Final Plan

Business Plan for Bereta Debela 3* Hotel & Guest House Service
UNIT ONE
Executive Summary
This Business Plan is organized for the newly built three star hotel building project of Berta Debela 3Star
Hotel & Guest House; the promoter & owner of the business Ato Berta Debela is one of the known and well
respected person in Bishoftu and the surrounding towns. The location of the project is very attractive and
ideal for running such a business in the town. The hotel satisfies the standards & requirements for three star
hotel & guest house business set by Ethiopian Standards Agency.
The hotel business is managed by the owner Ato Berta Debela himself who has accumulated adequate
experience in several types of business activities within the country. In addition to this, hired employees will
handle the day to day activities of the project. It will also create employment opportunities for about 58
residents of Bishoftu town in different types of employment designation.
The General Manager Ato Berta Debela has an ideal mix of educational background, versatile work and
business experience in a wide range of business sectors and activities’. He is fully familiar with the envisaged
project, locality area and environment. He is therefore highly enthusiastic to contribute as a corporate citizen
playing socially responsible and exemplary roles as developmental entrepreneurs.
The owner of the business is also cognizant of the fact that service sector is the mainstay of the Ethiopian
economy plus as the main resource of the country, it contributes the predominant share of the GDP, Foreign
currency earnings and is the source of livelihood of the majority of the population.
This brief study has been undertaken to assess the technical as well as economic viability of the complex
outfit. As subsequent sections of the report reveal; the project shall be financially sound while its socio-
economic contributions cannot be neglected.
Ethiopia is a strategically important country in the Horn of Africa’s foremost countries and therefore, many
international meetings and conferences are held in Ethiopia. This creates huge demand for accommodation at
an international standard and even an increase in such a 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. Since the hotel industry can create job
opportunities for so-called blue collar workers, the development of the hotel industry benefits not only the
tourism sector but also has a great impact in poverty reduction. In the past twenty years the country has shown
an encouraging private investment in all areas of economic and social activities. The private sector has been
motivated by free market oriented economic policy on the government. To stimulate private investment, the
government amended the investment proclamation several times which resulted in booming of investment in
all sectors of the economy.
Considering the attractive investment climate, Ato Bereta Debela has decided to establish a three star hotel at
Bishoftu town of the Oromia regional state. The promoter Ato Bereta Debela has secured a total leased land
with the area of 394.5 Square meters. The project building will comprise G+7 & additional G+3 buildings
within the compound with a total capital of birr 138,633,056.33.
The location of the project is ultimate for successfully run such type of business. The new project is located at
the center of Bishoftu town in front of Rift Valley University and adjacent to Tommy International Hotel, on
the way to the right side of the road to Addis Ababa. Since its location is on the way to the main gate of Addis
Ababa (capital of the nation), the business opportunities for the owner as well as other business persons who
have a business centers around the project is considerably high.
This hotel project lies on a total area of 394.5sqm of land, out of which the construction of the buildings are
on 297sqm of land. The hotel building project consists of 25 rooms used for bed room services of its clients
and guests, reception area, gift shops, meeting halls, bank services, sauna & massages, bar and restaurants.
Furthermore it will have a garden and parking area for the users of the hotel & guest house. The total
investment cost of the project including its working capital requirement and contingency, furniture’s and
related equipments plus procurement of two vehicles are estimated to Birr 138,633,056.33 based on the bill of
Promoter – Ato Berta Debela 1

quantities prepared by the engineers of the building and assessment of current market price of furniture’s and
equipments. Out of which about 62.15% accounts for Birr 86,165,07874 is already injected to the construction
work of the buildings, acquisition and pre-production costs of the land, partial procurement of furniture &
equipment’s and additional working capital contribution raised from the owners own capital. The remaining
balance of Birr 52,467,977.59 (37.85%) will be expected from Bank’s in the form of long term debt. The loan
will be used for the remaining construction work of the hotel (12,467,977.59) & working capital requirement
of the hotel for one year (40,000,000.00).
Since the area under consideration is only 44kms far from the metropolis of the country and uninterrupted
struggle of the municipality of the town, Bishoftu town had to have well developed socio-economic
infrastructures. Such as road, electric power, water sources, telephone & internet line accesses and other
infrastructures.
To take a broad view, the hotel is ideally located for the purpose of modern hotel and room service center.
Even though, like most other business ventures, it aims to maximize return on invested capital, it also aspire
the promoter to contribute an additional view to the town, create more job opportunities for the local people
and making its own contribution to the renaissance and development of the country as a whole.
Moreover, in a process of attaining this basic original idea, it also benefits the community by creating a new
recreational hotel compound and the youth of the town will also benefited by having a high-quality
recreational mix. The town’s administrations will also have an additional revenue/income through VAT,
Profit tax and employment income taxes.
The hotel will not only conducive but also offer modern facilities that will make its guests turn into its clients.
It has the best facilities and also the right people to handle these amenities. The staffs are not only
professionals with the added touch of competence but have the experience to anticipate the needs of clients.
The strong business structure has led into deploying the best means of sourcing for and recruiting the best
staffs for the business. The project will create 58 permanent job opportunities to the community. The
promoter not only believe in recruiting the best but in ensuring that they are in tune with the vision and
objectives and are committed to seeing us achieve our goals as a company.
The promoter believe in ensuring that the employees are not only productive but that they remain happy
whilst carrying out their tasks, it is for this reason that Ato Berta has created a unique welfare package for
them that is the best in the industry amongst the category. Also, the promoter has put in place polices that will
allow for the continuous trainings of his employees in order to enhance their skills.
The hotel customers care service is excellent as it has those who not only have a thorough knowledge of the
industry but keep informed on current trends to handle this position and therefore help inquiring clients better
understand what they are seeking for.
Because Ato Berta knows how important his clients are, he has strategies in place that will ensure that his
loyal clients get incentives which comes in form of a discount for every client they refer to him. This has
made most of his clients turn into active marketers on his behalf and has grown his revenue base
tremendously.
It is clear that Ethiopia follows the free market system and this in turn needs the individuals to inject their
potentials to the economy, as a result the problems that the nation currently faced will gradually eradicated
and the national economy will also become progressively developed. It is this understanding and courage &
understanding for this project to be planned and invested by the promoter Ato Berta Debela.
This Business Plan is meant to briefly show the project’s importance, area advantages, planned activities,
estimated project capital, its profitability and other important aspects for the concerned stakeholders.
Hence, this study is conducted to determine the viability of the hotel by capturing the current and future
demand and supply of hotel services at Bishoftu town - a neighborhood to Addis Ababa.
Overall Strategy: Success will depend on offering a very high quality hotel experience, including making the
most attractive setting and recreational amenities, and offering a superior customer service. A very high

quality experience – both within and outside the hotel & conference facility – will offset the extra time and
cost required to reach Bishoftu from Addis Ababa & Adama.
Target Markets: The center’s location, amenities, and ability to develop a high quality facility provide the
chance to focus on several promising niche conference markets. One key market, linked to the community’s
attractive setting, is for small & medium (100-700) executive retreats, executive training sessions, board
visioning sessions, and incentive travel and similar events. For this type of event, participants are willing to
spend a bit more time and money to have a good hotel & conference facility, a more sequestered setting, and a
chance for enjoyable extra-hotel activities. A second important market is for larger events, particularly linked
to unique Governmental & Non-governmental institutions.
Financial Performance: Once the facility is built and an initial period of time is provided to market the
center and book events, the hotel & guest house center is estimated to attract an income of birr 29.23 million
& above.
Reasonable Expectations: Nearly all hotel service centers in Bishoftu, Addis Ababa and Adama do generate
enough revenue to cover annual operating costs. Hotel & guest house facilities are widely seen as valuable
community resources because they bring significant spending into the community.
Benefits to the Community: The community economic benefits expected to result from establishing a hotel
& guest house facility in Bishoftu will bring great opportunity for the residents of the town.
Major Findings of this Business Plan
 The minimum net profit from the hotel service is expected to be Birr 4.86 million in the first year and
the maximum profit will be registered in year 10 is more than birr 20.28 million. The cumulative net
cash inflow is to be Birr 99.8 million at the end of the project life.
 Using the major investment decision techniques, the expansion of the hotel business is found to be
attractive showing positive financial results, presented in financial evaluation section of this business
plan.
 The hotel will create additional job opportunity for more than 58 workers permanently and will pay
more than 2.5 million birr on the first projected year for its employees as a salary.
 The project will generate income to the government in the form of profit tax during its project life.
Purpose of this Business Plan
 The objective of this study is to investigate the economical as well as social outlook for the hotel &
guest house facility to be included as one portion of the proposed hotel. The hotel & guest house
center is planned as a collaborative project of the promoter Ato Berta Debela & will be considered as
one of the sister companies of his other portfolios.
 The purpose and goal of this Business Plan is to provide a viable option of capital for the completion
of construction work of the buildings with additional service capacities and its necessary support
spaces. This study reaffirms the need for additional performance space as identified in the next
sections of this study and provides a program and design option to meet the increased needs of the
hotel.
 In relation with the feasibility of this venture, the other main objective of this study lies on requesting
the concerned stakeholders to give a hand to finance the working capital need of the hotel in order to
swell its service quality to its clients.
 Request the Government Authorities to allow the promoter to bring construction materials, finishing
materials, furniture, equipments & machineries as well as one vehicle as a duty free privilege from
abroad in order to minimize the expense of the hotel.

UNIT TWO
Vision, Mission, Objectives & Keys to Success
Vision: The vision of the hotel is to contribute to the development of the country through having up to date
information’s and technological products, high standard professional employees and rendering a high quality
service to its clients and consumers by maximizing and giving priority to customer satisfaction and being
effective and efficient.
Mission: Higher quality service to consumers of the business and avail for customers in a sustainable manner
and always ensures customer satisfaction through quality and brand.
 Contribute to the development of the country by providing quality and efficient services in order to
enhance the consumer satisfactions;
 Provide efficient, high quality value adding services combined with the highest ethical, safety and
environmental standards locally;
 Bring the project services to the international standard;
 Strive to operate at all times in a responsible manner which means fair and honest treatment of all
those with whom the project deals, including customers, officials, employees and the general public;
and
 Provide favorable working atmosphere and opportunity for creativity and growth for employees of the
company; to encourage each employee to develop his abilities to his fullest capacity.
Objectives of the Project
Even though the major motive of any private investment is profit making, it is obvious that the role of the
private investment in the poverty alleviation endeavors to the country is indispensable. It is through the
expansion of the private investments that most citizens of the country will get a better job opportunity, and by
means of which the level of poverty will be reduced.
Key Assumptions Contributing to the Ultimate Success of the Facility
To generate the level of use and the revenue and benefits outlined on this study, the hotel & guest house
facility implements the following strategies:
 Facility – superior hotel, guest house & conference services and amenities
 Food – develop a strategy to ensure clients & attendees have good food
 Access – provide good access
 Accommodations – sufficient lodging, in the right locations
 Marketing – Carry out an aggressive marketing & packaging strategy
 Conference Packaging – Address all conference needs – “one stop shop”
 Community Support – Plan & operate the facility to provide broad benefits
Our Competitive Advantage
The hotel intends to ensure that its business is not only established to make profit but is also able to compete
favorably with other competitors in the industry. The vision is to ensure that it’s not only met but exceed the
expectations of all the clients that make use of our hotel and services, and this is one of our competitive
advantages against our competitors.
The hotel has modern and conducive facilities such as 2 buildings options that have various capacities of 25 to
700 guests, thereby giving the clients varied options in terms of picking something suitable for their event.
Another competitive advantage we have is the fact that the hotel have an individual event coordinator that will
help coordinate the events of clients’ throughout the duration of the event, thereby allowing our client have a
stress-free event.
Asides, the event coordinator, we also have a professional wait staff that have the experience of handling
different kinds of occasions that will crop up at our center. All our staff and communicate our brand all the
time by giving excellent customer service to clients regardless of events or packages.

Another competitive advantage we have is our meeting hall décor service which is also part of the services we
offer. We go beyond the average décor and give our clients a wonderful experience that is best experienced.
Finally, we are the best at caring for our employees as we offer the best salaries and welfare packages in the
whole of Bishoftu within our category as a start-up business center in the industry. We also ensure that our
employees undergo training that will enable them become better and more productive for our business.

