4star Hotel Abdela Abamecha Riviced

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4star hotel Abdela Abamecha Riviced
Development planning and project analysis-II (Jimma University)
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PROJECT PROPOSAL FOR THE CONSTRUCTION OF

4STAR INTERNATIONAL /TOURIST /HOTEL BUILDING
Project name: ABDELA A/MECHA 4STAR INTERNATIONAL /TOURIST HOTEL

BUILDING
Promoter: - MR. ABDELA A/MECHA
Submitted to:- Oromiya Investment and Industry bureau, JIMMA CITY ADMINSTRATION,
Land Administration Agency & Investment office
August 17, 2022
JIMMA TOWN

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CONTACT PERSON AND DETAILS

ABDELA A/MECHA 4STAR INTERNATIONAL
/TOURIST HOTEL BUILDING
Name: - MR. ABDELA A/MECHA

[OWENER]
Address: - JIMMA CITY
Telephone : 0970600021
Email: ------------------------

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TABEL OF CONTENT
Item Page
Executive Summary ……………………………………………………… ……………………..5
1. INTRODUCTION …………………………………………………………...……………….………6
1.1. GENERAL BACKGROUND ………………………………………...……………………….…...6
1.2. OBJECTIVE OF THE PROJECT…………………………………...……………………………10
1.3. PROJECT DESCRIPTION…………………………………………………………………..……11
1.4 .PROJECT RATIONALE…………………………………………...……………………………..12
1 .5.THE SIGNIFICANCE OF THE PROJECT…………………………………...…………...........13
1.6. PROJECT LOCATION………………………………………………………...…………….…….13
1.7. INDICATORS FOR SUCCESS……………………………………………...………….…...........16
2. THE MARKET STUDY ………………………………………………………………….…………18

2.1. MARKET ANALYSIS…………………………………………………………………………...18
2.2. THE DEMAND-SUPPLY GAP………………………………………………………………….18
2.3. CURRENT SUPPLY OF MIXED USE BUILDING………………….. ………….…………..19
2.4. FUTURE MARKET OR DEMAND OF COMMERCIAL
2.5. TARGET CUSTOMERS ………………………………………………………….…………….21
2.6. MARKETING PROMOTION AND STRATEGY …………………………………..………...22
2.7. COMPETITION ………………………………………………………………………..……….. 22
2.8. THE PROJECT FACILITIES AND SERVICES PLAN ……………………….…………….23
3 .MATERIALS AND CONSUMABLES AND INPUTS …………………………..………24
3. 1.MATERIALS AND CONSUMABLES ……………………………………..……..……….24
3. 2.UTILITIES …………………………………………………………………….……………….….29
4. TECHNOLOGY AND ENGINEERING ………………………..…………….………………..31
4. 1.TECHNOLOGY …………………………………….………………………………………..….31
4.2. Service Process ………………………………….…………………………………………….….31
4.3. Source of Technology ………………………….……………………………………………..….33
4.3. ENGINEERING ………………………….………………………………………………..….….33
4.3. 1. Machinery and Equipment ………………………….…………………………...……….….33
4.4. Land, Building and Civil Works ……………………….…………………………..……….….52
5. ORGANIZATIONAL STRUCTURE……………………………………………………..…………55
5.1. ORGANIZATION AND MANAGEMENT……………………….……………………….……...55

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5.2. MAN POWER …………………………………………………………………….….………….….55

5.3. ORGANIZATIONAL STRUCTURE ……………………………………….…......……………..55
5. 4.TRAINING REQUIREMENT ………………………………………...……......……………..56
6. FINANCIAL REQUIREMENT AND ANALYSIS…………………………….…………..............60
6.1 FIXED INVESTMENT ……………………………………………………………….............60
6.2 FINANCIAL ANALYSIS AND STATEMENTS ……………..……………………………60
6.2.1 BANK LOAN REPAYMENT SCHEDULE ………………………………...........60
6.2.2. EXPENDITURE /OPERATION COST………………….……………..………………….62
6.2.3. DEPRECIATION SCHEDULE ………………………………………………………………….62
6.3 UNDERLYING ASSUMPTION ……………………………..……………………………….62
6.4 SOURCES OF FUND ………………………………………………………….……………. 62
6.5. FINANCIAL STATEMENT……………………………………………….………………….62
6.5.1 INCOME LOSS/STATEMENT ……………………………………………….…………… 62
6.5.2 . CASH FLOW STATEMENT………………………………..……………………….…..63
6.2.3 BALANCE SHEET……………………………………………………...……………………63
6.6. FINANCIAL ANALYSIS ………………………………………………………………………….63
7. ENVIRONMENTAL IMPACT OF THE PROJECT ………………………………………. …….64

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I EXECUTIVE SUMMARY
Project name: ABDELA A/MECHA 4STAR INTERNATIONAL /TOURIST
HOTEL BUILDING
project Type : 4STAR INTERNATIONAL /TOURIST HOTEL BUILDING
Nationality: Ethiopian
Project Owner: - MR. ABDELA A/MECHA
Proposed Project location: South West Oromia region Jimma town AWETU
MANDERA KEBLE in front of Sefy Hotel Jimma city rental residential municipality
houses based on rule and regulation of city redevelopment policy.
Total investment Cost: 72,000,000 ETB is required from this amount 30% or birr
21,600,000 ETB from owner equity and the rest 70% or birr 50,400,000 from bank loan.
Project composition: 4STAR INTERNATIONAL /TOURIST HOTEL Building
(G+10) used for Hotel Service and the premises shall contain such amounts as
determined hereunder of main and secondary entrances, exits, reception areas, dining
areas, kitchen and service areas, lounge areas, cloakroom facilities, bathrooms and toilets,
guest bedrooms, staff accommodation, storage areas, together with sufficient corridors
and stairways to ensure proper circulation of air, proper movement of people and proper
access to the various units.
Premises Required Area: 7500m2 which is private property of project owner’s.
The hotel will create employment opportunities for 120 persons; permanent employee
110 and temporary worker 10 for service delivery.
To get Construction permission letter project owner’s ABDELA A/MECHA will asked
permission by submitting this project proposal to JIMMA city administration, JIMMA
city land management agency and investment office based on rule and regulation of
investment development to start building construction soon..
Social and Economic Benefit: provide better Hotel service, Employment opportunities,
generation of income and benefits for the Local people.
This profile envisages the establishment G+10 Building of an international / tourist
standard 4star hotel with a capacity of 150 rooms.

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The total investment requirement is estimated at Birr 72 million, out of which Birr 20 million is
required for hotel equipment.. The project is financially viable with an internal rate of return
(IRR) of 10.38 % and a net present value (NPV) of Birr 8.39 million, discounted at 4.3%.

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1. GENERAL BACKGROUND
The Ethiopian Government launched a programme for the privatization of state owned
enterprises in early 1995. Accordingly, the Ethiopian Privatization Agency (EPA) was
established to implement the privatization programme in the same year. The Government has
laid the ground to privatize most of the state owned enterprises to the private sector.
Accordingly, EPA has received a stock of 113 state owned enterprises from the government for
privatization in the years ahead. As indicated in EPA's work schedule, out of these enterprises, a
total of 43 states owned enterprises are in the pipeline for privatization in the near future. Most of
these enterprises fall under manufacturing, construction, agriculture and agro-industry, hotels,
transport, trade, and mining sectors. There is a strong commitment from the Government side to
fully privatize state enterprises in the coming in few years.
Ethiopia is one of the African countries that possess the highest number of UNESCO World
Heritage Sites in Africa, with 8 sites spread throughout the whole country, and therefore has
great potential to develop itself as a tourist destination. The Government of Ethiopia (GOE) has
prioritized tourism development in its development strategy, PASDEP1, to optimize the existing
tourism resources as a driving force of economic growth for the whole country. The Prime
Minister, Mr. Abe, has also mentioned the important role of tourism development in poverty
reduction in “Tourism Paradigm” document, which was prepared several years ago with support
from United Nation World Tourism Organization (UNWTO). Ethiopia is a strategically
important country in the Horn of Africa for most countries and therefore, many international
meetings and conferences are held in Ethiopia. This creates a huge demand for accommodation
at an international standard and even an increase in sucha demand is expected in the future
because the importance of Ethiopia has been growing and many international organizations have
been continuously strengthening their institutions and augmenting their personnel in Ethiopia.
The supply of accommodation, however, is far below the level needed to meet the demand.
There are only two five-star hotels in Addis Ababa and hotels of an international standard can
rarely be found in the regions, even where there are international tourism attractions, such as
Lalibela. Many hotels and lodges are under construction, stimulated by the initiative of GOE and
the sharp rise in demand. Since the hotel industry can create job opportunities for so-called blue

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collar workers, the development of the hotel industry is benefits not only the tourism sector but
also poverty reduction. On top of the importance of the industry itself, since hotels are at the
center of supply chains, such as food, handicrafts and tour operations, focusing on the hotel
industry provides an occasion to overview those associated industries at the same time.
There exist seven associations related to tourism, e.g. Ethiopian Hotel Operators’ Association,
Ethiopian Tour Operators’ Association, and Ethiopian Eco-tourism Association, to name three.
The Ethiopian Hotel Operator’s Association was established 10 years ago and now consists of 36
hotels. The operation cost is basically covered by the fee from the members but additionally
donors and international organizations such as GTZ and Initiative Africa are providing support.
The Ethiopia Hotel Operators’ Association has been working very closely with GOE at both the
Federal and Regional level and is playing a crucial role in public-private partnership.
The export value of tourism is equivalent to 130million US$ according to a study of the World
Bank. This figure includes direct expenditure made on such aspects of the industry as transport,
accommodation, services and goods. In addition to the direct expenditure, the indirect
expenditure, such as purchase of foodstuff and other items by hotels from local suppliers, or the
economic activities induced by tourism, such as consumption made by the workers involved in
the tourism industry must be significant. Notably, one of the biggest hotels in Addis Ababa
purchases most of its foodstuff, (vegetables, meats, milk and some cheese) consumed at the
hotel’s restaurants, from the local market. This significantly reduces the leakage of the profits
although most of the goods, from electric bulb to shampoos, are imported from abroad.
According to the interview we made, the hotel spends 3 million birr (equivalent to 34,500 US$)
per month for local purchases, which is equivalent to approximately 2-3.5% of the total export
value of Ethiopia
In general, a stable macroeconomic condition leads to economic and business growth and
develops investors’ confidence. The Premises shall comprise one building or buildings which are
on one site and which are physically linked by well-lit, covered or insulated walkways which
said buildings shall share common access and egress and the premises shall contain such
amounts as determined hereunder of main and secondary entrances, exits, reception areas, dining
areas, kitchen and service areas, lounge areas, cloakroom facilities, bathrooms and toilets, guest
bedrooms, staff accommodation, storage areas, together with sufficient corridors and stairways to
ensure proper circulation of air, proper movement of people and proper access to the various

