1

CHAPTER I

INTRODUCTION

1.1 Name of the Project and Location

This project feasibility study is titled “A Proposed 4-Storey Dormitel Building in

Sto. Rosario Street, Buhangin, Davao City” and the proposed business name shall be

“Urban Eco-Dormitel”.

The business name “Urban Eco-Dormitel” came from the concept of providing an

eco-friendly building (Eco) in the middle of the city (Urban). According to Philippine

Daily Inquirer, the word dormitel is coined from the words “dormitories” and “hotels”

which is meant to offer hotel-like amenities in a dormitory setting.

This project will put emphasis on the providing clean, safe, and comfort living

through the benefits of initiating green and sustainable design by providing a well-

ventilated, naturally-lit and safe built environment for its tenant/s. It engaged a nature-

friendly designs which include water conservation practices, reduction of energy methods

in addition to installation of vertical gardens both indoor and outdoor. Its color scheme is

earth-toned which reflect that of flora and fauna notable to Davao City.
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Figure 1.1 Urban Eco-Dormitel Logo

The emblem to be used is a tree which is symbolic to the business name. It has

three branches and the name “Urban Eco-Dormitel” is printed below it. These three

branches represent the three members of the proprietors’ family (see Fig. 1.1).

The new dormitel building shall be situated in residential lot property owned by

the proprietors comprising an area of about 600 square meters in Sto. Rosario St.,

Buhangin, Davao City (marked X on Figure 1.2 below). The project site is conveniently

located near the airport and the center of the city, approximately 25 meters from the

Buhangin National Highway, near food establishments such as McDonalds, Jollibee,

Chowking, Burger King, and Penongs. Also within the 100 meter radius from the

property are the Southern Mindanao Medical Center (SPMC) and private offices and

educational institutions offering market potential for employees and students.

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Figure 1.2 Location Map

The site selection process is integral in any form of business but which is

dependent on the operation and marketing requirement. K. Elston & J.Draper (2012)

indicated the major factors in considering site for housing or residential development

such as condominiums, hotel, apartelles and others.

1. Accessibility

Ease and Cost of Accessibility. The project’s target market shall cater to

varied income classes, from those earning Php 40,000 below to those earning Php

250,000 above, it is then assumed that many of the tenants do not belong to the latter. The

target customer includes the tourist, students and office employees of which may not

bring or own a private transportation, it is then assumed that public transit becomes a

necessity. Thus it is important that these criteria shall be met.

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The selected project site has very good access to public transportation because it

is only 25 meters from the main highway, Buhangin-Cabantian-Indangan Road, and is

also accessible from Bajada Road. All major types of public utility transport such us

taxis, jeepneys and buses are available to the tenants twenty-four hours a day seven days

a week.

Proximity. Another consideration in accessibility is the proximity of the proposed

project site to the offices or schools of potential tenants. It is equally important that the

proposed project site should have reasonable commuting distance from the tenant’s place

of work or school.

In this study, we have taken into account that there is a possibility that some of

the tenant’s place of work or school may not be available in the immediate neighborhood

hence being accessible to public transportation should compensate for this limitation.

The selected project site is close to schools like University of Immaculate

Concepcion, Ford Academy of the Arts Inc., Lamb of God Sped Academy, Buhangin

Elementary School, Bernardo National Highschool, Jose Maria College, and the newly

constructed Lyceum of the Philippines University. It is also close to other key institution

such as Southern Philippines Medical Center (SPMC), Social Security System (SSS),

Metro Davao Medical and Research Center and office establishments such as Robinsons

and Flatworld
 5

2. Environment

Another consideration is the environment which include the availability of

neighborhood amenities . Sites that have key residential amenities, such as affordable

shopping (especially supermarkets), fast food restaurants, banks, drug stores, hardware

shops, payment centers, recreational and entertainment facilities provide a competitive

edge.

Urban Eco-Dormitel will be located in an area which is more or less a five minute

walk from Mercury Drug Store, Jollibee, Dunkin Donuts, and Penongs. It is also less than

a kilometer away from Petron & Shell Gas Stations, Central Convenience Store, Cebuana

Lhuilier, and BDO Bank.

Security is also included in considering the environment factor. The project site

selected should ideally be in an area that has a low crime rate since the tenants may be

vulnerable to victimization.

The proposed location is just 1.4 kilometers from Buhangin Barangay Hall. The

said barangay have their own police force and fire fighters which are on standby 24/7 for

any eventualities. The proximity of the LGU’s office to Urban Eco-Dormitel shall

provide a reasonable assurance to the tenants that the community is safe and that they can

rely on immediate police response when necessary.

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Finally, the researcher also considered the accessibility of community-based

services near the selected project site. It will be an advantage to the project in ensuring its

success if the housing tenants have easy access to supportive services available in the

community.

Supportive services such as health clinics, police and fire safety services, and

other barangay services are immediately available in the area considering that there is

Southern Philippines Medical Center and Metro Davao Medical and Research Center

which is within 100 meters from the target location as well as the barangay health center

which is only around 1.4 kilometers away. Other government offices providing basic

services which are not located in the immediate neighborhood such as but not limited to

the SSS and Pag-Ibig are easily accessible by public transportation.

1.2 Descriptive Definition of the Project

The Urban Eco-Dormitel rents out affordable room that targets the middle income

travelers, professionals and students. The business will introduce a complete facility in

each room in addition to the common areas per floor and areas available at the ground

floor and roof top such as the visitor’s lounge, open lounge area, mini-kitchen and dining.

At the present, there is both demand for more hotel rooms in order to

accommodate the growing tourism sector of Davao City. Davao has only 3,000 plus

rooms to date which cannot accommodate big numbers of guests that visit the city. In a

monthly hotel occupancy rate by hotel category reported by Department of Tourism from
 7

year 2006-2018, Davao City has shown the increasing requirement for inns, apartelles

and economy sized room intended for middle income earners.

Davao Region had a total population of 4,893,318 persons based on the 2015

Census of Population (POPCEN 2015). Population 19 years old and below comprised

42.5 percent of total household population this means that 2,000,000 persons of the

population comprises of students based on the data reported by the Philippine Statistics

Office. It is with interest that this project, a 4-storey dormitel with standard features

suitable for students as well is being proposed. This posed a consideration in the function

of today’s housing role in society. Its primary role was to serve the need for shelter and

privacy, but housing must now offer other advantages: (1) accesibility, including

proximity to the workplace, shopping, businesses, schools, and other homes; (2)

environment- that is, the quality of the neighborhood., including public safety and

aesthetics; and (3) investment potential, or the degree to which home ownership may

affect capital accumulation.

The total area earmarked for initial development will be about two hundred ten

(210) square meters. One hundred fifty (150) square meters building footprint is

earmarked for the construction of the structure and the rest is utilized for parking. Land

uses of the surrounding area are residential.

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1.3 Project’s Long Term Objectives

An Urban Eco-Dormitel long term objective focuses on gaining

competitive advantage, profitability, return on investment, and good business image.

These objectives will help the business in monitoring its performance and provide a clear

direction to where the business is heading in the future.

The following are the project’s long term objectives:

1. To establish the business image of Urban Eco-Dormitel as comfortable,

safe, clean, affordable establishment to stay in Davao City. This will help the business

gain competitive advantage against its competitor.

2. To establish the building as a model of sustainable design and show its

benefits through its effect on the users, and cost reduction in utilities. This will again help

the business gain competitive advantage as a preferred establishment against its

competitor.

3. To expand its business operations by constructing another building within

the vicinity. This will improve the business’ profitability and help generate more cash to

be invested and used for its future expansions and ventures.

4. To penetrate Airbnb and Trivago market offering short-term rentals for tourist

and other transient seeking customers in the next five years of operation. This will help

generate more profit for the business.

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1.4 Scope and Limitation of the Study

1. Market Feasibility

 Secondary data, ocular inspection and interview are conducted is

established the demand, supply, price strategy and market program of the Urban

Eco-Dormitel.

 The presence of competition in the area will not be significant

since the business is expected to gain competitive advantage through its price,

quality and strong marketing program. Moreover, there are only few competitors

near the area thus the business venture is not yet saturated.

2. Technical Feasbility

 The site is approximately 600 square meters, with 2 existing

residential buildings measured at approximately 200 square meters, and 75

squares meters consecutively. The area for the development of the proposed 4-

storey dormitel building will cover approximately 210 square meter of area

(including the parking area). The proposed building will be positioned at the

existing 75 squares residential building which is currently used as a guest house.

Demolition works will carry over prior the construction of the building.

 The room sizes are dictated by providing spacious comfort living

spaces for its tenants. It intends to go beyond the standards as dictated by

the National Building Code and Fire Code of the Philippines.

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3. Management Feasibility

 The proposed business shall be setup as a single proprietorship, it shall

be owned and managed by a single individual.

4. Financial Feasibility

 The total amount of funding or start up capital shall be 11,846,958.25

Php. 8,500,000 Php shall be sourced from HSBC while the remaining

will be provided by the proprietor. The property will be used as collateral

for the home loan with its market value as the basis for the amount.

5. Socio Economic Feasibility

 The construction of the building will generate job opportunities for

approximately ten (10) specialized skilled workers and ten (10) laborers

for the duration of the project.

 During the initial operation of the business, it will only require four (4)

staff which will be hired an agency

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CHAPTER II

MARKET STUDY

2.1 Service Description

The Urban Eco-Dormitel is a four (4)-storey dormitel building with twenty-four

(24) rooms. The site is located near the airport and the Central Business District of the

city where it intends to provide a safe, convenient, clean accommodation for backpackers

or domestic tourist, college students, and the working class.

The rooms of the Urban Eco-Dormitel varied in rates in terms of the duration of

the stay of the tenant. The transient room will be located on the first floor, and the solo

rooms on the second and third floor. The first floor is also intended for the receiving

counter, garage, and the visitor’s lounge. The rooftop is intended as common area for

boarders, and also serve for storage, laundry and washing, and other utility-related

activities.

Ground Floor: This floor is intended for transient rooms where ten (10) rooms are

allocated. Each transient room will be provided with one (1) queen size bed or two (2)

twin size bed fully furnished with air conditioning unit with its own toilet and bath.

Second floor and third floor: These floors are intended for all female and male

boarders consecutively. All female boarders are on the second floor while male boarders
 12

are on the third floor. In each floor, eight (8) rooms are provided for solo room leasing. A

room can either cater one to three individuals. Each room is fully furnished with its own

toilet and bath equipped with exhaust fans. In addition, each room has cabinets, desk and

chairs, and an air conditioning unit. Internet through wireless connection will be readily

available per room.