UNIT THREE
Company Summary
Project Promoter & Legality
Project promoter: Ato Bereta Debela Hawase
Project: Three Star Hotel
Total Capital: 138,633,056.33 Birr
Address: Oromia Region, Bishoftu town, Kebele-05, H.No. -.
Telephone: +251 930 108907
Legal form of Business: Sole Proprietorship
Investment License: KIO/BMB/00032 Issued on 25/05/2008
Authorizing Office: Oromia Regional Government, Bishoftu Town Investment Bureau
Background
Ato Bereta Debela as a sole trader engaged in several types of businesses since 1980. He has started his
business activity by establishing a Mill house and cultivating different types of agricultural products in East
Shoa zone, Bishoftu town of Oromia regional state. Then after by building-up his capital, he opens a liquor
store at Bishoftu town. Considering the natural link between the former liquor store and the current
standardized three star hotel services, the promoter later on has established the current three star hotel in the
center of Bishoftu town.
Before starting the current hotel services, the promoter Ato Bereta has engaged in manufacturing sector and
starts a hollow section production center in Dukem town. In relation with the business Ato Bereta has also
provide several types of construction materials for different contractors, construction areas, Governmental and
Non Governmental organizations.
The manufacturing business sector has been also the main income generating businesses and has now become
an equity source for the construction of the current hotel project under consideration. The hotel has been
engaged in the business since 2010E.c and has a satisfactory reward both for the project owner Ato Debela as
well as other stakeholders.
The Project (Current Status)
Standard of the Hotel: The hotel under consideration is a construction of comprehensive three star hotel
located at one of the fastest growing suburb town of Bishoftu which is located about only 44 kilometers
distance from Addis Ababa on the road to Djibouti.
The hotel has been rendered high quality services and accommodation to its clients since its inauguration.
The Ethiopian Standards Agency has prepared new hotels rating requirements and classification directives
that will involve in the standardization process of grading hotels to different star levels.
As per the Ethiopian Standards Agency definition, Hotel is a commercial establishment which provides rooms
in which people can stay, especially to travelers and sometimes to permanent residents, and which provides
food, lodging and other services for paying guests, including the general public.
Therefore, the hotel has been granted a three stars level as a result of comprising the following points to the
hotel business as per the standard of the agency:
 The hotel have 25 standardized rooms with a minimum room size of 16m 2, most of them has a
standard bed size of 1.80m x 2.00m, some of the rooms has a double bed with a size of 0.90m x
2.00m.
 All rooms are equipped with necessary facilities like TV sets, Refrigerator, Cupboard, Sofa, Tables
and Chairs etc
 In addition the hotel gives free internet/Wi-Fi/ services for its clients
 All furniture’s and equipments used were selected in order to satisfy its clients and are chosen to make
the standard of the hotel factual
 Meeting hall with a capacity of 700+ persons is already available

 The construction work of the buildings are finalized with a quality finishing materials and
equipments, acceptable decorations, harmonized and impressive wall and mirror coverings and paints,
well-constructed and professional finishes and detail on all furniture’s, quality flooring and ceilings
using outstanding materials were used for the buildings
 An elevator space is available for the first G+7 building
 The lighting system of the hotel (inside & outside) were done as per the requirements of the standard
 There are 28 skilled and semi skilled, qualified & certified permanent employees
 The requirements for health, safety and fire security, environmental services requirement for waste
management and have certified documentary evidence of compliance
 The hygiene and sanitation of the kitchen and public area is at a high standard
 The hotel has a bar & restaurant available for services
 There is a separate & independent reception area ready for users 24/7
 All guest rooms have their own bathrooms for personal use
 All rooms are serviced including linen/towel change, removal of rubbish and cleaning 7 days a week
 There is always a contact person at a reception area 24 hrs / 7 days a week
 There are three meeting halls with high quality sound system and lightening
 Bank service is also available at the gate of the hotel
 Gallery & Gift shop will be one of the hotel’s service area
 Separate Bar, Restaurant & smoking area available for clients of the hotel
 It is much available to use a taxi and is only 5 minutes far from bus station of the town
 Recreational activities like beauty center & shopping centers are available in near distance
 Clean, neat & appropriate uniform dress is used by all staffs with proper identifications
 Full laundry/dry cleaning service is available for users all the time
 Sufficient car parking area is available for users of the hotel
Location: The main highway road crossing the town is considered to be the life line of the capital city of
Ethiopia, at the same time it is also the main gateway to the major parts and connects to most important
business cities such as Djibouti, Adama, Hawassa, Dire Dawa, Harar, Asala, etc. This indicates that the site
selected for the hotel business is suitable for the reason that the site is located adjacent to the main highway
road from Addis Ababa to Djibouti and on the center of Bishoftu town.
 The hotel business project site is found in Oromia Regional State East Shoa Zone, Ada Woreda,
Bishoftu Town, Kebele 05 locality area.
 The business site of the hotel building is found in front of Rift Valley University, adjacent to Tommy
International Hotel.
Land: The hotel was constructed on a plot of land with area of 394.5 square meters. The land is acquired on
lease basis for 37 years from Bishoftu town municipality office. Per the agreement, the annual rental payment
is birr 7,890. The total lease value of the land is birr 291,930.
Buildings: The total construction cost consists of G+7 & additional G+3 hotel buildings. The total
construction costs were estimated to be Birr 85,653,305.36. Per engineers of the project, it is estimated that
the building’s 85.4% (73,185,327.77) was completed and started to generate income for the business. The
remaining construction work is estimated as 14.6% (12,467,977.59) birr of the total construction cost.
Hotel Furnishing Items: Hotel furnishing items include machinery, equipment, soft furnishings, kitchen
materials and utensils, furniture and fixtures are determined and purchased from local market with a total cost
of birr 9,842,165.00.
Pre-operating Expenses: Pre-production expenditure includes interest during construction, costs of
registration, licensing and formation of the company including legal fees, commissioning expenses,
architectural, structural, electrical, sanitary, bill of quantity & feasibility studies etc. Hence the pre-operating

expenses of the project reaches birr 1,887,585.97 including land lease payments made by the promoter Ato
Bereta Debela. This cost of the project is covered from the promoter’s own source of capital.
Total Investment made so far:
Description Value
Hotel Buildings 73,185,327.77
Eqpmt’s, Furniture & Machinery 9,842,165.00
Working Capital 1,250,000.00
Land Acquisition & Pre-operating Expenses 1,887,585.97
Total 86,165,078.74
Project Budget Summary
The hotel cost has been evaluated for this Business Plan through the comparative analysis of other relative
performance venues bid and constructed over the last few years. At this stage, the estimated total hotel capital
budget would be approximately 138,633,056.33. Acoustical treatments, sound isolated mechanical systems,
lighting controls, site utility upgrades, and including the machinery, equipment, furniture & fixture costs, the
amount of pre-operating expenses & vehicles will all play a role in the project cost analysis.
Beneficiaries of the Project
The major beneficiaries include the following:-
 Returns on investment
 Supply of quality hotel and accommodation services to clients
 Tax to the government
 Foreign currency generation
 Job opportunity for productive and unemployed labor force and
 Indirect benefits accrue to the country as a whole in the form of generating potential investment
capital.
The Hotel Rationales
The government privileged the sector by giving duty free import of appliances & equipments and availing
land. The project is very near to the capital Addis Ababa, which is known, as centre of Africa, the seat of
diplomats, suitable condition for foreign direct investment, and the attraction of tourists. Considering these
favorable market conditions, the promoter decided to start the hotel business in Bishoftu town.
Formerly the promoter of the hotel needs his new business to be located in one of the first standard cities of
Oromia Regional State or near to those first standard cities, especially on Bishoftu town. According to urban
reform proclamation 65/2003 Bishoftu, Adama and Jimma towns are categorized as the first standard cities of
Oromia towns.
The land on which the hotel business lies was acquired by the promoter in thinking of starting a new three
hotel business in the town with a total price of birr 1,887,585.97 including its land acquisition & pre-
production costs. The terrain has a total of 394.5sqm of land for the project construction work. The promoter
Ato Bereta has been studied several places around Adds Ababa and the surrounding special zone towns of
Oromia in order to start his new business, subsequently after extensive studies was done and due to the next
points he decided to start his hotel project in Bishoftu town.
 Bishoftu town is in near distance to Addis Ababa
 Bishoftu town is on the way to the Eastern part of the country, on which he can find ample market
demands for his businesses
 The town is one of the major gate pass to Addis and outside of Addis
 There are a lot of travelers who spent their day & night time to work; rest and enjoy. They consider
the town as one of the stop-by cities on their day to day journey
 There are sufficient infrastructures to the business – electricity, water, and telephone line and
network availability has good quality

 There is a huge gap between the supply and demand of hotel and guest house business in the town
 The town is on the way to Modjo, Adama, Hawassa and other Eastern and Southern part of the
country, the town is one of the most of the weekenders of Addis Ababa spent their weekend times
 The town is favorable not only for the current business outfit but also for the Travel & Tour works,
Training and Advertisements on Hotel & Tourism of the town and surrounding areas too, on which
Ato Bereta plans to enter for the future
The above points and findings of the study made by the promoter of the project put together his vision to
decide to prefer Bishoftu town for his business spot and the main issue that creates a competitive advantage
for his project is that there is an access to transportation facilities to the business site, that will have a great
impact on the profitability of the project after being involved in the assembly and marketing process of the
hotel.
Our Products and Services
The hotel is the one stop hotel business center that intends to offer its various customers a beautiful
experience while also exceeding their expectations with the various services that it intends to offer them.
Therefore some of the services we offer are;
 Full Hotel & Guest house services
 A Convention center for national & international wide range meetings
 Governmental & Non Governmental Conferences & meetings
 Fund raising programs & Consultancy services & Trainings
 Public/Consumer shows, Banquets & Receptions
 Weddings, Business meetings, Rehearsal dinners, Holiday parties and Corporate parties
 Sport & Recreational compounds
 Business shops
Developmental Impact of the Project in Socio-economic
Given the multi-sectoral nature of the hotel and guest house business economic sector in Ethiopia and as a
major gear to enhance the renaissance and transformation of the country, a valuable impact will be create
since every economic sector needs sufficient supply of credit facilities, land, infrastructures, fuel and gas as
well as transportation services.
The hotel helps the sector to minimize the current market price of convention center and guest house rooms.
In addition to that the hotel will create extra recreational center for the youth of Bishoftu.
If it is assisted by the government, banks and related parties to extensive involvement of hotel & guest house
business center and other multi-purpose service outputs, the project will create additional job opportunity to
the community. Help for the foreign exchange earner of the country.
In relation with the social & economical impact of the project, it is planned to deliver clean water to the
society free of charge from the bore-hole it organized at the compound.
Additionally, the project creates additional demand for room services within Bishoftu town.
As a whole it will have significant socio-economic developmental impact for several types of stakeholders.

UNIT FOUR
Market- Demand & Supply Analysis and Strategy
To undertake the demand and market analysis both primary and secondary data was collected from primary
and secondary sources. The primary data was collected by personal observation, and interviewing
administrators, contractors, investment bureau employees, customers and different peoples who work in
similar businesses.
Secondary data was collected from governmental institutions such as investment office, ministry of tourism
and culture. These collected information’s are about market potential and shares, demand of community for
both satisfied and unsatisfied portions, pricing strategies and related impacts on the raw material and their
suppliers ,business environments (location) influences from both internal and external etc.
Bishoftu enjoys a relatively better infrastructure as compared to other towns of the administrative zone. There
is an asphalted road that connects the town to the capital city and other major towns around the metropolis
and the eastern part of the regional states. The site is well served by road transportation system. The important
supplies for development of business compounds (Electric power and water) are sufficiently available.
Electric power is supplied to the locality areas and nearby town from Koka Hydro Power Station. Social
service infrastructures are established in the locality and nearby towns with a sufficient capacity to
accommodate further development.
Since the proposed hotel site is located at the center of the town where there is fast growth in terms of
commercial activities it will have a fast return on investment.
More and more buildings (residential houses, offices, schools and other social and economic institutions) are
coming up to accommodate ever increasing population in our country as well as for other developmental
activities viz hotel and guest houses etc. There is good demand for hotel and guest house services due to the
increasing flow of road transportation through the town, the ever increasing number of residents within
Bishoftu town, high flow of recreational groups from both the metropolis and the nearby towns.
Recreational services now days is occupying an important position in daily life of people. The hotel & guest
house service is also used by several types of governmental offices, private companies, local area residents,
travelers etc. The demand for hotel and guest house service is increasing day by day due to the rapid
development of living standard of people and industrial and agricultural developments. The demand is also
not limited to major towns of the nation rather it’s getting more popular in small towns and villages too. Due
to this fact the project will not be faced with market problems.
To attain the project objectives, the strategies to be followed will include providing efficient & reliable
customer services, utilizing modern service facilities, strengthening the marketing wing of the company,
introducing service improvement schemes, introducing a computer-aided management information system,
establishing standards for enhanced quality of services. The project will engage in hotel business services in
order to meet its sales targets, the company has planned to create a consumer attraction and advertisement
network through its circulation plan.
Factors Influencing the Market
 Comparative price realization from the other hotel service outputs
 Carryover stocks and serve as per the demand of consumers
 Technological gains through improved facilities and management scheme
 Development of new applications and substitutes of hotel service products
Customers / Target Market
The target market for this industry is quite huge as there are events that are being thrown every now and then
consisting of different types of crowd, which makes for a huge customer base for event centers.
Therefore, our center cannot be restricted to just hosting weddings, parties, fundraising and business meetings
but it can host any event that our client deems worthy to celebrate or carry out. Our strategic location in
Bishoftu has offered us ample opportunity to be able to tap into the target market.

