1.

Area selected to establish the hotel: Wilpaththu

Wilpaththu National Park is the most visited and largest national park in Sri Lanka.
The park consists of main road which connects Puttalam and Mannar and also adjoining
parks. The park covers 1316.671 square kilometers (131,693 hectares) and is located about
185 kilometres (115 mi) from Colombo. Wilpaththu National park was designated as a
wildlife sanctuary in 1905, and, along with. The park is best known for its variety of wild
animals. It is important for the conservation of Sri Lankan elephants, Sri Lankan leopards and
aquatic birds.

There are six national parks and three wildlife sanctuaries in the vicinity of
Wilpaththu. Among the largest is Lunugamvehera National Park. The park is situated in the
dry semi-arid climatic region and rain is received mainly during the northeast monsoon
(December February). Wilpaththu hosts a variety of ecosystems ranging from moist
monsoon forests to freshwater and marine wetlands. It is one of the 70 Important Bird Areas
(IBAs) in Sri Lanka. Wilpaththu harbours 215 bird species including six endemic species of
Sri Lanka. The number of mammals that has been recorded from the park is 44, and it has one
of the highest leopard densities in the world.
2. Extent land with justifications

When considering land areas, it is included in playground, three swim pools, garden and
hotel. Hotel is three story building and in ground floor, a reception, main hall, liquor store,
kitchen and store rooms are included.
When considering first floor, we will include five single rooms, three double rooms and two
family rooms are included. It also same on second and third floors.

3. Price of land with assumption

Proposed hotel project is arranged in near Colombo area. Lets assume, price of one perch is
about Rs: 200000/=
So, total cost for land can be calculated as,
Cost for one perch of land : 200000/=
Total perches of land : 120
Total cost for land :24000000/=

4. Area Estimate

Ground Floor
Section Area(m2) Qtd Estimated
area(m2)

Reception and Main Hall 40 1 40

Liquor Store 30 1 30
Security room 20 1 20
Storage room 40 1 40
Kitchen 30 1 30
Public bathrooms 50 1 50
Other (Machine room) 700 1 700

First Floor
Section Area(m2) Qtd Estimated
area(m2)

Single Rooms 17 5 85
Double Rooms 20 3 60
Family Rooms 22 2 44

Second Floor
Section Area(m2) Qtd Estimated
area(m2)

Single Rooms 17 5 85
Double Rooms 20 3 60
Family Rooms 22 2 44

Third Floor
Section Area(m2) Qtd Estimated
area(m2)

Single Rooms 17 5 85
Double Rooms 20 3 60
Family Rooms 22 2 44

Total Area = 1477m2

5. Amount of money for construction.

Room type or Floor Average rate Rs per Total Area Total cost for room or
m2 floor
Single room 75,000 255 19,125,000
Double room 90,000 180 16,200,000
Family room 110,000 132 14,520,000

Total amount of money = Rs. 49,845,000

6. Hotel Room Occupancy Rate and Justification.

 We considered about the climates in which tourists favors, in coming to Sri Lanka, which is
mostly due to the hot climate, where most of the tourists are likely to sun bathe in the
beaches.
In addition, according to the website statistics shown in the website
http://www.sltda.lk/statistics , we have gathered the information provided in the above table
for the single, double and family rooms occupancy rates.

7. Decide on a suitable daily rate for different hotel room types for
the selected price.
We considered 16% for daily rate and following calculation
Rate = 16% 35000 per day 40000 per day 45000 per day
Construction Operating Maintenance Single room Double room Family room
 cost cost s Cost
Initial
49845000 1200000 2500000 12775000 14600000 16425000
Values
year
1 49845000 1034482.759 2155172.414 11012931.03 12586206.9 14159482.76
2 49845000 891795.4816 1857907.253 9493906.064 10850178.36 12206450.65
3 49845000 768789.2082 1601644.184 8184401.779 9353602.034 10522802.29
4 49845000 662749.3175 1380727.745 7055518.775 8063450.029 9071381.283
5 49845000 571335.6185 1190282.539 6082343.772 6951250.025 7820156.278
6 49845000 492530.7056 1026105.637 5243399.803 5992456.918 6741514.033
7 49845000 424595.4359 884573.8247 4520172.244 5165911.136 5811650.028
8 49845000 366030.5482 762563.642 3896700.211 4453371.669 5010043.128
9 49845000 315543.576 657382.45 3359224.319 3839113.508 4319002.696
10 49845000 272020.3241 566709.0086 2895883.034 3309580.61 3723278.187
11 49845000 234500.2794 488542.2488 2496450.891 2853086.733 3209722.575
12 49845000 202155.4133 421157.111 2152112.837 2459557.528 2767002.22
13 49845000 174271.908 363066.475 1855269.687 2120308.214 2385346.741
14 49845000 150234.4035 312988.3405 1599370.42 1827851.909 2056333.397
15 49845000 129512.4168 269817.535 1378767.604 1575734.404 1772701.205
16 49845000 111648.6352 232601.3232 1188592.762 1358391.728 1528190.694
17 49845000 96248.82341 200518.3821 1024648.933 1171027.351 1317405.77
18 49845000 82973.12363 172860.6742 883318.0453 1009506.337 1135694.63
19 49845000 71528.55485 149017.8226 761481.0735 870264.084 979047.0945
20 49845000 61662.54729 128463.6402 656449.2013 750227.6586 844006.116
21 49845000 53157.36835 110744.5174 565904.4839 646747.9816 727591.4793
22 49845000 45825.31754 95469.41155 487848.693 557541.3634 627234.0339
23 49845000 39504.58409 82301.21685 420559.2181 480639.1064 540718.9947
24 49845000 34055.67594 70949.32487 362551.0501 414344.0573 466137.0644
25 49845000 29358.34133 61163.2111 312544.0087 357193.1528 401842.2969
Total
values
after 49845000 7316510.367 15242729.93 77890349.95 89017542.79 100144735.6
25
years