Roof top. 50% of the area of this floor is intended for utility and 50% will be used

as common area for the renters/boarders. A mini-kitchen and dining will be provided on

this floor, along with an outdoor open lounge for relaxing and studying.

The Urban Eco-Dormitel emphasize on providing well-ventilated, naturally-lit,

and safe built environment for its tenant. It engaged a nature-friendly concept

architectural design which includes vertical gardens both indoor and outdoor. Its color

scheme is earth toned which reflect that of floral and fauna notable of Davao city. The

Urban Eco-Dormitel engages on providing a low maintenance facility with its rainwater

harvesting system used for toilets, LED lighting in common areas such as hallways,

window positioning that intends to maximize lighting in the interior while preventing the

in flow of too much heat to conserve on air conditioning energy consumption. The

staircase area will serve as a light well of the building to conserve on lighting energy

consumption during daylight.

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The Urban Eco-Dormitel is situated near food establishments such as Jollibee,

Penongs, Chowking, Burger King, Mcdonalds. It is also near grocery store, malls, and

institutions such as schools and offices providing convenience and ease for its tenant.

Geographical Areas of Dispersion

There is a growing trend for residential rental leasing in Davao City. In a data

provided by the Business Bureau in the year 2011-2015 for Social Economic Indicator of

Davao City, the number of boarding houses and dormitories continually increasing from

2014 to 2015. Demands for hotels below 3-star, appartelles, pension inn continually

increase from 82 in 2011 to 90 in 2015. Several apartments, boarding houses, dormitories

are construct in Buhangin, Lanang, and Obrero area. Currently there are around 4

dormitels near the area, 2 hotels, and 4 apartments identified by the researcher relatively

close to the project site that will serve as a guide in the implementation of this feasibility

project.

2.2 Market Description

Urban Eco-Dormitel is strategically located in Sto. Rosario St., Buhangin, Davao

City, which is easily accessible via all types of public utility transport such as taxis,

jeepneys and buses. It shall cater classes A, B and C customers primarily from the

following sectors:
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Tourists: Based on a study conducted by Casurao (2014) on Characterizing

Inbound Tourist in Davao City, majority of inbound tourists were single, ages between

21-30 years old and holding a middle class positions. Filipino was the dominant tourist as

shown in the data provided by Philippine Statistics Authority. Tourist is willing to stay

for at least 11 days in the city. The tourist used public transportation such as taxi and jeep

because of its affordability, cleanliness and safety. In a study conducted among the top 4

destinations in Davao City are Samal Island Resort, Jack’s Ridge, Matina Town Square,

and Crocodile park, all of which are accessible from the project location.

College Students: The Urban Eco-Dormitel will target students in college level,

those who lived from other cities and provinces and transferred to Davao city for their

studies. Among the target students are from University of Southern Philippines, Jose

Maria College, and soon to be Lyceum of the Philippines – Davao.

Office/Mall Employees: The biggest motivator for employees to move into

dormitel building is the need to locate close to their workspaces. Based on the report

provided by the Payscale on the Average Salary in Davao Region, employees in Davao

city make an average salary of Php 214,589. The most popular occupations are Customer

Service Representative, Civil Engineer and Human Resources. The most popular

industries are Business Process Outsourcing, Construction and Information Technology

(IT) Services. The Urban-Eco Dormitel will target these employees with an average

monthly income of 17,000 Php to 18,000 Php

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2.3 Demand

The market potential of dormitel establishments in the Davao City can be shown

by the studies conducted by Business Bureau, Philippine Statistics Authority and

Philippine Statistical Research and Training Institute (PSRTI).

Figure 2.1 Regional Distribution of Renters in the Philippines, 2014

In fact, there is a growing demand for residential rental leasing in city shown in

Figure 2.1, in which Davao ranked as 5th in the Regional Distribution of Renters in the

Philippines.
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According to Philippine Statistics Authority, Buhangin ranked as the second most

populous barangay in Davao City.

Table 2.1 Top 10 Most Populous Barangay in Davao

The Renting Public

In a data showed by Philippine Statistics Authority in 2010, in the total of 334,473

number of household in Davao City, 55,810 are being rented. This makes about 17% of

the total number of household.

Total Tenure-Status of the Housing Unit

Households
Owned/Being Rented Rent-free Rent-free Not Not
Amortized with without Reported Applicable
consent of consent of
Owner Owner
334,473 202,780 55,810 56,161 13,750 32 5970
Table 2.2 Households Occupied Housing Units by Tenure Status of the Housing Unit
2010
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According to City Planning Development Office in Davao City, there has been a

higher housing backlog of dwelling units in Davao City. As of the present, apartments,

dormitory and residential unit for rent located in Davao City cannot cope up the demand

of the interested lessees, due to rising transient investors residing in the city as well as the

regional agency’s employees brought about the designation of the city as regional capital

of Davao del Sur.

The middle income earners or those who earned 60,000 pesos below in Davao

City who have no dwelling units have utilized house for rent for past several years

temporarily occupying several residential buildings, While other interested higher income

renter’s gamble for excessive rental rates in the plush subdivision areas in the absence of

modest apartments and safe neighborhood environment within the city.

The demand for more residential rentals has been increasing in the past years. The

growing number of lessees in the city can attest to the trend of this profitable business.

By year 2016 alone, 41 lessors excluding the 28 registered real estate lessors for

apartments operated in the city proper, not counting on the low cost housing units for rent

in the different subdivisions.

The Tourism Industry

In 2017, Davao city was ranked among the top 10 as the most visited places in the

Philippines by the Department of Tourism. The city’s tourism industry has shown
 18

increasing growth in terms of visitors’ arrival in the last years. According to the 2017

Regional Social and Economic Trends Davao Region report by the Philippine Statistics

Authority, visitors arrivals in Region XI increased by 5.9 percent in 2016 recording

3,006,962 visitors from 2,838,806 visitors in 2015. Davao city’s visitor which was 62.0

percent share in the region’s total arrivals has increased by 7.7 percent in 2016. Domestic

travelers comprised the bulk of visitors to the region in 2016 with 94.8 percent share.

However, Davao has only 3,000 plus rooms to date which cannot accommodate

big numbers of guests that visit the city. In a monthly hotel occupancy rate by hotel

category reported by Department of Tourism from year 2006 – 2018, Davao city has

shown the increasing requirement for Inns, Apartelles and Economy sized room intended

for middle income earners. The city needs more hotel rooms in order to accommodate its

growing tourism sector.

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Tourist Arrivals 2011 2012 2013 2015 %

Change
T (2014-
2015)

Foreign 55,232 81,081 100,831 111,553 128,622

Balikbayan/Overseas Filipinos 5,951 10,604 6,144 7,012 14,699

Local/Domestic 683,092 983,315 1,322,85 1,411,34 1,586,68

2 2 8

Total 744,275 1,075,00 1,429,82 1,529,90 1,730,00

0 7 7 9

Average Length of Stay (no. of 3.5 3.5 4.0 3.5 4.0

days)

Average Daily Expenditures 4,000 4,000 4,000 3,200 3,850

(Php/day)

Estimated Tourist Receipts (Php 10.42 15.05 22.87 17.13 26.23

Billion)

Table 2.3 Tourism Industry, Davao Region, 2011-2015

With all these developments, it can be conclude that the potential of succeeding in

this industry is promising. There is an existing demand which continues to grow as the

city becomes more progressive. Migrants and transients including the tourist will

continue to come into the city from neighboring provinces.

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2.4 Supply

In a data provided by the Business Bureau in the year 2011-2015, although there

was a decline from 910 in 2012, the number of boarding houses, lodging houses and

dormitories continually increase from 2013 to 2015. The decline was due to non-

compliance with statutory and regulatory requirements such as fire safety standards as

well as non-compliance with the Bureau of Internal Revenue. But hotels below 3-star,

apartelles, pension inn, dormitels continually increase from 82 in 2011, to 96 in 2015.

Business Category 2011 2012 2013 2014 2015

Dwelling Places, Commercial

(DWL)

Boarding houses, lodging 862 910 832 836 883

houses and dormitories

Hotels (5 to 3 star) 20 27 30 32 31

Hotel below 3-star, apartelles, 82 85 89 95 96

pension inn, dormitels

Motels, Drive-inn 8 8 10 14 8

Other Commercial Dwelling 14 14 13 17 19

Table 2.4 Number of Business Lines, Davao Region, 2011-2015

The National Economic and Development Authority reported that the requirement

for dwelling units stand over at 800,000 per year. This was the five-year projected
 21

housing need estimated from 2013 to 2017 using the Census of Population and Housing

2010 data. The report further disclosed that of the estimated five-year housing need, only

close to 400,000 households shall be able to afford to purchase housing units. The gap

therefore is filled up by the house/room rental industry but there is not enough supply to

accommodate the growing demand across the country including Davao City.

The researcher was able to scout for direct and indirect competitors in the vicinity

near the proposed project site but attained limited information as these business

operations are confidential. Nonetheless, they disclosed significant information that can

be used in assessing the demand of this service. One such information is their current

occupancy rate. Other pertinent information that will be helpful in this study are the

monthly rental rates and some observable physical attributes of the dormitels in the area.

Based also on the information gathered, the current occupancy rate is at an

average of 91% (see table 2.4) which is considered a high occupancy rate. This is

computed using the simple average method of dividing the total number of rooms

occupied by the total number of rooms offered for rent.

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The rapid development and growth of Davao City which has attracted many

internal migrants will surely increase the demand for this type of service offering and that

this industry will have a very good outlook in the future.

Name of Direct Address: Number Occupied Occupancy

Competitor of Rate
Rooms
for Rent
Mieo Dormitel St. Rosario St. Corner 14 14 100%
Buhangin-Cabantian
Indangan Road
Bt Basco Highland Carnation st., 14 14 100%
Dormitel Buhangin, Davao City
St. Camillus J.P. Laurel Avenue, 14 13 90%
Dormitel Davao City
Housemates 42 Mamay Rd, Davao 34 25 74%
Dormitel City
Table 2.5 Current Occupancy Rate of Direct Competitors

2.5 Demand – Supply Analysis

Among the limitations of this study is the gathering of quantitative data that can

show the relationship between the demand and supply of the dormitel or room rental

business particularly in Davao City. However, the researcher is confident that supporting

publications, research works and statistics discussed in the previous sections which were

released by various sources including the PSA are reliable and can be used as sufficient

basis to conclude that there is sufficient demand.

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But to justify this analysis, it can be noted that Davao city is 5 th among the

populated cities in the Philippines with an annual population growth of 2.3%. If the trend

will continue, Davao City’s population will double in the next 50 years thereby

increasing the requirement for dwelling units which NEDA has already reported that the

current requirement is hardly being met.