However, we intend to conduct a market research in order to fully understand our target market and know
what they expect from us, this will help us properly draft the strategies that would be needed to attract more
customers to our business.
From the result of our market research, we have found that we are in business to offer our wide range of
services to the following groups of people;
 Couples
 Business organizations
 Government agencies
 Non-profit organizations
 Religious bodies
 Educational institutions
 Financial institutions
 Celebrities
 Anchor tenants: Organizations leasing office space within the conference center
 Group hirers: Local community groups or commercial organizations wishing to hire the hall to stage
their own events or activities (usually regular).
 Personal hirers: Local people wishing to hire the hall to hold their own (usually one-off) events.
 Attendees at organized events and paying audiences at cultural, artistic, sporting or musical events or
activities.
 Members of the local community with an active interest in preserving the Centre.
In light of market research and previous experience of other businesses in the industry, our target markets are
tourists, transit tourists and Bishoftu and surrounding town residents. The detail description of our target
market is listed as follows:
Foreign Tourists: the existence of many tourist attraction sites of the country in general & that of the city in
particular are attracting a large number of tourists to the country. Hence, these tourists prefer our hotel
services since they demand international standard high quality hotel services.
In addition, participants of international conference (seminars), business travelers, transit passengers, foreign
diplomats, officials of different international organizations, NGOs and Ethiopian diasporas who came home
for different reasons are the users of our hotel services. Based on the information obtained from the Ethiopian
tourism commission, the number of tourists visiting Ethiopia is growing fast from year to year.
Residents of Bishoftu & Surrounding Towns: the hotel is located at Bishoftu town which is the nearest
suburb of the capital Addis, where most of expatriates, Diasporas, icon business men and high rank politicians
are residing. Hence, they are one of targeted customers of the hotel.
Demand and Supply Gap Analysis
Demand Analysis: Ethiopia is endowed with unique cultural heritages, striking scenery, favorable climate,
rich flaura fauna, as well as important archeological sites. These blessings coupled with the government’s
initiative to promote the tourist attraction centers demanded the country to invest on convention centers &
hotel constructions as more tourist arrival is expected in the future. The capital -Addis Ababa is the venue of
Africa being the seat of many international and regional organizations including UN-ECA, AU, over 90
permanent residents of diplomatic missions and direct and indirect representative offices.
These diplomatic missions and organizations used to organize regular and extraordinary meetings.
Participants require standard accommodation services and meeting places in the capital. As it is well known,
there are a number of factors affecting the demand of hotel & conference center catering service. Mainly the
factors are disposable income of the population, its size, willingness and preference of the customer, quality
and availability of competitors in the sector. There are also implicit factors attributable to the general political,
economical and social activities of the country in general and the city in particular. In such circumstances, it is
difficult to know the exact magnitude of demand especially for local customers and hence what could be
worked out is a demand forecast based on historical tourist’s inbound trend to Ethiopia.

Analysis of Need
Because of the inadequacies with sufficient high ranking hotel & guesthouse centers in the town, the clients
with the demand have been forced to take their programs to be held at Addis Ababa & Adama towns. The
facilities available in Bishoftu town do not meet the demands that several Governmental & Non
Governmental organizations requires, thus limiting the types and sizes of conferences that can be held. Ato
Berta has determined through diligent examination of other hotels in the town, that the appropriate capacity
for this type of demand is not sufficient for clients.
The hotel has been broken down in to five primary categories based on function; Conference Halls, Hotel use,
Guest Rooms, Sport & Recreational zone & Business Shops.
The Convention Halls are programmed as a two-level design scheme that provides seating for 500 on the
main hall (G+7), 150 on the second building (G+3) with additional 50 seating capacity in its syndicate rooms.
This breakdown of seating capacities will provide more opportunity for various sized performances.
Supply Analysis: Ethiopia has a limited supply of Star and tourist standard hotels and accommodations. The
existing star hotels in the country are highly slanted towards the capital city. Hotel and accommodation
service in Ethiopia is characterized by among others, the following features:
 Low educational qualification and training system,
 Poor service quality and limited domestic consumption,
 Limited supply of star hotels and over-pricing of the existing hotels for what they offered
 Lack of hotel plain rating system, which prevents the existing licensing authority from downgrading
them,
 Less access to market information and poor infrastructure,
Supply of hotel service is not a mere forecast of the number of available rooms, it includes assessment of
establishment and constructions, expansions, quality of the service and factors that deal with the process of
service delivery.
Local Market Conditions
The demographic and socio-economic characteristics of a local market are important components in assessing
the market potential for new convention center space in any corner of the world. The strength of a market in
terms of its ability to attract events and attendees, and generate revenues, is predicated, somewhat, on the size
of the regional market area population and its demographic makeup as well as the level of competition within
the regional area. Further, a community’s hospitality infrastructure in terms of hotels, restaurants,
entertainment and other such factors contribute heavily to the ability to attract non-local conferences.
From a competitive standpoint as a “destination”, some of the project’s most prominent strengths include:
 the diversity of destination in terms of visitor appeal and interests (i.e., diverse and quality mix of
urban, rural, indoor, outdoor, entertainment, scenic, and leisure amenities and attractions);
 direct driving accessibility via the capital to the town;
 conveniently-located airport with direct air service to key regional hubs will be constructed in Dukem
town in near future;
 Progressive economic development and socioeconomic attributes.
Events that rotate within a given region (e.g., conventions, conferences, and meetings hosted by associations,
government, corporate/trade groups, and non-professional organizations, such as SMERF [social, military,
educational, religious, and fraternal] groups) normally view destinations with diverse offerings, such as this
project, favorably when considering convention sites.
Marketing Strategy
Product or service marketing is a fundamental job in business operation. The services to be offered should be
properly marketed so as to achieve the desired market share. The marketing techniques to be followed
arousing the proper mixing up of the four marketing techniques.

Marketing will be focused on generating sufficient income by lettings both to commercial and community
customers to create and run a successful community asset. In the longer term an active approach will be taken
to developing a responsive programme of community events. The range of facilities gives numerous, flexible
options for income generation.
Over time the most successful types will be identified and exploited and a business-like approach will be
taken. It can be seen from the financial forecasts that considerable income can be generated, enough to cover
costs and generate a profit, to take the hall forward sustainably and to maintain it well.

UNIT FIVE
Industry Analysis - Economic and Sector Review
Ethiopian Economy: The services sector of the country’s economy has—for the first time in the history—
overtaken agriculture as the largest segment of the Ethiopian economy. This reverses a centuries-long
economic structure, wherein agriculture was the dominant sector, followed in a distant second place by the
services sector, and lastly a very small industrial sector. The recent release of FY 2020/21 GDP statistics,
however, revealed that the service sector is now clearly at top, comprising 50.9percent of GDP, followed by
agriculture at 37.5 percent, and Industry at just 13.2 percent (Ministry of Finance & Economic Development).
The customary shorthand description of the Ethiopian economy as being overwhelmingly agriculture-based-
has thus just becomes obsolete. The overtaking of agriculture by services is not some statistical blip or a one-
off occurrence linked to a particularly poor crop season.
Agriculture has actually been overtaken by services at a time when crop output reached a record level of 17.1
million tons. Indeed, for close observers, the trend lines have been prevalent for almost a decade; agriculture was
more than 50 percent of GDP but started a gradual decline over the past decade, falling to about 47percent in the
middle of the decade and to a low of 43.2 percent of GDP most recently. The services share of GDP moved slowly
but consistently in the other direction, moving up from just 38 percent at the start of the decade to 45 percent of
GDP most recently.
Projected Composition of Ethiopian GDP
Industr Agricultur
Services y e
FY 2017/18 GDP Share 45.1 13.0 43.2
FY 2018/19 GDP Share 48.0 13.1 40.2
FY 2019/20 GDP Share 49.6 13.2 38.6
FY 2020/21 GDP Share 50.9 13.2 37.5
Source: MoFED & Access Capital Projections; figures do not add up to 100 percent due to
a technical adjustment for financial intermediation services in GDP data.
As indicated in the above statistical data the service sector GDP contribution in the overall economy has
grown year after year in arrow.
Tourism and Hotel Sector
International tourism recovered strongly in 2020 according to the Advance Release of the UNWTO World
Tourism Barometer. International tourist arrivals were up by almost 7% to 935 million, following the 4%
decline in 2018/19 – the year hardest hit by the global economic crisis. The vast majority of destinations
worldwide posted positive figures, sufficient to offset recent losses or bring them close to this target.
However, recovery came at different speeds and was primarily driven by emerging economies.
Boosted by improved economic conditions worldwide, international tourism has recovered faster than
expected from the impacts of the global financial crisis and economic recession of late 2018 and 2019.
International tourist arrivals were up by 6.7% compared to 2018, with positive growth reported in all world
regions. Worldwide, the number of international tourist arrivals reached 935 million. While all regions posted
growth in international tourist arrivals, emerging economies remain the main drivers of this recovery. This
multi-speed recovery, lower in advanced economies (+5%), faster in emerging ones (+8%), is a reflection of
the broader global economic situation and is set to dominate 2020/21 and the foreseeable future.
The recovery in international tourism is good news, especially for those developing countries that rely on the
sector for much-needed revenue and jobs. Following a year of global recovery in 2020, growth is expected to
continue for the tourism sector in 2021 but at a slower pace. UNWTO forecasts international tourist arrivals to
grow at between 4% & 5% in 2020/21, a rate slightly above the long-term average.
The conference center business is becoming a popular one as new projects are opened everyday somewhere in
the country. Most businesses in the hospitality industry are also leaning towards this trend by constructing

multi-purpose halls or renovating existing facilities so as to be able to tap into the trend of hosting parties and
conferences.
Nationally according to reports, the hotel industry has also recognized the importance of having centers to
host and service meetings to its revenue base and has started expanding its offer to cover these areas. This has
helped to boost the bottom line for most of these hotels.
Asides hotels, educational institutions such as colleges and Universities have started focusing on increasing
the number of conferences centers available to clients. Other unusual institutions such as museums, theatres,
cinemas, Regional & Local Municipalities have also started making centers available to host meetings and
other events.
There are new categories of venues that are now being added which create diversity to the other services in
the market. These venues are unusual and are also growing in popularity as they are regarded as funky and
edgy and are preferred by the younger generation, especially as they do not require overnight accommodation.
Companies are now picking brands that identify with their corporate values and brands, as this is seen as
being appreciated by their customers and other stakeholders. Also, guests to these meetings are likely to see
the venue as a reflection of the company’s goals.
Venues have also begun to shift towards smarter designs that not only make them accessible but smart as well
which mean accommodating all kinds of transportation in order to save attendees added stress.
Venues have also seen the need to ensure that those attending events can connect with the outside world, by
ensuring that connectivity is being provided for at events. This has become a priority for event centers and is
one detail that clients appreciate.
Convention centers are no more focusing on just providing halls for use but also adding other services as well
such as catering, event coordination, wait staff, bartending, décor and rentals of several of equipment not
included in contract.
Ethiopia: With its diversified natural endowments can be one of those main tourist attraction countries in the
world. The main features of the natural tourist attractions of the country are its landscape with numerous
scales of topographies, attractive rivers and waterfalls, gorges, caves, rift valley, lakes, fauna and flora,
monuments and artifacts, and diverse ethnic and cultural blends. Being an ancient country it has got rich
history. The famous historical routes are Addis Ababa, Bahir Dar, Gondar, Axum, Lalibela, Mekelle, Sof-
Oumer, Arba Minch, Hawassa, etc. These areas are famous for monasteries, ritual obelisks, manuscripts,
castles, rift valley and lakes, monolithic stones, etc.
The archeological attractions are Haddar in Awash Valley, Melka Kontur, Dilla and Dire Dawa areas.
Ethiopia is the cradle of mankind where four million years old fossil remains (Selam) has been recently
found. The unique character of the country are its attractive cultures and more than 80 ethnic groups having
over 200 dialect, varied traditions and customs, very interesting music, folk songs and dancing.
In addition to this, Addis Ababa is the centre of Africa, the seat of numerous diplomatic missions and
representatives of international organizations. It is a venue of many conferences and seminars and a home for
thriving commercial community.
Former’s Travel Guides, which has been offering the best tourist destination sites for those planning the
perfect travel excursion for the last 50 years, posted on Frommer’s.com scoured the globe, and poll edits
stable of authors and experts to identify twelve surprising, thriving, or emerging travel destinations. Following
this, Ethiopia is selected one of the top ten travel destinations.
Former’s Travel Guides also disclosed Ethiopia as finally emerged out of the shadows caused by year’s
political strife, economic hardship, and famine. The improved infrastructure has made travelling in Ethiopia
increasingly popular, especially for those seeking adventure. Ethiopia is reverted for its rich history as one of
the earliest Christian country, the town of Axum which is the home of the ancient ark of the covenants as well
as the monolithic rock-hewn churches of Lalibela are some of the tourist attraction sites in Ethiopia. The
country has a unique calendar of its own and it has celebrated its own Millennium. The African Union head of

