals said that some people have labeled
the city, "the spa capital of Africa.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Tourism: Tourism is a growing industry within Bonga and Ethiopia as a

whole. The country has seen a 10% increase in tourism over the last decade,
subsequently bringing an influx of tourists to Bonga. In 2015, the European
Council on Tourism and Trade named Ethiopia the #1 tourist spot in the
world

Development: The city hosts the We Are the Future center, a child care center
that provides children with a higher standard of living. The center is managed
under the direction of the mayor's office, and the internationalNGO Glocal
Forum serves as the fundraiser and program planner and coordinator for the
WAF child center in each city. Each WAF city is linked to several peer cities
and public and private partners to create a unique international coalition.

Launched in 2004, the program is the result of a strategic partnership

between the Glocal Forum, the Quincy Jones Listen Up Foundation and Mr.
Hani Masri, with the support of the World Bank, UN agencies and major
company

Education: Bonga University is one of the public higher Education institutions in

the Ethiopia. It is found in the south west ern part of Ethiopia, in south west Ethiopia.
Bonga university was laid February 04/2015 E.C. The construction of Research center in
Gimbo, Chena, Goba and Gesha District in kaffa zone was laid. January 26/2015E.C a
monthly tour of international project activation by teacher’s and adiministrative staff
was held.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Road: Universal Rural Road Access Program (URRAP) was launched to connect
all Kebele and Wereda considering the rural population's voice who demands
and have a basic right to access transport, social and other services. The delay
has limited the level of agricultural activities as most farmers found it difficult
to transport their agricultural products to the urban areas and prevent rural
population from access to services like social, health and education. The various
researchers conducted a study on the causes of delay in Ethiopia and in the rest
of the world and identified different number factors that cause a delay with
their extent of contribution towards the construction projects. Many
construction projects that have been carried outfaced the problem of non-
completion during the specified time. URRAP road project in Kaffa Zone is one
of the projects that have been subjected to delay repeatedly. The construction
projects' delays have a significant financial and social impact on all parties
involved in the projects, including the project's end-user. Therefore, this study
was aimed to identify the causes of delay in URRAP road projects in the Kaffa
Zone, southwestern Ethiopia. This was done through identifying and ranking
the most critical factors on an individual and category basis. The study has
adopted a comprehensive literature review to identify various factors from
scholars' points of view that suit the study area's context. A quantitative survey
research method through a structured questionnaire was administered on a
sample. The data was obtained from focus group discussion, interview and
questionnaire survey. A total of 42 questionnaires from clients, contractors, and
consultants were collected, and a desk study of 4 completed, 7 suspended and
11 ongoing URRAP road construction projects were analyzed. The data were
analyzed using MS EXCEL and SPSS software in which Relative Importance
Index (RII), ranking, and simple percentages were computed and tested for the
agreement among parties on the result through spearman’s correlation.
Ranking of factors and categories was demonstrated according to their
importance level on delay. From all parties combined result of RII, the following
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

are some of the most critical factors causing a delay in URRAP projects in the
study area late payment (RII=0.90), Weather conditions (RII=0.88), Delays in
site mobilization (RII=0.73), Inconvenient site access (RII=0.72) Cash-flow
problems (RII=0.70). The study concluded that the contractor-related category
is the most prominent delay factor with a relative importance index value of
(RII=0.61), followed by clients related (RII=0.59). Consultants related
(RII=0.55) and external related delay causes exhibited the least aggregated
relative importance index (RII=0.48).
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

4. MARKET STUDY

4.1. General Overview

The hotel industry consists of many different services, including

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

According to the United Nations Statistical Commission, Tourism

comprises the activities of persons traveling to and staying in places outside
their usual environment for not more than one consecutive year and staying
at least 24 hours in the country visited.

The total number of international tourists arriving in Ethiopia is steadily

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

Table 4.1 Total Tourist arrivals in Ethiopia

Year Number Growth Rate

1991 81,581 -
1992 83,213 2
1993 93,072 11.9
1994 98,070 5.4
1995 103,336 5.4
1996 108,885 5.4
1997 139,000 27.7
1998 112,000 -19.4
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
1999 115,000 2.7
2000 135,954 18.2
2001 148,438 9.2
2002 156,327 5.3
2003 179,910 15.1
2004 184,079 2.3
2005 227,398 23.5
Source: - Ethiopian Tourism Communion.

During the same period (1991- 2005), on average about 17% of the total
number of tourists that have visited the country were for vacation purpose
while those who visited the country for business account 22% of the total.
Regarding the others, transit accounts for 18%, visiting relative 9%, conference
11% and those who did not stated their purpose account for 22% of the total.

4.2. Present supply in Addis Ababa

According to Current 2022 Information Bonga has a quality supply of 3 hotels

and a total of 90 keys bed rooms currently in the market, givingan average
number of 30 rooms per hotel. Branded supply is very low, with only Starwood,
Rezidor, Marriott and Louvre present. Future supply is predominantly branded

Table 4.2 standard hotels in Ethiopia

S/N Name of Hotels in Ethiopia Number of

Beds
1 Coffee Land Hotel 26
2 Mankira Hotel 40
3 Haroni Hotel 24
4 Radisson Blu Hotel 204
5 Radisson Blu Hotel 204
6 Elilly Hotel 154
7 Intercontinental Hotel 152
8 Harmony Hotel 150
9 Capital Hotel And Spa 114
10 Ethiopia Hotel 110
11 Jupiter International Hotel - Kasanches 102
12 Dreamliner Hotel 96
13 Saro Maria Hotel 96
14 Mn International Hotel 91
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
15 Wassamar Hotel 66
16 Washington Hotel 65
27 Kaleb Hotel 64
18 Axum Hotel 56
19 Churchll Hotel 53
20 Aphrodite Hotel 52
21 National Hotel 52
22 Global Hotel 50
23 Bole Ambassador Hotel 48
24 Panorama Hotel 45
25 Tds Hotel 41
26 Adot-Tina Hotel 40
27 Jupiter International Hotel – Bole 40
28 Plaza Hotel 39
29 Nigist Towers Guest House 32
30 Kz Hotel 32
31 Nigist Towers Guest House 32
32 The Residence Hotel 19
3174
Source: - Ethiopian Tourism Communion.