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units. The premises shall be of substantial and durable construction, structurally safe and in good
repair throughout.. Following growing demand trends, and with the expectation of high return on
their investment capital, large number of land developers pooled their financial resources and
invested in the property market.
To this effect, the owner of the envisioned Planned to Build 4star hotel Mr. ABDELA
A/MECHA who have been born and living for long time in this town planned to construct G+10
in Jimma town and undertaken this project study to check the market, technical and financial
feasibility of this project.
The promoter is very ambitious and committed to realize the project. Hence, they expect to get
the necessary support from the city administration to make the project to be operational.
Looking at the past trends and permits issues by the Government to the construction of 4STAR
HOTEL building in the major urban areas of the country especially in Jimma one can easily
conclude that the momentum is more likely to continue.
Besides, the government polices and incentives for the private sector investment are very
promising that motivates the promoter to engaged in HOTEL business.
1.2 .OBJECTIVE OF THE PROJECT
The major goal of this project is to contribute towards the growth of the Hotel industry in Jimma
town. Its specific objectives include the following.
 To construct and develop modern six floor building which utilized for 4STAR HOTEL
SEVICE, Training and meeting hall and restaurant, bedroom, cafeteria facilities and modern
Bread distributing facility that enables to provide standard services to local community and
visitors.
 To undertake trading and other refuted business activities that enable to generate a reasonable
to the invested capital.
 To develop modern Hotel facility that would provide services of international standard in
order to attract foreign visitors and thereby contribute towards the generation of hard
currency for the country.
 To create employment opportunities for the population in the town and surrounding
community
 Contribute towards the beautification of the town through the construction of modern
building infrastructure and facilities.

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1.3.PROJECT DESCRIPTION
The long-term goal of the project is become the best choice in JIMMA and its surrounding areas
as well as foreigner by creating a differentiated experience capitalizing on personal service. The
proposed project will have a total area of 3000m2, designed to reader a modern hotel service
business, which will in turn plays significant role towards solving shortage of standard Hotel
service in JIMMA town.
The historical nature of the town as business unique location in one of the most attractive parts of
the occurrence of the town along the along the Ethiopian South West laid a fertile ground for
future promising growth of the town.
The Premises shall comprise one building or buildings which are on one site and which are
physically linked by well-lit, covered or insulated walkways which said buildings shall share
common access and egress and the premises shall contain such amounts as determined hereunder
of main and secondary entrances, exits, reception areas, dining areas, kitchen and service areas,
lounge areas, cloakroom facilities, bathrooms and toilets, guest bedrooms, staff accommodation,
storage areas, together with sufficient corridors and stairways to ensure proper circulation of air,
proper movement of people and proper access to the various units. The premises shall be of
Substantial and durable construction, structurally safe and in good repair throughout.
Floors, walls and ceilings throughout the premises shall be of suitable type and design to
maintain the highest standards of hygiene.
The premises shall contain effective means of natural lighting and ventilation. The premises shall
have in the public rooms and bedrooms a means of space heating capable of maintaining at all
times a minimum room temperature of 20 degrees centigrade. Access and egress to night club(s)
or discothèques must be located in such a way that it does not interfere or cause any
inconvenience to the hotel residents. For new Building’s entrance(s) and exits for night club(s) or
discothèques must be located away from the main entrance to the hotel. The assessment is
divided up into “quality areas” that represent aspects of the business that contribute to the quality
of the guest experience. Each quality area contains a series of minimum requirements. These are
aspects of the facility and service that must be in place in order to meet visitors’ fundamental
requirements. These minimum requirements must be met to ensure eligibility for a star grade.
1.4 .PROJECT RATIONALE
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Internationally the economic growth this country is experiencing, the good governance created
and even if the town is in its nascent stage of development these project are the first in kind in
the town are feasible and would be a model development in promoting and attracting different
urban investments.
In order to respond to the created environment the town is in need of major, basic and feasible
urban projects to be developed.
The existing promising investment opportunities, the demands of service needs along with
relatively sound investment support made by the government in such kinds of feasible projects,
compelled the project promoter to initiate investing in the town to accommodate the existing
demand of these services in the town and the surrounding areas. The mismatch between the
demand for and supply of such kind of services in easily observed in the town.
Therefore, the existing shortage or absence in the supply of these services, along with its
commercial and administrative access, better location and infrastructure access, escalating trend
of urbanization and business activities, thus it is with such reason that this project is identified
and proposed and assumed to be more profitable.
In general, the country’s decentralized state based economy, privatized and free market
economy; good governance creates a favorable environment for the development of investment
for private investors.
1.5.THE SIGNIFICANCE OF THE PROJECT
The envisaged project deemed to add to the economic development of the nation in general and
zone and town in specific with following ways:
A. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes, payroll income tax and VAT are collected from undertaking business activities. Therefore,
the building will serve as sources of revenue for the town as well as for the region.
B. Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self employment or employment in other
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organization. Hence, this project will hire 133individuals and more than eighty individual during
construction.
C. Sources of social service
In addition to serving as a source of employment and income for the region, the project renders
social services for different group of people. Hence, it is also providing the following services;
 Serve as a source of mental satisfaction for the different users,
 Since, the center encompasses different recreational areas; it will divert the attention of the
users from different evil deeds.
 It deemed to minimize the demand and Supply for HOTEL and other bundles of services in
the area.
Furthermore, it serves as the pilot experience and ground for other investor to enter in to such
kinds of urban development. It also contributes on the efforts made on as a character given
building for physical development pattern of the townscape.
1.6.PROJECT LOCATION
Jimma is located at 352 km away from Addis Ababa in south-western direction. Or between 7.40N
latitude & 36.50 E longitudes.
Jimma is found between 1725-1789 m above sea level. The highest place (1789m) is known as Jiren& it
is the place where the former local kings had built their palace and which still exists. The lower
elevation (1725m) is around Jimma cities great stadium.
In year 2004, the total population of the city was estimated to be 144,835. Now the total
population of the city is estimated to be over 220,000.The number of male accounts 51% and the
number of female accounts 49%.
The annual growth percentage is 4.7 % (office of the finance & economic development of Jimma city).
There are many nations & nationalities that live in the city. Some of them are Oromo, Amhara. Tigre,
Keffa, Dawuro, Yem, Gurage, etc. They live & work together in harmony and also keep their identity
exercise their culture freely.
Area classification
According the currently master plan the total area of the city is 102.2km2 (10,200) hectares.This area is
classified to: Administrative areas, Residential areas , Reserve for housing expansion ,Mixed use,
Commercial ,Service, Manufacturing & storage, Recreation, Forest, Urban Agriculture and
Infrastructures like road.
Since the city has the right to administer itself the rearrangement of the classification of land can be
done whenever it becomes necessary for the development of the city
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Topographically, Jimma city area might be divided into escarpment and alluvialplains. Elevation
within the town boundary ranges from the lowest 1720 meter above sea level of Jimma Airport
to the highest 2010 meter above sea level of Jiren (a place where the palace of king Abajifar of
Jimma found).
The work force in the city is well discipline and easily trainable and has great desire to work in
an enterprise. In addition, the city administration has launched extensive training programs and
vocational and technical skills development so as to provide the growing industry with trained
human resource
The proclamation which has declared in 2003 (1995 E.C) helped to establish the urban of the
region in a new form. According to the proclamation article No. 65/1995 Jimma has got formal
recognition as city administration from Oromia regional Government.
The administrative Council comprises the mayor, the deputy mayor and the rest heads of
different sectors that are responsible for the mayors and all of them are implement the
government policy. The mayor is the head of the city administration.
Since Jimma recognized as a City Administration, the mayor and his cabinet members and the
Municipality Manager has been leading the city administration as per rules and regulations
issued by Federal and Regional Government.
The city divided into 17 kebeles /sub city administration units/ which are responsible to the City
Council & the City Administration Office.
The main economic activity of the city is dominated by commercial activities (trade & delivering
service) and manufacturing enterprise. The local Urban-rural exchange in Jimma and its
surrounding has contributed significant business activity. This is because of the commercial
Orientation of farmers who have consumption pattern similar to that of the urban.
No large-scale industrial activity in the town, however, small-scale industries and cottage
industries like grain mills, wood and metal workshops, Coffee hullers, hollow block
manufacturing, bakeries and pastries are actively running. The major manufacturing activities
that account 70% are grain mills and wood works. Jimma Abba Jiffar is widely known by its
woodcarving and sculpture products.
The 1st grade standard asphalt road which stretched 352km connects Jimma & Addis Ababa. In
addition, Jimma to Mizan and Jimma to Gambella asphalt road construction have underway.
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Currently, around 12.7km modern internal asphalted road has already begun by the amazing
participation of various parts of the society, neighbor districts and who loves the city with more
than 98 million birr capital outlay.
Jimma Airport hosts six weekly reliable flights from Addis Ababa to Jimma. Currently, with 132
million birr cost, Jimma International Airport Extension Project is underway. In the city there
are sufficient mini buses and city buses which provide transport services that would enable one
to move within the town.
In 2009 academic year education coverage of the city has reached 98%. Before fourteen years
there were only 11 primary schools and 2 secondary schools in the town. During1994-2008, the
number of schools in the city has shown a radical change indicating an average growth rate of
8.4% per annum. Besides, Jimma University, the prominent higher education of the country is
currently more than 10,000 students are enrolled learning in different fields study.
Educational provision of TVET in Jimma City began in 2001 with the objective to produce
intermediate trained manpower with different skills so as to enable them to have job opportunity
in the governmental institutions, and to initiate entrepreneurships which will work not only to the
city but also create a citizen which will contribute to the aggregate economy of the country.
Since the establishment of TVET program in 2001up to 2009 3,565 students had trained in
different vocation. Currently there are two governmental & eight private Vocational education
training, TVET centers are found in Jimma.
The community is interested with educational exchange with twin city because the community
needs to know new things especially with technological advancement, different research on bio-
technology, agro industry, animal farm, health and so on. There for, the specific implementing
area will Awetu mandera keble infront of Seyef hotel.
1.7. INDICATORS FOR SUCCESS
Project owner will be asked Jimma city administration construction permission letter to start building
construction soon.
There are numerous indicators for the success and effectiveness of the project which include the
following:
1. The administration of Jimma city has provided a peaceful and secure environment for the project.
2. The Central Government Representative and Regional Government Representative of Jimma is
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behind the facilitation of any recommendation for assistance from the Government, and Ministry of
Urban development and Municipality in particular.
3. The local community in the City and surrounding has provided moral and is ready to provide the
necessary help it can afford. (Community Contribution).
4. The Building construction is situated between a Police Post and a Worada court Army Detachment for
the assurance of Security.
5. The project owners are well experience in the business activity and participate on different investment
activity play great role in the implementation of a project. Some of the investment they achieved
effectively and efficiently are as the following;-
i. he has high commitment to implement this project since he was ahead accumulating construction
material in the stock.
ii. he has different experience since he was visiting business activity of foreign country
iii. he was educated Business person those have Business Plan by utilizing a fertile ground of Rule and
Regulation of investment proclamation of the country.
iv. he has deposited 30% of cash birr immediately to starting construction.
v. he is customer of different Bank Jimma branch for long period of time and he can get loan priority
with in short period of time.
vi. Most Building materials are locally available and are relatively affordable..
Vii. Expertise’s (surveyor and Engineer) are available and reliable for such a Job with maximum
commitment and efficiency.
Viii. Man power is undoubtedly available from the whole Keble and beyond, and the work can be done
at a reasonable spee
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2. MARKET STUDY AND SERVICE CAPACITY