The table below shows the values that we have calculated the NPV for different room types.
Net present value
Single room Double room Family room
5486109.648 16613302.5 27740495.35

8. Workout the annual operating cost and list the items

that constitute this cost

Employee Hotel Securit Audit Food and Entertain Vehicles Total

year s salaries employee y cost Beverage ment (7%) (10%) Operating
 s health
and
(20%) (15%) (6%) (25%) cost
safety
(12%)
1 206897 124138 155172 62069 258621 72414 215517 1094828
2 178359 107015 133769 53508 222949 62426 185791 943817
3 153758 92255 115318 46127 192197 53815 160164 813635
4 132550 79530 99412 39765 165687 46392 138073 701410
5 114267 68560 85700 34280 142834 39993 119028 604664
6 98506 59104 73880 29552 123133 34477 102611 521262
7 84919 50951 63689 25476 106149 29722 88457 449364
8 73206 43924 54905 21962 91508 25622 76256 387382
9 63109 37865 47332 18933 78886 22088 65738 333950
10 54404 32642 40803 16321 68005 19041 56671 287888
11 46900 28140 35175 14070 58625 16415 48854 248179
12 40431 24259 30323 12129 50539 14151 42116 213948
13 34854 20913 26141 10456 43568 12199 36307 184438
14 30047 18028 22535 9014 37559 10516 31299 158998
15 25902 15541 19427 7771 32378 9066 26982 137067
16 22330 13398 16747 6699 27912 7815 23260 118161
17 19250 11550 14437 5775 24062 6737 20052 101863
18 16595 9957 12446 4978 20743 5808 17286 87813
19 14306 8583 10729 4292 17882 5007 14902 75701
20 12333 7400 9249 3700 15416 4316 12846 65260
21 10631 6379 7974 3189 13289 3721 11074 56258
22 9165 5499 6874 2750 11456 3208 9547 48498
23 7901 4741 5926 2370 9876 2765 8230 41809
24 6811 4087 5108 2043 8514 2384 7095 36042
25 5872 3523 4404 1762 7340 2055 6116 31071

Year Air Electric Plumbin Health Cleanin Furnitur Equipm Total

conditio al g and g (5%) e (5%) ent Mainten
ning mainten mainten Safety (20%) ance
System ances ances (10%) cost
(10%) (15%) (12%)
1 215517 323276 258621 215517 107759 107759 431034 165948
3
2 185791 278686 222949 185791 92895 92895 371581 143058
9
3 160164 240247 192197 160164 80082 80082 320329 123326
6
4 138073 207109 165687 138073 69036 69036 276146 106316
0
5 119028 178542 142834 119028 59514 59514 238057 916518
6 102611 153916 123133 102611 51305 51305 205221 790101
7 88457 132686 106149 88457 44229 44229 176915 681122
8 76256 114385 91508 76256 38128 38128 152513 587174
9 65738 98607 78886 65738 32869 32869 131476 506184
10 56671 85006 68005 56671 28335 28335 113342 436366
11 48854 73281 58625 48854 24427 24427 97708 376178
12 42116 63174 50539 42116 21058 21058 84231 324291
13 36307 54460 43568 36307 18153 18153 72613 279561
14 31299 46948 37559 31299 15649 15649 62598 241001
15 26982 40473 32378 26982 13491 13491 53964 207760
16 23260 34890 27912 23260 11630 11630 46520 179103
17 20052 30078 24062 20052 10026 10026 40104 154399
18 17286 25929 20743 17286 8643 8643 34572 133103
19 14902 22353 17882 14902 7451 7451 29804 114744
20 12846 19270 15416 12846 6423 6423 25693 98917
21 11074 16612 13289 11074 5537 5537 22149 85273
22 9547 14320 11456 9547 4773 4773 19094 73511
23 8230 12345 9876 8230 4115 4115 16460 63372
24 7095 10642 8514 7095 3547 3547 14190 54631
25 6116 9174 7340 6116 3058 3058 12233 47096
9. Estimate the annual maintenance cost and list the
items that constitute this cost

10. Salvage value

The value of the land tends to increase in value as the time goes on.

As the hotel gets older, it tends to have a better reputation compared with the upcoming new
hotels.

Initial cost of the hotel = Rs.49845000

Salvage value of the hotel (after 25 years) = 4984500030/100 =.14953500

We assumed that the hotel having an initial value of Rs.49845000 will have a salvage value
of .14953500 (after 25 years) as calculated above.

11. Annual income from the hotel with justification

Income from Maintenance cost Operating cost Annual income
rooms
37758620.69 2155172.414 1034482.759 34568965.52

Incomes of different types of rooms were taken from the occupancy rate, then from the total
income, the maintenance cost and operating cost was deducted to get the annual income.

12. IRR for the hotel project.

13. Conclusion
The main objective was to find a location where locals and foreign visitors were regular. With
the help of the Official Sri Lankan Tourism Website, we found out that Wilpaththu National
Park attracted a large number of both the locals and foreign visitors. As a result of this large
number of visitors, the total income for the past years was increasing. Considering all these
facts and data, we were able to select a land near by the Wilpaththu National Park.

Foreigners can easily can access the proposed hotel via the Katunayaka Airport which is
about 141km in distance. The selected land is 120 perches, which was divided into sub areas.
The total land consists of a main building, pool, garden, STP, water tank and a parking area.
The total amount allocated for the construction is Rs.49.8 million. Assumed that no severe
damages such as environmental chaos are done, during the operation period. Operating costs
and maintenance costs were calculated using current daily rates in Sri Lanka.