Moreover, Davao city continues to thrive as the center for business and education

in Mindanao with now the influx of investors coming from Manila and abroad. These

create more internal immigrants into the city as more job opportunities are made. If the

trend continues, demand for dormitels and room rental services will continue to thrive

and could dwarf the supply of room rental businesses in the future.
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2.6 Price Study

Pricing on the room types was considered by 2 major factors: current rental rate of

neighboring competitors, and the payback period. There were 4 major direct competitors

identified in the area with differing rental rates.

Name of Direct Adress: Number of Max Pax Rent Per Person

Competitor Rooms for Per Daily Monthly
Rent Room
Mieo Dormitel St. Rosario St. Corner 14 3 700 4,000
Buhangin-Cabantian
Indangan Road
Bt Basco Highland Carnation st., 14 2 350 7,000
Dormitel Buhangin, Davao City
St. Camillus J.P. Laurel Avenue, 14 8 450 4,500
Dormitel Davao City
Housemates 42 Mamay Rd, Davao 34 2 850 –
Dormitel City Economy

2-3 1000 –
Standard

4 1300 -
Premium
Table 2.6 Rental Rates of Direct Competitors
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Based on competitors’ room rate and occupancy percentage, Urban Eco-Dormitel

will set up a more affordable rate to gain competitive advantage against its competitor.

The following are the rate for Urban Eco Dormitel:

Solo Room (per head) Transient Room (for 2 person)

Inclusive of water and electricity Inclusive of water and electricity

Rate Rate

Daily 250.00 Daily 600.00

Monthly 3200.00

Single Occupant 8,000.00

(per month)
Table 2.7 Urban Eco-Dormitel Room Rate

For monthly rentals, Urban Eco Dormitel will require payment for the first month

and 2 month security deposit upon signing of the agreement. The security deposit will be

provided to defray damages that the tenant might incur to the housing unit he rented as

well as for his remaining unpaid utility bills and other accountabilities.

2.7 Existing Competition

In any effective marketing plan is it important to know the competitor of the

business, this enables the proprietor of the business to come up with strategies that will

challenge the strength of the competition and take advantage of their weaknesses.

There are four direct and four indirect competitors identified by the researcher in

the area. Each posed strengths and weaknesses that shouldn’t be taken for granted. These

competitors have already established their businesses and developed a good rapport to
 26

their tenants however certain issues such as lack of enough parking, exposure to noise

and pollution, sizes of room and price are among problems that needed to be addressed

(see Table 2.8)

The indirect competitors identified within the vicinity are the hotel and apartment

building. These establishment have more amenities but offer higher rates compared to the

dormitels within the vicinity. (see Table 2.9)

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Table 2.8 Direct Competitor’s Strengths and Weaknesses

Name of Direct Strengths Weaknesses

Competitor
Mieo Dormitel  Along National Highway
 Room can accommodate 3
pax
 With food cafeteria on the
ground floor
 Operation for 10 years
 Equipped with CCTV
Cameras
Bt Basco Highland  Room size is relatively
Dormitel spacious and can
accommodate 2 pax only
 Operating for 5 years
 With café and internet shop
on the ground floor
 Each room is equipped with
furnitures and equipment
such as air-conditioning
units, television set
 Parking area is shared with
commercial space renter on
the ground floor
 No common areas for tenants
 Rent does not include light
and water
 Parking area is limited to
owner’s vehicles
 No CCTV Camera
 Rent non-inclusive of light
and water
 No common areas for tenants
 Room rate cost more than
other existing competitors

St. Camillus Dormitel  Room can accommodate 8  Limited Parking Area

person per room  No CCTV Camera
 Accessible via National  No common areas for tenants
Highway

Housemates Dormitel  Accessible via National  Limited Parking Area

Highway
 Varying room size and rates
 Breakfast included in Room
Rate
 Equipped with CCTV
Cameras
 With function rooms
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Table 2.9 Indirect Competitor’s Strengths and Weaknesses

Name of Indirect Strengths Weaknesses

Competitor
North Garden Suites  Offers varying room rates  Room rate cost more
from Twin, Deluxe, to
Queen Room
 Varying Room Sizes
 Has function rooms
 More parking space
 Includes Breakfast Meal
 Equipped with CCTV
Cameras
Orange Groove  Offers varying room rates  Room rate cost more
Hotel from Double, Deluxe Triple,
Executive Suite, Family
Suite
 Varying Room Sizes
 Has function rooms
 Has Bar/Coffee Shops
 More parking space
 Includes Breakfast Meal
 Equipped with CCTV
Cameras
Honeymoon Suite  Room can accommodate 4-5  Room rate cost more
Anavada Apartment pax  Room rate does not
 Spacious Room include water and utilities.
 Each unit has their own  Does not air conditioning
kitchen, living room, dining unit
room
Jesebelle S. Quiñola  Room can accommodate 4-5  Room rate cost more
Apartment pax  Room rate does not
 Spacious Room include water and utilities.
 Each unit has their own  Does not air conditioning
kitchen, living room, dining unit
room

The direct competitors are the immediate threat to Urban Eco-Dormitel however

with more affordable rate, marketing strategies, safe, clean, spacious room, the business

will have the competitive advantage which will make it the first choice of the future

renters.
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Table 2.10 Competitive Profile Matrix (Direct Competitors)

Bt. Basco
St. Camillus Housemates
Critical Mieo DormitelHighland
Dormitel Dormitel
Success Weight Dormitel
Factor Weighted Weighted Weighted Weighted
Rating Rating Rating Rating
Score Score Score Score
Price 0.3 2 0.6 1 0.3 3 0.9 1 0.3
Location 0.25 3 0.75 2 0.5 1 0.25 3 0.75
Cleanliness 0.25 3 0.75 3 0.75 3 0.75 3 0.75
Facilities 0.1 2 0.2 2 0.2 1 0.1 3 0.3
Promotion 0.1 1 0.1 1 0.1 2 0.2 3 0.3
Total 1 2.4 1.85 2.2 2.4

Based on the result of the CPM, Mieo Dormitel and Housemates Dormitel

has the most competitive advantage among the direct competitors of Urban Eco Dormitel.

Urban Eco-Dormitel Strength and Weaknesses

It is important to note the business’ own weakness and strength as it progresses in

its operation. It helps determine what is needed to be improved as well as what is needed

to be leveraged on to take advantage of the external opportunities. Below are the

highlighted weaknesses and strength of Urban Eco-Dormitel

Table 2.11 Urban Eco-Dormitel Strength & Weaknesses

Business Name Strengths Weaknesses

Urban Eco-  Green and Sustainable initiative  Capital is limited to the
Dormitel  More amenities proprietors’ financial capacity
 Spacious with its own toilet and  Limited parking space
bath  No elevator
 Distant from national highway
which protects it from noises
and pollution
 Accessible from Buhangin
Road and Bajada Road
 Strategic Location
 Rental includes light and water
 Internet and CCTVs
 With permits and licenses
 30

2.8 Marketing Program

Aside from its green and sustainable initiative, Urban Eco-Dormitel will focus on

affordability, location, and cleanliness, and provision of facilities on all its units. This is

in response to a study as the top most important considerations in any rental related

business such as dormitel. Each unit shall have a more convenient but affordable space

compared to its competitors in addition to the amenities provided. This will translate to

higher customer occupancy rate thereby allowing marketing and sales efforts to be

reduced after the first year of operations.

A new and effective marketing plan is needed to ensure the projected occupancy

rate used in sales projections. The following program are the possible advertising and

promotional strategies to pull the targeted Urban Eco-Dormitel tenants into the building:

Advertising and Promotion Where? How?

Strategies

Social Media Channels Facebook, Twitter, Instagram, Campaigns, competitions,

TripAdvisor, YouTube, sharing experiences via
videos and photos

Blogs/Vlogs Blogger.com, YouTube and Invite famous bloggers to stay

other blog sites at the hotel and use this
channel to gain publicity and
reach more people

Flyers, vouchers, posters Travel agency Distribute marketing material

to strategic places.

Online reservation systems Booking.com, hotels.com, Build networks, be connected

Agoda.com, expedia.com, from TripAdvisor and search
trivago.com, engines
bookyogaretreats.com,
Airbnb.com
Table 2.12 Advertising and Promotion Strategies
 31

Other promotional strategy may include:

● Promote or accredit with institution such as the Southern Philippines

Medical Center, or Robinson Cybergate to provide housing facilities to their employees

at a discounted rate.

● Link with Davao City’s social media influencers such as Davao Conyo,

Medyo Maldito, MhaiManKaDhai

Finally, the business will sell itself through “word-of-mouth” since the tenants

would be speaking of positive things about the Urban-Eco Dormitel to theirs friends and

families.
 32

CHAPTER III

TECHNICAL FEASIBILITY

3.1 The Service

Urban Eco-Dormitel offers short-term and long-term rental of the twenty four

(24) units which can accommodate a maximum of three (3) bed space per room. A tenant

may rent a single room for himself provided he complies with the provision of the lease

agreement.

Each room has an average floor area of 15 square meter including the bed areas,

toilet & bath, and work/study space. Toilet & baths are built in with exhaust fans to

ensure proper ventilation.

Each floor is provided with common living area/dining for tenants to use but their

guests are only allowed on the first floor lounge.

The building is equipped with CCTV Cameras, Fire Alarm and Protection System

1. Solo Rooms

There sixteen (16) solo rooms and are located on the 2nd and 3rd floor. Male and

female tenants are divided per floor. Female tenants are located on the second while male

tenants are situated on the third floor. Only 3 tenants are allowed per room and are

subject for assessment for safety considerations.

Solo rooms include furniture such as a built-in cabinet, study/work desk, one (1)

double deck and one (1) twin size bed. It also includes the air-conditioning unit in each

room. Each solo room has its own toilet and bath measuring 1.2 m x 2 m, which

measures above the building code standard.

 33

2. Transient Room

Transient rooms are situated on ground floor composing of ten (10) units.

Transient room rates are inclusive for two (2) people, additional person are subject to

additional rate. Transient rooms offer queen size bed or two (2) twin size bed depending

on the tenant/guest preference. It includes an air-conditioning unit, a 20-inch flat screen

TV, and a hot & cold shower in each room.

3.2 Service Process

1. Check-In Procedure

The service process of checking-in a unit at Urban Eco-Dormitel begins with

intent to rent from the prospect tenant. He/she may do this by making a phone call,

reservation through internet platform, or through personal inquiry at the office.

A hired front desk attendant will assist the prospect tenant at the office and

provide him/her the available room rates. The front desk attendant will then request the

following from the prospect attendant once he/she decided on what room to avail: filled-

up guest form and any valid identification card. For renters of monthly basis, a security

deposit of one month and 2 months advance is required. For renters of daily/weekly rate,

he/she must pay the amount due.

