Contents

Basic Information........................................................................................................................................1
1. EXECUTIVE SUMMARY.................................................................................................................2
2. Hotel and Tourism sector in Ethiopia..................................................................................................5
3. The Project Description.......................................................................................................................7
3.1. Project Objective..............................................................................................................................7
3.2. Mission and Goal..............................................................................................................................8
3.3. Project location and Justification......................................................................................................8
4. MARKET STUDY............................................................................................................................10
4.1. General Overview...........................................................................................................................10
4.2. Present Demand in Ethiopia...........................................................................................................11
4.3. Demand for hotel services..............................................................................................................11
4.4. Hotel Supply and its growth...........................................................................................................12
4.5. Capacity and service programme....................................................................................................12
4.6. Marketing strategy.......................................................................................................................13
4.7. Core facilities................................................................................................................................14
4.8. Machinery and equipment...........................................................................................................18
4.9. Environmental impact assessment..............................................................................................25
5. ORGANIZATIONS AND MANAGEMENT.................................................................................26
5.1. Organizational Structure.............................................................................................................26
5.2. Management..................................................................................................................................26
5.3. Manpower Requirement..............................................................................................................26
6. FINANCIAL STUDY.......................................................................................................................28
6.1. Revenue projection.......................................................................................................................28
6.2. NPV (Net Present Value)..............................................................................................................28

1|Page
 Basic Information
 Promoter: Ato Mesfin Worku
 Address: Bale Zone, Robe town tel:- +251911803917
 Project name: Egnan International Tourist Hotel
 Type of Business: Sole proprietor ship
 Project Location: East Bale Zone, Ghinner Town.
 Project capital: The total investment capital of the project is estimated at
birr 34,512,183 of which: -
 Birr 22,432,919 (65%) is for fixed investment cost.
 Birr 12,079,264 (35%) will be assign for working capital.
 Source of finance: The total investment capital of the project is to be
financed from the promoter’s equity and bank loan.
 Birr 10,353,655 (30%) is contributed by the promoter (Mesfin Worku).
 Birr 24,158,528 (70%) is to be financed by local banks.
 The project is financially feasible with an internal rate of return (IRR) of
33.9% and net present value (NPV) is discounted at 10%.
 Man power requirement: more than 200 skilled and unskilled employers will
be benefited within this project.
 Land requirement: The total area of 3000 m2 of land is required for the
project.

2|Page
 1. EXECUTIVE SUMMARY
The project feasibility study of proposed international tourist hotel investments has been
promoted by Mesfin Worku in East Bale Zone, Ghinner town. East Bale Zone is a fast growing
Zonal economic center and one of the most attractive tourist area of Ethiopia. East Bale Zone the
new zone of Oromia regional state and this zone is known as a potential area for the socio
economic growth of the country. There is also a great demand for the tourists to come and visit
the area.
Ginir Town is one of the most agricultural and animal product market centers and attraction for
both domestic and local tourists which is visited almost every day throughout the year. Of
course, there are more tourists during the dry season when the dry roads are open to Sof-Omar
cave and the neighboring desert districts of various ecosystem.
Project justification: International standard tourist hotel is high class hotel where services like
standard bedroom, catering, conference hole, Spa (Hot Spring), gymnasium, sauna and massage,
other sports facilities like tennis or squash court, min-golf or badminton, bowling, table tennis
and children playground, night club with dancing to live music or discotheque or cabaret etc.
The demand and supply of hotels and its bed rooms service in Bale has high gap with the supply
of East Bale Zone has. Branded supply is very low; due to this demand and supply analysis
Mesfin Worku hotel wants to participate and minimizes the gap of demand and supply standard
hotel in East Bale Zone.
In this profile study a three-star international tourist standard hotel is considered to following
provides: -
 10 standard Suit rooms, 20 double bed rooms and 30 single standard bed rooms totally 60
standard bed rooms’ services.
 International and national restaurant service.
 Standard bar and cafeteria.
 Conference hole and others important needs.

The total area of the Egnan International Tourist Hotel investment is about 3000-meter
square. The area covered and develop the following infrastructures such as main building (g+3)
hotel service and, store, gourd house, parking area and other necessaries facilities.

3|Page
The total investment capital of the project is estimated at birr 34,512,183 of which birr
22,432,919 (65%) is for fixed investment cost of which 65 % of the fixed cost is need foreign
currency while the remaining balance of birr 12,079,264 (35%) will be working capital.

Profitability: The financial analysis of the envisaged project is carried out for the following ten
years. Based on the 10 years’ financial projections using the income statement, cash flow
statement and financial internal rate of return (FIRR), the following results are obtained.