Accordingly, assuming 365 working days, currently international standard

hotels in Addis Ababa have a total of 597,140 per annum tourist night room
capacity. Based on discussion with various private hotel managers and
other knowledgeable persons the average stay of tourists in a hotel is
assumed to be 4 days.

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

arrival is considered. During the period 1991-2005, the total tourist arrival
in the country has registered an 8.2% average growth rate. Accordingly,
assuming that this growth rate will continue in the future and taking year
2005 figure (227,398) as a base, tourist arrival is forecasted. Moreover, in
order to compute the unsatisfied demand the total annual capacity of
international standard hotels in Bonga, which computed to be 597,140
rooms per annum is taken as the existing capacity. The projected tourist
room requirement, which is calculated by taking the projected tourist
arrival and multiplying it by the average hotel stay of tourists (4 days), the
unsatisfied demand is shownin Table 4.3.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 4.3. existing hotel capacities, projected and unsatisfied demand

Projection of Room Night Existing Hotels Un

Year Tourist Arrival Demand Annual Satisfied
Capacity Demand
2008 286,456 716140 597,140 119,000
2009 309,372 773430 597,140 282,283
2010 334,122 835305 597,140 381,283
2011 360,852 902130 597,140 488,203
2012 389,720 974300 597,140 603,675
2013 420,898 1052245 597,140 728,387
2014 454,570 1136425 597,140 863,075
2015 490,935 1227338 597,140 1,008,535
2016 530,210 1325525 597,140 1,165,635
2017 572,627 1431568 597,140 1,335,303
2018 618,437 1546093 597,140 1,518,543
2019 667,912 1669780 597,140 1,716,443
2020 721,345 1803363 597,140 1,930,175

Accordingly, based on the market study and other considerations a five star
hotel with room capacity of 75 to 100 is recommended.

4.3. Demand for hotel services

The feasibility study conducted for this project deals with the demand and
supply analysis for the hotel project to be established in the area by taking the
number of international and national tourist, investors, employers and
government directly related with the level of development of the economy in
general and the tourism sector in particular. It is a function of the number
of both domestic and foreign tourist travelers in the area, travelers for the
commercial or business purposes, travelers for conference and other
assembly purposes, residents in the area (in fact it depends up on the
standard of the hotel and the living status of the residents) etc. Touristcould
come to the country for the purpose of visiting our country areas and rest on
Addis Ababa mainly Addis Ababa is:-
• fast growing regional economic center and the capital of Ethiopia
• African Union
• UN Economic Commission for Africa
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

• foreign missions
• regional NGO’s and the UN Conference Centre
• Due to its regional political status Addis is often referred as the political
capital of Africa.
• Ethiopian Airlines has become a major demand driver, servicing 101
destinations from Bole International Airport.
• Economic growth is further increasing demand at +8% per annum
.
Hotel supply and its growth
Addis Ababa is poised to undergo a high level of supply growth during the
next five years with a total of 2,375 rooms (76%) having been announced.
We anticipate that 50% of this supply (1,188 rooms) to be completed, with
cash flow constraints, low access to debt funding and a shortage of foreign
currency holding back further supply growth. Promotors with stronger
balance sheets, technical support and access to foreign currency have a
higher likelihood of completing their developments. The result of this is a
more measured and appropriate supply pipeline of new hotels. New supply
is increasingly branded with this growing
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

4.4. Demands Evaluation Mechanism

The following are some of the methods which can be used to evaluate the
demand of the services. By use of Customers feedback follow up form

High GDP growth and increasing corporate entry is driving hotel demand in
the business and conference segment. The aid and diplomatic segments
continue to provide the majority of the market demand in Addis Ababa.
Ethiopia has a strong domestic economy which is driving demand growth
in the mid-market.

Performance

Bonga achieved an occupancy of 12% at an average daily rate of USD 220 in

2015*. We estimate market wide occupancy at 18% at an ADRof USD 135.
Once the locally branded quality supply is included.

Investment

Kaffa has received significant investment into the hotel sector in recent years,
with a number of successful local entrepreneurs investing in hotels. This has
largely shaped the type of supply in the market, with few of these investors
having turned to global brands to manage their properties.The extensive list of
branded hotels that has been announced, is evidence that this trend has changed.
The easier access to finance and technical service expertise associated with
having a brand are driving this change. The latest branded entrants are the
Marriott Executive Mankira Hotel and Coffee land Hotel, with the Ramada Bonga
scheduled to open in Q2 2016. Assets are tightly held and liquidity is low.

Outlook

Corporate demand growth prospects are positive with strong GDP forecasts and
growing regional demand, complimenting the significant and well established
aid and diplomatic markets that are already present in the city. Performance will
be shaped by the extensive supply pipeline of hotels across the city during
the coming years. Many of these projects have stalled,
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

the expectation of further delays and projects being put on hold, is likely to offer
existing players in the market some respite. On the whole we are positive about
the performance outlook, yet caution against potential oversupply.

HOTEL MARKET TRENDS IN BONGA

What drives Addis Ababa demand?

Bonga has three distinct demand segments, namely the corporate
market, aid and diplomatic markets. The corporate market is primarily
domestically driven, with a limited presence of international companies
despite the high growth in the economy. This segment typically uses 3-star
unbranded hotels. There are signs that the Ethiopian economy is opening
up and although this trend is anticipated to be gradual, it will ultimately
increase corporate entry into the market and subsequently hotel demand
from the international corporate market. We are already starting to see this
happen with the number of regional and business travelers to the market
growing steadily. The 4- and 5-star markets are in turn primarily driven by
the aid and diplomatic markets. The city is home to the world’s third highest
concentration of embassies as well as the African Union headquarters,
which collectively generate the majority of the diplomatic market. The
various conflicts affecting neighboring countries and its history of donor
presence make Addis Ababa one of the largest global bases for NGO’s and aid
agencies.