states on its summit decided the Ethiopian Millennium to be called as the African Millennium. This helps the
country to promote its tourism industry throughout the world.
Statistical report on most developing countries show that the demand for facilities such as hotels,
transportation, banking, insurance, telecommunications, road, electricity, etc are rising and should assist the
growing tourism industry. It is, therefore, high time for the country to develop and improve its tourist
facilities to a level of internationally acceptable standard.
Bishoftu Town: Favorable situation for the private sector in Bishoftu town causes to raise performance of
investment and considerable number of projects are flourished as resent facts reveled. Relatively presence of
well-developed infrastructure and its nearness to national capital makes the town highest recipient of
investment.
From time to time the increment and expansion of urban zone causes the demand of hotel & commercial
buildings are alarmingly increasing. The good governance experienced in the town is the main cause of
expansion of business movement which in turn seeks for suitable and modern working premises. Due to the
presence of high demand gap, suitability and relative advantage of Bishoftu town as industrial, commercial
and residential quarter, and personal interests of the owner of the project, Ato Bereta Debela initiates the first
project for himself and wants to be one of the pioneers in the town for constructing a three star hotel
commercial compound.
Bishoftu town is located at 44kms southeast of Addis Ababa and gate-way to the eastern and south-eastern
part of the country and is served as the main link to major economic centers of the country and has a heavy
traffic movement due to being a main transit location for heavy and medium weight travelers.
Emerged due to train station of the Ethio-Djibouti Railway, the town is established around 1915E.c in
between Dukem & Modjo towns.
Bishoftu is an Afan Oromo term that literally means ugly or stinking. As to why this term was applied to the
town, group of informants argues that it was because of the physical nature of the land surrounding the lakes,
which made them inaccessible site they are sloppy around their shore. On the other hand, others relate its
name to the stale and not potable nature of Lake Bishoftu with its ‘stinking’ foul odor.
Physical Characteristics of Bishoftu: The landscape of Dukem and Bishoftu owes its origin to the
volcanism Quaternary that gave rise to the existing peculiar geomorphology of volcanic environment. This
was later modified, to a limited extent, by recent alluvial depositions and formation. As a result, numerous
cinder and spatter cones as well as old volcanic create over within and in the vicinity of Dukem and Bishoftu.
The two towns and its immediate vicinity are surrounded by relatively highly elevated areas like Mt. Yerer to
the north, Mt. Sokour to the south, Mt. Zikuala to the south-west and some scattered cinder and spatter cones
to the east and west.
Under this setting, Dukem and Bishoftu towns are located at the northwestern tip of the G.R.V (Great Rift
Valley) within in the southern part of the Awash River Basin. Specifically, it is within the wood chat River
catchments, a tributary of the Modjo River that fall into the Awash and into the Koka Lake and Aba Samuel
River.
Since Bishoftu town is one of the neighboring towns and found in between to the metropolis and Modjo,
different types of consumers should pass through Bishoftu town and that makes the town one of the most
attractive residential, recreational, business plus industrial area of the region.
What makes Bishoftu town unique is also the colorful annual ceremony for Irrechaa (Thanks giving) at Lake
Hora Arsedi as a true manifestation of Oromo religion and culture. This is part of the thousands of nationals
and international visitors. Currently, it has drawn large-scale attention and received wide media coverage.
Thus, in addition to its significant as a shrine for the worship of Oromo religion, it has a magnificent potential
as valuable source of beauty.
Population: Bishoftu is situated along the Addis Ababa - Djibouti highway and is a station on the Ethio-
Djibouti Railway. It is also found adjacent to the location of an industrial park covering 40 hectares owned
and developed by East African Group (Ethiopia), Ltd. The town has an elevation of 1950 meters above sea

level. The town has a population of more than three hundred fifteen thousand. The growth rate ranges from
5,000 to 10,000 yearly.
Business and Finance: As Bishoftu town is becoming an established investor’s destination throughout the
nation, many state owned and private banks are opening their branch in the city to exploit the financial
activity.
The town has more than thirty private and seven state owned banks.
Economic Activities: Despite its status as one of the fastest growing towns in the region for decades,
Bishoftu is physically not larger than most of zonal/woreda towns in the regional state of Oromia. Coupled
with urban agriculture, the availability of suitable flat land, infrastructure, abundant water resource, feed for
animals etc. has contributed to the establishment of agro-industrial manufacturing, recreational resorts, hotels
and business firms. Presence of a number of governmental, non-governmental organizations and private
sectors, in addition to its proximity to Addis Ababa offered and easy access to transportation of raw materials,
finished goods and other trade and commerce activities. With more to come, these are the major economic
basis and potentials of the town.
Due to its favorable area for investment, there are a lot of private investors investing on different type of
industries which create a lot of employment opportunities for the residents of the town.
Investment Overview: Existing Investment Economic Policy of the country makes Bishoftu the ideal place
to invest.
 Capital and decentralized economy
 Free Market Policy (Minimum Government Intervention)
 Encouraging investment and private capital Accumulation
 Favorable investment Policy and Conditions
 Encouragements made for Investors (Tax free, duty free and the like....) made the town one of the
ideal business locations in the nation.
Infrastructure Development: By way of infrastructure rehabilitation, Bishoftu town has undertaken various
forms and qualities of developmental schemes. Among these are asphalt and coble stone roads, draining and
flood protection structures such as walls and check dams, new and rehabilitated market places, water supply
and sewerage developments within the town.
Hotel Business Sector
Modern hotel Businesses in the country begin at the end of the 19th c, particularly during the Emperor
Minelik II period. At the end of 1890’s a modern hotel was built with the name of “Taitu Hotel” with the aim
to serve the royal families, embassy workers, envoys and tourists. In addition, Italian invention was
contributed to the development of the sector through the establishment of Italian owned hotels in major cities
and towns of the country. More specifically, they have started to establish better equipped hotels in Addis
Ababa, Dire Dawa and other towns with main objective of providing hotel services to the Italian armies and
beside to this, to strength its colonial position by introducing economic colonization. In addition, factors like
the following contributed towards the development of the sector:-
 The construction of Ethio-Djibouti railways
 The existence of various tourist sites
 The strengthening of Ethiopia’s foreign relations
 The increasing settlement of foreign citizens from countries like Armenia, Greece, Italy, and India
who all helped to bring entrepreneurial capacity to develop the hotel services locally.
 The establishment of various international organizations such as AAU and ECA in Addis Ababa
which resulted in the increase in the demand of conference tourism in the country.
Although the number of foreign travelers who were interested in the natural, cultural, and historical attractions
of Ethiopia had been increasing from year to year since Mimili’s time (late 19th century), tourism as an
economic activity and important industry was given due attention in the early 1960s. Thus, in Ethiopia,
modern tourism activity was started not more than 45 years ago.

Accordingly, the first tourist organization was established in 1961 and consequently, to develop tourism and
attract investors in the sector, the Imperial Government promulgated a decree in 1962. The main objective of
the decree was to initiate private investment in tourism sector. At this time, tourism infrastructure was very
poor and there were inadequate number of hotels to accommodate tourists. Therefore, the Imperial
government emphasized in building hotels and other infrastructure. With this view, government established
various hotels and resorts in the capital city and major tourist attraction areas. The Hilton Hotel, Ras hotel,
Ethiopia hotel and Gihon hotel counts among the hotel chains established in the capital and major tourist areas
of the country during the Imperial Hailessellassie era. During this period, tourism and hotel business was in
the process of rapid expansion. However, because of the change of government in 1974, the rapid growth of
tourism had been hindered significantly. Even during this period, though several efforts were made to develop
the tourism sector, due to the government’s ideology, the sector’s performance was left behind the pre 1974
period. Therefore, the performance of tourism and hotel Business during the military regime had been
disappointing, owing to the hostile environment for international tourists, restrictions imposed on private
sector participation, low level of investment on tourism promotion and development, inadequate tourist
facilities and poor transport and other infrastructure (Survey of Tourism, 1998; MEDaC, 1999). All these
factors accounted for the poor performance of the sector in terms of tourist flows, foreign exchange
generation, and job creation.
Finally, the military government issued ‘mixed economic policy’ in1989 and the private sector was invited to
participate in tourism business.
In 1991, after the collapse of the military government, a transitional government was established and it
campaigned for the shift from command economy to free market economy. This change of economic policy
further encouraged the participation of private investment that was already started because of the mixed
economy in 1989.Consequently, the government introduced reforms in the tourism sector and Ethiopia was
open for tourists from all parts of the world. The new policy allows the participation of private investors in the
tourism sector. As a result, several private tour operators and travel agencies have been established.
Accordingly, the hotel sector became one of the beneficiaries of the new economic policy. Thus, there is a
relatively conducive investment opportunity in hotel industry and the trend shows that tourism will be one of
the main contributors to the balance of payments as well as pro-poor economic growth opportunities in the
future. Thus, the very intent of this project is to take advantage of this opportunity and expand and improve
the existing hotel business near to the most vibrant and growing city (Addis Ababa).

UNIT SIX
Justification of the Project & SWOT Analysis
Bishoftu is clearly a thriving town in terms of community activity, particularly when it comes to performing
arts, sports & other social & economical events. However, the needs of many of these groups are not currently
met by the facilities available, which are relatively small and not always fit for purpose. The Hotel & Guest
House Business Center development probably represents the best opportunity for decades (and for years to
come) to meet much of this need in one large, purpose-built commercial building.
The proposal for a new hotel & guest house in Bishoftu cannot be considered in isolation, as it raises the
wider strategic issue of what commercial facilities are needed in the town as it grows, as well as what will be
sustainable in times of austerity. Building a new hotel business in addition to what already exists will create
more capacity than is needed, and threaten the viability of all venues. Since there is good evidence that co-
location of facilities and services in urban areas helps to ensure sustainability of the industry, consideration
should be given by all local stakeholders to ‘consolidating’ a number of facilities & services within the one
new project.
One of the clear consequences of urban development is increase demand for urbanized multi-use hotel &
guesthouse service. Mismatch between supply and demand of hotel buildings has caused problems that could
be reflected in the socio-economic, health, sanitation, environment and well being of the community in
general. Hotel & Guesthouse Business building problem is seriously felt in any urban centers of the country
both quantitatively and qualitatively. As it is common to Ethiopian towns, Bishoftu town suffer from such a
problem as there is a large gap between the demands on one hand and the lack of supply and stock to services
of multi-use hotels & guest house commercial buildings on the other hand.
The increasing human population in the town and the rate of urbanization indicates that there will be
substantial need to improve service giving institution like that of multi-use convention center, hotels, modern
shopping centers, standardized supermarkets, cafeteria and different business centers.
Since the town was included in to urban reform program, the city administration has been undertaking various
investment promotions encouraging private sectors to invest their wealth and knowledge, is the driving force
of the development of the town. However there are no sufficient modern hotel business center services giving
organizations. For the demand of modern hotel & guesthouse center services citizens are exposed to extra
costs by travelling to the surrounding towns like that of Adama, Addis Ababa and Hawassa. Therefore this
project is intended to solve such problems and to serve the ever increasing number of residents of the town,
travelers and weekenders mainly from the capital city and others.
Why Invest in Bishoftu?
1. Access to market because of its geographical location
2. Peace and Stability is always in the town and around
3. Cheap Potential Resources (Human and Natural Resources)
4. Infrastructure is at its best (Transportation, Power, Telecommunication, Water are adequately
available)
5. Conducive Environment Policy
6. Tourism Center – are some of the reasons to initiate the emotion of the promoter Ato Bereta Debela to
invest his capital and knowledge in Bishoftu town.
Technology and Special Amenities
Many Hotel & Guesthouse Business center operators agreed that offering technology and special amenities
can enhance the attractiveness and use of a facility. Suggestions include:
 Wireless Internet or multiple areas where Internet can be accessed.
 High quality projectors and screens – having multiple large screens in bigger rooms is particularly
successful in their main conference space.
 High quality and consistently reliable sound equipment.
 Wireless microphones were recommended by several interviewees (easy to use, set up).

 Sound protection between partitions and individual sound equipment for each section for conference
areas that can be split into multiple sections.
 Outsourcing of AV services and/or has staff dedicated to ensuring that all equipment is functional
throughout a meeting or conference.
 Commercial kitchen allowing catered events to be done in-house - with a warming kitchen, there will
be a limit to who can cater particular events because of the logistics of transferring prepared foods
from the catering location to the conference facility while also meeting permitting requirements.
 Flexible spaces for a wide range of group sizes and activities and the ability to offer breakout rooms.
As is discussed in other sections of this study, demand for small conferences (50-100 people) is
greater than demand for gatherings for 500 or more people.
 Small nooks or dedicated space for networking, conducting business, and small two to four person
meetings is essential for tapping into the larger conference market.
SWOT Analysis
Like every successful business out there, the promoter intends to ensure that his hotel business is of the
required standard whilst also offering the best services and so to ensure that he attain this, he hired a reputable
business consultant here in Bishoftu, to help his business critically look through his business concept and
determine if he had what it takes to become a standard company.
Due to his request, the hired business consultant had to use the SWOT analysis in taking stock of strengths,
weaknesses, opportunities and threats to determine how the business were likely to fare in the industry fare in
the industry here in Bishoftu and in the whole of the Region as well as the Country. Below is the result of the
critical analysis conducted on behalf of Berta Debela Hotel Business Center;
Strength: the strength lies in the fact that we offer diverse services that will meet any requirements by our
clients, which allows us stand apart from our competitors. Also, we have professional and competent staffs at
hand to ensure that every event no matter the kind is conducted smoothly.
Our halls are not only well designed but also convenient as well as we also have the grounds for customers
who want an outdoor ceremony. Finally, the expertise of the prompter, Ato Berta Debela who not only has
amassed several years of experience but also has several qualifications, is another strength at the business of
his project.
 The existing promising market for the service
 Availability of labor for the project
 Geographical location of the project area
 Bishoftu town is a busy town connection with different major & small towns and peasant association
Weakness: this industry is not saturated with these kinds of businesses; however, we intend to stand apart
from our competitors by offering unique services that will attract the customers and offering excellent
customer care that will retain most of our customers. Therefore there is no significant weakness identifies on
the project.
Opportunity: there are various opportunities that abound for us because the halls can be converted to any
kind of event that intends to be hosted by our clients. The hotel also can cater to religious bodies who intend
to use the halls for regular meetings.
 Existence of good policy environment for investment
 Government incentive for investment
 Existence of high demand for improved and equipped modernized hotel service buildings
 Availability of professionals around project area
 Existence of several standardized hotels and resorts in the town
 There are 7 lakes in Bishoftu town
 Premium prices can be obtained by providing quality service

Threats: there are various threats that exist to every business in general, and so the probability of facing
threats is not alarming to us. The threats are likely to face in the course of starting and running the business is
the off-peak periods, where there are less likely events to be thrown.
The promoter however has come up with other services that will generate income for the business during
these periods. Another threat is having a major competitor offering same services in the same location. He has
proactive measures in place that will ensure that he remain unique and different in all the services that he
would be offering.
 Government policies and procedures may be could be characterized as a threat
 Market share competitors