A. MARKET STUDY
1. Past Supply and Present Demand
According to the information obtained from the Ministry of Culture and Tourism, the total
number of hotels in Ethiopia is 373 and rooms and beds are computed to reach 10,930 and
14,535, respectively in year 2014. In Addis Ababa, there are 57 hotels and 3,153 rooms and
4,391 beds. Details are given in Table 3.1.
Table 2.1 TOTAL NUMBER OF HOTELS, ROOMS AND BEDS IN ETHIOPIA IN 2014
Sr. No. Regional No.of No.of No.of Beds

State Hotels Rooms
1 Amhara 46 1,293 2,201

2 Afar 9 174 221
3 Benishangul 6 122 133
4 Dire Dawa 10 293 400
5 Gambela 1 22 44
6 Harari 9 241 301

7 Somali 11 215 245
8 Oromiya 136 3,259 4,113
9 SNNPRS 53 1,083 1,252
10 Tigray 35 1075 1,234
Sub-Total 316 7,777 10,144
11 AddisAbaba 57 3,153 4,391
GrandTotal 373 10,930 14,535
Source: Ministry of Culture and Tourism
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In case of star hotels, the total number at national level is 58 with the capacity of 3,405 rooms
and about 5,116 beds, while in Addis Ababa there are 28 star hotels and 2,282 rooms and 3,294
beds (see Table 3.2). The remaining 29 hotels in Addis Ababa are recommended - to - tourist
hotels that may be grouped in the near future to the star rating system upon upgrading their
services to the level of the required international standard. In case of JIMMA there no
international standard Hotel which is full fill minimum requirements of star hotel.
Table 2.2 TOTAL NUMBER OF STAR HOTELS, ROOMS AND BEDS IN ETHIOPIA IN 2014
Sr. No. Regional State No. of Star No. of Rooms No. of Beds
Hotels
1 Amhara 6 248 467
2 Oromiya 5 232 454
3 SNNPRS 4 134 225
4 Tigray 9 320 449
5 Dire Dawa 3 83 123
6 Harari 3 106 149
Sub-Total 30 1,123 1,867

7 Addis Ababa 28 2,282 3,249
Grand Total 58 3,405 5,116
Source:- Ministry of Culture and Tourism
Although a relative increase of investment is observed in the hotel & tourism sector, Even there
are still only two five star hotels, six four star hotels and 14 three star hotels in Addis Ababa.
Hence, the City requires more hotels of international standard to accommodate the increasing
number of tourists and conference participants of the African Union, UNECA, and other
randomly occurring meetings at different times. Therefore, In Jimma city still there is no
international standard three star hotel.
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.
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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 2.3 TOTAL TOURIST ARRIVALS IN ETHIOPIA
A 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
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.
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 in tourist 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
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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
JIMMA, which computed to be 597 rooms per annum, is taken as the existing capacity.
Table 2.4 TOTAL INTERNATIONAL AND NATIONAL TOURIST ARRIVALS IN JIMMA
Year NUMBER Growth Rate

2002 200,000 4.2
2003 207,000 4.4
2004 209,000 5.4
2005 266,000 5.6
2006 257,000 5.5
Source;-Jimma City Culture And Turism Biro
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
shown in Table 3.5.
Table 2.5 EXISTING HOTEL CAPACITY, PROJECTED AND UN SATISFIED DEMAND
Year Projection of Room Night Existing Hotels Un Satisfied
Tourist Arrival Demand Annual Demand
Capacity
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
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2020 721,345 1803363 597,140 1,930,175

2021 1803363 1903363 1963363 1,980,363
Accordingly, based on the market study and other considerations a three star hotel with room
capacity of 375 to 1000 is recommended.
Of these factors, the most important to have influence is population growth and the level of
income. The currently expanding coffee processing industry in the town and around the town has
been inviting skilled and unskilled labor forces to the town; in addition, the number of both
government and non government offices has been increasing. Above all the increase in the
number of population of the town increases for the provision of different services. As clearly
indicated in the introductory part of this proposal, and Jimma city in the dynamically growing
town of south West Oromiya. Though the market demand gap for HOTEL use building in Jimma
as clearly understand there is wider gap for such demand as many merchants, organizations and
higher institution are flouring to the town every day. From prior business experiences, the
demand of 4STAR HOTEL use building in Jimma is very high and hence the demand and the
supply gap is very wide.
1.2. FUTURE MARKET OR DEMAND OF THREE STAR HOTEL
Jimma town is situated in very centre of Ethiopian Coffee production area which is highly
known for its quality coffee and special flavor. These days Jimma is brand name Commercial
route of South Western Ethiopia. Jimma town is also a major business center and commercial
route that attracts thousands of business travelers. These are also the most important groups of
potential customers that include both the local and foreign tourists and the modern business
community who choose services that range from economic to high class standards. These groups
would also choose a healthy comfortable climate that combines a more traditional type with that
of modern bedrooms restaurants and cafeterias. Even though when compared with similar towns
in the region Jimma seems to have no developed HOTEL INDUSTRY, the existing supply is far
behind the growing demand for standard service. Hence, the project will solve the serous demand
problem in the town.
Over the last decade, there has been a significant growth in the number of local and international
trades across the country. This increase is mainly associated with the stimulation of economic
activist and partly due to an increase in the flow of international and local traders in to the town.
Since Jimma is an important commercial center in addition there is a significant increase in
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business activates and hence increasing the number of traders to the town. Even though there is a
lack of quantitative estimates that number of traders to the town and Even though there is a lack
of quantitative estimates that depict the actual demand and also the annual growth rate Hotel
facilities and urban commercial facilities are scarce in the city. So far in the town there is no
development of such kind standard HOTEL and it is the first of its kind in the town and will
promote other investors from the town and the surrounding areas. They are mostly gust house
type premises modified as show rooms and sailing posits. As a result there is a large gap between
the developed and that of the supply for modern bed rooms; cafeteria accommodation hence this
project would not face any problem of demand scarcity for it HOTEL business and it would
provide good service to customers.
2.3.TARGET CUSTOMERS
The target customers of this envisaged project include:-
1. International and Local Tourist Arrivals In Jimma city
1. business Community
2. Nearby business organization
3. the government bureau
4. small accounts SME
5. Nongovernmental organizations
6. Jimma university and other higher institution students ,staff and students family
2.4.MARKETING PROMOTION AND STRATEGY
In order to penetrate and gain considerable market share, one of the major marketing strategies
for the project is consistently rendering quality service to its tenants. Due emphasis must be
placed on improving quality of service and facilities. The major marketing strategies to promote
the project and gain considerable market share include:
 Registering to national and international HOTEL Association
 Advertising through different means focusing on the existing service and facilities
 Promote in association to the key location and nearby business
 Working on sustained promotional work.
 Working on public relations to reach and influence key personas and organization with a
capacity of making decision.
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 Keeping the quality of its service/ facilities and consistently improving with changing
situations.
 Seasonal discount pricing different others customer centric marketing strategies will be
used by the company.
2.5.COMPETITION
2.5.1.QUALITY SERVICE DELIVERY
There are different forms of competition that may face the envisaged 4STAR HOTEL. These are
price and non price based competition. Moreover, there are different competitors that will
compete with the project either directly or indirectly. But the Proposed Project 4STAR
INTERNATIONAL /TOURIST HOTEL under discussion has diversified marketing
strategies that could enable it coupe up with the different competitors in the market. Moreover it
will frequently conduct competitors research which focuses on, the strength and the weaknesses,
the different competitors’ strategies, the techniques they use in rendering the service, their
customer handling methods, and others. Generally the project has many other projects all over
Ethiopia which compete with it.
2.5.2. PRICING
The pricing of hotel services depends considerably on the quality of service rendered and its
location. The relatively high standard hotels in JIMMA charge a price, which ranges from USD
20(Honey land) to USD 30(Bony) for a single night per single room. Other hotels charge prices
that fall in this range. For the envisaged project a price of Birr 350 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 25 per cent of the revenue
obtained from room rents
2.8.THE PROJECT FACILITIES AND SERVICES PLAN
B. CAPACITY AND SERVICE PROGRAMME
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:
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Table 3.6. SERVICE CAPACITY OF THE ENVISAGED 4STAR INTERNATIONAL TOURIST