The process ends with the signing of agreement form which shall be provided for

the tenant along with the duplicate key to his/her assigned room/bedspace.
 34

2. Check-Out Procedure

The service process of checking-out a unit at Urban Eco-Dormitel involves the

following:

First, the tenant must inform the office of his/her intention to check-out at least 24

hours before leaving. Second, a hired front desk attendee will immediately check the

outgoing tenant’s records of payments and security deposits (for monthly renters). An

attendant will then check the room for any damages that maybe liable to the tenant and

reduce the cost to the tenant. For renters of monthly basis the process ends with the

issuance of acknowledgement receipt, release of security deposit and returning of the

duplicate key to the office. For renters of daily and weekly basis, the process ends with

the returning of the key to the office.

3. Eviction

Any tenant who grossly violated the terms and conditions of the contract such

habitual late of payment or violation of the house rule shall be evicted from the premises

within seven (7) days from the receipt of formal notice from the management.

C. Location

Urban Eco-Dormitel’s strategic location targets tourist, employees, and students.

The following are the reasons why it is an ideal place for its target customers:

Tourist: The location of the project is within 15 minutes’ drive from Francisco

Bangoy International Airport and is accessible from top tourist spot in Davao City via

public transportation.
 35

AIRPORT

THE
SITE

Fig. 3.1 Site Location from the Airport

College Students: The site is located near universities such as the soon-to-rise

Lyceum of the Philippines University, University of the Southern Philippines, Jose Maria

College, and is accessible to other universities such as Ateneo de Davao University,

University of Mindanao, and other college via public transportation.

Office/Mall Employees: The site is situated near Bajada Road (J.P. Laurel

Avenue) where offices such as SSS, Robinsons, Landco and malls such as Abreeza,

Victoria Plaza, SM Lanang are found which makes it convenient for prospect office/mall

employees to commute from the Urban Eco-Dormitel.

 36

Fig. 3.2 Site Location from the Central Business District

THE
SITE
 37

Fig. 3.3 Buhangin Road to Project Lot

Buhangin Road to Project Lot

Fig. 3.4 Buhangin Road to Project Lot

 38

Fig. 3.5 Actual Lot

 39

3.3 Project Layout

The project site is 600 square meters in area with existing 2 residential

building measured at 200 square meters and 76 square meters consecutively. The

proposed location of the Urban Eco-Dormitel within the vicinity will occupy

approximately 150 square meters building footprint excluding the parking area,

this will be positioned at the location of the 76-square meter guest house building

which will be demolished.

 40

Fig. 3.6 Ground Floor Plan

 41

Fig. 3.7 Second Floor Plan

 42

Fig. 3.8 Third Floor Plan

 43

3.4 Building

The total estimated cost of constructing the proposed 4-storey dormitel building is

9,960,000.00 Php. One of the partners is a licensed contractor under a Category D thus

she will directly hire the labor force for the construction project. The proprietors will

handle the necessary permit processing requirements before the implementation of

construction; this includes the preparation of the plans, specification, and estimate of

construction.

The Urban Eco-Dormitel is a proposed 4-storey dormitel building with twenty

four (24) rooms available for rent.

Fig. 3.9 Architect’s Perspective of Urban Eco-Dormitel

 44

Fig. 3.10 Perspective on Site

3.5 Legal Consideration

For this type of business, one needed to check if the property is zoned for the

construction of rental business such that it’s maximum height or number of floors

restriction. For new construction, application of building permit is required with the

following provisions from the National Building Code and Fire Code of the Philippines.

It stated as follows: “Rooms shall have a minimum size of 6.00 square meters (65

square feet) with a least horizontal dimension of 2.00 meters (6 feet, 7 inches) for rooms

of human habitations; 3.00 square meters (32 feet) with a least horizontal dimension of

1.50 meters (5 feet) for kitchens; and 1.20 square meters (13 square feet) with a least

horizontal dimension of 90 centimeters (3 feet) for bathrooms.”. Moreover, House Bill

5716 requires dormitories and apartments to comply with the minimum requirements set

by the National Building Code and Fire Code of the Philippines before a license to

operate is finally issued.

 45

Another legal consideration is the implementation of Davao City Rainwater

Ordinance of 2009, whereas it states the adoption and development of appropriate

technologies related to rainwater utilization by medium to large size commercial,

institutional, agricultural and industrial establishments, including medium to high-end

residential subdivisions.

Then the following procedures takes place as the general steps in applying for

permit for this type of business venture (businesscoachphil.com, 2011):

 Register with the Department of Trade and Industry (DTI) if you will be

the sole owner of the property or with the Securities and Exchange Commission (SEC) if

you plan to be a corporation.

 Get a Barangay Clearance.

 Obtain a Building Permit and Occupation Permit from the municipal or

city hall. You must also secure your Fire Safety Permit there.

 Register with the Bureau of Internal Revenue (BIR). Get your certificate

of registration (COR). This will contain the schedule of your tax obligations with the

national government.

 Have your receipts printed.

 46

FIRECODE OF THE PHILIPPINES

Section 10.2.12.4 of the Firecode of the Philippines covers the fire safety

requirements for apartment buildings which also includes dormitels. The following are

the excerpts taken from this law (Bfp.gov.ph, 2008):

A. General Requirements

1. Any apartment building which complied with all of the preceding

requirements of this Section for hotels may be considered as a hotel and as such, the

following requirements for apartment buildings will not be applicable.

2. Every individual unit covered by this Section shall at least comply with

the minimum provisions of Section 10.2.12.6 of this IRR entitled Single and Two-Family

Dwellings.

B. Exit Details

1. General Types and Capacities of Exits

a. Exits of the same arrangement, types and capacities, as required by Section

10.2.12.3 of this IRR shall be provided. b. Street floor exits shall be sufficient for the

occupant load of the street floor plus the required capacity of stairs and ramps

discharging onto the street floor.

2. Number of Exits

a. Every living unit shall have access to at least two (2) separate exits.

Exception 1: Any living unit, which has an exit directly to the street or yard at

ground level or by way of an outside stairway that serve a maximum of two units or an

enclosed stairway with fire-resistance rating of one (1) hour or more serving that
 47

apartment only and not communicating with any floor below the floor of exit discharge or

other area not a part of the apartment served, may have a single exit.
 48

Exception 2: Apartment buildings of not more than three storeys in height with

not more than six (6) living units per floor, with a smoke-proof enclosure or an outside

stairway as the exit, immediately accessible to all apartments served thereby, may have a

single exit.

Exception 3: Any building not more than three (3) storeys in height with no floor

below the floor of exit discharge or, in case there is such a floor, with the street floor

construction of at least one-hour fire resistance, may have a single exit, under the

following conditions:

i. The stairway is completely enclosed with a partition having a fire

resistance rating of at least one (1) hour with self-closing fire units protecting all

openings between the stairway enclosed and the building.

ii. The stairway does not serve any floor below the floor of exit discharge,

iii. All corridors serving as access to exits at least a one (1) hour fire-resistance
rating.

iv. There is not more than six and one-tenth meters (6.10 m) of travel distance

to reach an exit from entrance unit of any living unit.

3. Minimum Corridor Width

a. Corridors with a required capacity of more than 50 persons shall be of

sufficient width to accommodate the required occupant load but have a width of not less

than one hundred twelve centimeters (112 cm).

b. Corridors with a required capacity of not more than 50 persons shall not be less

than ninety one centimeters (91 cm).

 49

4. Access to Exits

a. Exits shall be remote from each other, as required by Section 10.2.5.2 of this
IRR.

b. Exits shall be so arranged that there are no dead-end pockets, hallways,

corridors, passageways or courts.

c. Exits and exit access shall be so located that:

i. It will not be necessary to travel more than fifteen and one-half meters (15.50

m) within any individual living unit to reach the nearest exit, or to reach an entrance unit

of the apartment which provides access through a public corridor to an exit on the same

floor level.

ii. Within any individual living unit it will not be necessary to traverse stairs more

than one (1) storey above or below the floor level of the apartment to the nearest exit or

entrance unit.

iii. The entrance unit to any apartment is within thirty one meters (31 m) of an

exit of within forty six and a half meters (46.50 m) in a building protected by approved,

supervised sprinkler system in accordance with Section 10.2.6.5 of this IRR.

d. Units between apartments and corridors shall be self-closing.

5. Discharge from Exits

Discharge from exits shall be the same as required for hotels.

 50

6. Lighting and Signs

a. Every public space, hallway, stairway, and other means of egress shall have

illumination in accordance with Section 10.2.5.11 of this IRR. All apartment buildings

shall have emergency lighting.

b. Signs in accordance with Section 10.2.5.12 of this IRR shall be provided in all

apartment buildings.

Alarm Systems

a. Every apartment building of four (4) storeys or more in height, or more than

twelve (12) apartment units shall have an automatic fire detection and alarm system in

accordance with Section 10.2.6.4 of this IRR, except buildings provided with approved,

supervised sprinkler protection in accordance with Section 10.2.6.5 of this IRR.

b. Apartment buildings of not more than three (3) storeys in height shall be

provided with manual fire alarm system, provided that dwelling units shall be installed

with single – station or multi –station smoke detectors.

Extinguishing Requirements

a. All buildings shall be protected throughout by an approve, supervised sprinkler

system except in buildings where all guest sleeping rooms or guest suites have a unit

opening directly outside at the street or grade level or exterior exit access arranged in

accordance with Section 10.2.5.2 of this IRR in buildings up to and including three (3)

storeys in height. b. Listed quick response or listed residential sprinklers shall be used

throughout all dwelling units.

c. Portable fire extinguishers shall be installed in accordance with Section

10.2.6.5 of this IRR.

 51

3.6 Utilities and Waste Disposal

Utilities such as electricity and water are readily available as there is an existing

residential building in the property. Moreover, other utilities such as internet connection

and cable TV are also easily obtainable.

Waste disposal in the proposed project site is through designated garbage area

available and regular garbage collection schedule set by the local government. The city

has 80 garbage truck units, with 24 to 25 of them passing by main highways every night,

and more than 20 trucks every morning, picking up garbage from collection points in

subdivisions.

3.7 Office Equipment and Labor Requirements

The proprietor of the business will be the manager of Urban Eco-Dormitel, only

three staff, including the security personnel, will be required at the start of the operations.

The office will need one computer unit, one small office desk and around three (3) office

chairs. The office will be situated in an existing house inside the proposed project site.

The proprietor shall be responsible for the planning and execution of the

marketing programs. He shall be responsible for the overall management of the business.