 Income statement: According to the projected income statement, the project will
generate profit beginning from the first year of operation. Based on the 10 years’
financial projections the projects average annual net profit after payment of bank interest,
depreciation and tax amounts to birr 8,810,480.70.
 Cash flow statement: The cash flow statement also shows a substantial amount of cash
surplus right from the first year of project operation life. The cash balance grows
from birr 9,259,139 in the first year to cumulative balance of birr, 23,618,548 during the
10th year of operation indicating the capacity of the project to finance itself and
generate cash surplus for further investments.
 FIRR Computation: The computation of the project FIRR shows that the project will
profitably generate reasonable return on investment. Before tax financial internal
rate of return is calculated to be 33.9%. This indicates the project is financially viable
with an internal rate of return (IRR) of 33.9 % and net present value (NPV) 54,439,417 at
discount rate 10 %.
 Socio economic benefits: The socio economic benefit of the project is also very high.
The project will provide: - more than 200 permanent employs, generate revenue to
government in the form of taxes, Facilitate and give a good service for local and
international tourists.
 Conclusion and recommendation: The Project is found to be operationally profitable,
viable & has significant socio-economic benefits. We recommended that according to this
attractive financial and economic benefit of the project all concerned offices & financial
institutions should give their support to facilitate the implementation of this plan.

4|Page
 2. Hotel and Tourism sector in Ethiopia
Ethiopia has vast potential for development of various economic sectors. Although agriculture is
the mainstay of the country’s economy the opportunity to invest in other sectors especially in
Hotel, Tourism and various recreation activities are there.

Although Ethiopia is endowed with many natural and manmade tourist attractions, these
resources have not been sufficiently exploited. The country’s geographical location and the
remarkable physical features and climate have endorsed it with rich and varied natural heritages.
Despite considerable demand, tourism sector remains at relatively low stage of development.

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

The government of Ethiopia has devised a long term strategy that gives due regard to the
preservation, development and promotion of the country’s tourist attraction. This includes plan
for expansion of tourist facilities and the necessary infrastructure. Indeed, in the wider sense the
country has a good potential for the development of high standard hotels, recreation and market
center and there is a growing realization that this sector holds a significant development
perspective, which should be fully exploited in the planned and controlled manner.

In adopting a planned and regulated approach the country is in a position to expand its hotel and
tourism sector in a way that emphasizes environmental conservation and enhances the quality of
the overall tourist experience. This will contribute substantially towards improving the standard
of living and the quality of life of the population.

The past trend shows that most of the high standard hotels and recreation centers are
concentrated in the capital, Addis Ababa. The number of hotels and recreation service facilities
in other regions of the country has remained insignificant to respond to the customer’s demand.
Only few hotels and recreation centers out of Addis Ababa have the capacity to provide
accommodation for mid or high-class guests.

5|Page
By taking this encouraging as an opportunity the promoter project plan to establish international
Hotel service in East Bale Zone of Ghinner Town for the benefit of the promoter, the district
community as well as the country as a whole.

a. Promoter Background

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

b. Ambition of creating the hotel project

According to the preliminary market research, the demand for hotel service is very high and yet
the supply is limited leaving a huge service gap to the customer. Unfortunately, there is no
saturated standard hotel in the area. The service (international hotels) is widely accepted in East
Bale Zone, Government employees, Private employees, Tourists, local customers, and to some
extent even in rich house-holds. So there is good scope for establishing the units for establishing
and maintain standard international and tourist hotel service in Ghinner as well as in the East
Bale Zone. Due to this, it has become imperative to build and maintain standard hotels service
for the mankind in prevailing conditions.

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

A hotel is an establishment that provides paid lodging on a short-term basis. Facilities provided
may range from a modest-quality mattress in a small room to large suites with bigger, higher-
quality beds, a dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat screen
television and en-suite bathrooms. Small, lower-priced hotels may offer only the most basic
guest services and facilities. Larger, higher-priced hotels may provide additional guest facilities
such as a swimming pool, business center (with computers, printers and other office equipment),
childcare, conference and event facilities, tennis or basketball courts, gymnasium, restaurants,
day spa and social function services.

Hotel rooms are usually numbered (or named in some smaller hotels and B&B) to allow guests
to identify their room. Some boutique, high-end hotels have custom decorated rooms. Some
hotels offer meals as part of a room and board arrangement. In the United Kingdom, a hotel is
required by law to serve food and drinks to all guests within certain stated hours. In Japan,
capsule hotels provide a tiny room suitable only for sleeping and shared bathroom facilities.

3.1. Project Objective

The main objective of the project is aimed at to maximize the return on invested capital in the
form of profit for the promoter. However, its implementation will benefit the employee, the
consumer society and the government at different levels. In this respect the project is aimed to
promote the following objectives: -

 To maximize the return on invested capital through modern Hotel services.

 To raise the significance and importance of the sector and thereby raising its contribution
to the national economic development.
 To give quality and standard hotel service.
 Effectively use local inputs and strengthening the linkage between agriculture and other
sectors of the economy.

7|Page
  To provide gainful employment to a large segment of the population of the project area
and augment earning capacity at the grassroots level,
 Increase government revenue through the different forms of taxes, which in turn used to
facilitate social and economic development.

In general, the project is believed to have significant social and economic benefits that accrue to
the society, the region and the country beyond the financial returns to its owner.