STANDARD HOTEL
Sr. No. Type of Service Feasible Service Capacity
1 Bedroom 150 rooms, 25 will be double rooms, 120 single rooms and 5
suits.
2 Bar and Restaurant 60 Persons at a time.
Restaurant (Modern and traditional 200 at a time each

10- 15 seats at a time
3 Sauna and steam bath 200 heads/day
4 Gymnasium 300 heads/day
5 Swimming pool (Big and small pools) 500 Heads/day and 120 head/day
6 Multipurpose Assembly hall 750 seats
7 Meeting room 50x3 seats
8 Children Playground 50 at a time
9 Modern Bakery 300 Bread at a time
2. Service Programme:
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 3.7.
Table 3.7 SERVICE PROVISION PROGRAME
Sr. No. Service Service Year
1 2 3- 10
1 Service provision rate (%) 75 90 100
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3 .MATERIALS AND CONSUMABLES AND INPUTS

A.MATERIALS AND CONSUMABLES
The annual cost and list of raw materials are indicated in Table 4.1
Table 4.1 ANNUAL MATERIALS AND CONSUMABLE REQUIREMENT AT FULL SERVICE
CAPACITY
Sr. No. Description Unit of Measure Qty. Total Cost (000) Birr
I Sauna /steam bath
1.1 Set of towels Set 600 180
1.2 Gripping plastic floor mat Pcs 50 5000
1.3 Head cover Pcs 1000 200
1.4 Sauna oil scent (115 ml) Bottle
1.5 Eucalyptus fragrance aroma Bottle 1500 225
1.6 Cedar fragrance aroma Bottle 1000 150
1.7 Winter green fragrance aroma Bottle 1000 150
1.8 Menthol fragrance aroma Bottle 1000 150
1.9 Sauna soap (200 pcs/pkt)
1.10 Pine scent Pkt 200 400
1.11 Birch scent Pkt 200 400
1.12 Sauna brush with long handle Pcs 100 20
1.13 Sauna head & back rests Set 80 4
1.14 Sauna sponges pcs 500 25
Sub-Total 1706.5
II Massage
2.1 Bolsters pillows and supports Set 3 6
2.2 Multi purposes massage cream Lump sum 10
(assorted size)
2.3 Massage oil (assorted size) Lump sum 10
2.4 Massage gels (Assorted size) Lump sum 10
2.5 Linens & covers (Assorted size Lump sum 5
Sub-Total 41
III Laundry Center
3.1 Cleaning Agent (Assorted) Lump sum 80
3.2 Swing thread (Assorted) Lump sum 0.2
Sub-Total 80.2
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IV Multipurpose Assembly Hall

4.1 Instrumental Audio CD (Assorted) Lump sum 5
4.2 CD-cleaner 0.15
Sub-Total 5.15
V Modern & Traditional Restaurant, Bar
and coffee shop
5.1 Food ( 35% of revenue) 142
5.2 Beverage ( 35% of revenue) 123
Sub-Total 265
VI Swimming Pool
6.1 Toilet soap Pcs 40
6.2 Cleaning agent (Assorted) Lump sum 70
Sub-Total 110
VII Other miscellaneous items 50
Sub-Total 50
Grand Total
30,057.85
3.2. UTILITIES
The utilities required for the service provision are electricity for lighting, for running of facility
and equipment, and cold water for all services available, gardening, drinking, etc. The hotel also
needs telephone for both local and international communication including Internet service and
LPG gas for various kitchens, diesel and petrol fuel for diesel generators and for running
vehicles. Based on past trends of utilities consumption by the existing facilities of similar hotels,
the annual requirement of utilities by the envisaged international tourist standard hotel is
estimated at Birr 1,544,440. The details of the utilities required with their corresponding annual
cost are shown in Table 4.2.
Table 4.2 UTILITIES REQUIREMENT AND COST
Description Qty. Cost ('00Birr)
Electricity, kWh 400,000 189,44
Water, m3 200,000 650,00
LPG, lt 1,000 15,000
Diesel, lt 100,000 690,000
Total 775,444
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4. TECHNOLOGY AND ENGINEERING

A. TECHNOLOGY
1. Service Process
a) Bedroom
The hotel will have bedrooms and will offer versatile services and facilities. Of the total 203
rooms, 50 will be double rooms, 153 single rooms and 5 suits.
Bedrooms will be more spacious allowing ample and generous ease of movement, comfort and
relaxation for guests. Among the features of the guest rooms the major ones are:
Rooms of excellent quality both smoking and non- smoking, and with luxurious standard of
furniture, wall coverings quality paintings and excellent quality floors,
movies, sports, and music and guest charge systems. In addition to terrestrial channels video
channels would be included,
phones in each room,
d with an excellent quality of sanitary

wares and fittings,
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b) Bar and Restaurant

 Bar
The bar will provide in-house and terrace food and beverage services .Its total capacity is
estimated to be 60 persons at a time.
 Restaurant
Two restaurants one modern and the other traditional with a capacity of 200 at a time each will
be established. The restaurants will basically serve breakfast, lunch and dinner by providing
daily menu, weekly buffet, and other choices of customers.
 Coffee Shop
A small - cozy coffee shop will be established with a capacity of 10- 15 seats
c) Multipurpose Assembly Hall
The proposed capacity of multi-purpose assembly hall is 715 seats. The hall is planned to
accommodate and serve multiple purposes. It can be used for multi-purpose activities by
rearranging of seats and adding appropriate facilities on time and site. The hotel has various
options to use available rooms such as for conventions, wedding services, training, workshops,
and others other public gatherings.
d) Gymnasium
The envisaged gymnasium will composed of one machine room (200sq. mt), one Aerobics studio
(100 sq. mt)
e) Laundry Center
The laundry center provides in-house cleaning service to bed room, and sauna/stem bathrooms
by providing clean towels, linens, covers and uniform of the employees with the required time
and quantity. The main processes of laundry center are sewing (if any), washing, and squeezing
drying, folding and pressing.
The laundry center will have a daily capacity of providing 200 clean sets of towels, 300 sets of
linen and cover 100 sets of uniforms and other miscellaneous items.
f) Swimming Pool
A swimming pool of having bigger size (50 m long x 25 m width x 1 m to 4 m slopping depth)
for male and female and small size (20m long x 10 m width x 30 cm to 80 cm slopping depth)
for children shall be constructed.
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The swimming pool service will be provided to customer from guest room or from outside.
Lockers are provided for customers for clothing and other belongings. The lockers require a coin
to be inserted as deposit or payment. Showers are also ready for customers (male and female),
before and after swimming. Other service requirements (deserts, hot and cold drinks) are also
provided to customers
g) Children’s Play Ground
The facilities included in the children’s play ground are swings, sliding stands, tunnels, merry go
round, sand filled pits, and coin operated toy vehicles and different kinds of arcade video games.
The whole area of the playground shall be free from any obstruction that could result in accident
and the recreational tools are installed in such a way that they will not cause any accident. The
arcade coin operated video game room having an area of about 100 m2 will be constructed from
prefabricated material with ventilation and lighting, and it will be carpeted. It should also be free
from any visible electrical connections and free from an accident or hazard.
The provision of such service doesn't have any adverse impact on environment.
4.2. Source of Technology
The technical data has been complied by visiting the existing international hotels with in Addis
Ababa and discussion with various professionals in similar fields and review of technical
documents about the international tourist standard hotels.
4.3. ENGINEERING
4.3. 1. Machinery and Equipment
The total cost of machineries, equipment, articles and accessories required by the envisaged hotel
is estimated at Birr 2, 001,490.
The complete list of machinery and equipment together with estimated cost are shown in Table
4.1.
Table 4.1 MACHINERY AND EQUIPMENT REQUIRED AND COST
Sr. No. Description Unit of Qty Unit Total Price
Measur Price (Birr)
e (Birr)
1 Bed rooms
1.1 Foldable Rest chair Pcs 20 300 6,000
1.2 Foldable rest bed Pcs 14 700 9,800
1.3 Wall mirror (1x 1.5mt), Supply and Installation Pcs 18 350 6,300
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1.4 Sofa Guest chair (Three seat) Pcs 20 3,500 70,000

1.5 Wardrobe with coat hungers Pcs 14 1,500 21,000
1.6 Receptionist table, Pcs 2 1,200 2,400
Single pedestal
1.7 Swivel chair Pcs 2 810 1,620