Bonga bound demand

The majority of hotel demand generators are found 2,in the districts of Mizan
and Jimma, where diplomatic. Missions and larger corporates are
situated.The Mizan area is a new area expanding to the southeast of the city
Centre, between Bonga and Tepi. This area is expected to experience the
largest growth of hotel supply over the coming five 5years by 70% to 1499
rooms driven by availability and affordability of land and ease of access.
Whilst supply is increasingly shifting south-east, the key demand
generators are likely to remain in Mizan, with the midscale
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

demand likely to shift towards Bonga. The growing presence of Ethiopian

Airlines further underpins demand into this node and hotels near the airports
have been announced including a hotel funded by HNA and Ethiopian Airlines.
4.5. Pricing

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

rendered and its location. The relatively high standard hotels in Bonga charge a
price, which ranges from USD 110(Coffee land Hotel) to USD 115(Mankira) for a
single night per single room. Other hotels charge prices that fall in this range.
For this envisaged project a price of Birr 1000, for single bed, 1400 for double
bed room and 1800 for suit king size hotel per room per single night is
proposed.
The hotel service will also earn revenues from the sale of food and drinks and
other hotel services. The total revenue earned from this service is estimated at
35 per cent of the revenue obtained from room rents.

4.6. Capacity and service program

4.6.1. Capacity

From the market study, it is observed that there is a great demand gap
between the demand and supply of international tourist standard hotel
service. Therefore, taking in to account the market study and economic scale
of service provision the envisaged international tourist standard hotel will
have capacities as shown below:
Table 4.4 service capacity ofthe envisaged internationaltourist standardhotel

Sr. No. Type of Service Feasible Service Capacity

1 Bedroom 80 rooms, 20 will be double

rooms, 50 single rooms and 10 suits.

2 Bar and Restaurant

• Restaurant (Modern 200 at a time each
and traditional
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
• Coffee Shop 10- 15 seats at a time
3 Sauna and steam bath 20 heads/day
4 Gymnasium 20 heads/day
5 Swimming pool (Big and small pools) 45 Heads/day and 20
head/day
6 Meeting room 50x3 seats
7 Night club 300 at a time

4.6.2. Service Program:

At the initial stage of the service provision period, the hotel would require
some years to penetrate into the market and capture a significant market
share. Therefore, in the first and second year of service the capacity
utilization rate will be 75% and 90%, respectively. Full-service provision
shall be attained in the third year and then after. The proposed service
provision program is shown in Table 4.7.

Table 4.5 service provision program

Sr. Service Service Year

No.
1 2 3- 10
1 Service provision rate (%) 75 90 100

4.7. Marketing strategy

As discussed earlier the major target groups of hotel sector are tourists who
arrives the country for business, leisure, conference and other purposes.
Providing quality services and consistently improving with the changing
situations should be the promoters’ objective. Hence, according to the
feasibility study, the promoter has the following marketing strategies:

• Contacting government and private agencies affiliated with tourism on

a regular basis, informing them of any corporate rate, discount
programs, availability of services, etc.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

• Emphasizing the access of the proposed hotel to support client’s

attractions, as well as the services and amenities available,
• Special effort will be made to emphasize the price-value relationship of
the service available,
• Actively marketing the hotel prior to the completion and opening,
• An aggressive local marketing effort and promotion of the hotel market
to enable the hotel to capture a more than proportionate share of support
within the market,
• Working with local people to establish a competitive amenity package
responsive to specific requirements.

4.8. Competitors Overview

Three are 36 standard 3 to 5 hotels in Bonga but still three is a huge gab but
our hotel service is do quality and clean services.
In addition to the above, the failure stories that I have observed from others
and the comments collected from my customers will help me to win my
competitors.
In conclusion, my service compared to the competitors looks like:
▪ I keep the promise I make
▪ Quality service is my motto
▪ Transparent price setting and fair price will be bases to win the
competitors
▪ The promoter long term experience and goodwill that he has achieved
from his respected customers will allow me to win the competitor. In
addition to the above, the failure stories that we have observed from others
and the comments collected from our customers will help us to win our
competitors.
▪ In conclusion, his service compared to the competitors looks like:
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

5. TECHNICAL STUDY

5.1. Design and particulars

The project owner interest, as regards to how the overall building design looks
like and the level of service to be rendered by the envisaged project, is dependent
on the area at which the buildings to be placed. The owner has already decided
to commit himself to construct a five- s t a r hotel having the full knowledge
what is required by the national and international standard of Hotels in Ethiopia.
The standard by the way its exhaustiveness as well as being explicitly specific on
the level of the service expected under the selected category, determines also the
physical and financial requirement ofthe project. Hence, in effect the contents of
project components to be described below are the derivatives of the
requirements mentioned above.

5.2. Physical appearance

The hotel would have G + 8 building placed on an area of 974 m2. The
architecture of the buildings are influenced by the modern design setting
holding the characters of attracting customers from out ward and allowing
the maximum comfort it can provide from service point of view. Apart from
the need to add a new look within the locality, exterior of the building will be
dominated by a glass panel at the strategic corners to provide a maximum
opportunity for guest to have, a look at the important land escape/scenery
of the area.

The outer space is allocated to have an open garden, children’s playing

ground, parking area, fountains and inter campus paving with a medium
size swimming pool adjoining the front side of the buildings.

5.3. Core facilities

The envisaged hotel should have sufficient and comfortable space to

accommodate the core services as per the requirements of the Five-star hotel.
Actually, this has been considered seriously at the design stage of the
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

building along with the allocation of appropriate area and placement of each
component with the building accordingly. On the other hand, it is also important
to figure out the layout of each component not only from the perspective of
having compliance for the standard but for the benefit exploring possibilities of
bringing complementary services under the same location and allow maximum
convenience in the work processes.

The size (area) of each service, which will be explained below, determine the
holding capacity of guests as it determines the level and quality of service.
Other than the critical factors mentioned above the market aspect i.e.
customers need and resource availability are considered in which case they
are the determinants to give the final set up of the facilities.

(a) Bed rooms

A total of 80 classes are allotted for room services with options to avail two
different types of
accommodations. In the interest
of following the trend in the
industry single and double
bedrooms. Actually the
standard requires allowing
maximum 30% from the total
while the rest can remain with
big double bed rooms or any
other smaller rooms. On the bases of the above considerations under this
component, the hotel will have 50 single ,20 double and 10 suit king bed
rooms

(b) Bars
Standard Five-star hotels must have at least one bars with a superior comfort
and service quality. The furniture and equipment’s, as being the basic sources
of customer’s attractions, need to be fashionable of higher quality
commensurate with the expectation of guests who happen to prefer
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

this class. Therefore, the envisaged hotel, having the requirements considered
too, will have one main bar at the ground floor adjoining the reception area.
Another bar preferably with smaller space but furnished with cozy furniture will
be placed at top floor of the building. This is just to add another attractive look
for the hotel as it will be placed at a strategic location for customer to have a
panoramic view of the area. The minimum carrying capacity of the bars is
estimated 200 persons per day.