3.2. Mission and Goal

Mission

 Mission of the particular project is to expand the standard star hotel system and to give
quality service.
 To prove to other people that struggle for a better life and economic independences can
do business and bring change and can make a difference if opportunities are given.
 To become financially liquid and guaranteed more than ever.

Goal

Objectives are the goals toward which activities of the business are directed and one of the most
important functions the business owner must perform is setting objectives. This important aims
of this sole proprietorship business among others include the following highly interrelated
general goals with each other.

 To create employment opportunities for more than 200 permanents employer.

 To achieve standard tourist hotel and give quality service.

3.3. Project location and Justification

The proposed project of Egnan International Tourist hotel will have planned to be located in
East Bale Zone, Ghinner Town. Ghinner is a town which is found 530 km away from the capital
city of Ethiopia. The total land size the promoter requesting for the implementation of the project
is estimated at 3000 square meters, which will have been obtained from investment commission
of Ghinner town administration. Hence the owners select East Bale Zone, Ghinner town for
proposed project by looking every aspects of business integrity tourist area.

8|Page
Geography: Ginir is a town in south Eastern Ethiopia which lies at an elevation of between
1,750 and 1,986 meters above sea level and is a grassland biome, located in a latitude and
longitude of 7°08’N 40°42′E Coordinates38°44′24″E. Ginir town is the admistrative center of
East Bale Zone.

About 15% of the area of this town is covered with valley, georges and hills. Rivvers include the
dinkit, gololcha and Tebel Rivers. A survey of the land in the town shows that 30.5% forest, and
the remaining 2.7% is considered swampy, mountain and otherwise un usable as of 2005 central
stastical data.

9|Page
 4. MARKET STUDY
4.1. General Overview
The hotel industry consists of many different services, including accommodation, restaurants,
and cafes and catering. The market for the hotel industry, especially classified hotels in a
developing country like Ethiopia, is closely linked to the tourism industry, because a majority of
consumers for the sector services come from international tourists.

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

The total number of international tourists arriving in Ethiopia is steadily increasing. The highest
number of tourist arrival is in 2005 i.e. 227.4 thousand. 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.

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
2015 156,327 9.2
2016 179,910 5.3
2017 298,878 15.1
2018 363,243 2.3
Source: - Ethiopian Tourism Communion.

10 | P a g e
4.2. Present Demand in Ethiopia
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. 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 4.2.

Table 4.2. Existing hotel capacities, projected and unsatisfied demand

Projection of Room Night Existing Hotels Un

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

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

4.3. Demand for hotel services

The feasibility study conducted for this project deals with the demand and supply analysis for the
hotel project to be established in the area by taking the number of international and national
tourist, investors, employers and government directly related with the level of development of
the economy in general and the tourism sector in particular. It is a function of the number of both
domestic and foreign tourist travelers in the area, travelers for the commercial or business

11 | P a g e
purposes, travelers for conference and other assembly purposes, residents in the area (in fact it
depends up on the standard of the hotel and the living status of the residents) etc. Tourist could
come to the country for the purpose of visiting our country areas and rest on Ethiopia mainly
Bale Zone is: -

 Fast growing regional economic center of Ethiopia.

 Bale mountain national park.
 Sof oumar cave.
 Madda walabu university and a panel discussions held in the university.
 Dire shek Hussein tourist area.
 Economic growth is further increasing demand at +8% per annum.

4.4. Hotel Supply and its growth

Ethiopia is poised to undergo a high level of supply growth during the next five years with a total
of 2,375 rooms (76%) having been announced. We anticipate that 50% of this supply (1,188
rooms) to be completed, with cash flow constraints, low access to debt funding and a shortage of
foreign currency holding back further supply growth. Promotors with stronger balance sheets,
technical support and access to foreign currency have a higher likelihood of completing their
developments. The result of this is a more measured and appropriate supply pipeline of new
hotels. New supply is increasingly branded with this growing.

4.5. Capacity and service programme

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:

12 | P a g e
 Table 4.3 service capacity of the envisaged international tourist standard hotel.

Sr. No. Type of Service Feasible Service Capacity

1 Bedroom 60 rooms,
20 will be double rooms, 30 single
rooms and 10 suits.
2 Bar and Restaurant
• Restaurant (Modern 200 at a time each
and traditional
• Coffee Shop 10- 15 seats at a time
3 Sauna and steam bath 20 heads/day
4 Gymnasium 20 heads/day
5 Swimming pool (Big and small pools) 45 Heads/day and 20
head/day

6 Meeting room 50x3 seats

7 Night club 300 at a time

4.6. Marketing strategy

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

 Contacting government and private agencies affiliated with tourism on a regular basis,
informing them of any corporate rate, discount programs, availability of services, etc.
 Emphasizing the access of the proposed hotel to support client’s attractions, as well as the
services and amenities available,
 Special effort will be made to emphasize the price-value relationship of the service
available,
 Actively marketing the hotel prior to the completion and opening,

13 | P a g e
  An aggressive local marketing effort and promotion of the hotel market to enable the
hotel to capture a more than proportionate share of support within the market,
 Working with local people to establish a competitive amenity package responsive to
specific requirements.