1.8 Satellite dish with Color TV 21" & antenna Set 1 5,000 5,000
1.9 Public addressing system Set 1 5,000 5,000
1.10 Wall watch Pcs 1 100 100
Sub-Total 127,220
2 Laundry center
2.1 Laundry center (Supply and Installation) comprising of LOT 1 300,000 300,000
Washing machines, drying machine, squeezing machine,
Ironing (pressing) machines, steam drying machines electrical
hydro-extractor and sewing machine. Daily a capacity of
providing 100 clean set of towels, 300 sets of linen & cover 50
sets of uniforms.
Sub-Total 300,000
3 Sauna and Steam bath
3.1 Sauna Electric heater Pcs 8 10,000 80,000
3.2 Sauna bucket, wooden 4 lt. Pcs 8 500 4,000
3.3 Sauna Ladle (Dipper), Wood, Birch, 381mm Long Pcs 8 300 2,400
3.4 Sauna thermometer Wood, Shows ºF and ºC, 140mm Square Pcs 10 249 2,490
3.5 Electronic sauna timer 90 Minute Pcs 10 200 2,000
3.6 Sauna hygrometer Pcs 8 800 6,400
3.7 Steam generator Pcs 1 30,000 30,000
3.8 Clothe hunger (Peg rack) Pcs 10 150 1,500
3.11 Wall mirror (1x 1.5mt), Supply and Installation Pcs 12 350 4,200
3.12 Sofa Guest chair (Three seat) Pcs 20 3,500 70,000
3.13 Wall mounted Lockers, supply and installation, 10 lockers in Pcs 10 1,500 15,000
one
3.14 Receptionist table, Single pedestal Pcs 1 1,200 1,200
3.15 Swivel chair Pcs 1 810 810
3.16 Satellite dish with Color TV 21" & antenna Set 1 5,000 5,000
3.17 Public addressing system Set 1 5,000 5,000
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3.18 Wall watch Pcs 1 100 100

Sub-Total 243,100
4 Physiotherapy
4.1 Infrared heaters, for facial treatment Pcs 6 10,000 60,000
4.2 Aerobics
4.2.1 Public addressing system (supply and installation) Set 1 15,000 15,000
4.2.2 Aerobics dumbbell Set 5 2,000 10,000
4.2.3 Stepping rocks (assorted) set 100 150 15,000
4.2.4 Wall mounted mirror (supply and installation) m2 30 150 4,500
4.3 Physical fitness (Machine)
4.3.1 Bike protus pcs 3 5,000 15,000
4.3.2 Track tread mills (electrical) pcs 1 20,000 20,000
4.3.3 Track tread mills (manual) pcs 2 4,000 8,000
4.3.4 Heart rate monitors and pedometers pcs 3 1,000 3,000
4.3.5 Body solid endurance up right pcs 1 10,000 10,000
4.3.6 Muscular dynamics pcs 1 12,000 12,000
4.3.7 Simplex II series pcs 1 14,000 14,000
4.4 Massage
4.4.1 Portable massage table with tools and accessories pcs 1 15,000 15,000
4.4.2 Massage bodywork tools Set 2 3,500 7,000
4.4.3 Massage chair with tools & accessories pcs 1 10,000 10,000
4.4.4 Massage store heater Set 1 1,000 1,000
4.4.5 Massage table electric warming pad pcs 2 2,000 4,000
4.4.6 Fleece massage table pad pcs 1 500 500
4.4.7 Massage music and video kit Set 1 5,000 5,000
4.4.8 Pillows/body support/ back care Set 2 4,000 4,000
4.4.9 Cleaner and sanitizers Set 2 2,000 2,000
4.4.10 Wall mirror (1x 1.5mt), Supply and Installation Pcs 5 350 1,750
4.4.11 Sofa Guest chair (Three seat) Pcs 20 3,500 70,000
4.4.12 Wall mounted Lockers, supply and installation, 10 lockers in Pcs 30 1,500 45,000
one
4.4.13 Receptionist table, Pcs 2 1,200 2,400
Single pedestal
4.4.14 Swivel chair Pcs 2 1,620 1,620
4.4.15 Satellite dish with Color TV 21" & antenna Set 2 5,000 10,000
4.4.16 Public addressing system Set 2 5,000 10,000
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4.4.17 Wall watch Pcs 2 100 200

Sub-total 375,970
5 Multi-Purpose Assembly Hall
5.1 Foldable sofa chair supply and installation Pcs 715 400 286,000
5.2 Guest chair with arm seat Pcs 10 400 4,000
5.3 Laminated conference table (200x100x175) Pcs 2 1,850 3,700
5.4 Window curtain, Valance type (supply and installation) Sq.Mt. 645 250 162,500
5.6 Stage lighting (decorative quartz flood lights and spot lights) Set 1 8,000 8,000
(assorted)
5.7 Multi media projector Unit 1 35,000 35,000
5.8 LCD projector Pcs 1 22,000 22,000
5.9 Overhead projector Pcs 1 3,000 3,000
5.10 Projector screen with portable tripod (250x250) Pcs 1 2,500 2,500
5.11 Wall mounted projector screen (300-350x300-350) Pcs 1 5,000 5,000
5.12 Public Addressing System, Auditoria type (supply & Lot 1 77,000 77,000
Installation)
5.13 Sink with two bay(for the kitchen) Pcs 1 500
5.14 Multimedia service (Supply and installation) comprising 20 Lot 1 350,000 350,000
brand desktop computers with accessories, 17” monitor (20
nodes), Server Network accessories (Terminals, patch cords,
patch panels, switches/hubs, cables, cable trays, etc) Tele broad
band service line etc.
5.15 Heavy duty & color photocopy machine Pcs 1 250,000 250,000
5.16 Binding machine Pcs 2 3,500 7,000
5.17 Laminating machine Pcs 1 3,000 3,000
5.19 Kitchen working table with drawers, 3m x90cm Pcs 2 3,000 6,000
5.20 Kitchen cabinet Pcs 2 1,500 3,000
5.21 Cabinet for coffee, tea cups, spoons etc Pcs 2 2,000 4,000
5.22 Sink with two bay for washing tea and coffee cups, draft Pcs 1 500 500
glasses, water glasses etc
5.23 Digital satellite dish with all accessories Pcs 1 5,000 5,000
5.24 Steel legged adjustable height chairs around the balcony Pcs 10 450 4,500
5.25 Plastic chair Pcs 200 150 30,000
5.26 Oval shaped plastic table Pcs 50 800 40,000
5.27 Umbrella Pcs 20 400 8,000
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5.28 Presidential desk 75x32x100cm) Pcs 1 8,000 8,000

5.29 Law back swivel chair Pcs 1 1,800 1,800
5.30 Laminated conference table (200x100x175 cm) Pcs 1 1,590 1,590
5.32 Sofa guest chair with arm seat Pcs 8 1,200 9,600
5.33 Oval coffee table Pcs 1 690 690
5.16 Binding machine Pcs 2 3,500 7,000
5.17 Laminating machine Pcs 1 3,000 3,000
5.19 Kitchen working table with drawers, 3m x90cm Pcs 2 3,000 6,000
5.20 Kitchen cabinet Pcs 2 1,500 3,000
5.21 Cabinet for coffee, tea cups, spoons etc Pcs 2 2,000 4,000
5.22 Sink with two bay for washing tea and coffee cups, draft Pcs 1 500 500
glasses, water glasses etc
5.23 Digital satellite dish with all accessories Pcs 1 5,000 5,000
5.24 Steel legged adjustable height chairs around the balcony Pcs 10 450 4,500
5.27 Umbrella Pcs 20 400 8,000
5.28 Presidential desk 75x32x100cm) Pcs 1 8,000 8,000
5.29 Law back swivel chair Pcs 1 1,800 1,800
5.30 Laminated conference table (200x100x175 cm) Pcs 1 1,590 1,590
5.32 Sofa guest chair with arm seat Pcs 8 1,200 9,600
5.34 Open shelf and sliding door office cabinet Pcs 1 1,720 1,720
5.35 Open book shelf (151x78x35) Pcs 1 1,220 1,220
5.36 Wooden filling cabinet, four drawers Pcs 1 1,100 1,100
5.37 Coat hunger Pcs 6 320 320
5.38 Executive sec. Desk and chair Set 1
5.39 Office desk (140x75x75) Pcs 1 923 923
5.40 Arc joint table (75x75) Pcs 1 263 263
5.41 Computer table (90x75x75) Pcs 1 1,352 1,352
5.42 Mobile drawer Pcs 1 750 750
5.43 Swivel chair Pcs 1 810 810
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5.44 Sofa Guest chair Set 1

5.45 One seat Pcs 1 1,840 1,840
5.46 Two seats Pcs 1 2,630 2,630
5.47 Three seats Pcs 1 3,410 3,410
5.49 Filling cabinet, four drawers Pcs 22 1,170 25,740
5.50 Metallic storage cabinet Pcs 1 1,103 1,103
5.51 Office desk (180x75) with mobile 3 drawers Pcs 7 1,833 12,831
5.52 Managerial chair, high back Pcs 7 938 6,566
5.54 Wooden office shelf (165x30x180) Pcs 12 1,820 21,840
5.55 Coffee table (100x50x50) Pcs 13 450 5,850
5.56 Open shelf office cabinet with drawer shelf office cabinet, Pcs 6 1,800 10,800
metallic
5.57 Metallic L-shape secretarial desk (150x75x75) Pcs 6 2,192 13,152
5.58 Secretary swivel chair Pcs 6 800 4,800
5.59 Office desk (120x80) with mobile 3 drawers Pcs 13 1,109 14,417
5.60 Guest chair Pcs 26 250 6,500
5.61 Open wooden shelf Pcs 13 1,109 14,417
5.62 Office desk w/o pedestal Pcs 12 845 10,140
5.63 Chair with arm seat Pcs 12 200 2,400
5.64 Metallic storage cabinet, slide Pcs 4 1,347 5,388
5.65 Dixon shelf (250x100x50) Pcs 8 600 4,800
5.66 Meeting room chairs with arm seat Pcs 40 300 12,000
5.67 Meeting room table (200x100x125) Pcs 2 600 1,200
5.68 White board (200x150) Pcs 1 350 350
5.69 Cash safe box Pcs 1 3,400 3,400
5.70 Brand desktop computer Set 10 9700 97,000
5.71 Laser jet printer Pcs 7 3,250 22,750
5.72 Fax machine (with scanner & copy) Pcs 1 3,000 3,000
5.73 Electronic type writer Pcs 1 2,500 2,500
5.74 Photocopy machine Pcs 1 12,750 12,750
5.75 Carpet, woolen strip (160x230cm) Pcs 1 2,500 2,500
5.76 Carpet, woolen strip (160x230cm) Pcs 1 2,500 2,500
5.77 Window curtain, Blind vertical fabric 1st grade (Supply and Sq. Mt 105 200 21,000
installation)
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5.78 Floor carpet (Supply and installation) Sq. Mt. 32 250 8,000
5.79 Floor carpet (Supply and installation) Sq. Mt. 178 150 26,700
5.80 Window curtain, Blind vertical fabric 1st grade (Sup and inst.) Sq. Mt 105 200 21,000
5.81 Coffee machine 2olt. Pcs 1 20,000 20,000
5.82 Water glass Set 20 20 400
5.83 Coffee cups with saucer Set 20 100 2,000
5.84 Tea cups w/saucer Set 20 50 1,000
5.85 Butter plate Pcs 2 150 300
5.86 Bread plate Pcs 30 20 600
5.87 Sugar dispenser size 6 Pcs 20 25 500
5.88 Juice glass Set 20 50 1,000
5.89 Tea spoon Pcs 50 1 50
5.90 Coffee spoon Pcs 50 1 50
5.91 Juice strainer pcs 2 120 240
5.92 Oil & vinegar holder Set 22 20 440
5.93 Kitchen knife Set 3 150 450
5.94 Refrigerator, 240 lt Pcs 1 5,000 5,000
5.95 Deepfreeze 500lt Pcs 1 10,000 10,000
5.96 Gas burner with cylinder, 12kg,two gas and two electric stoves Pcs 2 4,000 8,000
5.97 Frying pans Set 4 200 800
5.98 Dishes with two handle Set 4 500 2,000
5.99 Pressure cooker (1 up to5 bars) Set 3 1,500 4,500
5.100 Medical Equipment, tools, instruments and furniture for the Lump 500, 500,000
Clinic sum 000
Sub Total 2,586,378
6 Swimming Pool
6.1 Wall mounted Lockers, supply and installation, 10 lockers in Pcs 20 1,500 30,000
one
6.4 Lawnmower Pcs 2 2,000 4,000
6.5 Chemical mixing tank, Pcs 1 3,000 3,000
6.6 Chemical dosing pump, supply and installation Pcs 2 5,000 10,000
6.7 Coffee machine 10 lt Pcs 1 8,000 8,000
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6.10 Umbrella Pcs 10 400 4,000