His staff will be responsible for the safety and cleanliness of the apartment

building. He will be in-charge of the monthly billing and collection from the tenants,

petty cash fund as well as the payment of all dues, bills and taxes.
 52

3.8 Potential Problems and Contingency Plans

While the proprietor is confident that this project will be implemented smoothly

without any significant problems, it is still prudent to anticipate any eventualities that

could affect or hamper the progress of the project. In this regard, the potential problems

that might be encountered shall be discussed together with the possible responses or

contingency plans of Urban Eco-Dormitel so that these problems are immediately

resolved.

DEMOLITION AND CONSTRUCTION

The construction of the building will require excavation and demolition of an

existing 2-storey residential own by the proprietor as living quarters for guests. These

procedures could adversely affect adjacent lots and houses thus triggering potential

complaints from the neighbors.

To be able to avoid these scenario, the proprietor would request the contractor to

consider the anticipated problem before construction shall commence. They should

consult with the City Planning Office to determine future plans of the government in

relation to the barangay road in the area. Moreover, the company lawyer should be

consulted on the legal aspects that must be considered apart from the permits and licenses

that shall be complied with. Finally, the neighbors should be duly informed of the

construction plans and consider also their inputs particularly on the drainage system so

that a compromise agreement is reached if it becomes necessary.

 53

PROPERTY OWNERSHIP

The title of the land is under process to transfer between one of the proprietor and

her brother of legal age, 20, and agrees to use the portion of the land for the construction

of the project. However in case of disputes that may occur in the future regarding the

ownership of the building, it shall be addressed between family members.

FINANCIAL CAPACITY

The proprietors’ limited financial capacity may pose potential threat upon the

construction or operation of the business thus it is important to prepare for these

circumstances.

The following are the viable options of which the proprietor may pursue in case of

financial threat:

 Progressive construction of the project. Scale down the project to 50% to

60% so that the available funds will be able to suffice the construction and operation.

This can be done by limiting the number of floors of the projects but preparing the

foundation for future vertical expansion. In this case the business will still be profitable

but with a higher payback period.

 Negotiate with the bank since the collateral can carry higher market value

up to Php 8000 per sqm so that loan proceeds will be sufficient to fund the project. This

however will increase the financing cost and the payback period of the project will

slightly increase but the project will still be profitable and is self-liquidating.

 Delay the project until funds are sufficient.

 54

CHAPTER IV

MANAGEMENT FEASBILITY

Before the operation of the business, the construction of the building requires the

following phase which will be taken over by the proprietor: Pre-Implementation Phase,

Implementation Phase and Post Implementation Phase.

Pre-Implementation Phase

All plans and drawings shall be prepared by licensed professional in coordination

with the proprietor of the business subject for the approval of City Engineers Office in

the Application of Building Permit. This includes the Architectural Plans, Structural

Plans, Plumbing Plans, Electrical Plans and Mechanical Plans.

Implementation Phase

For any construction project, a license to construct must be obtained through

Philippine Contractors Accreditation Board. For this project, the proprietor will use her

license to construct this project. The construction shall be initiated through administration

wherein the proprietor will directly hire skilled workers and sub-contractors for

specialized activity such as plumbing, electrical and painting.

Post Implementation Phase

At ninety percent (90%) progression of construction, application of occupancy

permit will initiate as requirement for the business permit application.

 55

Urban Eco-Dormitel shall be established as a sole-proprietorship type of business.

Therefore it is owned and run by proprietor and there is no legal distinction between the

owner and the business entity. The advantage of this structure is that it is easy to comply

and set up with the licensing requirements. The paperwork and formalities are

substantially less than those of corporations, allowing sole proprietors to open the

business quickly and with relative ease.

The proprietor shall be the general manager of the business. The reporting line is

simple and straight-forward due to the simplicity of the organizational structure. Only

one staff reports to the owner who will be hired from an agency. He will be compensated

as an employee of the agency thus all statutory requirements shall be for the account of

the agency. The sole decision maker for immediate decisions about the business is

undertaken by the general manager.

General Manager /
Owner

Front Desk Attendant

Housekeeping Security Guard

Employee

Fig. 4.1 Organizational Chart

 56

MAJOR ROLES & RESPONSIBILITIES

1. General Manager

 Makes all the major decisions pertaining to the business such as but not

limited to deciding whether to expand, allow payment extension to a tenant, terminate or

extend a contract, decide on major repairs, etc.

 Responsible for performing audit of all transactions of the business

 Develops and implements short and long term objectives of

the business

 Prepares and implements marketing programs for the

business

 Provide overall direction

 Responsible for training the staff to ensure he gets the competencies

required for his roles and responsibilities

2. Front Desk Attendant

 Responsible for recording all transactions of the business including

internal communications to the tenants

 Monitors expiring contracts and informs tenant at least a month

before expiration Responsible for processing all permits and licenses of the business

 Entertains walk in clients for any inquiries

 57

3. Housekeeping Employee

 In charge of keeping the building clean

 Change sheets and make beds in transient room

 Keep the transient room stocked with towels, and bathroom items such as

tissue

 Deliver items such as extra pillow or blankets in transient rooms

4. Security Guard

 Ensures the security of the establishment

 Assist in the arrival of guest such as carrying their luggage to designated

rooms
 58

CHAPTER V

FINANCIAL FEASIBILITY

5.1 Major Assumptions

1. Operations

 The study will use the 15,000 php valuation as basis for valuation. This

makes the market value of the 600 square meter property where the proposed 4-storey

dormitel will be erected approximately P9,000,000 using the market valuation.

 Operation of the business is 24 hours a day, 7 times a week for the whole

year. There will be shifting of the staff.

 All transactions made by the tenants shall be in cash and/or dated checks

 Payables of the business shall be in the form of check except for

transactions amounting to P1,000 or less

 A petty cash fund of P 3,000.00 shall be setup to defray petty cash

expenses such as for the supplies and similar items.

 Inflation is projected at 5% per year for maintenance and utilities expense.

 The source of capital shall be through debt and equity.

 The bank loan of 8,500,000 php will be obtain

 There will be drawings of 500,000.00 php per year

 Depreciation of fixed assets will be computed using straight line method

assuming 20 year useful life and no salvage value, and 5 years useful life for equipment,

furniture and fixtures.

 Interest of bank loan has 4.99 percent fixed interest rate for 10 years.

 Percentage tax is paid quarterly based on the TRAIN Law

 59

 Security deposits for those yearly occupants are released at the termination

of the contract

 All fees are inclusive of light and water.

 Real Property Taxes are paid at the beginning of the year at 26,400 php

 Rate of Rental Space:

Solo Room (per head) Transient Room (for 2 person)

3-pax maximum per room

Rate Rate

Daily 250 Daily 600

Monthly 3,200.00

Single Occupant (per 8,000.00

month)
Table 6.1 Room Rate at Urban Eco-Dormitel

 Taxes & Licenses

Year 1 Year 2 Year 3 onwards

31,453.05 php 9,168.05 php 9,168.05 php
Table 6.2 Taxes and Licenses Cost

 Advertising Expense Year 1 (1st quarter only) 6,000.00 php

 Insurance Expense is 0.5% of assured amount; Assured amount is

8,500,000.00 php

 Cleaning and Maintenance at 2,000.00 php

 Repairs and Maintenance of the Building is at 0.50% of the construction

cost, with increment of 0.25% per year.

 Staff are hired from an agency and paid at minimum wage every 15th and

30th day
 60

 Utilities Expense are computed as follows:

OCCUPANCY RATE UTILITY EXPENSE SCHEDULE

YEAR AREA 1st 2nd 3rd 4th
1st QTR 2nd QTR 3rd QTR 4th QTR TOTAL
QTR QTR QTR QTR
SOLO 10% 50% 70% 70% 1,574.20 7,871.00 11,019.40 11,019.40
TRANSIENT 10% 30% 60% 60% 998.00 2,994.00 5,988.00 5,988.00
2020
OTHER 161,400.00
1,587.00 1,587.00 1,587.00 1,587.00
AREAS
SOLO 80% 80% 80% 80% 12,593.60 12,593.60 12,593.60 12,593.60
TRANSIENT 60% 60% 60% 60% 5,988.00 5,988.00 5,988.00 5,988.00
2021
OTHER 242,023.20
1,587.00 1,587.00 1,587.00 1,587.00
AREAS
SOLO 90% 90% 90% 90% 14,167.80 14,167.80 14,167.80 14,167.80
TRANSIENT 70% 70% 70% 70% 6,986.00 6,986.00 6,986.00 6,986.00
2022
OTHER 272,889.60
1,587.00 1,587.00 1,587.00 1,587.00
AREAS
SOLO 90% 90% 90% 90% 14167.8 14167.8 14167.8 14167.8
TRANSIENT 70% 70% 70% 70% 6986 6986 6986 6986
2023
OTHER 272,889.60
1,587.00 1,587.00 1,587.00 1,587.00
AREAS
SOLO 90% 90% 90% 90% 14167.8 14167.8 14167.8 14167.8
2024 TRANSIENT 70% 70% 70% 70% 6986 6986 6986 6986
OTHER 272,889.60
1,587.00 1,587.00 1,587.00 1,587.00
AREAS
Table 6.3 Utilities Expense
 61

2. Balance Sheet

Current Assets

This consists of cash in bank, cash on hand, and the petty cash fund.

Non-Current Assets

Fixed asset shall consists of the Office Equipment, Furnitures and Fixtures, Land

and Building. The Building shall depreciate in 20 years while the Office Equipment and

the Furnitures & Fixtures shall depreciate for 5 years. All are computed using the straight

line method.

Current Liabilities

 All suppliers are paid on or before the end of each period thus there is no

account payable

 No statutory contributions and deductions payable since the staff will be

hired from an agency

 Internet Expense Payable is the current unpaid portion for the internet

services used by the business to be settled in the month following the billing period.

 Utilities Expense Payable is the current unpaid portion for the electricity

and water consumption by the business to be settled in the month following the billing

period

 Percentage tax payable is the tax due based on annual net income of the

business, paid in the following year of the taxable period

 Interest Expense Payable is the unpaid bank interest loan at the end of

each period.
 62

Non-Current Liabilities

 Loan Non-Current is composed of the non-current portion of the bank loan

which is payable on a monthly basis.

 Security Deposit is considered as non-current as the tenants are expected

to stay for more than a year. It is release at the expiration of the contract.

Capital

 It is composed of the capital balances and drawing of the proprietor.

 Part of the capital is the estimated fair market value of the land and

improvements at 9,000,000 php.