The outer space is allocated to have an open garden, children’s playing ground, parking area,
fountains and inter campus paving with a medium size swimming pool adjoining the front side of
the buildings.

4.7. Core facilities

The envisaged hotel should have sufficient and comfortable space to accommodate the core
services as per the requirements of the three-star hotel. Actually this has been considered
seriously at the design stage of the building along with the allocation of appropriate area and
placement of each component with the building accordingly. On the other hand, it is also
important to figure out the layout of each component not only from the perspective of having
compliance for the standard but for the benefit exploring possibilities of bringing complementary
services under the same location and allow maximum convenience in the work processes.

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

(a) Bed rooms

A total of 60 classes are allotted for room services with options to avail two
different types of
Accommodations. In the interest
of following the trend in the
industry single and double
bedrooms. Actually the
standard requires allowing
maximum 30% from the total
while the rest can remain with

14 | P a g e
big double bed rooms or any
Other smaller rooms. On the bases of the above considerations under this
component, the hotel will have 30 single and 10 Suit rooms and 20 double
bed rooms.
(b) Bars
Standard three star hotels must have at least one bars with a superior comfort and service
quality. The furniture and equipment’s, as being the basic sources of customer’s attractions,
need to be fashionable of higher quality commensurate with the expectation of guests who
happen to prefer this class. Therefore, the envisaged hotel, having the requirements considered
too, will have one main bar at the ground floor adjoining the reception area. Another bar
preferably with smaller space but furnished with cozy furniture will be placed at top floor of
the building. This is just to add another attractive look for the hotel as it will be placed at a
strategic location for customer to have a panoramic view of the area. The minimum carrying
capacity of the bars is estimated 200 persons per day.
(c) Main restaurant
Technically a hotel to be classified under three stars of as such this one must have at least two
dining places having the size proportional to the guests who have checked in as normally
customers do not prefer to worry about going out once they have settled. The area
determination has to take into account this. Hence, the hotel must provide the maximum range
of varieties at all times.
The hotel will have the capacity entertaining 200 guests and allow maximum efficiency in the
service by having the restaurant located nearer to the main kitchen.
(d) Banquet/Conference hall
A hotel with three stars needs to have a conference/banquet hall of larger area which can be
used for banquet or conference interchangeably. This project considers this component as the
second important function next to the room services as this area has a higher potential for such
services. The holding capacity of the main conference hall will be 500 persons.

15 | P a g e
Car Parking
The hotel must provide the service of car parking with 24 hours’ protection at least for those
customers who have checked in. Again, it should be large enough to accommodate as many
vehicles as the hotel is going to entertain a large crowd. In view of this, a parking space for about
50 vehicles is planned to be allocated with the standard width and height of the drive in routes.
Therefore, for this particular category of forecasting two levels of considerations are taken into
account. One, by the fact that the design of building directly determines the space available for
every item, size will be governed by this and again the quality required furniture will determine
base on the kinds of facilities available. In any case the required quantities are forecasted based
on the components stated below:
 60 bed rooms,
o 10 standard suit bedrooms’
o 20 standard Double bedrooms’
o 30 standard Single bed rooms
 Special Bar and cafeteria
 Traditional and international restaurant
 conference rooms,

16 | P a g e
  Night club (dancing area)
 Management office and store,
Secondly, in order to fulfill the basic requirements of hotel service, the quantities forecasted for
the above facilities have to be reviewed against the national standard. Such consideration gives
the benefit of consciously sorting out what item goes with what kind of facility or service. Once
this is determined the forecast of quantity will follow accordingly. The project detail design work
has already been undertaken and the planned facilities of the project and the required quantities
are forecasted in the next section below.
a. Inputs/ raw materials and utilities
i. Raw Material cost
The annual cost and list of raw materials are indicated in Table 5.1.
Table 5.1 Annual requirements of raw and auxiliary materials
Raw materials Quantity per cost per per year
month month
Food materials raw costs lamp sum 500,000.00 6,000,000.00
d/t type Beverage raw costs lamp sum 500,000.00 6,000,000.00
massage, sauna bath and other lamp sum 15,000.00
related cost 180,000.00
Cleaning materials and other lamp sum 15,000.00
miscellaneous uses 180,000.00
Total 12,360,000.00

ii. Utilities
Annual requirement of electricity, water and fuel is estimated at 2,367,000 birr from which,
500,000 kWh, 300,000 m3 and 2000 liters, are electricity, water and fuel respectively. The total
costs of utilities are, therefore, about Birr 2,367,000 per annum.
Table 5.2 utilities
Description Qty. Cost per
unit cost year
Electricity, kWh 500,000 1.25 625,000
Water, m3 300,000 4.5 1,350,000
LPG, lt 2,000 16 32,000
Diesel, lt 20,000 18 360,000
Total 2,367,000

17 | P a g e
4.8. Machinery and equipment
Furniture and equipment's required for double and suit bedrooms

S/n Description Quantity Unit price Total (birr)