6.17 Coffee cups with saucer Set 20 100 200
6.19 Ice cream box Pcs 1 5,000 5,000
Sub Total 89,740
7 Park and Recreation Center
7.1 Lawnmower Pcs 5 2,000 10,000
7.2 Wheelbarrow Pcs 10 400 4,000
7.3 Metal Scrapper (fork) Pcs 10 40 400
7.4 Coffee machine 10 lt Pcs 1 8,000 8,000
7.7 Umbrella Pcs 10 400 4,000
7.14 Coffee cups with saucer Set 20 100 200
7.16 Ice cream box Pcs 1 5,000 5,000
7.17 Water sprinklers Pcs 30 40 1,200
7.18 Water hose nylon rope reinforced 25.4 mm dia, 36 mt length Pcs 4 250 1,000
with clamp
7.19 Gardener kit Set 2 600 1,200
7.20 Children Play ground
7.21 Two chain rope swing with steel sit and stand Set 1 1,500 1,500
7.22 Plastic made Slide and hide tower (2-8 years) Set 2 3,000 6,000
7.23 15ft x 42 in. plastic made play tunnel Set 1 1,200 1,200
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7.24 Merry-go-round (made of steel) Set 1 2,500 2,500

7.25 See-saw (made of steel) Set 1 1,000 1,000
7.26 Sand filled pits, 5m2 Set 3 500 1,500
7.27 Coin operated toy vehicles Set 2 25,000 50,000
7.28 Coin operated video game machines (different type) Set 6 45,000 270,000
Sub Total 386,440
8 GUEST ROOMS
8.1 BED ROOMS Pcs
8.2 Bed sets - queen size, 2 by 1.90 m(for 3 suite rooms) Pcs 6 3,200 19,200
8.3 Bed sets – single, 1.20 * 1.90m ( for 24 double/twin rooms) Pcs 48 1,900 91,200
8.4 Bed -2*1.90 Pcs 6 1,500 9,000
8.5 Bed-1.2*1.90 Pcs 48 1,500 72,000
8.6 Bed side armoires-wood with 2 chest drawers Pcs 54 432 23,328
8.7 Sofa- single seat upholstery 2 for each room Pcs 54 860 46,440
8.8 Coffee table- round glass top Pcs 27 1200 32,400
8.9 Chair- wooden Pcs 27 380 102,660
8.10 Writing table- wooden with 4 chest drawers Pcs 27 545 14,715
8.11 Luggage rack- movable & flexible Pcs 27 128 3,456
8.12 Wardrobe – wooden built-in with partitions Pcs 27 904 24,408
8.13 TV set – 14 inches , flat screen Pcs 27 7,600 205,200
8.14 Telephone Pcs 27 1,200 32,400
8.15 Bath Pcs 27 2,600 70,200
8.16 Shower Pcs 27 380 10,260
8.17 Toilet seat Pcs 27 280 7,560
8.18 Washing basin Pcs 27 450 12,150
8.19 Mirror Pcs 27 185 4,995
Sub total 781,572
9 MODERN RESTAURANT Pcs
9.1 Tables- round Pcs 40 326 13,040
9.2 Chairs Pcs 160 112 17,920
9.3 Side service tables Pcs 5 185 925
9.4 Service trolleys Pcs 2 380 760
9.5 Cupboards Pcs 2 420 840
9.6 Main dish Plate with rim- 20 cm Pcs 200 46 9,200
9.7 Soup cup with saucer Pcs 80 32 2,560
9.8 Salad plate Pcs 200 41 8,200
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9.9 Bread plate Pcs 50 31 1,550

9.10 Salt & pepper –set Pcs 50 28 1,400
9.11 Butter holder/dish Pcs 50 15 750
9.12 Coffee cup with saucer Pcs 80 22 1,760
9.13 Tea cup with saucer Pcs 80 18 1,440
9.14 Soup spoon Pcs 80 6 480
9.15 Main dish knife Pcs 300 7 2,100
9.16 Forks Pcs 300 7 2,100
9.17 Salad knife Pcs 200 21 4,200
9.18 Dessert bowl Pcs 200 28 5,600
9.19 Water glass Pcs 200 26 5,200
9.20 Red wine glass Pcs 50 28 1,400
9.21 White wine glass Pcs 50 28 1,400
9.22 Champagne glass Pcs 30 30 900
9.23 Liqueur glass Pcs 200 25 5,000
9.24 Cocktail glass Pcs 30 25 750
9.25 Beer glass Pcs 120 17 2,040
9.26 Wine cooler with stand Pcs 4 206 824
9.27 Ashtray Pcs 50 12 600
9.28 Cash register Pcs 1 1,500 1,500
9.29 Wine storage shelf Pcs 1 2,600 2,600
Sub total 95,779
10 BAR Pcs
10.1 Tables Pcs 20 103 2,060
10.2 Chairs Pcs 60 82 4,920
10.3 Bar counter Pcs 1 3,650 3,650
10.4 Beverage shelve/ cupboard Pcs 1 2,800 2,800
10.5 Bar stool (counter chairs) Pcs 8 70 560
10.6 Bar coffee machine Pcs 1 6,450 6,450
10.7 Mixer & Juicer Pcs 1 560 560
10.8 Beverage dispenser Pcs 1 1,300 1,300
10.9 Water glass Pcs 40 26 1,040
10.10 White wine glass Pcs 20 28 560
10.11 Red wine glass Pcs 20 28 560
10.12 Wine cooler Pcs 2 206 412
10.13 Ice bucket Pcs 1 54 54
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10.15 Ashtray Pcs 40 12 480
Sub total 32,906
11 Traditional Restaurant Pcs
11.1 Short-leg traditional chair Pcs 120 476 57,120
11.2 Short-leg traditional table Pcs 30 1,714 51,420
11.3 Traditional sofa – set (3,2,1 seats with table) Pcs 10 4,628 46,280
11.4 Traditional lamp shed- big size Pcs 4 860 3,440
11.5 Traditional ordinary stool Pcs 20 86 1,720
11.6 Food & beverage serving trays Pcs 10 32 320
11.7 Sauce (wet) preparing pot- big size Pcs 5 325 1,625
11.8 Sauce “ “ - medium size Pcs 3 210 630
11.9 Sauce “ “ - small size Pcs 6 130 780
11.10 Refrigerator - Pcs 2 8,400 16,800
11.11 Counter with shelve and drawers Pcs 1 12,100 12,100
11.13 Washing basin unit Pcs 1 2,600 2,600
Sub total 198,525
12 COFEE SHOP Pcs
12.1 Coffee shop counter unit- custom built Pcs 1 10,950 10,950
12.2 Coffee machine Pcs 1 12,350 12,350
12.3 Long-leg counter stool Pcs 5 190 950
12.4 Chair with coffee table (set) Pcs 2 3,650 7,300
12.5 Coffee cup with saucer Pcs 30 22 660
12.6 Tea cup with saucer Pcs 20 18 360
12.7 Sugar holder (for all outlets) Pcs 12 23 276
Sub total 32,846
13 KITCHEN
13.1 Electrical & gas grill with six burners Pcs 1 46,340 46,340
13.2 Microwave oven-20nos Pcs 1 18,000 18,000
13.3 Salamander Pcs 1 45,000 45,000
13.4 Deep fryer Pcs 1 18,400 18,400
13.5 Mixer Pcs 1 9,000 9,000
13.6 Silcer Pcs 1 4,300 4,300
13.7 Hot – water bath ( bain maire) Pcs 1 12,600 12,600
13.8 Freezer Pcs 1 17,400 17,400
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13.9 Stock pot(50 liters) Pcs 4 3,300 13,200