(c) Main restaurant

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

(d) Banquet/Conference hall

A hotel with Five stars needs to have a conference/banquet hall of larger area
which can be used for banquet or conference interchangeably. This project
considers this component as the second important function next to the room
services as this area has a higher potential for such services. The holding
capacity of the main conference hall will be 500 persons.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Business center (mini market shop)

A Five-star hotel needs to have also a business center with the service that
would the customers need. For such a service, the envisaged project will
allocate a relatively bigger area preferably separate rooms at the ground
floor. Rooms are allocated to secretarial service, executive rooms for business
meeting and shopping corners. The secretarial service will be furnished with
all the machines and equipment to handle any business enquiry that may be
raised by hotel guests. The shopping corner also accommodates mini
boutique, cosmetics and d/t type of shop

(e) Supports
Kitchen
Two kitchens, with the processes of multiple varieties of food preparation and a
proportional capacity to handle the maximum guests to be served in the main
restaurant as well as in banquet hall, is the critical requirement for the proposed
hotel. It should be large enough also to accommodate the working areas of cold
and hot meals on the one hand and pastries and bakery on the other.

In order to allow reasonable space for workers to move around as well as to

avoid the possibility of contamination and spoilage, the pastries and bakery
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

will be placed at the nearest door joining the main buffet at the gate of the
restaurant. On the other hand, the kitchen should be provided with a space
to add a small store with a flexible structure to contain butchery and coldrooms.
These are critical for easy facilitation of cooking’s. Moreover, the kitchen will
have a well-connected washing corner with at most margin of clearance to make
the area safe and clean.

Power House
For the service of the hotel to continue uninterrupted, a power house is
already planned to be placed in the underground or back to the building.
Hence, the power house will be supplied with a goner planned to be fixed for
emergency service.

Store
Alike the capacity projection made on the kitchen, the envisaged project
requires a store as big as the varieties of items that are needed to be kept as
stock. The store will need to have a systematic management for stocks
properly placed and identified at the time of delivery and inventory. Hence, it
is the required procedure to organize the stock items in separate sections so
that the proper handling of stocks shall be maintained. In view of this, the
hotel requires a number of stores with sections for food items, beverage, glass
wares, silver wares, soft furnishings, cleaning and sanitary materials,
stationery materials all placed according to their physical appearances. The
store will be placed in locations nearer to kitchen or leisure service.
Car Parking
The hotel must provide the service of car parking with 24 hours protection
at least for those customers who have checked in. Again, it should be large
enough to accommodate as many vehicles as the hotel is going to entertain a
large crowd. In view of this, a parking space for about 17 vehicles is planned
to be allocated with the standard width and height of the drive-in routes.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

5.4. Hotel Furniture and Equipment’s

Furniture and equipment required to furnish the envisaged hotel depend on

the space to be available as well as on the quality and volume of service to
be rendered. Normally the quantity required will also depend on the standard of
the hotel i.e., Five-star hotel. To the extent that the engineering design of the
building align with the requirements of the standard, the projection of furniture
and equipment’s has to be consistent with the size and number of rooms, bars,
restaurants and leisure center. However, one has to be realistic in the sense that
the forecasting trend to link with the technical feasibility particularly with that of
the envisaged service capacity. Moreover, the balance to be between image
building and income generation capacity has the same level of influence as said
above.

Therefore, for this particular category of forecasting two levels of

considerations are taken into account. One, by the fact that the design of
building directly determines the space available for every item, size will be
governed by this and again the quality required furniture will determine base
on the kinds of facilities available. In any case the required quantities are
forecasted based on the components stated below:
▪ 80bed rooms,
o 10 king size luxury bed rooms
o 20 standard Double bedrooms
o 50 standard Single bed rooms
▪ Special Bar and cafeteria
▪ Traditional and international restaurant
▪ conference rooms,
▪ Massage room
▪ Sauna and steam bath room
▪ Physical fitness room
▪ Night club (dancing area)
▪ Indoor and outdoor game facilities,
▪ Management office and store,
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

▪ Other civil works including land escaping, parking area, fountains

and inter campus paving.
Secondly, in order to fulfill the basic requirements of hotel service, the quantities
forecasted for the above facilities have to be reviewed against the national
standard. Such consideration gives the benefit of consciously sorting out what
item goes with what kind of facility or service. Once this is determined the
forecast of quantity will follow accordingly. The project detail design work has
already been undertaken and the planned facilities of the project and the
required quantities are forecasted in section 5.
5.5. Inputs/ raw materials and utilities

5.5.1. Raw Material cost

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

S/N Raw materials Quantity per cost per per year

month month
Food materials raw costs lamp sum 500,000.00 6,000,000.00
d/t type Beverage raw costs lamp sum 500,000.00 6,000,000.00
massage, sauna bath and other lamp sum 15,000.00
related cost 180,000.00
Cleaning materials and other lamp sum 15,000.00
miscellaneous uses 180,000.00
Total 12,360,000.00

5.2.2. Utilities
Annual requirement of electricity, water and fuel is estimated at 2,367,000
birrs from which, 500,000 kwh, 300,000 m3 and 2000 liters, a r e electricity,
water and fuel respectively. The total costs of utilities are, therefore, about
Birr 2,367,000 per annum.
Table 5.2 utilities
Description Qty. Cost per
unit cost year
Electricity, kWh 500000 1.25 625000
Water, m3 300000 4.5 1350000
LPG, lt 2000 16 32000
Diesel, lt 20000 18 360000
Total 2367000
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

5.6. Machinery and equipment

Machinery and equipment required for jute bags manufacturing plant are given in Table
Table 5.3 list of machinery and equipment
Furniture and equipment's required for Suit bed rooms (10 )

S/n Description Quantity Unit price Total (birr)

1 Sofa single 20 2,500 50,000

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

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

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
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
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

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
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