1 Sofa single 20 2,500 50,000

2 TV 21” 10 8,000 80,000
3 Telephone stand 10 500 5,000
4 Telephone apparatus 10 750 7,500
5 Refrigerators 10 4,000 40,000
6 Standing lump 10 1,000 10,000
7 Coffee table 10 1,500 15,000
8 French Bed (120 x 180cm) 10 12,000 120,000
9 Cupboard built in 10 5,000 50,000
10 Head lump 10 1,000 10,000
11 Writing table with chair 10 2,500 25,000
12 Chest drawer 10 1,500 15,000
13 Spring mattress 20 5,000 100,000
14 Bed made wood 40 20,000 800,000
15 Bed sheets 40 500 20,000
16 Bed cover 40 800 32,000
17 Pillow 40 250 10,000
Total 1,389,500

Furniture and equipment's required for single bedrooms

S/n Description Quantity Unit price Total (birr)

1 Sofa single 80 2,500 200,000
2 TV stand 40 2,000 80,000
3 TV 21” 40 5,000 200,000
4 Telephone stand 40 500 20,000
5 Telephone apparatus 40 750 30,000
6 Refrigerators 40 4,000 160,000
7 Standing lump 40 1,000 40,000

18 | P a g e
 8 Coffee table 40 1,500 60,000
9 French Bed (150 x 180cm) 40 20,000 800,000
10 Cupboard built in 40 5,000 200,000
11 Head lump 40 1,000 40,000
12 Writing table with chair 40 2,500 100,000
13 Chest drawer 40 1,500 60,000
14 Spring mattress 40 3,000 120,000
15 Bed sheets 80 250 20,000
16 Bed cover 80 500 40,000
17 Blanket 80 1,000 80,000
18 Pillow 80 100 8,000
Total - - 2,258,000

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

S/n Description Quantity Unit price Total (birr)

1 Executive double redistill desk 2 20,000 40,000
2 Executive swivel arm chair 2 5,000 10,000
3 Double pedestal desk 5 4,000 20,000
4 Servile admin chair 5 3,500 17,500
5 Secretarial desk 2 3,500 7,000
6 Guest chairs 8 600 4,800
7 Safe box 4 4,000 16,000
8 Shelf 4 3,000 12,000
9 Reception desk 2 40,000 80,000
10 Sofa box 2 15,000 30,000
11 Cash register with stand 2 7,500 15,000
12 Telephone apparatus box 2 20,000 40,000
13 Telephone apparatus 10 300 3,000
14 Fax machine with stand 2 30,000 60,000
15 Pc with printer and stand 10 15,000 150,000
16 Single sofa high based 4 5,000 20,000
17 Coffee tables 4 2,000 8,000

19 | P a g e
 18 Standing lump 6 2,000 12,000
19 Recreation facilities Ls - 150,000
21 Emergency power generator 2 300,000 600,000
Total - - 1,295,300

Furniture and equipment's required for bar and cafe

S/n Description Quantity Unit price Total (birr)

1 Tables 60 2,500 150,000
2 Chairs 300 750 225,000
3 Long drawer (Balcony) 2 30,000 60,000
4 TV stand 5 2,000 10,000
5 TV set 27” 5 15,000 75,000
6 Casher box 3 5,000 15,000
7 Stools (high chairs) 12 1,500 18,000
8 Coffee machine stand 2 50,000 100,000
9 Refrigerator big 2 20,000 40,000
10 Refrigerator medium 2 12,500 25,000
11 Coffee roaster 2 7,500 15,000
12 Ice maker 2 5,000 10,000
13 Pastries stand 2 15,000 30,000
14 Juice maker 2 5,000 10,000
15 Draft beer machine 2 15,000 30,000
16 Tape recorder 2 10,000 20,000
17 DVD player 2 1,200 2,400
18 Satellite dish with receiver 2 2,500 5,000
19 Shelf with drawer 2 20,000 40,000
20 tea cup 500 25 12,500
21 coffee cup 500 25 12,500
22 Milk cup 500 25 12,500
23 Makiyato cap 500 25 12,500
24 water glass 500 15 7,500
25 draft glass 500 60 30,000

20 | P a g e
 26 wine glass 500 100 50,000
27 Whisky glass 400 100 40,000
28 local gen glass 500 50 25,000
29 service tree 1000 150 150,000
Total - - 1,232,900

Furniture and equipment's required for dinning/restaurant room

S/n Description Quantity Unit price Total (birr)

1 Tables 50 2,500 125,000
2 Chairs 200 750 150,000
3 Long drawer (Balcony) 2 30,000 60,000
4 TV stand 2 2,000 4,000
5 TV set 27” 2 7,500 15,000
6 Stools (high chairs) 2 1,500 3,000
7 Refrigerator big for beer 2 20,000 40,000