 63

Income Statement

Revenue

 It consists of the rent revenue generated by the business. Assumption are

based on the monthly basis for solo room and daily basis for transient room. This

includes light and water. Exlcusive of the rent revenue is the advance payment for

security deposits.

 No rental fee adjustment is projected for the first five years of operation.

 Rent revenue is based on occupancy projection as follows:

NO. OF OCCUPANCY RATE

YEAR ROOM TYPE
ROOMS 1st QTR 2nd QTR 3rd QTR 4th QTR
SOLO 16 10% 50% 70% 70%
2020
TRANSIENT 10 10% 30% 60% 60%
SOLO 16 80% 80% 80% 80%
2021
TRANSIENT 10 60% 60% 60% 60%
SOLO 16 90% 90% 90% 90%
2022
TRANSIENT 10 70% 70% 70% 70%
SOLO 16 90% 90% 90% 90%
2023
TRANSIENT 10 70% 70% 70% 70%
SOLO 16 90% 90% 90% 90%
2024
TRANSIENT 10 70% 70% 70% 70%
Table 6.4 Projected Occupancy Rate at Urban Eco Dormitel

Occupancy projection is based on assumption by the proprietor based on current

occupancy rate of existing competitions in the area.

 64

Operating Expense

 The taxes and licenses are the annual and regulatory requirement for the

business to operate legally. The business is expected to incur bigger expenses in taxes

and licenses during the first year at 31,453.05 php due to additional processing fees

followed by 9,168.05 php the following year.

 Percentage Tax is computed at 3% of the gross rent income payable every

quarter as indicated by the TRAIN law

 No income tax provision for the sole proprietor.

 The advertising expense includes prints and social media platform

payments as indicated in the marketing plan of this study. Expected to be incurred in the

first quarter of the operation.

 The Insurance expense is the annual premium paid to cover the property

from possible fire and damages brought by acts of God, terrorism and other damages.

This is computed at 0.50% of the assured amount by the bank which is 8,500,000 php

 The Interest Expense is the periodic expense incurred due to the loans

availed by the business. Principal amount and the interest is paid on a monthly basis.

 Cleaning and Maintenance Expense include the soaps, detergents and

other cleaning materials.

 The Internet Fee includes the wireless and broadband network to be used

for the office and tenants secured by a password.

 65

 The Utilities Expense include is for the light and water consumed

monthly. It is paid in the month following the billing period

 Agency Fee is the monthly salary due to the staff that is paid every 15th

and 30th of the month. There is no outstanding obligation at the end of each period.

 Repairs and Maintenance of the Building covers the repairs and

maintenance for plumbing works, electrical, mechanical (for air-conditioning units)

 The Real Property Taxes is computed based on the land, existing

improvements and the new building. This is paid in the beginning of the year

 Depreciation – for Furniture and Fixtures is the allocated cost on a yearly

basis. Furniture and Fixture is depreciated over 5 years.

 Depreciation – for Office Equipment is the allocated cost on a yearly

basis. Office Equipment is depreciated over 5 years.

 Depreciation – for Building is the allocated cost on a yearly basis.

Building is depreciated over 20 years.

 66

5.2 Total Project Cost

The Total Project Cost is 11,846,958.25 Php which includes the cost of the

building, office equipment, furnitures and fixtures, office equipment, and the one-year

operating expense.

BUILDING
Item Labor and Materials
No. Description Costs
1 GENERAL REQUIREMENTS 398,400.00
2 EARTHWORKS 796,800.00
3 REBARS AND CONCRETING 2,988,000.00
4 MASONRY WORKS 1,892,400.00
5 FORMS AND SCAFFOLDS 597,600.00
6 TILEWORKS 697,200.00
7 ELECTRICAL WORKS 448,200.00
8 PLUMBING WORKS 866,520.00
9 ROOFING 398,400.00
10 PAINTING WORKS 637,440.00
11 PARKING AREA/EASEMENTS/WALKWAY 239,040.00
TOTAL BUILDING COST 9,960,000.00
Table 6.5 Project Cost

The building cost amounts to 9,960,000.00 php including the following scope of

work stated in Table. One of the proprietors holds a license to construct under Category

D which means she is allowed to construct project 10,000,000 php and below. The

construction of the project shall be done under administration agreement, employing the

licensed proprietor’s construction worker.

TOTAL BUILDING AREA TOTAL COST COST PER SQ.M

600 SQ.M 9,960,000.00 Php 16,600.00 SQ.M
Table 6.6 Project Cost Per Square Meter
 67

The cost per square meter is 16,600.00 Php which goes within the range of the

construction industry’s medium-end residential building cost per square meter at 15,000

to 18,000 Php.

OFFICE EQUIPMENT
Item Description Specification Qty Unit Price Cost
No.
1 Air Conditioner 1 HP 24 15,500.00 372,000.00
2 Exhaust Fan Standard 24 1,500.00 36,000.00
3 Refrigerator 6 cu.ft 1 18,500.00 18,500.00
4 Oven Toaster 1 1,200.00 1,200.00
5 Microwave 1 6,000.00 6,000.00
6 Lighted Signage 8X8 1 20,000.00 20,000.00
7 PABX System 1 30,000.00 30,000.00
8 Front Desk 1 10,000.00 10,000.00
9 Office Equipment 1 30,000.00 30,000.00
10 Decorations and Etc 1 15,000.00 15,000.00
TOTAL OFFICE EQUIPMENT COST 538,700.00
Table 6.7 Office Equipment Cost

FURNITURES AND FIXTURES

Item Description Specification Qty Unit Price Value
No.
1 Tables and Chairs Bfast 24 3,000.00 72,000.00
Nook/Chairs
2 Closet Wooden 24 8,000.00 192,000.00
3 Beds Spring 24 5,000.00 120,000.00
4 Desk Wooden 24 2,000.00 48,000.00
5 Lobby Furniture 1 100,000.00 100,000.00
6 Office Furniture 1 60,000.00 60,000.00
TOTAL FURNITURE AND FIXTURES COST 592,000.00
Table 6.7 Furnitie and Fixtures Cost

Office Equipment Cost amounts to 538,700 Php and Furnitures & Fixtures

amounts to 592,000.00 Php.

 68

5.3 Initial Working Capital Requirements

1. Working Capital Requirement

The business shall have an initial working capital of 754,967.05 Php to cover the

operation expense in its first year. This shall include the Building permit fee, Business

permit fees, Taxes (Percentage Taxes and Real Property Tax), Insurance Expense,

Cleaning and Maintenance Expense, Utilities Expense, Agency Expense, Repairs

Expense.

2. Cash

The cash balance shall include the Petty Cash Fund, Cash on Hand including the

commercial checks and the Cash in Bank

Cash-on-Hand are the cash received from the tenants which includes the cash for

deposit still in the cashier box or cash endorsed to the owner.

The Petty Cash Fund shall have a maintaining balance of 3,000 Php. It shall be

replenished when it reaches 50% of its maintaining balance.

2. Credit Policy

The business in general does not allow credit to its tenant. It shall exercise fair

and just management of its defaulting tenants as provided within the bounds of the law.
 69

5.4 Alternative Sources of Financing

It is important to acknowledge the potential of having financing problem thus

alternative sources should be realized. Online loan calculators of different financial

institution are available to gain information on their financing schemes. Among financing

institutions considered are Pag-IBIG and other banks.

Fig. 6.1 Pag IBIG Amortization Breakdown

Though Pag-IBIG offers the minimal monthly amortization compared to banks,

the maximum loanable amount is only 6,750,000.00 Php. This requires an additional

capital amounting to 5,096,958.25 from the proprietor.

 70

Fig. 6.2 Other Sources of Financing

 71

5.5 . Sources of Financing the Project

The Total Project Cost amounts to 11,846,958.25 Php. To finance this project, the

proprietor shall avail of the bank loan through home loans option. The loan with HSBC is

payable within 10 years at 4.99 interest rate. The loan is expected to generate proceeds of

about 8,500,000 Php. The additional 3,346,958.25 shall be provided by the proprietor

from his personal savings account.

 72

5.6 Pro-forma Financial Statement

URBAN ECO-DORMITEL
STATEMENT OF FINANCIAL POSITION
AS OF YEARS 2020-2024
2020 2021 2022 2023 2024
ASSETS
Current Assets:
Cash 315,520.00 381,314.85 739,042.07 1,049,189.32
1,405,673.97

Fixed Assets:
Office 430,960.00 323,220.00 215,480.00 107,740.00 0.00
Equipment,net
Furniture and 473,600.00 355,200.00 236,800.00 118,400.00 0.00
Fixtures, net
Land 9,000,000.00 9,000,000.00 9,000,000.00 9,000,000.00 9,000,000.00
Building, net 9,462,000.00 8,964,000.00 8,466,000.00 7,968,000.00 7,470,000.00
Total Fixed Assets: 19,366,560.00 18,642,420.00 17,918,280.00 17,194,140.00 16,470,000.00

TOTAL 19,682,080.00 19,023,734.85 18,657,322.07 18,243,329.32 17,875,673.97

ASSETS

LIABILITIES & CAPITAL

Current
Liabilities
Account Payable
Internet Expense 1,500.00 1,575.00 1,653.75 1,736.44 1,823.26
Payable
Utilities Expense 13,450.00 20,168.60 22,740.80 22,740.80 22,740.80
Payable
Percentage Tax 14,784.00 22,790.40 26,179.20 26,179.20 26,179.20
Payable
Loan-Current 850,000.00 850,000.00 850,000.00 850,000.00 850,000.00
Total Current 881,025.20 893,295.60 899,090.55 899,173.24 899,260.06
Liabilities:

Non-Current
Liabilities:
Loan - Non 6,800,000.00 5,950,000.00 5,100,000.00 4,250,000.00 3,400,000.00
Current
Security Deposit 247,500.00 285,000.00 322,500.00 322,500.00 322,500.00
Total Non-Current 7,047,500.00 6,235,000.00 5,422,500.00 4,572,500.00 3,722,500.00
Liabilities

Total Liabilities
7,927,234.00 7,129,534.00 6,323,073.75 5,473,156.44 4,623,243.26

Capital (include
Land) 11,754,846.00 11,894,200.85 12,334,248.32 12,770,172.88 13,201,774.27