UNIT SEVEN
Technical Analysis
Land and Location: The project is located in Bishoftu town suburb to east of Addis showing fastest growth.
The project site is adjacent to main road stretched between Addis and Djibouti. A leased land area of 394.5
square meters allocated for the hotel project is adequate to accommodate the hotel building with its facilities
and enough for parking spaces.
Infrastructures: The project area is designed by professional engineers. The building designed was taken
keen attention for architectural, structural, sanitary and electrical layouts. The project site is availed with
water, electrical light and power with excellent access road.
Service Capacity: The Hotel is designed to rank a three-star hotel. It is planned to cater all hotel facilities.
The building floors are designed to give different services as detailed in the table below.
 Assuming pre-marketing period, both deluxe & standard rooms are assumed to be occupied in a
capacity of 80%, 90% and 100% in the 1st, 2nd, 3rd and thereafter years, respectively.
 Food & Beverages will have a capacity of 60%, 70% & 80% of the room service income for the first
three years and thereafter.
 The meeting halls will be occupied 300 days per year.
 The gift shops & other incomes will have a capacity to generate an income of 20%, 30% & 40% for
the first three years and thereafter.
Land Utilization: The project has been established on a 394.5sqm area of land. The project has a total of 25
standardized guest rooms/bed rooms, Bar & Restaurants, Reception area, Meeting Hall, Gift Shop and
Offices. The hotel business will be run by the General Manager Ato Bereta Debela and additional hired
professional hotel manager.
Out of 394.5sqm of land about 47.4% of land (187sqm) is allocated for the main hotel and guest rooms
building (G+7) & 27.88% (110sqm) of land is assigned for the second building of G+3, which is currently
under construction.
The rest 24.71% (97.50sqm) of land will be used for garden and additional parking areas. In general the
planned project will respect the cities rules and master plan instruction and acts accordingly.
The overall land use pattern is described as follows:
Building Unit Plan of the Project (G+7 Building):
SN Description Unit area (m2) Qty Remark
G+7 Building
1 Ground Floor 187 1 Bank Service, Mini-Bar
2 1st Floor 187 1 Office & Rooms
3 2nd Floor 187 1 Office & Rooms
rd
4 3 Floor 187 1 Office & Rooms
5 4th Floor 187 1 Office & Rooms
6 5th Floor 187 1 Office & Rooms
7 6th Floor 187 1 Meeting Hall
th
8 7 Floor 100 1 Meeting Hall
Grand Total 1,409m2
Building Unit Plan of the Project (G+3 Building):
SN Description Unit area (m2) Qty Remark
G+3 Building
1 Ground Floor 110 1 Bar & Restaurant, Kitchen
st
2 1 Floor 110 1 Shops
3 2nd Floor 110 1 Sauna & Massage
4 3rd Floor 110 1 Meeting Hall
2
Grand Total 440m

Capital and Employment

The project is established at a total capital of Birr 138,633,056.33 in Bishoftu town, Ada woreda around
Tommy International Hotel. The project has been previously constructed the 1 st phase G+7 building. The
ground floor is already rented to Lion Bank Bishoftu Branch. In addition to that there is bar, offices and store
in the ground floor.
The first floor of the G+7 building is also finalized and gives services to clients of the hotel, there are five
standardized rooms which are all furnished and start generating income for the business. Each room currently
has a price of 600.00. In addition, twenty deluxe rooms are ready for service with the current marketing price
of birr 750.00.
The second G+3 building was under construction and the construction work is almost done. Taking the bill of
quantities of the building under consideration, finished works have a cost of birr 73,185,327.77 (85.4%) and
remaining works of the hotel has a cost of birr 12,467,977.59 (14.6%).
The current business project will create job opportunity for 58 permanent and additional temporary employees
will be hired as needed at the time of expansion.
The company will keep records of transaction for Audit by applying Generally Accepted Accounting
Principle more over the project will prepare quarterly and annual reports for concerned parties and
management of the hotel business.
Evaluation & Monitoring
Each element of the project’s strategy will be recorded, measured and evaluated, so the most effective tools
can be identified and used to best advantage.
Sales Projection of the Project
This industry is one that will never dip as there are always events that are usually conducted every now and
then, thereby resulting in the booking of event centers.
Our location in Bishoftu has us quite optimistic in that the project will not only met its set revenue generating
target in the first year but that it will make marginal profit that will allow to grow the business and eventually
expand it during the second year.
However, to be able to make a factual sales projection, the promoter have been able to take a critical look at
the industry in order to analyze his chances and come up with a sales forecast that he can use to adequately
plan and draft strategies for his business.
The sales projection was however gathered based on information and assumptions that were peculiar to hotel
business center start-ups here in Bishoftu, Adama & Addis Ababa. Therefore below are accurate sales
projections for the three star hotel business center’s based on the location of the business and several other
assumptions;
Room Services: the room services are classified in to two grades, Deluxe & Standard rooms. The hotel
business center has 20 deluxe & 5 standard rooms available for guests.
This study assumes 80%, 90% & 100% accommodation rate for the first, second & third year of operation.
The price will be 750.00 birr for deluxe rooms & 600.00 birr for standard rooms. The price for
accommodation will increase by 5% in every two years.
Income from Deluxe Rooms:
Year Deluxe Rat No. of Rooms Total Income per
s Rooms e Rented Price No of working days/year Year
1 20 0.8 16 750 365 4,380,000.00
2 20 0.9 18 750 365 4,927,500.00
3 20 1 20 788 365 5,748,750.00
4 20 1 20 788 365 5,748,750.00
5 20 1 20 827 365 6,036,187.50
6 20 1 20 827 365 6,036,187.50
7 20 1 20 868 365 6,337,996.88
8 20 1 20 868 365 6,337,996.88

9 20 1 20 912 365 6,654,896.72

10 20 1 20 912 365 6,654,896.72
Income from Standard Rooms:
Year Standard Rat No. of Rooms Pric No of working Total Income per
s Rooms e Rented e days/year Year
1 5 0.8 4 600 365 876,000.00
2 5 0.9 5 600 365 985,500.00
3 5 1 5 630 365 1,149,750.00
4 5 1 5 630 365 1,149,750.00
5 5 1 5 662 365 1,207,237.50
6 5 1 5 662 365 1,207,237.50
7 5 1 5 695 365 1,267,599.38
8 5 1 5 695 365 1,267,599.38
9 5 1 5 729 365 1,330,979.34
10 5 1 5 729 365 1,330,979.34
Conference Halls: Assuming that the Halls are available for hire daytime and evening every day of the year,
the total number of possible occupants for the conference halls will be 70%, 80% & 90% of the total capacity
of conference halls starting from its first year, second & third year respectively. Then after, the total demand
will be 90% of its total capacity. Realistically, no hall is ever used to anything near to full capacity, and the
feasibility needs to be assessed at a much lower level of occupancy.
The price per individual is be birr 120.00 per person without food & beverage services. The price will increase by
5% in every two years. Based on the assessment of this study the conference halls will be occupied 300days every
year as per past history.
Years 1 2 3 4 5 6 7 8 9 10
No of users 490 560 630 630 630 630 630 630 630 630
Price/Person 120 120 126 126 132 132 139 139 146 146
Working Days 300 300 300 300 300 300 300 300 300 300
Income - Halls 17,640,000 20,160,000 23,814,000 23,814,000 25,004,700 25,004,700 26,254,935 26,254,935 27,567,682 27,567,682
Food & Beverages: this study identifies that out of the total room service income, only 60%, 70% & 80% will be
generated as Food & Beverage income for the project for the first three years and thereafter.
Years 1 2 3 4 5 6 7 8 9 10
Room Income 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Capacity 0.60 0.70 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
F&B Income 3,153,600 4,139,100 5,518,800 5,518,800 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701
Other Incomes, Gift Shops, Sauna & Massage: 20%, 30% & 40% of the room service income will be
generated for the first three years & thereafter.
Years 1 2 3 4 5 6 7 8 9 10
Room Income 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Capacity 0.20 0.30 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40
Other Income 1,051,200 1,773,900 2,759,400 2,759,400 2,897,370 2,897,370 3,042,239 3,042,239 3,194,350 3,194,350
Rent Income: the project rented out 180m 2 of the ground floor of the 1 st G+7 building to Lion Bank S.c with
890.00 birr /m2. So the total income generated from rent income is presented below.
Years 1 2 3 4 5 6 7 8 9 10
Rental Income - m2 180 180 180 180 180 180 180 180 180 180
Price/m2 890.00 890.00 934.50 934.50 981.23 981.23 1,030.29 1,030.29 1,081.80 1,081.80
Rental Income 1,922,400 1,922,400 2,018,520 2,018,520 2,119,446 2,119,446 2,225,418 2,225,418 2,336,689 2,336,689
Sustainability and Expansion Strategy

Every business that is established to make profit intends to use such profit in sustaining itself and possibly
expanding based on the vision and objective of the company. Our sustainability and expansion strategy at the
hotel is drafted in such a way as to ensure that we continue in the business for a long time to come.
First, the promoter intends to ensure that he hire only competent and professional staffs that fully understand
his core values as a company as well as the industry. Also, his staffs have the required expertise to ensure that
the business is taken to the level it should be.
To keep employees happy and productive, the project intends to ensure that it provides favorable working
environment, have great welfare packages for them and also ensure that they undergo training every now and
then that will not only enhance their skills but make them more productive for the company.
Ato Berta intends to offer various services at his business center so as to be able to build a revenue base that
will sustain him and ensure that he do not constantly go to seek for loans to be able to run the business.
Various services will also make the project stand out from its competitors whilst ensuring that have a healthy
bottom line.
Finally, he intend to retain a high percentage of his clients by ensuring that he offer them the best customer
service by his trained customer executives. Asides offering excellent customer care, he also intends to ensure
that clients that refer him get an incentive and that repeat clients get a discount. These are the strategies he
intends to apply in sustaining and expanding his business venture.
Pricing Strategy
When it comes to the rates we intend to charge for our services, we have come up with a pricing strategy that
will meet with the budget of our clients. There are different packages and categories with varying rates
available for all our different clients and we have ensured that each package is not only affordable but will
meet and exceed the needs of all our different clients.
In a bid to raise awareness and also attract customers to our business, we intend to offer our customers a
discount for the first three months of business. We have ensured that the discounted rates we will offer our
clients will in no way allow us run at a loss even though we might be operating on a low profit margin for the
duration of the discounted prices.
The proposed hotel is operated with a high class hotel, guest house & convention center standard, it is,
therefore, ready to identify and monitor the price of its competitors to gain and maintain the loyalty of the
market. The best way for the hotel to grasp its competition is to take into account the taste and behavior of the
customers.
Price is the only element in the marketing mix that creates sales revenue. It is, therefore, important to set
reasonable price for all services by paying keen attention to cost, demand and competition:-
To determine the price of the services the project:
 Assess the operating cost of the service
 Taking into account demand intensity and customers psychology
 Assess the price range and price movement of the conference halls & hotels through time to support
sales and profit objective and marketing positions in the target group
 The current bed room renting price in Bishoftu is very diverse even among hotels with similar star
levels. This is mainly due to the non standardized nature of the service.
Price of Services
The hotel is constructed to fulfill the standards of a three star hotel. Hence, the service price is to be taken in a
three star hotel standard. In order to get the desired market share, however, the prices for the hotel services
shall be set at a lower price than expected. Depending on the market response to the services and the price,
periodical revision of service price is taken into consideration.
In light of the above and the facilities availed to the bed rooms, the proposed hotel room price would be able
to fetch at least similar with the least priced hotels in the town which have the same three star standard hotels.
 Based on this & the current market price of the hotel, this study identifies that the room price per night
for the 5 standard bed rooms is 600.00 & deluxe rooms have a daily price of birr 750.00.