8 Refrigerator medium for soft drank 2 12,500 25,000

9 Coffee roaster 2 7,500 15,000

10 Ice maker 2 5,000 10,000
11 Draft beer machine 1 15,000 15,000
12 water glass 200 12 2,400
13 draft glass 200 60 12,000
14 service tree 50 30 1,500
15 30-34 sauce pot 10 20 200
16 Sauce-medium 40 30 1,200
17 Soup pot 40 50 2,000
18 Medium 4 45 180
19 Large – round hot pot 10 80 800
20 Medium – round hot pot 10 57 570
21 Small – round hot pot 10 30 300
22 High rim flat 10 70 700
23 Flat rim round 12 50 600

21 | P a g e
 24 Normal alloy 20 45 900

25 Nonstick normal 20 20 400

Total 485,750

Furniture and equipment's required for Conference rooms

S/n Description Quantity Unit price Total (birr)

1 Tables 100 2,500 250,000
2 Chairs 1000 750 750,000
3 Buffet stand 5 20,000 100,000
4 Speaker (big) 5 5,000 25,000
5 Amplifier 3 20,000 60,000
6 Wireless microphone 5 750 3,750
7 Table microphone 20 350 7,000
8 LCD projector 5 30,000 150,000
9 Slid board 5 5,000 25,000
10 Satellite dish with receiver 5 2,500 12,500
11 TV stand 5 2,000 10,000
12 TV set 27” 5 15,000 75,000
Total - - 1,468,250

Kitchen materials
S/n Description Quantity Unit price Total (birr)
1 Stove 5 45,000.00 225,000.00
2 Toaster 5 15,000.00 75,000.00
3 Oven 5 40,000.00 200,000.00
4 Aluminum tables 8 4,000.00 32,000.00
5 Grill (electrical) 5 15,000.00 75,000.00
6 Washer sink 5 5,000.00 25,000.00
7 Refrigerator 5 20,000.00 100,000.00
8 Clip fryer 5 5,000.00 25,000.00

22 | P a g e
 9 Pastries formwork 5 5,000.00 25,000.00
10 Petra 10 2,500.00 25,000.00
11 Cupboard 3 7,500.00 22,500.00
12 Shelf 3 5,000.00 15,000.00
13 Grill bench top 5 11,887.00 59,435.00
14 Deep friend double 6 4,218.00 25,308.00
15 Micro wave grill 5 3,250.00 16,250.00
16 Mincer meat 5 12,999.60 64,998.00
17 Brad oven 5 47,999.85 239,999.25
18 Pizza clayey oven 5 29,841.00 149,205.00
19 mixer 15 KG capacity 5 37,999.45 189,997.25
20 Range commercial 5 38,745.00 193,725.00
21 Range linear 3 14,995.00 44,985.00
22 Fruit blender 3 3,585.00 10,755.00
23 Potato chopper 3 41,999.30 125,997.90
24 Onion peeler /chopper 3 15,780.00 47,340.00
25 Blender small 3 3,185.00 9,555.00
26 Deep refrigerator 6 9,450.00 56,700.00
27 refrigerator 10 9,960.00 99,600.00
28 Digital scale (35k.g) 3 1,800.00 5,400.00
29 Waiting scale (220 Kg) 3 4,700.00 14,100.00
30 Kitchen hood 5 29,745.00 148,725.00
31 Kitchen cabin with double Sink 5 31,488.00 157,440.00
32 Kitchen cabin 5 27,488.00 137,440.00
33 Kitchen top -stainless steel 8 8,195.00 65,560.00
34 Kitchen top -stainless steel -large 8 13,195.00 105,560.00
35 Chaffing dish -silver 25 9,499.00 237,475.00
36 Spaghetti plate 50 712.2 35,610.00
37 Dinner plate 50 720 36,000.00
38 Dessert plate 50 720 36,000.00
39 Table fork 10 163.8 1,638.00
40 Table knife 10 136.8 1,368.00
41 Chopper knife 10 62.1 621.00
42 Table spoon 15 163.8 2,457.00
43 Kitchen Pan 10 499 4,990.00
44 Food Box 5 220 1,100.00
45 soup bowl 3 336 1,008.00

23 | P a g e
 46 Cook pot large 10 693.2 6,932.00
47 Cook pot big 38 10 3,054.00 30,540.00
48 Cook pot medium 20 581.4 11,628.00
49 Cook pot small 20 469.6 9,392.00
50 restaurant Table w/ 4 Chair 50 9,246.00 462,300.00
51 cafe table 20 1,455.00 29,100.00
52 Restaurant chair- Sheraton Type 100 2,510.00 251,000.00
53 cafe chair 100 964.5 96,450.00
54 Open generator-24 KV 3 389,748.00 1,169,244.00
sub total 5,237,428.40

Garden recreation center

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

24 | P a g e
Summary of equipment
S/n Description Total cost
1 Furniture and equipment for 60 Bed room
1 For suit and double bed room (10 & 20) 1,389,500
Single bed room (30) 2,258,000
2 Furniture and equipment for office and reception area 1,295,300
3 Furniture and equipment for bar and cafeteria 1,232,900
4 Furniture and equipment for restaurant and dining room 485,750
5 Furniture and equipment for conference room 1,468,250
6 Furniture and equipment for kitchen materials 5,237,428
7 Garden and creation area 81,000
Total 13,448,128