TOTAL
LIABILITIES
AND CAPITAL 19,682,080.00 19,023,734.85 18,657,322.07 18,243,329.32 17,825,017.53
 73

URBAN ECO-DORMITEL
INCOME STATEMENT
AS OF YEARS 2020-2024
2020 2021 2022 2023 2024

Rent Revenue 1,478,400.00 2,279,040.00 2,617,920.00 2,617,920.00 2,617,920.00

Operating Expenses

Taxes and Licenses 39,867.05 31,958.45 35,347.25 35,347.25 35,347.25

Advertising 6,000.00
Insurance
Exp 42,500.00 44,625.00 46,857.37 49,201.41 51,662.71
Cleaning &
Maintenance 12,000.00 12,600.00 13,230.00 13,891.50 14,586.08
Internet Fee 18,000.00 18,900.00 19,845.00 20,837.25 21,879.11
Utilities Exp 161,400.00 242,023.20 272,889.60 272,889.60 272,889.60
Agency Fee 399,000.00 399,000.00 399,000.00 399,000.00 399,000.00
Repair &
Maintenance -
Bldg 49,800.00 49,924.50 50,049.31 50,174.43 50,299.87
RPT 26,400.00 26,400.00 26,400.00 26,400.00 26,400.00
Depreciation -
Furnitures & Fix. 118,400.00 118,400.00 118,400.00 118,400.00 118,400.00
Depreciation -
Office Equipment 107,740.00 107,740.00 107,740.00 107,740.00 107,740.00
Depreciation -
Bldg 498,000.00 498,000.00 498,000.00 498,000.00 498,000.00
Total Operating
Expenses 1,479,107.05 1,549,571.15 1,587,758.53 1,591,881.44 1,596,204.61

Operating
Income (707.05) 729,468.85 1,030,161.47 1,026,038.56 1,021,715.39

Interest Exp (90,114.00) (90,114.00) (90,114.00) (90,114.00) (90,114.00)

Net Income (90,821.05) 639,354.85 940,047.47 935,924.56 931,601.39

 74
URBAN ECO-DORMITEL
STATEMENT OF CASHFLOW
AS OF YEARS 2020-2024
2020 2021 2022 2023 2024
Cash flow from operating activities

Rent Revenue 1,478,400.00 2,279,040.00 2,617,920.00 2,617,920.00 2,617,920.00

Security Deposit 247,500.00 37,500.00 37,500.00
Payment of operating
expense (725,233.05) (810,631.15) (857,578.78) (867,658.75) (821,321.35)
Net cash flow from operating
activities 1,000,666.95 1,505,908.85 1,797,841.22 1,750,261.25 1,796,598.65

Cash from investing activities

Building Construction (9,960,000.00)
Purchase of office
equipment (538,700.00)
Purchase of furniture and
fixtures (592,000.00)
Net cash flow from investing
activities (11,090,700.00) - - - -

Cash flow from financing activities

L
oan 8,500,000.00
Payment of Loan (850,000.00) (850,000.00) (850,000.00) (850,000.00) (850,000.00)
Payment of interest
expense (90,114.00) (90,114.00) (90,114.00) (90,114.00) (90,114.00)
Capital investment of the
owner 3,345,667.05
Drawings by the owner (500,000.00) (500,000.00) (500,000.00) (500,000.00) (500,000.00)

Total Cash Inflow 10,405,553.05 (1,440,114.00) (1,440,114.00) (1,440,114.00) (1,440,114.00)

Net cash increase (decrease) 315,520.00 65,794.85 357,727.22 310,147.25 356,484.65

Add: Cash-Beginning 315,520.00 381,314.85 739,042.07 1,049,189.32

Cash Ending Balance 315,520.00 381,314.85 739,042.07 1,049,189.32 1,405,673.97

 75

URBAN ECO-DORMITEL
STATEMENT OF CHANGES IN EQUITY
AS OF YEARS 2020-2024
2020 2021 2022 2023 2024
Owner's Equity at
Dec. 31,2019 11,754,846.00 11,894,200.85 12334248.32 12770172.88
Add: Owner's
investment 12,345,667.05
(includes land)
Net
Income (90,821.05) 639,354.85 940,047.47 935,924.56 931,601.39

Subtotal 12,254,846.00 12,394,200.85 12,834,248.32 13,270,172.88 13,701,774.27

Deduct:
Drawings (500,000.00) (500,000.00) (500,000.00) (500,000.00) (500,000.00)

Owner's Equity
Ending 11,754,846.00 11,894,200.85 12,334,248.32 12,770,172.88 13,201,774.27

There is a change in equity brought by the net income per year, increase in equity

on a year to year basis indicates a good business operation.

 76

5.7 Financial Analysis

URBAN ECO-DORMITEL
STATEMENT OF FINANCIAL
POSITION
VERTICAL ANALYSIS

2020 2021 2022 2023 2024

ASSETS
Current Assets:
Cash 1.60% 2.00% 3.96% 5.75% 7.86%

Fixed Assets:
Office equipment,net 2.19% 1.70% 1.15% 0.59% 0.00%
Furniture and Fixtures,
net 2.45% 1.91% 1.32% 0.69% 0.00%
Land 46.47% 48.28% 50.23% 52.34% 54.64%
Building, net 48.86% 48.08% 47.25% 46.34% 45.36%
Total Fixed Assets: 98.40% 98.00% 96.04% 94.25% 92.14%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%

LIABILITIES & CAPITAL

Current Liabilities
Account Payable 0.00% 0.00% 0.00% 0.00% 0.00%
Internet Expense
Payable 0.01% 0.01% 0.01% 0.01% 0.01%
Utilities Expense
Payable 0.07% 0.11% 0.12% 0.12% 0.13%
Percentage Tax Payable 1.68% 2.55% 2.91% 2.91% 2.91%
Loan-Current 4.32% 4.47% 4.56% 4.66% 4.77%
Total Current Liabilities: 6.08% 7.13% 7.59% 7.70% 7.81%

Non-Current Liabilities:
Loan - Non Current 34.55% 31.28% 27.34% 23.30% 19.07%
Security Deposit 1.26% 1.50% 1.73% 1.77% 1.81%
Total Non-Current
Liabilities 35.81% 32.77% 29.06% 25.06% 20.88%

Total Liabilities 41.88% 39.90% 36.66% 32.76% 28.70%

Capital 58.12% 60.10% 63.34% 67.24% 71.30%

TOTAL LIABILITIES
AND CAPITAL 100.00% 100.00% 100.00% 100.00% 100.00%
 77

Current assets which is mainly compose of cash has been increasing from 2020 to

2024. While the non-current assets are decreasing from 2020 to 2024. This means that the

business is going well and becoming more liquid throughout the year of its operation.

Current Liabilities increase, one reason is the increasing income tax payable, that

is a percentage of increasing profit per year. While the non-current liabilities are

declining from 2020 to 2024, which meant that the business has been able to pay its long

term obligations thus a decrease.

The capital has been increasing from 2020 to 2024 because increasing profit of

the business, which is a good sign that the business is growing and progressing up.
 78

URBAN ECO-DORMITEL
INCOME STATEMENT
VERTICAL ANALYSIS
2020 2021 2022 2023 2024
Rent Revenue 100.00% 100.00% 100.00% 100.00% 100.00%

Operating Expenses
Taxes and Licenses 2.70% 1.40% 1.35% 1.35% 1.35%
Advertising 0.41% 0.00% 0.00% 0.00% 0.00%
Insurance Exp 2.87% 1.96% 1.79% 1.88% 1.97%
Cleaning &
Maintenance 0.81% 0.55% 0.51% 0.53% 0.56%
Internet Fee 1.22% 0.83% 0.76% 0.80% 0.84%
Utilities Exp 10.92% 10.62% 10.42% 10.42% 10.42%
Agency Fee 26.99% 17.51% 15.24% 15.24% 15.24%
Repair & Maintenance
- Bldg 3.37% 2.19% 1.91% 1.92% 1.92%
RPT 1.79% 1.16% 1.01% 1.01% 1.01%
Depreciation -
Furnitures & Fix. 8.01% 5.20% 4.52% 4.52% 4.52%
Depreciation - Office
Equipment 7.29% 4.73% 4.12% 4.12% 4.12%
Depreciation - Bldg 33.69% 21.85% 19.02% 19.02% 19.02%
Total Operating Expenses 100.05% 67.99% 60.65% 60.81% 60.97%

Operating Income -0.05% 32.01% 39.35% 39.19% 39.03%

Interest Exp -6.10% -3.95% -3.44% -3.44% -3.44%

Net Income -6.14% 28.05% 35.91% 35.75% 35.59%

There is higher percentage difference for net income in 2020 vs. 2021, this is

because of the advertising expense incurred in 2019, and the additional permit cost during

its first year of operation. After 2022, there is a slight reduction in the net income going

2024. This is due to the 5% inflation assumed from 2020 to 2024 without any rental
 79

increase. In 2024, the NI percentage is expected to increase since the office equipment

and the furniture and fixture will be fully depreciated by then. Moreover, the market

penetration in the Airbnb market will boost the company’s income from 2025 onwards.
 80

URBAN ECO-DORMITEL
STATEMENT OF FINANCIAL
POSITION
HORIZONTAL ANALYSIS
2020 2021 2022 2023 2024
ASSETS
Current Assets:
Cash 0.00% -13.3% 54.5% 27.3% 27.4%

Fixed Assets:
Office equipment,net 0.00% -25.0% -33.3% -50.0% -100.0%
Furniture and Fixtures,
net 0.00% -25.0% -33.3% -50.0% -100.0%
Land 0.00% 0.0% 0.0% 0.0% 0.0%
Building, net 0.00% -5.3% -5.6% -5.9% -6.3%
Total Fixed Assets: 0.00% -3.74% -3.88% -4.04% -4.21%

TOTAL ASSETS 0.00% -3.95% -2.70% -3.03% -2.87%

LIABILITIES & CAPITAL

Current Liabilities
Account Payable
Internet Expense
Payable 0.00% 0.05 0.05 0.05 0.05
Utilities Expense
Payable 0.00% 0.50 0.13 0.00 0.00
Percentage Tax Payable 0.00% 0.34 0.15 0.00 0.00
Loan-Current 0.00% 0.00 0.00 0.00 0.00
Total Current Liabilities: 0.00% 0.01 0.01 0.00 0.00

Non-Current Liabilities:
Loan - Non Current 0.00% -0.13 -0.14 -0.17 -0.20
Security Deposit 0.00% 0.15 0.13 0.00 0.00
Total Non-Current
Liabilities 0.00% -0.12 -0.13 -0.16 -0.19

Total Liabilities 0.00% -0.10 -0.11 -0.13 -0.16

Capital 0.00% 0.00 0.02 0.02 0.02

TOTAL LIABILITIES
AND CAPITAL 0.00% -0.04 -0.03 -0.03 -0.03

There will be a positive change in cash account for year 2022 to 2024 indicating that the business

is becoming more liquid and its cash position is improving. The negative percentages of the fixed aseets
 81

from year to year is due to the depreciation of these assets. The year to year reduction in the non-current

liabilities is due to the monthly amortization of the long term loans. This indicates that the business is able

to to pay its long term obligations. The positive changes in the capital is brought about by the net income

per year given that there are no additional investments from 2020 to 2024

URBAN ECO-DORMITEL
INCOME STATEMENT
HORIZONTAL ANALYSIS
2020 2021 2022 2023 2024
Rent Revenue 0.00% 34.07% 14.59% 0.00% 0.00%