13.10 Sauce pan Pcs 3 1,800 5,400
13.11 Sauce pot(50 liters) Pcs 5 1,800 9,000
13.12 Boiler( 30 liters) Pcs 4 6,400 25,600
Sub total 198,525
13.13 Baking pan Pcs 3 1,710 5,130
13.14 Roasting pan Pcs 5 1,710 8,550
13.15 Scale(portion) Pcs 1 1,000 1,000
13.16 Scale Pcs 1 3,200 3,200
13.17 Measuring spoons Pcs 2 5,140 10,280
13.18 Chef’s Knife (10 in.) Pcs 5 310 1,550
13.19 Salad knife (6 in.) Pcs 2 240 480
13.20 Vegetable knife (2in.) Pcs 3 240 720
13.21 Boning (6in.) Pcs 4 240 960
13.22 Slicer knife (12in.) Pcs 2 240 480
13.23 Bucher’s knife(12in.) Pcs 2 240 480
13.24 Cleaver (4in.) Pcs 1 240 240
13.25 Vegetable peeler (set) Pcs 1 85 85
13.26 Cutting Board – hard rubber Pcs 4 310 1,240
13.27 Pastry wheel Pcs 1 105 105
13.28 Kitchen spoon ( perforated) Pcs 2 176 352
13.29 Kitchen spoon( solid) Pcs 5 176 880
13.30 Skimmer (long) Pcs 2 208 416
13.31 Tongs (long) Pcs 2 126 252
13.32 Grater (normal size) Pcs 1 132 132
13.33 Strainer Pcs 2 182 364
13.34 Can opener Pcs 1 190 190
13.35 Kitchen counter top, with cupboard unit Pcs 1 5,700 5,700
13.36 Sink unit (900 / 1600mm) Pcs 1 4,910 4,910
13.37 Wall attached shelves Pcs 2 3,500 7,000
13.38 Refrigerator (self contained)- 1500lt Pcs 2 8,400 16,800
13.39 Hot cupboard (warmer) Pcs 2 1,500 2,600
13.40 Toaster Pcs 1 850 1,700
13.41 Ice cream machine Pcs 1 3,700 3,700
13.42 Ice cube machine Pcs 1 4,940 4,940
13.43 Dishwashing machine Pcs 1 2,175 2,175
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Sub-Total 319,851
14 HOUSEKEEPING Pcs
14.1 Cleaning trolley Pcs 3 2,450 7,350
14.2 Supplies and linen storage shelf unit Pcs 1 3,712 3,712
14.3 Wet and dry floor cleaning machine Pcs 2 2,710 5,420
14.4 Vacuum cleaner (upright) Pcs 3 2,310 6,930
14.5 Mop trolley with squeezer Pcs 3 35 405
14.6 Buckets big size Pcs 5 82 410
14.7 Buckets small size Pcs 10 71 710
Sub Total 21,937
15 Stand By Generator Set With Canopy And Unit 3 3,500,000
Accessories(100KVA)
Sub Total
Total 9,092,264
Contingency 909,226
(10%)
Grand Total
50,000,745
4.3. Land, Building and Civil Works

Land requirement by the envisaged hotel is estimated at 5000 m2. The hotel floor area is
estimated to cover 3000 m2 and the remaining 2,000m2 is left for construction of, generator
house, guard house, parking lot, children play ground, swimming pool garden, shops and walk
ways. The type of buildings and its corresponding civil construction cost is given on Table 4.2.
Table 4.2
TYPE OF CONSTRUCTION AND ITS RATE (BIRR/m2)
LIST OF BUILDING AND CIVIL WORKS AND THEIR COSTS
Sr. No. Building Total Rate per m2 Total cost (Birr)

Area (m2) (Birr)
1 Hotel building 3,000 6,500 19,500,000
2 Swimming pool, 2000 4000 8,000,000
park and
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recreation center,
walk ways etc
Sub -Total 5000M2 10,500 27,500,000 .00
Contingency /10/ 2,750,000.00
Grand Total 50,250,000.00
As shown on Table 5.2, the total cost of building and civil work is estimated at Birr 50,250,000
According to the Federal Legislation on the Lease Holding of Urban Land (Proclamation No
272/2002) in principle, urban land permit by lease is on auction or negotiation basis, however,
the time and condition of applying the proclamation shall be determined by the concerned
regional or city governments depending on the level of development.
Moreover, advance payment of lease based on the type of investment ranges from 5% to 10%.
For those that pay the entire amount of the lease will receive 0.5% discount from the total lease
value and those that pay in installments will be charged interest based on the prevailing interest
rate of banks. Moreover, based on the type of investment, two to seven years grace period shall
also be provided. The lease price is payable after the grace period annually.
Regarding, the terms and conditions of land lease the OROMIYA Government have adopted
Article 6 of the Federal Legislation with very minimal changes. Therefore, for the purpose of this
project profile since the project is engaged in social service, 99 years lease period, 50 years lease
payment completion period, 5% down payment and seven years grace period is used.
Accordingly, the land lease cost of the project, at rate of Birr 30 per m2 for 99 years of holding is
estimated at Birr 27.37 million. Assuming 5% of the total cost ( Birr 6.37 ) will be paid in
advance as down payment and the remaining Birr 21 million will be paid in equal installments
within 50 years, the annual lease payment is estimated at Birr 120,095.
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5. MANPOWER AND TRAINING REQUIREMENT

A.MANPOWER REQUIREMENT
The envisaged hotel requires 120 labor forces. The list of manpower and the annual cost of labor
is indicated in Table 6.1.
Table 5.1 MANPOWER REQUIREMENT AND ANNUAL LABOUR COST
Sr. No. Description No. of Persons Monthly Salary Annual Salary
(Birr) (Birr)
I Bed Room
1.1 Bed rooms supervisor 1 2,000 24,000
1.2 Receptionist 3 1,500 18,000
1.3 Casher 3 1,500 18,000
1.4 Cleaner 6 2,100 25,200
1.5 Plumber 1 600 7,200
1.6 Electrician 1 600 7,200
1.7 Guard 3 1,200 14,400
Sub- Total 18 9,500 114,000
II Sauna /steam Bath
2.1 Sauna and Steam bath attendant 4 2,200 26,400
2.2 Cleaner 4 1,400 16,800
Sub -Total 8 3,600 43,200
III Massage
3.1 Massage expert 8 8,000 96,000
3.2 Physiotherapist 2 3,600 43,200
3.3 Receptionist 2 10,000 12,000
3.4 Cleaner 4 1,400 16,800
IV Multipurpose Assembly Hall
4.1 Assembly hall supervisor 1 1, 000 12,000
4.2 Film projector operator 3 2,400 28,000
4.3 Hall attendant 8 4,000 32,000
4.4 Casher 4 2,000 8,000
4.5 Cleaner 20 700 1,400
4.6 Store keeper 2 11,00 2,200
Sub -Total 38 11,200 83,600
V Pastry and Staff Cafeteria
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5.1 Cafeteria supervisor 1 1,000 12,000

5.2 Waiter 12 4,800 57,600
5.3 Cook 6 3,000 36,000
5.4 Coffee machine operator 2 1,000 12,000
5.5 Cleaner 6 2,100 25,200
5.6 Pastry attendant 2 900 10,800
Sub- Total 29 12,800 153,600
VI Modern Hotel and
Traditional Restaurant
6.1 Supervisor 1 1,500 18,000
6.2 Purchaser 1 700 8,400
6.3 Driver 2 900 10,800
6.4 Cook 10 7,000 84,000
6.5 Waiter 40 20,000 240,000
6.6 Coffee ceremony attendant 4 1,400 16,800
6.7 Cleaner 20 7,000 84,00
Sub -Total 78 38,500 378,000
VII Swimming Pool
7.1 Supervisor 1 900 10,800
7.2 Waiter 10 4,500 54,000
7.4 Dessert attendant 2 900 10,800
7.5 Life saver 4 2,800 33,600
7.6 Cleaner 4 1,400 16,800
7.7 Casher 4 2,000 24,000
7.8 Plumber 1 600 7,200
7.9 Electrician 1 600 7,200
7.10 Gardener 1 350 4,200
7.11 Guard 3 1,200 14,400
Sub -Total 33 16,250 195,000
VIII Park and Recreation Center
8.1 Supervisor 1 900 10,800
8.2 Waiter 6 2,700 32,400
8.4 Dessert attendant 2 900 10,800
8.5 Children play-ground attendant 12 4,800
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8.6 Cleaner 4 1,400 16,800

8.7 Casher 2 1,000 12,00
8.8 Gardener 1 350 4,200
8.9 Guard 3 1,200 14,400
Sub- Total 33 14,250 101,400
VIX Guest Room
9.1 Chief receptionist 1 600 7,200
9.2 Receptionist 4 300 3,600
9.3 Porter 5 250 3,000
9.4 Door attendant 2 280 3,360
9.5 Head housekeeper 1 500 6,000
9.6 Guestroom attendant/ cleaner 4 300 3,600
9.7 Public area cleaner 4 250 3,000
9.8 Laundry supervisor 1 400 4,800
9.9 Laundry attendant 6 300 3,600
Sub -Total 28 3,180 38,160
Total 120 54,640 553,480
Employees benefit 27,320 327,840.00
(25% of basic salary)
Grand Total 68,300 717,400
B. TRAINING REQUIREMENT
All the staffs, in the catering and recreation sections, including physiotherapists, and supervisors
should be given at least two weeks on-the-job- training by the equipment supplier’s expert during
commissioning. The management members should also be given a two weeks training in local
training centers. The total cost of training is estimated at Birr 100,000.
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6. FINANCIAL ANALYSIS
6. FINANCIAL ANALYSIS
The financial analysis of the international / tourist standard hotel project is based on the data
presented in the previous chapters and the following assumptions:-
Construction period 2 year
Source of finance 40 % equity 60 % loan
Bank interest 15.5%
Discount cash flow 15.5%
Accounts receivable 30 days
Raw material (perishable) 3 days
Raw Material (non perishable) 30 days
Cash in hand 5 days
Accounts payable 30 days
Repair and maintenance 5% of equipment cost
6.1. TOTAL INITIAL INVESTMENT COST
The total investment cost of the project including working capital is estimated at Birr 72million.
The major breakdown of the total initial investment cost is shown in Table 7.1.
Table 6.1 INITIAL INVESTMENTS COST (‘000 Birr)
Sr. No. Cost Items Local Cost Foreign Total Cost
Cost
1 Land lease value 10 - 1,370,000
Pre operation cost 50,000 50,000
2 Building and Civil Work 47,000,000 14,000,000 50,000,000
3 Hotel Equipment 5,001.49 - 10,001.490
4 Office Furniture and 250.00 - 10,000
Equipment
5 Vehicle 700,000 700,000 500,000
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6 Bank Loan interest 13,950,000.00 3,950,000.00