4.9. Environmental impact assessment

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

25 | P a g e
 5. ORGANIZATIONS AND MANAGEMENT
5.1. Organizational Structure
The organizational structure of the project is designed by including all the necessary personal
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of plant. Depending up on the
nature of the center and the amount of work to be performs under each will be supervised by the
unit head that is accountability for general manager.
5.2. Management
As to the management of the project is concerned the owner will be responsible for the overall
project planning, co-ordination and implementation. After project implementation the
promoter serves as a top management body and frequently visits and supervises the organization.
Cattle fattening farm a business man who has a long year experience in managing business
activities. Therefore, the extensive experience he has enables him to organize and properly
manage the envisaged International Hotel Service.
5.3. Manpower Requirement
For smooth and efficient operation of the organization, it has been anticipated that each unit will
have adequate number of qualified and experienced manpower. The labor component of the
International Hotel Service G/manager will hire qualified and experienced in management whose
main responsibility is to coordinate the overall activity of the project. The distinct units have
their own operational teams under them. To fill in all these work units with the required
manpower the project will provide 200 skilled and unskilled workers. For smooth operation of
the project, employees will be given on job training, clear duties and responsibilities under the
direct supervision of their respective units.

Table 5.1: Manpower Requirement

Annual
S/n Description of Job Qualification No. Monthly Salary(Br)
1 General Manager BSc in Hotel management 1 10000 120000
2 Coordinator/supervisor BSc in Hotel management 5 6000 360000
1 Assistance Supervisor diploma in Hotel management 5 6,000 360000
2 Receptionist diploma in Accountant 5 5,000 300000
3 Pastry and Staff Cafeteria diploma in food preparation 5 7,000 420000
4 Cafeteria supervisor diploma in Hotel management 2 5,000 120000

26 | P a g e
 5 Waiter diploma and Certificate 20 2,000 480000
6 Cooker diploma in food preparation 20 7,000 1680000
7 Coffee machine operator 12th complete 2 3,000 72000
9 Pastry attendant Certificate 5 5,000 300000
10 Coffee machine operator 12th complete 5 3,000 180000
11 Dessert attendant skill professional 4 1,500 72000
12 Casher diploma in Accountant 4 2,500 120000
13 Cleaner vice 8th grade complete 10 1,500 180000
14 Plumber diploma in electrical 2 2,000
engineering 48000
15 Electrician diploma in electrical 2 2500
engineering 60000
16 Gardener skill professional 2 1000 24000
17 Guards gardener 8 1,000 96000
Total 125 - 4,992,000

27 | P a g e
 6. FINANCIAL STUDY
6.1. Revenue projection
The project will collect its revenue from the customer service. The selling of food and beverage
and rented rooms has estimated based on the current market price and hotel standard of similar
service provision in town. The annual service program is formulated based on proposed plant
capacity considered the following table.
Table 6.1 Description of revenue projection
No of bed Price/day
S/N Bed room service rooms /night
per year

1 Double bed room 10 1400 3,360,000

2 Single bed room 40 1000 9,600,000
Subtotal 12,960,000.00
S/N Raw materials No of cost per per year
customer month
per day
1 Food service income 100 850,000.00 10,200,000.00
2 Beverage service income 200 850,000.00 10,200,000.00
6 Income f r o m Meeting 20 150,000.00
hole days/month 1,800,000.00
service Subtotal 22,200,000.00
Grand total 35,160,000.00

6.2. NPV (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 into a common measuring unit i.e. present value. It is a standard method for using the
time value of money to asses’ long-term projects. NPV is an indicator of how much value an
investment or project adds to the capital invested. In principle a project is accepted if the NPV is
non-negative. Accordingly, the net present value of the project at 10% discount rate is found to
be Birr 54,439,417 which is acceptable.
 Benefit cost ratio
The BCR is defined as the ratio of the sum of the project’s discounted benefits to the sum of its
discounted investment and operating costs.
When BCR > 1, accept the project

28 | P a g e
When BCR < 1, reject the project
When BCR = 1, be indifferent

Bt n

 (1  r ) t
t 0
BCR  n
C
 (1  tr ) t
t 0

BCR is 5 and positive this indicates this project would return 5 birr in benefits for each birr spent
 Payback Period (PBP)
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 3 year 9 months.
 IRR
The internal rate of return (IRR) 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
the project after tax is computed to be 34.13% indicating the viability of the project.