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
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
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
9 Coffee machine stand 2 50,000 100,000
10 Refrigerator big 2 20,000 40,000
11 Refrigerator medium 2 12,500 25,000
12 Coffee roaster 2 7,500 15,000
13 Ice maker 2 5,000 10,000
14 Pastries stand 2 15,000 30,000
15 Juice maker 2 5,000 10,000
16 Draft beer machine 2 15,000 30,000
18 Tape recorder 2 10,000 20,000
19 DVD player 2 1,200 2,400
20 Satellite dish with receiver 2 2,500 5,000
21 Shelf with drawer 2 20,000 40,000
22 tea cup 500 25 12,500
23 coffee cup 500 25 12,500
24 Milk cup 500 25 12,500
25 Makiyato cap 500 25 12,500
26 water glass 500 15 7,500
27 draft glass 500 60 30,000
28 wine glass 500 100 50,000
29 Whisky glass 400 100 40,000
30 local gen glass 500 50 25,000
31 service tree 1000 150 150,000
Total - - 1,232,900

Furniture and equipment's required for dinning/restaurant room

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

PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

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
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

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
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
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
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

steam and sauna bath

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

Garden recreation center

S/N Garden recreation center Qty Unit cost Total Cost
1 Lawnmower 5 2000 10000
2 Wheelbarrow 10 500 5000
3 Metal scraper 10 100 1000
4 Coffee machine 2 10000 20000
5 plastic chair 40 150 6000
6 Oval shaped plastic table 20 800 16000
7 Umbrella 20 400 8000
8 juice glass 40 50 2000
9 tea spoon 50 5 250
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL
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 sprinkles 30 40 1200
17 water house nylon rope 4 500 2000
18 Gardner's kits 2 100 200
Total 81,000
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000
For double bed room (20) 3,019,000
Single bed room (50) 2,822,500
2 Furniture and equipment for office and reception area 1,295,300
3 Furniture and equipment for bar and cafeteria 1,232,900
4 Furniture and equipment for restaurant and dining room 485,750
5 Furniture and equipment for conference room 1,468,250
6 Furniture and equipment for kitchen materials 5,237,428
7 Sauna and steam bath materials 526,690
8 Aerobics and physical fitness 682,100
9 Massage service materials 300,000
11 Mini market shop establish costs 200,000
12 Garden and creation area 81,000
Total 17,069,918

5.7. Land, Building and civil work

5.7.1. Land lease

The overall land required is about 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
5,291,795.4 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-
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

ventilated appropriate international Hotel service area the structure includes

separate services and other different activates the detail as follows

Table 5.4. Description of Land use plan

S/n Description Qantity Unit Price Total Price
(Br) (Br)
1 Main Building G+8 500 5,000 20,000,000
Gust room
Manager office
Minimarket shops
Bar and restaurant
Bed room (80 rooms,20 will be
double rooms, 50 single rooms and
10 suits.)
Meeting room
Sauna and steam bath
Gymnasium physical fitness
4 Store service 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
Total - 23,143,475
974.00

5.8. Environmental impact assessment

The project will seriously involve itself protecting conserving and developing the
natural and flora of the project area in line with the millennium development
goal. To this to will play a vital role in participating the varies organization and
the community around the project area to from an environmental commute in
charge of all environmental issues to be handled in accordance to varies
environmental and water policies of 97/99.
The owner of the project believes to undertake several environmental issues
for the conservation development and creation of sustainable environmental
around the project area.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

5.9. Implementation Schedule

The actual implementation of the International 5-star hotel is planned to begin

on the July 2023. The major activities envisaged are processing of land
preparation, construction and delivery, installation and commissioning of the
factory line. Undertaking of civil design works and execution of construction
works which will be carried out by side which opening and processing of L/C will
take 3 months. The FOB delivery of plant machinery and equipment will take 4
months. Allowing additional one month for sea freight and clearing, the delivery
of plant of project site and thus commencement of installation work requires 5
months. Plant installation and commissioning will take place for 4 months.
The provision of infrastructural facilities such as Electric Power and water will
be carried out in the course of project implementation schedule. Other activities
such us man power recruitment and training, system development, and
procurement of raw and other supplies will also be duty performed to ensure that
everything is in place by the time the plant is ready foroperation. All in all the
project is expected to take 12 months for completion as per the below detailed
implementation schedule.
Table 5.5. Implementation schedule
(Months) in Gregorian Calendar
Description 5 6 7 8 9 10 11 12 1 2 3 4
Acquisition of I n v e s t m e n t
Land
(May 2018)
Opening & Processing of L/C x x x
Building Construction x x X x x x
Delivery of Plant machinery and X x x x x
Clearing
Installation and Commissioning x x x x
Recruitment of man power x x x x x x
arranging for other works
Customers, timely availability all the week including week end days, customer
care, and quick response to the feedback from clients.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

6. ORGANIZATIONS AND MANAGEMENT

6.1. Organizational Structure

The organizational structure of the project is designed by including all the

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

CEO

Adviser Internal Auditing

& Inspection

Secretary

As clearly shown the organizational structure, the integrated projected center

has CEO three Departments under the general manager, Addition and the internal
Auditing and inspection. The departments are the production Department, the
marketing department and the general service department under each
department there are different section which are undertaking different activities
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

6.2. Management

As to the management of the project is concerned the owner will be responsible

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

6.3. Manpower Requirement

For smooth and efficient operation of the organization, it has been

anticipated that each unit will have adequate number of qualified and
experienced manpower. The labor component of the International 5- s t a r
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, 1 2 5 p e r m a n e n t ( 100 s k i l l e d & 2 5 unskilled) 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.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 6.1: Manpower Requirement