 The hotel service also earn revenues from the sale of food and drinks and other hotel services
especially the night bar will earn more revenue to the hotel. The total revenue earned from this service
is estimated at 60%, 70% & 80% percent of the revenue obtained from room service income for the
first three years
 The conference halls will occupy 70%, 80% & 90% percent of their total holding capacity with an
initial 120.00 birr service charge per person without additional services (food & beverages) daily.
 The Gift and gallery shop will earn revenue of 20 percent of the revenue gained from room services.
 The rent income from Bank’s is 890.00/m2; the total area rented out is 180m2.
 Price will be revised and adjusted every two years with an increment of 5%.
 In addition meeting halls are occupied 300 days per year as per past history.
Promotion
Promotion is vital for any business. The services of the convention center should be advertised through the
electronic and print Medias. The project will also develop its existing and new marketing links with touring
companies, international organizations, and Airliners. The project’s name will be printed in a specialized
news papers such as Selamta, the Ethiopian Tourism and Culture Ministry publications. Sponsoring of events,
conferences and symposiums will also be the other techniques to promote the convention center.
It is the intention to establish a readily identifiable brand image and corporate identity which can be easily
recognized in the area, building on the community status. This will help to maximize the existing high profile
and promote the venue at every turn.
Together with the new brand, a range of promotional tools will be used:
Personal Selling: Use existing contacts to build upon customers for the center. A high conversion rate is
expected.
Public Relations: Existing good links with local media will be exploited. Stories will be given to local press
and radio announcing opening of the hotel and availability for hire, exploiting the current high profile and
maximizing human interest stories as they develop.
Website: A website, vital to any project today will be established.
Direct Marketing: Attractive leaflets and posters will be produced and distributed widely and carefully
targeted campaigns run to the numerous organizations and supporters who so strongly support the project.
Environmental and Social Impacts
 The hygiene of the employees /both clerical and non clerical/, the type of outputs and rendered to the
domestic / local markets will be keep up based on the standards and directives stated by Ministry of
Health
 There will be no environmental pollutions affecting the area with relation to the proposed project
 The Eco system of the area will not be degraded by the project work

UNIT EIGHT
Organization and Management
Organizational Structure: Structuring is an internal arrangement of an organization to achieve the optimum
arrangement of functions among many possible alternatives. In order to make the structure efficient and cost
effective there are a number of management principles and logical parameters by which the process of
structuring should be governed.
In the current competitive business environment the hotel business needs a simple functional structure that
can respond and adapt to rapidly changing market conditions. The structure should fit the envisaged project’s
objectives.
Thus the structure should accommodate the following points:
 Start up operation should follow the phase from simple to complex based on market growth,
 Organizational growth must be anticipated in the future and this should be reflected in the structure,
and
 The structure must consider the ability to pay for employees.
There are different types and approaches in structuring an organization. The following are some of the
commonly used approaches:
 Functional Organization,
 Product or market oriented organization structure, and
 Matrix organization structure
Whatever organizational structure is chosen the essential points in structuring should consider the
organization’s strategy. To achieve the objective set to it, what is needed for the hotel is a structure that could
enable it to be agile and responsive to environmental changes. Thus, simple functional structure with low
complexity and normalization is necessary for the hotel to be successful in achieving its objectives and
solving problems.
Departments: Based on the principles mentioned above, the hotel will be organized based on a simple
functional organization structure principle. The hotel will have three departments and one service unit under
the hotel manager. The hotel manager will be professional in Hotel management who will be authorized fully
to run the hotel with standards set for three star hotels.
The three department managers will also be professional in their respective area. Under the departments there
will be sections. The functional departments are Administration and Finance, Front Manager and Market
development and promotion managers.
Sections: Under the Finance and Administration Department Manager there will be accounts section and
chief casher. The Front Operation Department is responsible for food and beverage section, accommodation
and cleaning sections. Food and beverage section is responsible for the supply of foodstuffs and beverages.
These departments are also responsible for kitchen, beverage and “barista” operations. The organizational
structure of the hotel is pictorially shown below.

GENERAL MANAGER
AUDITOR LEGAL ADVISOR
HOTEL MANAGER
SECRETARY
MARKET DEV’T & FRONT OPERATION DEP’T FIN. & ADMIN. DEP’T
PROMOTION DEP’T
FOOD & BEVERAGE ACCOMODATION & ACCOUNTS SECTION CHIEF CASHER

SECTION CLEANING SECTION
Manpower Requirement and Salary of the Project
The Hotel is operated by a hired manager who has experience in managing well recognized hotels. The
department managers also are competent and experienced managers.
The hotel manager is fully responsible for the day to day operation of the hotel. The responsibility of the
owner/General Manager is limited to the hiring and firing of the hotel manager, and determination of the hotel
manager’s remuneration. They also review and approve the budget and performance of the hotel. This mode
of management system enables the hotel to attain a three star hotel standard which is one criterion for grading.
The manpower needs of the hotel project and the related salary &benefits payments for professional as well as
support staff is presented in the following table.
The salary scale will be made based on a three-star hotel standard.
Description No. of Monthly Annual
Person Salary Salary (Birr) Educational Year of
s (Birr) Background Experience
Hotel Manager 1 11,000 132,000 BA Degree 4 Years
Department Managers 3 8,500 306,000 BA Degree 2 Years
Secretary 1 4,500 54,000 Diploma 2 Years
Legal Advisor 1 6,200 74,400 BA Degree 2 Years
Head Accounts 1 5,500 66,000 Diploma 2 Years
Accounts Clerks 1 4,500 54,000 TVET 1 Year
Cashiers 2 3,000 72,000 TVET 2 Years
Receptionist 2 3,000 72,000 Certificate 1 Year
Auditor 1 5,500 66,000 Diploma 1 Year
Purchaser 1 4,000 48,000 Diploma 2 Years
Store Keeper 1 4,000 48,000 Certificate 1 Year
Massagist & Spa Professional 2 6,000 144,000 Diploma 2 Years
Sales Girls (For Shop Sales) 4 3,500 168,000 Diploma 2 Years
Nurse 1 4,700 56,400 BA Degree 1 Year
Laundry Man 1 3,000 36,000 Certificate 1 Year

Bar Man 1 2,500 30,000 10+ 1 Year

Head-waiters 1 4,200 50,400 Diploma 2 Years
Waiter 10 2,200 264,000 10+ 1 Year
Chief Cook 1 6,000 72,000 Diploma 2 Years
Ass. Cookers 2 3,200 76,800 Certificate 1 Year
Gardner 2 2,300 55,200 10+ 1 Year
Bill Boy 1 2,500 30,000 10+ 1 Year
Electrician 1 4,000 48,000 Diploma 1 Year
Plumber 1 4,000 48,000 Diploma 1 Year
Sales Promotion Expert 1 5,500 66,000 Certificate 1 Year
Telephone Operator 1 3,500 42,000 Certificate 1 Year
Property Administrator 1 5,000 60,000 Diploma 1 Year
Cleaners 6 2,200 158,400 8+ 1 Year
Guards 6 2,800 201,600 8+ 1 Year
Grand Total 58 126,800 2,599,200
As shown above the project will have a total of 58 employees working at different level. The annual salary to
be paid is about 2,599,200.00 birr. This will grow by 5% per annum.

UNIT NINE
Financial Projections & Analysis
The financial analysis of the project is based on the data provided in the previous chapters and the following
assumptions:-
 Construction period (Remaining) 6 months
 Source of finance 62.15% own equity
37.85% Bank loan
 Tax holidays 0 years
 Bank interest 16.5%
 Loan Period 10 Years
 Insurance Expense 0.50% of Fixed Assets
 Repair & Maintenance 0.30% of Fixed Assets
 Depreciation Expense 20% for Mach. & Equip., & 5% for Bldgs.
 Accounts receivable 30 days
 Work in progress 365 days
 Raw material (perishable) 3 days
 Raw Material (non perishable) 30 days
 Cash in hand 5 days
 Accounts payable 30 days
Loan Request
 The credit requirement that the promoter of this project presented to the bank is 52,467,977.59 that
can be repaid back within the next 10 years including all the interest and related charges.
 The repayment will be made monthly due to the nature of the business.
 The requested loan amount will be utilized for the remaining construction work of the building, finishing
works and mainly for the working capital need of the hotel for one year, loan buyout from Lion Bank S.c
& contingencies. 97% will be used for its working capital requirement of the hotel and contingency
requirements for one year and 14.6% of the loan will be used to finalize the remaining construction work
of the hotel building.
Equity Finance Bank Finance
% %
Description Total cost age Value age Value
Hotel Buildings 85,653,305.36 85.4% 73,185,327.77 14.6% 12,467,977.59
Equipment, Furniture & Machinery 9,842,165.00 100% 9,842,165.00 0% -
Vehicles - 0% - 0% -
Pre-operating Expenditure 1,887,585.97 100% 1,887,585.97 0% -
Total Fixed Investment 97,383,056.33 87% 84,915,078.74 13% 12,467,977.59
Other Investments - 0% - 0% -
Initial Working Capital 41,250,000.00 3% 1,250,000.00 97% 40,000,000.00
Total Working Capital 41,250,000.00 3% 1,250,000.00 97% 40,000,000.00
Total Equity & Bank Finance 138,633,056.33 62% 86,165,078.74 38% 52,467,977.59
Loan Repayment Schedule
 The banks are assumed to charge an interest rate for the term loans which lasts for ten years is 16.5%
per year as per the present scenario.
 Hence the requested project loan will be paid within the scheduled period through monthly repayment
amount of 895,325.63 that leads to an annual repayment amount of 10,743,907.56, the related interest
charges and principal payments are presented below.

Years Annual Repayment Interest Payment Principal Payment Outstanding Loan Balance
0 - - - 52,467,977.59
1 10,743,907.56 8,491,948.73 2,251,958.83 50,216,018.77
2 10,743,907.56 8,090,946.64 2,652,960.92 47,563,057.85
3 10,743,907.56 7,618,538.86 3,125,368.70 44,437,689.14
4 10,743,907.56 7,062,010.30 3,681,897.26 40,755,791.88
5 10,743,907.56 6,406,381.75 4,337,525.81 36,418,266.07
6 10,743,907.56 5,634,006.64 5,109,900.92 31,308,365.15
7 10,743,907.56 4,724,096.15 6,019,811.41 25,288,553.75
8 10,743,907.56 3,652,159.60 7,091,747.96 18,196,805.79
9 10,743,907.56 2,389,345.32 8,354,562.24 9,842,243.55
10 10,743,907.56 901,664.02 9,842,243.54 0.00
Total 107,439,075.60 54,971,098.01 52,467,977.59 0.00
Fixed Investment Costs
Fixed investment costs include constriction /civil work/ cost, Pavement, Garden and Parking area construction
cost, sewerage and electricity installation costs, machinery cost, vehicle and different equipment costs, while
annual operating cost /working capital requirement/ includes the costs that will be expend per annum for the
operation of the project to cover running cost of the whole project. The existing total project costs
requirement of this hotel is calculated as follows.
The construction cost is the major cost incurred in an establishment of any project. The building has G+7 &
G+3 buildings that have an additional basement floor. As per the bill of quantities prepared by the concerned
professional persons the total cost of the buildings including their final stage will take 85,653,305.36. Out of
which the project needs 14.6% (12,467,977.59) only for construction cost; the rest 85.4% (73,185,327.77) birr
is already covered by the project owners.
Next to the construction cost of the project the promoter furnishes the hotel & guest rooms with quality
equipments and furniture’s in order to be a competitor and succeed the current market competition, the costs
that were incurred to purchase for machineries, furniture’s and related equipments are birr 9,842,165.00.
The other main cost of the project is the related working capital requirements that will be used after the
completion of the whole project including contingencies, the total working capital need of the project after
completion is birr 41,250,000.00. Out of which the project needs 97% (40,000,000.00) of the working capital
cost; the rest 3% (1,250,000.00) birr is already covered by the project owners.
Ato Bereta costs a total of birr 1,887,585.97 for acquisition of land & pre production expenses; all are covered
from his own capital contribution. This pre operating expenditures includes broker commission, fees made for
owner certificate transfer, architectural, structural, electrical, sanitary, bill of quantity, feasibility study and other
charges. Therefore the total cost of the project will be birr 138,633,056.33.
No Fixed Investments m2 Total Cost
1 Construction Cost 1,749 m2
2 Parking, Gardening & Fence Works 97.5 m2
3 Sewerage & Sanitation -
4 Electrical Installation - 85,653,305.36
Sub Total 85,653,305.36
5 Purchase Cost - 0.00
6 Pre-operating Costs - 1,887,585.97
7 Equipments, Furniture’s & Fixtures - 9,842,165.00
8 Working Capital + Contingency - 41,250,000.00
Sub total 52,979,750.97
GRAND TOTAL - 138,633,056.33
* N.B: Pre-production expenditure includes interest during construction, costs of registration, licensing and formation of the
company including legal fees, commissioning expenses, architectural, structural, electrical, sanitary, bill of quantity &
feasibility studies etc.

Owners Equity Debt Equity %

Items to be Purchased Total Cost (62.15%) (37.85%) Share
Buildings 85,653,305.36 73,185,327.77 12,467,977.59 61.78
Furniture & Equipment 9,842,165.00 9,842,165.00 - 7.10
Vehicles - - - -
Pre-production Cost 1,887,585.97 1,887,585.97 - 1.36
Working Capital + Contingency 41,250,000.00 1,250,000.00 40,000,000.00 29.75
Total Investment Cost 138,633,056.33 86,165,078.74 52,467,977.59 100.00
Annual Revenue Projection
The revenue of the project is expected to be generated from rent of 25 guest rooms, Food & Beverage
Services, Night bar services, Gift Shop sales, Rental Income and the income generated from the meeting hall
services.
Based on the current market assessment and demand for bed room services made by this feasibility study,
each guest room will be equipped at 80% rate of its total number of rooms per day for the first year, 90% for
second operational year and will be equipped at 100% rate starting from third year.
Each room will be given to customers at a price of birr 600.00 per day for standard rooms & 750.00 birr for
deluxe rooms. The price for the guest rooms will rise by 5% every two years.
It is assumed that the Food and Drinks revenue including the night bar service will be equal to 60% of the
income generated from room services and other incomes including the gift shop revenue is 20% of the room
service income produced for the first year. It is expected that 30% of the total sales from Food, Drink & Night
bar Services and other income will be considered as gross profit, so that cost of goods sold will be 70% of the
sales. Meeting Hall is expected to be rented 300 days on a year for several types of events on average and
price will rise by 5% every two years.
Accordingly the project is assumed to generate annual total income of birr 29,023,200.00 on the first year.
Revenue generated from Deluxe Room Service:
Years Deluxe Rooms Rate No. of Rooms Rented Price No of working days/year Total Income per Year
1 20 0.8 16 750 365 4,380,000.00
2 20 0.9 18 750 365 4,927,500.00
3 20 1 20 788 365 5,748,750.00
4 20 1 20 788 365 5,748,750.00
5 20 1 20 827 365 6,036,187.50
6 20 1 20 827 365 6,036,187.50
7 20 1 20 868 365 6,337,996.88
8 20 1 20 868 365 6,337,996.88
9 20 1 20 912 365 6,654,896.72
10 20 1 20 912 365 6,654,896.72
Revenue generated from Standard Room Service:
Years Standard Rooms Rate No. of Rooms Rented Price No of working days/year Total Income per Year
1 5 0.8 4 600 365 876,000.00
2 5 0.9 5 600 365 985,500.00
3 5 1 5 630 365 1,149,750.00
4 5 1 5 630 365 1,149,750.00
5 5 1 5 662 365 1,207,237.50
6 5 1 5 662 365 1,207,237.50
7 5 1 5 695 365 1,267,599.38
8 5 1 5 695 365 1,267,599.38
9 5 1 5 729 365 1,330,979.34
10 5 1 5 729 365 1,330,979.34
Revenue generated from Assembly Halls:

Years 1 2 3 4 5 6 7 8 9 10
No of users 490 560 630 630 630 630 630 630 630 630
Price/Person 120 120 126 126 132 132 139 139 146 146
Working Days 300 300 300 300 300 300 300 300 300 300
Income from Halls 17,640,000 20,160,000 23,814,000 23,814,000 25,004,700 25,004,700 26,254,935 26,254,935 27,567,682 27,567,682
Revenue generated from Food & Beverage Service:
Years 1 2 3 4 5 6 7 8 9 10
Room Income 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Capacity 0.60 0.70 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
F&B Income 3,153,600 4,139,100 5,518,800 5,518,800 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701
Revenue generated from Rental Service:
Years 1 2 3 4 5 6 7 8 9 10
Rental Income - m2 180 180 180 180 180 180 180 180 180 180
Price/m2 890.00 890.00 934.50 934.50 981.23 981.23 1,030.29 1,030.29 1,081.80 1,081.80
Rental Income 1,922,400 1,922,400 2,018,520 2,018,520 2,119,446 2,119,446 2,225,418 2,225,418 2,336,689 2,336,689
Revenue generated from Gift Shops, Sauna & Massage Service:
Years 1 2 3 4 5 6 7 8 9 10
Room Income 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Capacity 0.20 0.30 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40
Other Income 1,051,200 1,773,900 2,759,400 2,759,400 2,897,370 2,897,370 3,042,239 3,042,239 3,194,350 3,194,350
Projected Total Revenue Table
Income / Year 1 2 3 4 5 6 7 8 9 10
Deluxe Rooms 4,380,000 4,927,500 5,748,750 5,748,750 6,036,188 6,036,188 6,337,997 6,337,997 6,654,897 6,654,897
Standard Rooms 876,000 985,500 1,149,750 1,149,750 1,207,238 1,207,238 1,267,599 1,267,599 1,330,979 1,330,979
Conference Halls 17,640,000 20,160,000 23,814,000 23,814,000 25,004,700 25,004,700 26,254,935 26,254,935 27,567,682 27,567,682
Hotel Service 3,153,600 4,139,100 5,518,800 5,518,800 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701
Other Income 1,051,200 1,773,900 2,759,400 2,759,400 2,897,370 2,897,370 3,042,239 3,042,239 3,194,350 3,194,350
Rental Income 1,922,400 1,922,400 2,018,520 2,018,520 2,119,446 2,119,446 2,225,418 2,225,418 2,336,689 2,336,689
Grand Total 29,023,200 33,908,400 41,009,220 41,009,220 43,059,681 43,059,681 45,212,665 45,212,665 47,473,298 47,473,298
Associated Costs and Expenses
Utilities Expense: The major essential utilities required for the envisaged project are electricity, water,
internet and telephone lines. Per month-
 Telephone Expense – 1,800.00
 Water Expense – 7,700.00
 Electricity Expense – 6,350.00
 Utility expenses are assumed to increase by 3% annually.
Projected Years Utility Expenses
1 190,800.00
2 196,524.00
3 202,419.72
4 208,492.31
5 214,747.08
6 221,189.49
7 227,825.18
8 234,659.93
9 241,699.73
10 248,950.72

Supplies Expense: Br 52,500.00 for 1st year will be spent for different types of stationeries & printing expenses
and other supplies expenses. Then after it will have an annual increment of 4%.
Project Years
Expense Item 1 2 3 4 5 6 7 8 9 10
Supplies Expense 52,500 54,600 56,784 59,055 61,418 63,874 66,429 69,086 71,850 74,724
Insurance Expense: Is expected to be 0.50% of the value of total fixed assets owned by Ato Bereta.
477,447.35 will be assumed as an annual insurance expense of the project (95,495,470.36 * 0.50% =
477,447.35).
Repair & Maintenance Expense: is estimated to be 0.30% of the projects fixed asset, which will be birr
286,486.41 per annum (95,495,470.36 * 0.30% = 286,486.41). After five years of operation repair & maintenance
costs of the project is expected to rise to 0.60% of fixed assets and will become birr 572,972.82 per year.
Type of Expenses Rate Fixed Assets Value of Expense
Insurance Expense 0.50% 95,495,470.36 477,477.35
Repair & Maintenance Expense 0.30% 95,495,470.36 286,486.41
Repair & Maintenance Expense 0.60% 95,495,470.36 572,972.82
after five years of operation
Depreciation Expense: Fixed assets of the project will have their proportional depreciation expenses as per the
following determination.
Annual
Fixed Assets Original Value Depr. Rate Depreciation
Buildings 85,653,305.36 5% 4,282,665.27
Machineries, Equipments & Furniture’s 9,842,165.00 20% 1,968,433.00
Total 95,495,470.36 6,251,098.27
Miscellaneous Expenses: includes expenses incurred for transportation, loading/unloading, fuel and gases,
cleaning and other expenses used for the project. Per annum 382,920.00 birr will be expected to be spent for
miscellaneous reasons and it will have an increment of 5% yearly.
Project Years
Expense Item 1 2 3 4 5 6 7 8 9 10
Miscellaneous Expense 382,920 402,066 422,169 443,278 465,442 488,714 513,149 538,807 565,747 594,035
Salary Payments: The total permanent manpower requirement will be 58, of whom 32 will be skilled and
semi-skilled the rest 26 employees will be unskilled manpower. The list of the manpower requirement is
presented above along with monthly and annual salaries and wages.
Salary will be higher than before by 5% for permanent employees every year.
Projected Expense Item
Years Salary Expense
1 2,599,200.00
2 2,729,160.00
3 2,865,618.00
4 3,008,898.90
5 3,159,343.85
6 3,317,311.04
7 3,483,176.59
8 3,657,335.42
9 3,840,202.19
10 4,032,212.30
Current Total Operational Costs

Hence, the current operational cost at this stage of the hotel business for one year is estimated at Birr
4,388,322.14 including 9.09% contingency for the year. The utility cost accounts for 4.35 percent while repair
and maintenance take 6.53 percent of the operational cost, supplies expense covers 1.20 percent,
miscellaneous expenses are also take 8.73 percent of the total working capital needed for the project.
Out of the total operational cost of the hotel salary and wage expense covers 59.23 percent in addition to that
insurance expense accounts for 10.88 percent of the working capital.
Projected Total Cost Table
Project Year
Cost Items 1 2 3 4 5 6 7 8 9 10
Utility Exp. 190,800 196,524 202,420 208,492 214,747 221,189 227,825 234,660 241,700 248,951
Supplies Exp. 52,500 54,600 56,784 59,055 61,418 63,874 66,429 69,086 71,850 74,724
Insurance Exp. 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35 477,477.35
Salary Exp. 2,599,200 2,729,160 2,865,618 3,008,899 3,159,344 3,317,311 3,483,177 3,657,335 3,840,202 4,032,212
Repair & Main. . 286,486.41 286,486.41 286,486.41 286,486.41 286,486.41 572,972.82 572,972.82 572,972.82 572,972.82 572,972.82
Misc. Exp. 382,920 402,066 422,169 443,278 465,442 488,714 513,149 538,807 565,747 594,035
Contingency 398,938 414,631 431,095 448,369 466,491 514,154 534,103 555,034 576,995 600,037
Operational Cost 4,388,322 4,560,945 4,742,050 4,932,057 5,131,405 5,655,693 5,875,134 6,105,373 6,346,944 6,600,409
Depr. Exp. 6,251,098 6,251,098 6,251,098 6,251,098 6,251,098 4,282,665 4,282,665 4,282,665 4,282,665 4,282,665
Bank Interest Exp 8,491,949 8,090,947 7,618,539 7,062,010 6,406,382 5,634,007 4,724,096 3,652,160 2,389,345 901,664
Non-oper. Costs 14,743,047 14,342,045 13,869,637 13,313,109 12,657,480 9,916,672 9,006,761 7,934,825 6,672,011 5,184,329
Total Cost 19,131,369 18,902,990 18,611,687 18,245,165 17,788,885 15,572,365 14,881,895 14,040,198 13,018,955 11,784,738

Determination of Working Capital Requirement

From the total investment cost of 138,633,056.33; 29.75% will be utilized for working capital requirement of
the project including its contingencies. The working capital can be used for one year from where the hotel
commences its operation at full capacity.
Using its full capacity the hotel will incur additional working capital expenses presented below so as to render
its service with better quality and quantity so that the annual income of the hotel will also get higher for the
projected years.
The requirement of the new working capital determination for the hotel is presented as follows:
Description Annual W.C %age Share
Utility Exp. 248,040.00 0.62%
Supplies Exp. 223,000.00 0.56%
Insurance Exp. 620,720.56 1.55%
Salary Exp. 3,378,960.00 8.45%
Repair & Main. Exp. 1,543,783.79 3.86%
Fuel & Gas Exp. 205,102.00 0.51%
Oil & Lubricants Exp. 50,000.00 0.13%
Wage/Labor Exp. 149,400.00 0.37%
Legal & License Fees 150,000.00 0.38%
Professional Service Fees 250,000.00 0.63%
Advertisement Exp. 108,950.00 0.27%
Cleaning Materials Exp. 62,589.00 0.16%
Misc. Exp. 574,380.00 1.44%
Repayment of Bank Loan- Lion Bank S.c 4,500,000.00 11.25%
Bank Interest 9,713,917.00 24.28%
Purchase & Repair of Furniture & Fixture 2,895,000.00 7.24%
Contingency 6,000,000.00 15.00%
Purchase of Goods to be Sold 9,326,157.65 23.32%
Total Working Capital Required 40,000,000.00 100%

Projected Income Statement of the Project

Bereta Debela Hawase
Forecasted Profit & Loss Statement of the Project (in Birr)
For the Year Ended XXXX
Description Project Years
1 2 3 4 5 6 7 8 9 10
Room Service
Income 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Meeting Hall
Income 17,640,000 20,160,000 23,814,000 23,814,000 25,004,700 25,004,700 26,254,935 26,254,935 27,567,682 27,567,682
Foods &
Beverages 3,153,600 4,139,100 5,518,800 5,518,800 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701
Other Income 1,051,200 1,773,900 2,759,400 2,759,400 2,897,370 2,897,370 3,042,239 3,042,239 3,194,350 3,194,350
Rental Income 1,922,400 1,922,400 2,018,520 2,018,520 2,119,446 2,119,446 2,225,418 2,225,418 2,336,689 2,336,689
Gross Income 29,023,200 33,908,400 41,009,220 41,009,220 43,059,681 43,059,681 45,212,665 45,212,665 47,473,298 47,473,298
Cost of Goods
Sold 2,943,360 4,139,100 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701 6,708,136 6,708,136
Operational Costs 4,388,322 4,560,945 4,742,050 4,932,057 5,131,405 5,655,693 5,875,134 6,105,373 6,346,944 6,600,409
Gross Profit 21,691,518 25,208,355 30,472,430 30,282,423 31,843,799 31,319,511 32,948,831 32,718,591 34,418,218 34,164,754
Depreciation Exp. 6,251,098 6,251,098 6,251,098 6,251,098 6,251,098 4,282,665 4,282,665 4,282,665 4,282,665 4,282,665
Interest Payment 8,491,949 8,090,947 7,618,539 7,062,010 6,406,382 5,634,007 4,724,096 3,652,160 2,389,345 901,664
Non-operational
Costs 14,743,047 14,342,045 13,869,637 13,313,109 12,657,480 9,916,672 9,006,761 7,934,825 6,672,011 5,184,329
Profit Before Tax 6,948,471 10,866,310 16,602,793 16,969,315 19,186,319 21,402,839 23,942,069 24,783,767 27,746,208 28,980,424
Less: Profit Tax 2,084,541 3,259,893 4,980,838 5,090,794 5,755,896 6,420,852 7,182,621 7,435,130 8,323,862 8,694,127
Net Profit 4,863,930 7,606,417 11,621,955 11,878,520 13,430,423 14,981,988 16,759,448 17,348,637 19,422,345 20,286,297

Projected Cash Flow Statement

This study applies a decomposition approach of projection of cash inflows and outflows of Ato Bereta
Debela. Cash flows rather than profits are used in financial analysis for the following three reasons.
 Cash is what ultimately counts; profits are only a guide to cash availability: they cannot actually be
spent.
 Profit measurement is subjective, the time period on which income and expenses are recorded, and so
on, are a matter of judgment.
 Cash is used to pay the term loans and owners equity, owners equity are the ultimate method of
transferring wealth to the project holders as a dividend at the time of official declaration of the
members.