Operating Expenses
Taxes and Licenses 0.00% -25.36% 10.23% 0.00% 0.00%
Advertising 0.00%
Insurance Exp 0.00% 5.00% 5.00% 5.00% 5.00%
Cleaning &
Maintenance 0.00% 5.00% 5.00% 5.00% 5.00%
Internet Fee 0.00% 5.00% 5.00% 5.00% 5.00%
Utilities Exp 0.00% 49.95% 12.75% 0.00% 0.00%
Agency Fee 0.00% 0.00% 0.00% 0.00% 0.00%
Repair &
Maintenance - Bldg 0.00% 0.25% 0.25% 0.25% 0.25%
RPT 0.00% 0.00% 0.00% 0.00% 0.00%
Depreciation -
Furnitures & Fix. 0.00% 0.00% 0.00% 0.00% 0.00%
Depreciation - Office
Equipment 0.00% 0.00% 0.00% 0.00% 0.00%
Depreciation - Bldg 0.00% 0.00% 0.00% 0.00% 0.00%
Total Operating
Expenses 0.00% 4.59% 2.45% 0.26% 0.27%

Operating Income 0.00% 377.4% 45.6% -0.5% -0.5%

Interest Exp 0.00% 0.0% 0.0% 0.0% 0.0%

Net Income 0.00% 1296.3% 53.5% -0.5% -0.5%

The revenue of the Urban-Eco Dormitel increased drastically from 2020 to 2021.

This is due to to the increase in occupancy rate from 10% to 50% in the second quarter of

2020. Moreover there is an increase in revenue from 2021 to 2022 due to the
 82

improvement in occupancy rate. The occupancy stabilized from 2022 onwards thus no

changes can be noted.

Consistent with the movement in revenue is the same pattern changes in the net

income except that it registered a negative change in 2023 to 2024. Though the business

is having positive cash flows, the net income for these years reduced due to to the

assumed inflation of 5% per year without any assumption of price increase.

 83

5.8 Payback Period and IRR

PAYBACK PERIOD 7.64 PAYBACK PERIOD 9.749

(DISCOUNTED)
YEAR CASHFLOW BALANCE YEAR CASHFLOW BALANCE
Initial Investment 11,846,958.25 Initial Investment 11,846,958.25
1 1,129,786.95 10,717,171.30 1 1,076,090.06 10,770,868.19
2 1,380,777.65 9,336,393.65 2 1,252,644.62 9,518,223.57
3 1,650,759.62 7,685,634.03 3 1,426,395.73 8,091,827.84
4 1,603,424.45 6,082,209.58 4 1,319,643.91 6,772,183.93
5 1,648,278.65 4,433,930.93 5 1,292,084.61 5,480,099.32
6 1,677,700.42 2,756,230.51 6 1,252,641.51 4,227,457.81
7 1,677,700.42 1,078,530.09 7 1,193,105.54 3,034,352.27
8 1,677,700.42 (599,170.33) 8 1,136,399.22 1,897,953.04
9 1,677,700.42 (2,276,870.76) 9 1,082,388.06 815,564.98
10 1,677,700.42 (3,954,571.18) 10 1,030,943.96 (215,378.97)
CASHFLOW FROM
OPERATIONS
Investment
2020 2021 2022 2023 2024 Cost IRR
1,129,786.95 1,380,777.65 1,650,759.62 1,603,424.45 1,648,278.65 (11,846,958.25) 13%

The undiscounted payback period shows that the business can recover their initial

investment in less than 8 years while discounted payback period shows a recovery of less

than 10 years. Both are acceptable to the proprietor. Moreover, the business has an IRR

of 13% which is higher that the projects WACC at 2.77% thus indicating that the

business proposal is acceptable.

 84

5.9 Ratio Analysis

2020 2021 2022 2023 2024

LIQUIDITY RATIOS
Quick Ratio 35.87% 42.63% 82.06% 116.49% 156.06%
Current Ratio 35.87% 42.63% 82.06% 116.49% 156.06%

LEVERAGE RATIOS
Debt Ratio 40.28% 37.48% 33.89% 30.00% 25.86%
Debt to Equity 67.44% 59.94% 51.26% 42.86% 35.02%
Equity Ratio 59.72% 62.52% 66.11% 70.00% 73.85%

PROFITABILITY RATIOS
Profit Margin Ratio
Return on Asset -6.14% 28.05% 35.91% 35.75% 35.59%
Return on Equity -0.46% 3.36% 5.04% 5.13% 5.21%

The liquidity ratio shows an increasing quick and current ratios which indicates a

successful business operation as the business becomes more liquid. Being able to pay the

current obligations signifies a good credit standing which enables the company to be

subjected for future loans intended for expansion.

The leverage ratios shows that the business becomes less dependent on debt as it

move towards 2024. It shows a shift from 2020 to 2024

In general the business is profitable in the years projected however there is a

slight decline in the profit margin ration from 2022 to 2023 due to te assumed 5%

inflation rate per year without any assumptions for rental increases. This is consistent

with the trends in ROA and ROE but the returns are still positive.
 85

5.10 Notes to Financial Statement

1. Loan Amortization Schedules

Amortization Balance
HSBC Principal Interest Principal
Year 8,500,000.00
1 850,000.00 90,114.00 7,650,000.00
2 850,000.00 90,114.00 6,800,000.00
3 850,000.00 90,114.00 5,950,000.00
4 850,000.00 90,114.00 5,100,000.00
5 850,000.00 90,114.00 4,250,000.00
6 850,000.00 90,114.00 3,400,000.00
7 850,000.00 90,114.00 2,550,000.00
8 850,000.00 90,114.00 1,700,000.00
9 850,000.00 90,114.00 850,000.00
10 850,000.00 90,114.00

The HSBC loan to be availed is 8,500,000 Php at 4.99% interest rate payable in

ten (10) years. The above schedule show the principal and interest amortization per year.
 86

2. Revenue Schedule

OCCUPANCY
NO. REVENUE SCHEDULE
MON RATE
OF
YEA ROOM THLY 2n
RO 1st 3rd 4th
R TYPE REVE d 1st 2nd 3rd
OM QT QT QT 4th QTR TOTAL
NUE QT QTR QTR QTR
S R R R
R
8,400. 10 50 70 70 13,440. 201,600. 282,24 282,240.
SOLO 16
00 % % % % 00 00 0.00 00 1,607,5
2020
TRANSIE 18,00 10 30 60 60 18,000. 162,000. 324,00 324,000. 20.00
10
NT 0.00 % % % % 00 00 0.00 00
8,400. 80 80 80 80 107,52 322,560. 322,56 322,560.
SOLO 16
00 % % % % 0.00 00 0.00 00 2,155,2
2021
TRANSIE 18,00 60 60 60 60 108,00 324,000. 324,00 324,000. 00.00
10
NT 0.00 % % % % 0.00 00 0.00 00
8,400. 90 90 90 90 120,96 362,880. 362,88 362,880.
SOLO 16
00 % % % % 0.00 00 0.00 00 2,469,6
2022
TRANSIE 18,00 70 70 70 70 126,00 378,000. 378,00 378,000. 00.00
10
NT 0.00 % % % % 0.00 00 0.00 00
8,400. 90 90 90 90 120,96 362,880. 362,88 362,880.
SOLO 16
00 % % % % 0.00 00 0.00 00 2,469,6
2023
TRANSIE 18,00 70 70 70 70 126,00 378,000. 378,00 378,000. 00.00
10
NT 0.00 % % % % 0.00 00 0.00 00
8,400. 90 90 90 90 120,96 362,880. 362,88 362,880.
SOLO 16
00 % % % % 0.00 00 0.00 00 2,469,6
2024
TRANSIE 18,00 70 70 70 70 126,00 378,000. 378,00 378,000. 00.00
10
NT 0.00 % % % % 0.00 00 0.00 00

The revenue schedule shows how the revenues per year in the projected income

statement are computed. The major assumptions followed are the occupancy rates

detailed in this schedule

 87

3. Depreciation Schedule

FURNITURE & OFFICE

FIXTURES EQUIPMENT BUILDING TOTAL
COST 592,000.00 538,700.00 9,960,000.00 11,090,700.00
LIFE IN YRS 5 5 20
DEP. PER YR 118,400.00 107,740.00 498,000.00 724,140.00

FURNITURE & OFFICE

DEP SCHEDULE FIXTURES EQUIPMENT BUILDING TOTAL
2020 118,400.00 107,740.00 498,000.00 724,140.00
2021 118,400.00 107,740.00 498,000.00 724,140.00
2022 118,400.00 107,740.00 498,000.00 724,140.00
2023 118,400.00 107,740.00 498,000.00 724,140.00
2024 118,400.00 107,740.00 498,000.00 724,140.00
ACCUMULATED
DEP. 592,000.00 538,700.00 2,490,000.00 3,620,700.00

NET BV at Dec.
2024 7,470,000.00
 88

CHAPTER VI

SOCIO – ECONOMIC STUDY

The construction of the building will offer temporary jobs in the construction

industry. The duration of construction is estimated to be one year, and targeting to

employ 10 skilled workers, and 10 laborers. But during the initial operation of the

business, it only requires four (4) staff to operate, maintain and manage, unlike other

businesses. However as the business progresses, it will require more staff and external

services such as plumbing and electrical maintenance, providing more work opportunities

for the community.

Other businesses within the community will also benefit from Urban Eco-

Dormitel. Businesses such as food establishments, laundry services, markets will thrive

because of the entrant of new customers that will patronize their products and services. It

is estimated that sixty (60) new customers will occupy the Urban Eco-Dormitel that will

be mutually beneficial for these businesses as well as the progress of the community and

the local government.

Moreover, taxes will increase revenues the local and national governments which

it can use for the development of the community. This is because of the operation of

Urban Eco-Dormitel and the increased sales and profits of other businesses in the area.

The more income is generated the more taxes goes to the government. Furthermore, the

local government will be able to collect annual statutory and regulatory fees such as

clearances, fire safety permit, business permit etc. which means an increase in the LGU’s

revenue.
 89

Finally, since Urban Eco-Dormitel is constructed to be compliant with all the

sanitary and safety standards set by the government, it is expected to provide a safe and

modest place to stay for our tenants thus improving their standards of living and well

being.
 90

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