Annual
S/n Description of Job Qualification No. Monthly Salary(Br)
1 General Manager BSc in Hotel management 1 10000 120000
2 Coordinator/supervisor BSc in Hotel management 5 6000 360000
1 Assistance Supervisor diploma in Hotel management 5 6,000 360000
2 Receptionist diploma in Accountant 5 5,000 300000
3 Pastry and Staff Cafeteria diploma in food preparation 5 7,000 420000
4 Cafeteria supervisor diploma in Hotel management 2 5,000 120000
5 Waiter diploma and Certificate 20 2,000 480000
6 Cooker diploma in food preparation 20 7,000 1680000
7 Coffee machine operator 12th complete 2 3,000 72000
9 Pastry attendant Certificate 5 5,000 300000
10 Coffee machine operator 12th complete 5 3,000 180000
11 Dessert attendant skill professional 4 1,500 72000
12 Massage expert Certificate 5 5,000 300000
13 Physiotherapist Certificate 5 5,000 300000
14 Sauna /steam Bath Certificate 5 5,000 300000
15 Sauna and Steam bath Certificate 5 5,000
Attendant 300000
16 life saver Certificate 4 5,000 240000
17 Casher diploma in Accountant 4 2,500 120000
18 Cleaner vice 8th grade complete 10 1,500 180000
19 Plumber diploma in electrical 2 2,000
engineering 48000
20 Electrician diploma in electrical 2 2500
engineering 60000
21 Gardener skill professional 2 1000 24000
22 Guards Gardener 8 1,000 96000
Total 125 - 6,432,000

6.4. Training Requirement

Since the machinery and equipment and services are easy to operate, aspecial
training arrangement is not needed. But operators, chemists,mechanics &
electricians need a two weeks training during erection, commissioning period
on the production process, raw material and product quality and operation
and maintenance of machinery and equipment by the expert of machinery
supplier..
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7. FINANCIAL STUDY

Financial analysis of the proposed project of Cattle fattening farm will be

projected to test the financial visibility if the investigated organization.
Quantifying both project cost and benefits over the assumed project life,
which is five years, made the project visible. Besides it has been tried to make
a realistic forecasting of costs and the benefits based in current market price
of all necessary materials. Once the anticipated cattle fattening operation has
been attained both projects cost and revenue is estimated to be consumed to
be compensated by increasing in sales revenue

7.1. Classified Investment cost

The cost of the project is classified as fixed incitement cost and initial working
capital. With regards to fixed investment cost of the project, the land lease,
building and civil works cost, machinery and equipment cost office furniture
costs and fuel costs will be required. As to working and operating cost a brief
illustration will be given as to utilities, salary expense, maintenance cost and
depreciation cost and the other related costs

7.1.1. Fixed costs

Fixed cost that includes Land development, Building and civil work,
machinery equipment and vehicles and office furniture estimated birr
68,793,341.76. which is 65 % of the total project.
Table 7.1 land development
Description Qty Unit Price Total Price (Br)
S/N (Br)
1 Land clearing and leveling 974 m2 2,500 1,000,000
2 Land lease (5%) 5,291,795.52
3 Canal work 1 1000,000 1000,000
4 Water reservoirs 2 2000,000 2000,000
Total - - 9,291,795.52
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 7.2 Building and civil works

S/n Description Qty Unit Total Price
Price (Br)
(Br)
1 Main Building G+8 500 5,000 30,000,000
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 50,00 8,000,000
0
8 Parking area 150 3,000,000
9 Generator house 44 1000,000
10 Guard house 30 643,475
Total - 42,643,475
974.00
N.B. out of the total cost of G+8 Building construction, steel metal is covered 50 % of the
cost therefore the promoter is must be import from foreign using duty free by the rule of
Investment initiation.

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

S/n Description Total cost
1 furniture and equipment for 90 Bed room
Luxury bed room (10 rooms) 688,000 Import from
Double bed room (20 rooms) ,019,000 duty free
Single bed room (50 rooms) 1,822,500
2 furniture and equipment for office and reception area 1,295,300 Local market
3 furniture and equipment for bar and cafeteria 1,232,900 Local market
4 furniture and equipment for restaurant and dining room 485,750 Local market
5 furniture and equipment for conference room 1,468,250 Local market
6 furniture and equipment for kitchen materials 3,237,428 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 200,000 Duty free
11 Mini market shop establishes costs 150,000 Local market
12 Garden and creation area 61,000 Local market
Total 13,868,918
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 7.4. Procurement of Vehicles and furniture’s

Type of Vehicles Unit Qty Unit Price Remark
S/N
(Br)
1 Pick-up (4WD)/ No. 2 1,250,000 duty free
2 Mini bus No. 2 1,000,000 duty free
4 Office furniture’s Ls - 439,000.23 Local market
5 computer and accessories 301,053 Local market
Total - - 2,989,153.23

Table 7.5 Summary of Fixed asset

S/n Description Cost Estimate Remark
(Birr)
1 Land development 9,291,795.52 100% local market
2 Building & Constructions 42,643,475 50% duty free imported
3 Machinery and equipment 13,868,918 50 % duty free imported
4 Procurement of Vehicles & furniture’s 2,989,153.23 90 % duty free imported
Total 68,793,341,.76 49.7 % duty free
imported

7.1.2. Operational cost costs

Production cost of the project includes direct production and overhead costs.
The major cost item under this category includes cost of material and Labouré
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 7,778,939.4144 million 21 % of the
total project capital is.

Direct cost
Table 7.6.Raw materials
S/N Raw materials Quantity cost per per year
per month month
1 Food materials raw costs Lamp sum 500,000.00 15,000,000.00
2 d/t type Beverage raw costs Lamp sum 500,000.00 15,000,000.00
3 massage, sauna bath and other related Lamp sum 15,000.00
cost 4,000,000
4 Cleaning materials and other Lamp sum 15,000.00
Miscellaneous uses 180,000.00
Total 34,180,000
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 7.7 Utilities

Description Qty. unit cost Cost per year
Electricity, kWh 500000 1.25 1,000,000
Water, m3 300000 4.5 1,000,000
LPG, lt 2000 16 62,000.64
Diesel, lt 20000 18 800,000
Total 2,862,000.64

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

• Insurance: It is assumed to be 1% of fixed investment cost = birr

1,056,859
• 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 190,000 /year.
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

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 37,042,568.64
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.2. Project Capital and financing

7.2.1. Project Capital

The total investment capital of the project is estimated at birr 105,835,910.4 of
which birr 68,793,341.76 (65%) is for fixed investment items while the
remaining balance of birr 37,042,568.64 (35%) will be initial working capital.
The detail of investment capital of the project is given below
7.9. Project capital and source of income
Investment Source of Income Remark
S/n Description
capital (Br.)
1 Land development 9,291,795.52 Local Market
2 Building & Constructions 42,643.475 50% foreign currency Duty free
3 Machinery and equipment 13,868,918 45% foreign currency Duty free
4 vehicles and furniture 2,862,000.64 90% foreign currency Duty free
Sub total 26,065,356.99 49.7% foreign currency Duty free
5
5 Working Capital 37,042,568.64 Local market
63,107,988.995
32% need foreign Duty free
Total
currency