Projected Cash Flow Statement:
Forecasted Cash Flow Statement of the Project (in Birr)
Description Project Years
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow
Beginning Cash 86,165,079 40,000,000 40,380,271 43,901,245 52,199,735 59,750,103 68,009,033 74,569,359 81,757,316 87,880,441 94,510,409
Bank loan 52,467,978 - - - - - - - - - -
Room Service Income - 5,256,000 5,913,000 6,898,500 6,898,500 7,243,425 7,243,425 7,605,596 7,605,596 7,985,876 7,985,876
Meeting Hall Income - 17,640,000 20,160,000 23,814,000 23,814,000 25,004,700 25,004,700 26,254,935 26,254,935 27,567,682 27,567,682
Food & Beverages - 3,153,600 4,139,100 5,518,800 5,518,800 5,794,740 5,794,740 6,084,477 6,084,477 6,388,701 6,388,701
Shop Income - 1,051,200 1,773,900 2,759,400 2,759,400 2,897,370 2,897,370 3,042,239 3,042,239 3,194,350 3,194,350
Rental Income - 1,922,400 1,922,400 2,018,520 2,018,520 2,119,446 2,119,446 2,225,418 2,225,418 2,336,689 2,336,689
Total Inflow 138,633,056 69,023,200 74,288,671 84,910,465 93,208,955 102,809,784 111,068,714 119,782,024 126,969,981 135,353,739 141,983,707
Cash Outflow
Fixed Inv. 95,495,470 - - - - - - - - - -
Other Outflows - 2,100,000 2,310,000 2,541,000 2,795,100 3,074,610 3,382,071 3,720,278 4,092,306 4,501,537 4,951,690
Pre-operating Costs 1,887,586 - - - - - - - - - -
Purchase - 9,326,158 9,512,681 9,702,934 9,896,993 10,094,933 10,296,832 10,502,768 10,712,824 10,927,080 11,145,622
Operating Expense 1,250,000 4,388,322 4,560,945 4,742,050 4,932,057 5,131,405 5,655,693 5,875,134 6,105,373 6,346,944 6,600,409
Bank Repayment - 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908 10,743,908
Tax Payment - 2,084,541 3,259,893 4,980,838 5,090,794 5,755,896 6,420,852 7,182,621 7,435,130 8,323,862 8,694,127
Total Outflow 98,633,056 28,642,929 30,387,426 32,710,730 33,458,852 34,800,751 36,499,355 38,024,708 39,089,540 40,843,331 42,135,756
Balance 40,000,000 40,380,271 43,901,245 52,199,735 59,750,103 68,009,033 74,569,359 81,757,316 87,880,441 94,510,409 99,847,951
Projected Depreciation & Amortization Schedule
Depreciation & Amortization Expense Schedule
Depreciation & Amortization Schedule
Original Rate Depr. Project Years
Description Value % Amount 1 2 3 4 5 6-10 Years
Machineries, Furniture & Equipments 9,842,165.00 0.2 1,968,433.00 1,968,433.00 1,968,433.00 1,968,433.00 1,968,433.00 1,968,433.00 0
Buildings 85,653,305.36 0.05 4,282,665.27 4,282,665.27 4,282,665.27 4,282,665.27 4,282,665.27 4,282,665.27 4,282,665.27
Total 95,495,470.36 6,251,098.27 6,251,098.27 6,251,098.27 6,251,098.27 6,251,098.27 6,251,098.27 4,282,665.27

Projected Balance Sheet of the Project
Forecasted Balance Sheet of the Project (in Birr)
PROJECT YEARS
DESCRIPTION 0 1 2 3 4 5 6 7 8 9 10
ASSETS
CURRENT ASSETS
Cash 40,000,000 40,380,271 43,901,245 52,199,735 59,750,103 68,009,033 74,569,359 81,757,316 87,880,441 94,510,409 99,847,951
Other Current Assets 0 4,196,771 4,280,706 4,366,320 4,453,647 4,542,720 4,633,574 4,726,246 4,820,771 4,917,186 5,015,530
Inventory 0 2,186,027 1,092,874 -458,126 -351,394 -532,264 -421,220 -612,178 -496,648 -698,242 -578,044
Total Current Assets 40,000,000 46,763,069 49,274,826 56,107,929 63,852,356 72,019,488 78,781,714 85,871,383 92,204,564 98,729,353 104,285,437
FIXED ASSETS
Building and Civil
Work 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305 85,653,305
Machineries, Furniture
& Equipments 9,842,165 9,842,165 9,842,165 9,842,165 9,842,165 9,842,165 0 0 0 0 0
Acc. Depr. - Bldg 0 -4,282,665 -8,565,331 -12,847,996 -17,130,661 -21,413,326 -25,695,992 -29,978,657 -34,261,322 -38,543,987 -42,826,653
Acc. Depr.- Mac, Fur
& Eqpmt’s 0 -1,968,433 -3,936,866 -5,905,299 -7,873,732 -9,842,165 0 0 0 0 0
Total Fixed Assets 95,495,470 89,244,372 82,993,274 76,742,176 70,491,077 64,239,979 59,957,314 55,674,648 51,391,983 47,109,318 42,826,653
Total Assets 135,495,470 136,007,441 132,268,100 132,850,105 134,343,433 136,259,467 138,739,027 141,546,031 143,596,547 145,838,671 147,112,090
LIABILITIES
Bank Loan 52,467,978 50,216,019 47,563,058 44,437,689 40,755,792 36,418,266 31,308,365 25,288,554 18,196,806 9,842,243.55 0.00
Tax Payable 0 2,084,541 3,259,893 4,980,838 5,090,794 5,755,896 6,420,852 7,182,621 7,435,130 8,323,862 8,694,127
Total Liabilities 52,467,978 52,300,560 50,822,951 49,418,527 45,846,586 42,174,162 37,729,217 32,471,174 25,631,936 18,166,106 8,694,127
CAPITAL
Owner's Equity 83,027,493 78,842,952 73,838,732 71,809,623 76,618,327 80,654,883 86,027,823 92,315,409 100,615,974 108,250,219 118,131,666
Current Year Profit 0 4,863,930 7,606,417 11,621,955 11,878,520 13,430,423 14,981,988 16,759,448 17,348,637 19,422,345 20,286,297
Total Capital 83,027,493 83,706,881 81,445,149 83,431,578 88,496,847 94,085,306 101,009,810 109,074,857 117,964,611 127,672,565 138,417,963
Total Liabilities and
Capital 135,495,470 136,007,441 132,268,100 132,850,105 134,343,433 136,259,467 138,739,027 141,546,031 143,596,547 145,838,671 147,112,090

UNIT TEN
Financial Evaluation
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 be Birr 4.86 million at the first year of its operation and at the end of the
project year it will have a profit of birr 20.28 million.
Liquidity
The cash flow projection also shows an incremental cumulative cash balance from Birr 40,380,271.00 of the
first project year to Birr 99,847,951.00 of the last projection period implying that the project will not face
liquidity constraint to finance its operational costs and at the same time its debt obligation.
Ratios
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.
Acid Test Ratios: Is a strength indicator that determines whether a firm has enough short-term assets to cover
its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working
capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. As per
the determination of this ratio it shows that the project has an acid test ratio of 0.77 at the beginning of the
project year and 11.48 at the end of its projected years.
Debt Ratio: A financial ratio that measures the extent of a company’s or consumer’s leverage. The debt ratio
is defined as the ratio of total debt to total assets, expressed in percentage, and can be interpreted as the
proportion of a company’s assets that are financed by debt.
The higher this ratio, the more leveraged the company and the greater its financial risk. As per this ratio
indicates that at the end of first year the projects debt ratio shows 0.37 and then will decline as long as the
loan is paid regularly, finally at the end of its project life the debt ratio will become 0.00.
Asset Turnover Ratio: The amount of sales or revenues generated per birr of assets. The Asset Turnover
ratio is an indicator of the efficiency with which a company is deploying its assets.
Generally speaking, the higher the ratio, the better it is, since it implies the company is generating more
revenues per birr of assets. At the first the project will record a 0.21 asset turnover ratio and finally will reach
0.32 at the end of its project life.
Gross Profit Margin: A financial metric used to assess a firm's financial health by revealing the proportion
of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as
the source for paying additional expenses and future savings. This study proves that the project will amount
0.90 gross profit margins at the beginning and 0.86 at the end of its project life.
Return on Assets/Return on Investment: An indicator of how profitable a company is relative to its total
assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage.
Sometimes this is referred to as "Return on Investment". The project reaches 0.21 percent of Return on
Asset/Investment at the beginning and finally will reach 0.32 percent of Return on Assets/Investments at the
end of its project life.
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 is estimated by
using income statement projection.

BE = Fixed Cost = 4.40%

Sales – Variable Cost
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 its project
life time.
Economic Benefits
The project can create employment benefit for 58 permanent employees at the time of operation and more
than 30 temporary laborers under the construction period.
In addition to supply of the domestic needs of standardized hotel service and narrow the gap, the project will
generate birr 59,228,554.00 in terms of profit tax revenue for the Government within the projected years of
time. Moreover, the Regional Government can collect Employment Income Tax and Sales Tax Revenue.
The financing bank will also generate an interest income of birr 54,971,098.01 within the projected years.

UNIT ELEVEN
Conclusions & Recommendations
Conclusions of Berta Debela Three Star Hotel facility project’s business plan can be assessed in various ways,
including:
Market Feasibility: the facility’s ability to attract and support levels of event activity and patronization those
are consistent with or in excess of industry standards.
Financial Feasibility: the ability of the facility to “break-even” or generate an operating profit focusing only
on direct facility-related operating revenues and expenses.
Economic Spending: the facility’s ability to generate new spending activity in the local community (i.e.,
direct and indirect spending that is attributable to out-of-town visitors that would not otherwise occur in the
local area).
Tax Generation: the ability of the facility to generate new tax revenue for the local area (i.e., tax revenue
resulting from direct, indirect and induced spending that is attributable to out-of-town visitors that would not
otherwise occur in the local area).
Costs/Benefits/Return on Investment: the facility’s ability to generate new revenues (i.e., from taxes,
operating income and ancillary facility related revenues, etc.) in excess of quantifiable facility-related costs
(i.e., construction costs, operating costs, marketing costs, public sector contribution, etc.).
Intangible Benefits/Public Good: the ability of the facility to represent an important resource for the local
community, regardless of financial or economic concerns. These types of benefits add to the local
community’s “quality of life” in the same way that libraries, museums and recreational parks do, without
consideration of the economic impacts that the facility might generate.
Therefore, since the service sector in Ethiopia is in a low level progress, growth and improvement of the
service sector can substantially contribute to the economic development at National, Regional and Family
level. The promoter believes that, the hotel will contribute its own part to the modern hotel & guest house
business center trading system of the town as well as will confirm sustainability of the firm’s growth and
development.
By investment in advanced technologies, standardized machineries and equipments and by implementing
codes of conducts of the town and regional government more added values can be generated to the towns
marketing system.
As shown in the above analysis, the hotel will pay back its debt equity within ten years as per the scheduled
time table. Create a job opportunity for not less than 58 permanent residents of Bishoftu town. Contribute to
the government significant revenue in the form of income tax and VAT.
Therefore, the project is beneficial both for the owner, residents of Bishoftu town, the town administration
and the regional government as a whole.
Hence this study believes and recommends that financing the project of Ato Berta Debela and replying the
requests of the promoter has a great impact for the development of the town and will have a direct and
indirect positive effect on the project owner’s wealth, the development and renaissance of the region and the
country as a whole.
The bank will also be profitable from the loan it injects to this project by generating an interest of
54,971,098.01 within the project loan period.
 This business plan believes that, Berta Debela hotel & guest house business center building will have
its own part to the modern plus standardized hotel services in Bishoftu town.
 The financial analysis confirms sustainability of the firm’s growth and development.
 By investment in customary hotel & guest house buildings and by implementing codes of conducts of
the region and the town, more added values can be generated.
 Loan should be obtained in order to manage the cash flow during the construction period. The loan
would cover only 37.85% of the project value and therefore loan-finance request from the project
owners shall be presented to the bank on time.

 Ethiopian Customs Authority should reply to the request of the promoters on time and respond to the
request of the promoter to allow his duty free privileges as per his requirement.
 The Investment agency of the town should also give a hand to the project by renewing the Investment
license and paves the way to facilitate duty free privileges to the promoters on time.
 The strong management capacity is one of the main aspects to accelerate the process of acting
according to business plan indicators.
 In order to increase loyalty of employees and other stakeholders towards the projects aim and goal,
the communication flow shall be strengthened. Loyalty and membership feeling within the
stakeholders is important aspects to increase accountability and responsibility of employees.
As a result this study believes that financing this hotel business will have a direct and indirect positive effect
on Ato Berta Debela’s wealth, the residents lived in Bishoftu town, other stakeholders and yet the project will
have a great impact to the development and renaissance of the country as a whole.

Final Plan

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Business Plan for Bereta Debela 3* Hotel & Guest House Service

Promoter – Ato Berta Debela 1

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Capital and Employment

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9 20 1 20 912 365 6,654,896.72

Sustainability and Expansion Strategy

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AUDITOR LEGAL ADVISOR

FOOD & BEVERAGE ACCOMODATION & ACCOUNTS SECTION CHIEF CASHER

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Bar Man 1 2,500 30,000 10+ 1 Year

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Owners Equity Debt Equity %

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Current Total Operational Costs

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Determination of Working Capital Requirement

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Projected Income Statement of the Project

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Projected Cash Flow Statement

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BE = Fixed Cost = 4.40%

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