7 Working Capital 5,OO,OOO - 5OO,OOO
Total = 72,860,000
Investment
cost
6.2. FINANCIAL STATEMENTS
6.2.1 REVENUE/INCOME STATEMENT of First Year Operation (in 000 Birr)

The source of revenue for this hotel is bead, food and beverages sale.
Table 6.2 Revenue/Income Statement Of First Year Operation (In 000 Birr)
Quantity Source of Sales Price Amount of Amount of Amount
Revenue per unit daily incomes monthly incomes of Annual Total
incomes
153 Single bed 500.00 76500 2,295,000.00 27,540,000 27,540,000
50 Double bed 600.00 30,000 900,000.00 10,800.000.00 10,800,000.00
Breakfast for 60 35.00 2,100.00 63,000.00 756,000.00 756,000.00
persons
Restaurant Meal for 60 55.00 3,300.00 99,000.00 1,188,000.00 1,188,000.00
persons
Lunch for 48 55.00 2,640.00 79,200.00 950,400.00 950,400.00
persons
Beverages Coffee 6.00 420.00 12,600.00 151,200.00 151,200.00
for 70 Tea 4.00 280.00 8,400.00 100,800.00 100,800.00
person
Milk 10.00 700.00 21,000.00 252,000.00 252,000.00
Soft drink Juice and other 10.00 700.00 21,000.00 252,000.00 252,000.00
for 70 soft drink
Non- Soft Beers and 40.00 2800.00 84,000.00 1,008,000.00 1,008,000.00
drink for Alcohols
70
Different Swimming 100 5000 150,000 1,800,000 1,800,000
recreation
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al income
from-
swimming
pool
50rson pe,
meetin g 3000 124440 5,000,000 5,000,000
hole 3000
Total 49,798,400
76547940 3,733,200.00 38,998,400 49,798,400
VAT 15% 7,469,760.00
Growth 42,328,640.00
income
6.2.2 EXPENDITURE /OPERATION COST

The annual production cost at full operation capacity is estimated at Birr 6.03million (see Table 7.2). The major
components of the production cost depreciation, financial cost and material and input which account for 26.82%,
22.63% and 18.72%, respectively. The remaining 31.82% is the share of direct labour, utility, repair and
maintenance, labour over head and other administration cost.
Table 6.3 ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)
l Cost %
Material and Inputs 300,000 18.72
Utilities 780,879.66 12.81
Maintenance and repair 26.12 4.2
Labor direct 244.404 7.14
Labor overheads 47.042 2.97
Administration Costs 573.92 4.76
Land Lease Cost - -
Total Operating Costs 600,000.00 50.54
Depreciation 2,90162.936 26.82
Cost of Finance 379.493.118 22.63
Total Production Cost 1,095.860 100
6.2.3 BALANCE SHEET

Gross income-42,517,840.00
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Expenditure- 32, 095860.00

BALANCE SHEET- 5421980.00
NET INCOME -10,897,693.00
6.2.4 BANK LOAN PYMENT PERIOD
Bank loan payment completed with 7 year
Table 6.4 ANNUAL LOAN PYMENT Including Interest for BANK Break Down ('000 BIRR)
Amount Loan YEAR
90,000,000. 1st 2nd 3rd 4th 5th 6th 7th
Per year 12,857,143 12,857,143 12,857,143.00 12,857,143.00 12,857,143.00 12,857,143.00 12,857,143.00
Per month 1071428.00
Per day 35,500.00
Table 6.5.1 Cash Flow Statement (in 000 Birr) proposed project 4 STAR INTERNATIONAL /TOURIST
HOTEL
Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cash
Receive
d
Net sale 42,328,640 42,669.6 43,936. 45,330.2 46,863.2 58,549.59 60,404.5 62,445.01 64,689.513 67,158.4
.00 24 586 45 69 7 56 2 64
Total 42,328,640 42,669.6 43,936. 45,330.2 46,863.2 58,549.59 60,404.5 62,445.01 64,689.513 67,158.4
.00
Cash in 24 586 45 69 7 56 2 64
flow
Expendi
tures
Total 12,000,000 12,000,000 12,000,00 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000
Operation 0
and
production
cost
Expense
Bank Loan 1,980.00 1,980.00 1,980.00 1,980.00 1,980.00 1,980.00 1,980.00 0.00 0.00 0.00
with
interest
Payments
Total 8,075.86 8,075.86 8,075.86 8,075.86 8,075.86 8,075.86 8,075.86 6,095.86 6,095.86 6,095.86
payme
nt
Net 3441.98 4593.764 5860.726 7254.385 8787.409 10473.737 12328.696 16349.152 18593.653 21062.604
Cash
Flow
Cumula 23,035.68 25,339.25 27,873.17 30,660.49 33,726.54 37,099.19 40,809.11 44,890.02 49,379.03 54,316.93
tive
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cash
flow
Table 6.6. Balance sheet Statement (in 000 Birr) of proposed project Modern Standard Hotel
Year Year Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
1
Total 11,51 12,669. 13,936.5 15,330. 16,863.2 18,549.5 20,404.55 22,445.01 24,689.513 27,158.464
7.84 624 86 245 69 97 6 2
Asset
Total 8,075.8 8,075.86 8,075.86 8,075.86 8,075.86 8,075.86 8,075.86 6,095.86 6,095.86 6,095.86
6
Liabili
ty and
Capita
l
Net 3,441.9 4,593.76 5,860.726 7,254.38 8,787.409 10,473.737 12,328.696 16,349.152 18,593.653 21,062.604
8 4 5
worth
Balance sheet Statement of 4 STAR INTERNATIONAL /TOURIST HOTEL

ASSETS LIABLITIES
Cash 3163.99 birr Building loan 3,000,000.00 birr

Inventory 0.00 birr Loan Interest 1,860,000.00 birr
Building and Civil Work 3,000,000.00 birr Total Liabilities 4,860,000.00 birr
Land 0.00 birr OWNER’S EQUITY
Other Asset 0.00 birr Paid in capital 500,000.00 birr
EQUIPMENT 1,696,000.01 birr Total Equity 4,000,000.00 birr
Total Assets 40,860,000.00 birr Total Liabilities and 72,860,000.00 birr

Equity
6.7. FINANCIAL EVALUATION

1. Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax will grow from Birr 3.79 million to Birr 4.02 million
during the life of the project. Moreover, at the end of the project life the accumulated cash flow
amounts to Birr 42.165 million.
2. Ratios
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In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project. Using the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net income by revenue,
return on assets ( operating income divided by assets), return on equity ( net profit divided by
equity) and return on total investment ( net profit plus interest divided by total investment) has
been carried out over the period of the project life and all the results are found to be satisfactory.
3. 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 3) is
estimated by using income statement projection.
BE = Fixed Cost = 23 % ==Sales – Variable Cost
4. Payback Period
The payback period, also called pay – off period is defined as the period required recovering the
original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 5 years.
5. Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded return rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way, the internal rate
of return for an investment is the discount rate that makes the net present value of the
investment's income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater than the rate of return
that could be earned by alternate investments or putting the money
in a bank account. Accordingly, the IRR of this project is computed to be 10.385 % indicating
the viability of the project.
6. Net Present Value
Net present value (NPV) is defined as the total present (discounted) value of a time series of cash
flows. NPV aggregates cash flows that occur during different periods of time during the life of a
project in to a common measuring unit i.e. present value. It is a standard method for using the
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time value of money to appraise long-term projects. NPV is an indicator of how much value an
investment or project adds to the capital invested. In principal a project is accepted if the NPV is
non-negative.
Accordingly, the net present value of the project at 4.25% discount rate is found to be Birr 36.73
million which is acceptable.
D. ECONOMIC BENEFITS
The project can create employment for 133 persons. The project will generate Birr 9.5 million in
terms of tax revenue. The project could be one of the sources for foreign exchange earnings by
giving services to international tourists.
51

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lOMoARcPSD|18172836

4star hotel Abdela Abamecha Riviced

Development planning and project analysis-II (Jimma University)

Studocu is not sponsored or endorsed by any college or university

PROJECT PROPOSAL FOR THE CONSTRUCTION OF

Project name: ABDELA A/MECHA 4STAR INTERNATIONAL /TOURIST HOTEL

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CONTACT PERSON AND DETAILS

Name: - MR. ABDELA A/MECHA

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1.7. INDICATORS FOR SUCCESS……………………………………………...………….…...........16

2. THE MARKET STUDY ………………………………………………………………….…………18

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5.2. MAN POWER …………………………………………………………………….….………….….55

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2. MARKET STUDY AND SERVICE CAPACITY

Sr. No. Regional No.of No.of No.of Beds

1 Amhara 46 1,293 2,201

6 Harari 9 241 301

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Sub-Total 30 1,123 1,867

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Year NUMBER Growth Rate

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2020 721,345 1803363 597,140 1,930,175

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Table 3.6. SERVICE CAPACITY OF THE ENVISAGED 4STAR INTERNATIONAL TOURIST

Restaurant (Modern and traditional 200 at a time each

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3 .MATERIALS AND CONSUMABLES AND INPUTS

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IV Multipurpose Assembly Hall

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4. TECHNOLOGY AND ENGINEERING

phones in each room,

d with an excellent quality of sanitary

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b) Bar and Restaurant

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1.4 Sofa Guest chair (Three seat) Pcs 20 3,500 70,000

1.7 Swivel chair Pcs 2 810 1,620

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3.18 Wall watch Pcs 1 100 100

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