7.2.2. Financing

The total investment capital of the project is to be financed from the

promoter’s equity and bank loan. Out of the total capital birr 32,071488
(30%) is contributed by the promoter, Diaspora investment group while
the remaining balance of birr 74,500,140 (70%) is to be financed by local
banks. The bank loan will be repaid based on the following terms and
conditions:
▪ Loan amount = birr 74,500,140
▪ Installment period/ term = 10 years
▪ Interest on loan (including service charge) = 11.5%
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 7.10 Loan Repayment Schedule

Principal Interest Year ending
Year
Repayment Payment Balance
0 - - 74,500,140
1 7,450,014 5,923,804 46,360,206
2 7,450,014 5,331,424 41,209,072
3 7,450,014 4,739,043 36,057,938
4 7,450,014 4,146,663 30,906,804
5 7,450,014 3,554,282 25,755,670
6 7,450,014 2,961,902 20,604,536
7 7,450,014 2,369,522 15,453,402
8 7,450,014 1,777,141 10,302,268
9 7,450,014 1,184,761 5,151,134
10 7,450,014 592,380 0
Total 7,450,014 74,500,140

Depreciation of fixed investment items

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

Original Annual Depreciation

S/n Item
Value % Amount (Br.)
1 Land development 9,291,795.52 10 929,179.552
2 Building & Constructions 42,643,475 10 4,264,347.5
3 Machinery and equipment 13,868,918 10 1,386,891.8
4 vehicles and furniture 2,862,000.64 10 2,862,00.064
Total 47,797,310 - 6,866,618.916
 PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Table 7.12 Summary of project Annual production costs

S/n Cost item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1 Direct cost
1.1 Direct cost 12,360,000 12,978,000 13,626,900 14,308,245 15,023,657 15,774,840 16,563,582 17,391,761 18,261,349 19,174,417
1.3 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
Sub total 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
2 Administrative costs
2.1 Salary and wage 6,432,000 6,753,600 7,091,280 7,445,844 7,818,136 8,209,043 8,619,495 9,050,470 9,502,993 9,978,143
2.2 Employee benefits 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
2.3 Travel expense 643,200 675,360 709,128 744,584 781,814 820,904 861,950 905,047 950,299 997,814
Repair and
2.4 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
maintenance
2.5 Insurance 477,973 501,872 526,965 553,314 580,979 610,028 640,530 672,556 706,184 741,493
Advertising
2.6 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
expense
2.7 Telephone expense 365,000 383,250 402,413 422,533 443,660 465,843 489,135 513,592 539,271 566,235
Wi fi Internet
2.8 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426 88,647 93,080
service
2.9 Office supplies 100,000 105,000 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133
Miscellaneous
2.1 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699
expense
Sub total 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
Total cost working capital 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.

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PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.3. Revenue projection

The project will collect its revenue from the customer service. The selling of food
and beverage and rented rooms has estimated based on the current market price
and hotel standard of similar service provision in town. The annual service
program is formulated based on proposed plant capacity considered the
following table
Table 7.13 Description of revenue projection

No of bed Price/day
S/N Bed room service per year
rooms /night
1 King standard room 10 1800 4320000
2 Double bed room 20 1400 6720000
3 Single bed room 50 1000 12000000
Subtotal 23,040,000.00
S/N Raw materials No of cost per per year
customer month
per day
1 Food service income 100 850,000.00 10,200,000.00
2 Beverage service income 200 850,000.00 10,200,000.00
3 income from Massage service 40 360,000.00 4,320,000.00
4 Income from Gymnasium 20 180,000.00
Service 2,160,000.00
5 Income from sauna bath 45 472,500.00 5,670,000.00
6 Income from Meeting hole 20 150,000.00
service days/month 1,800,000.00
Subtotal 34,350,000.00
Grand total 57,390,000.00

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 PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.4. Financial statements

7.4.1. Projected Profit/loss statement

Diaspora investment
group
5 star international Hotel
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: Production
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
costs
Gross Income 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
Less: Interest on
loan 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

Less: Depreciation 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
Profit before tax 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
Less: Income tax
7313651.22 8073978.79 8861956.08 9678965.58 10526458.90 11405960.22 12319069.96 13267468.52 14252920.36 15277278.13
(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 37,372,088

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

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 PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.4.2. Projected cash flow statement

Diaspora investment group

5 star international Hotel
Projected cash flow statement
Table 7.15 Project cash flow Statement

Project Year
Description
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow
Equity 22,076,289 - - - - - - - - -
Bank loan 51,511,340
Revenue 57,390,000 60,259,500 63,272,475 66,436,099 69,757,904 73,245,799 76,908,089 80,753,493 84,791,168 89,030,726
Depreciation 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
Total Inflow 73,587,629 52,610,269 65,039,231 68,052,206 71,215,830 74,537,635 78,025,530 81,687,820 85,533,224 89,570,899 93,810,457
Cash Out Flow
Fixed Cost 47,797,310 - - - - - - - - -
Initial W.C 25,790,318 25,790,318 27,079,834 28,433,826 29,855,517 31,348,293 32,915,708 34,561,493 36,289,568 38,104,046 40,009,249
Loan Repayment 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134 5,151,134
Total Out flow 73,587,629 30,941,453 32,230,968 33,584,960 35,006,651 36,499,427 38,066,842 39,712,627 41,440,702 43,255,180 45,160,383
Net Inflow - 21,668,816 32,808,263 34,467,246 36,209,178 38,038,207 39,958,688 41,975,192 44,092,522 46,315,718 48,650,075
Cumulative
- 21,668,816 54,477,079 88,944,325 125,153,503 163,191,711 203,150,399 245,125,591 289,218,113 335,533,832 384,183,906
balance

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PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.4.3. Balance sheet