29 | P a g e
Annex.1 income statement

Operating years of the project

Description 1 2 3 4 5 6 7 8 9 10
Sales 18,914,33
Revenue
17,158,850 5 20,805,769 22,642,409 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
Less: 4,123,791 4,270,766 4,425,090 4,587,130 4,761,271 4,944,319 5,136,739 5,339,022 5,551,686 5,775,275
Operating
cost
Income 13,035,059 14,643,569 16,380,679 18,055,279 20,145,379 22,184,667 24,705,145 27,191,888 30,232,314 33,262,446
before
Depreciation
and interest

Less: interest 448,658.00 448,658.00 448,658.00 448,658.00 448,659.00 448,660.00 448,661.00 448,662.00 448,663.00 448663

Income 12,586,401 14,194,911 15,932,021 17,606,621 19,696,720 21,736,007 24,256,484 26,743,226 29,783,651 32,813,783
before
Depreciation

Less: 0.00 0.00 667,449 667,450 667,451 667,452 667,453 667,454 667,455 667,455
Depreciation

Profit /Loss 12,586,401 14,194,911 15,264,572.00 16,939,171.00 19,029,269.00 21,068,555.00 23,589,031.00 26,075,772.00 29,116,196.00 32,146,328.00
Before Tax
Less: Tax 3,775,920.30 4,258,473.30 4,579,371.60 5,081,751.30 5,708,780.70 6,320,566.50 7,076,709.30 7,822,731.60 8,734,858.80 9,643,898.40
(30%)
Net Profit or 8,810,480.70 9,936,437.70 10,685,200.40 11,857,419.70 13,320,488.30 14,747,988.50 16,512,321.70 18,253,040.40 20,381,337.20 22,502,429.60
Loss After
Tax

30 | P a g e
 Annex 2 undiscounted cash flow
Project Years
Investment
Description Operating years
Year
0 1 2 3 4 5 6 7 8 9 10
INFLFOWS                      
Inflow Funds                      
Own Equity
10,353,655                  
Long-term Loan 24,158,528 0 0                
Inflow Operations
  20,805,76 22,642,40
17,158,850 18,914,335 9 9 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
Sales revenue 20,805,76 22,642,40
0
17,158,850 18,914,335 9 9 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
TOTAL 20,805,76 22,642,40
INFLOWS
34,512,183 17,158,850 18,914,335 9 9 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
OUTFLOWS                      
Investment cost 0 0 0 0 0 0 0 0 0 0
34,512,183
Operating cost 4,270,76 4,761,27 5,136,73
0 4,123,791 4,425,090 4,587,130 4,944,319 5,339,022 551,686 5,775,275
6 1 9
Financing Cost                      
· 3,451,218 3,451,218 3,451,218 3,451,218 3,451,218 3,451,218 3,451,218
0 0 0 0
Principal
·Interest 0
448,65 448,65 448,658 448,65 448,65 448,658 448,658 448,658 448,658 448,658
8 8 8 8
Income Tax 0
3,775,92
4,258,473 4,579,371 5,081,751 5,708,780 6,320,566 7,076,709 7,822,731 8,734,858 9,643,898
0
TOTAL
OUTFLOWS 34,512,183 8,348,369 8,977,897 9,453,119 13,568,757 14,369,927 15,164,761 16,113,324 17,061,629 13,186,420 19,319,049
NET CASH FLOW
0 8,810,481 9,936,438 11,352,650 9,073,652 10,536,723 11,964,225 13,728,560 15,469,281 22,597,580 19,718,672
BEGINNING
CASH BALANCE 0 0 8,810,481 18,746,919 30,099,569 39,173,221 49,709,944 61,674,169 75,402,729 90,872,010 113,469,590
ENDING CASH
BALANCE 0 8,810,481 18,746,919 30,099,569 39,173,221 49,709,944 61,674,169 75,402,729 90,872,010 113,469,590 133,188,262

31 | P a g e
 Annex 3. discounted cash flow
Investment
Project Life years
Year
Description
0 1 2 3 4 5 6 7 8 9 10
INFLOW
                     
Net sales
revenue 0
17,158,850 18,914,335 20,805,769 22,642,409 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
TOTAL
INFLOWS 0
17,158,850 18,914,335 20,805,769 22,642,409 24,906,650 27,128,986 29,841,884 32,530,910 35,784,000 39,037,721
OUTFLOWS
                     
Investment 34,512,18
cost - - - - - - - -
3 - -
Operating cost 5,136,73
0 4,123,791 4,270,766 4,425,090 4,587,130 4,761,271 4,944,319 5,339,022 5,551,686 5,775,275
9
Income tax
0 3,775,920 4,258,473 4,579,371 5,081,751 5,708,780 6,320,566 7,076,709 7,822,731 8,734,858 9,643,898
TOTAL
OUTFLOWS 8,529,23 12,213,4 13,161,75 14,286,54
34,512,183 7,899,711 9,004,461 9,668,881 10,470,051 11,264,885 15,419,173
9 48 3 4

NET CASH 10,385,096.0 17,628,436. 19,369,157.0 21,497,456.0

FLOW 10,850,695.00 9,259,139.00 11,801,308.00 12,973,528.00 14,436,599.00 15,864,101.00 23,618,548.00
0 00 0 0

      NET PRESENT VALUE (NPV) 54,439,417.00

      INTERNAL RATE OF RETURN (IRR) 34.13%

      DISCOUNTED PAYBACK PERIOD (DPBP) 3.9years

32 | P a g e
33 | P a g e