Current asset
Raw cost and utilities 12,360,000
Utilities 2,367,000
Administrative costs
Salary and wage 6,432,000
Employee benefits 1,608,000
Travel expense 643,200
Repair and maintenance 1,177,145
Insurance 477,973
Advertising expense 50,000
Telephone expense 365,000
Wi fi Internet service 60,000
Office supplies 100,000
Miscellaneous expense 150,000
Sub total 11,063,318
Fixed cost
Land development 9,291795.52
Building & Constructions 42,643,475
Machinery and equipment 13,868,918
Procurement of Vehicles & furniture’s 2,862,000
Total fixed cost 68,793,341.76
Total asset 106,571,628
Liabilities
Bank loan 74,500,140
owners Capital 32,071,488
Total liabilities and capital 106,571,628

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 PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

7.5.3. Viability and other measurement

Diaspora investment
Group
5 star international Hotel
Financial IRR computation
Table 7.16 Financial IRR computation
In ' birr

Year 0 1 2 3 4 5 6 7 8 9 10
Gross income 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
Total costs 73,587,629 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
Gross profit -73,587,629 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
Less: Profit tax 11,059,889 11,612,883 12,193,527 12,803,203 13,443,364 14,115,532 14,821,308 15,562,374 16,340,493 9049001.6
After tax net benefit -73,587,629 20,539,793 13,478,615 13,976,013 14,503,150 15,061,512 14,873,630 15,596,585 16,355,688 17,152,746 17,989,656
DF at 35% rate 1 0.741 0.549 0.406 0.301 0.223 0.165 0.122 0.091 0.067 0.05
Present Value -73,587,629 42,525,990 33,082,466 25,688,625 19,997,266 15,556,013 12,085,557 9,382,787 7,348,568 5,681,008 4,451,536
Net present Value 102,212,186 - - - - - - - - - -
DF at 30% rate 1 0.769 0.592 0.455 0.35 0.269 0.207 0.159 0.123 0.094 0.073
Present Value -73,587,629 44132910.0 35673624.0 28788976.1 23252634.6 18764876.1 15161880.4 12228386.1 9932679.7 7970369.8 6499243.0
Net present Value 128,817,951 - - - - - - - - - -

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PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

➢ NPV (Net Present Value)

It is a method of calculating the expected net gain or loss from project by

discounting rate of all expected future cash inflow and outflows to the present
point in time In the above table shoes that NPV at 30% and 35 % discount rate is
128.8 million and 102.2 million respectively, this figure is positive value or
NPV>0 it is indicate that accepted the project until 30 % and 35 % of discount
rate

Break-even Analysis

The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point of the project including cost of finance when it starts to operate at full capacity ( year
4) is estimated by using income statement projection.

BE = FixedCost = 23 %
Sales – Variable Cost

➢ Payback Period (PBP)

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

PBP = Initial investment Cost

Gross Profit + Depreciation

= 106,571,628
19,582,495 + 4,779,731

4=5Years
The payback period =4 is less than the maximum acceptable payback
period (10) therefore accept the project.
➢ IRR
PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Project Proposal on 5 star international /tourist hotel

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

8. SENSITIVITY ANALYSIS

Sensitivity analysis is variant of scenario analysis in which each scenario

represents a change in only one variable, rather than a number of variables.
For the proposed project, the sensitivity of the project has been computed at
30% and 35% for sales reduction, operating cost increase and investment
cost increased accordingly, as described in table 7.16 the result shows that
IRR at 33.9% operating cost increase and 30 and 35% investment cost
increase and 30% service sales reduction. Predicting among these sales
reduction is more sensitive to the project and it should further expand after
the project proposed life time because in this case NPV equal zero at IRR=33.9
9. RISK ANALYSIS

The major risk of this project shall be high market price fluctuation and turnover
the skilled and trained man power. These risks can be mitigated. The high staff
turnover may be lessened by creating conductive working atmosphere and
providing some benefits. For this project, 25% benefit is proposed for the
permanent employees
Characteristic (Personal) Risk: This is the most important risk, which
should be seriously considered? As to this company, the promoter have
sufficient years of work experience in both government and private
organization (leading private business by engaging themselves), so personal
risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable.
The demand- supply analysis exhibits the need of the service of the business

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PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Project Proposal on 5 star international /tourist hotel

organization. According to the overall demand the effect of competitors in the
sector would not be an immediate alarming threat at least for the coming
few years. In additional to this Long year experience of the owner in the field
will help to react against any adverse situation in the business. However, the
reaction of competitors should be attended. In additional to an advanced
promotional work and sustainable goodwill development by creating new
and best quality products with good service deliveries

Collateral Risk: Since the owners of the project are engaged on different related
business, there is no any risk related to collateral. In this regard, the proposed
building and other proposed equipment and the business as a whole are
dependable securities. The experience and skill of the owner as well as the
manager and the other expertise add confidence to the lenders. Therefore, there
is no risk regarding collateral in general.

Construction Risk: Construction risk is one of the most important areas of

risk that need great consideration during project implementation. In the case
of 5 star international hotel services, the construction work of the proposed
building will be made by phase with self-response supervision. Hence, there
is no as such serious risk related to construction work.

All the identified risks, which are related to the universally accepted lending
policy, are to the acceptable level that keeps the lender’s interest in safe
position. Furthermore, the quality of the assets of the company is
dependable and the projected finical reports show that the company will have
a capacity to pay the principal and interest without any problem within
short period of time.

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PROJECT PROPOSAL ON G+8 FIVE STAR INTERNATIONAL DIASPORA INVESTMENT HOTEL

Project Proposal on 5 star international /tourist hotel

10. MONITORING AND EVALUATION

Monitoring and Evaluation (M&E) has long been recognized as a vital aspect
of development projects generally and of industrial and services projects in
particular. The monitoring of project performance consists ofthe tracking
of human, physical and financial resources and the recordingof how they
are converted into outputs (project goods and services), and in turn,
outcomes and impacts.

11. CONCLUSION AND RECOMMENDATION

Conclusion: The Project is found to be operationally profitable & has significant

socio-economic benefits. According to the projected income statement, the
envisaged project starts earning profit from the first year of production. The
income statement and other profitability indicators show that the project is
viable. The project is believed to have significant social and economic benefits
that accrue to the society beyond those financial returns to its owner. The
most remarkable social benefits can be expressed in termsof 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.

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