PROJECT PROPOSAL FOR

EXPANSHION OF HOTEL BUILD

PROMOTER:-DEREJE ASANAKE YERGU

LOCATION:-ADDIS ABABA ,KIRKOS SUB-CITY

Oct, 2023

Addis Ababa city, Ethiopia

Dereje Asnake
Page 1
G
 1. Project title – Hotel Establishment
2. Promoter – Dereje Asnake
3. Project Location:-

 Addis Ababa city

4. Total Proposed Land Area (M2) = 1, 000m2
5. Employment Opportunity = 57 Per.and 120 tempo. Workers
6. Total Capital = Br. 120,419,075
a. Working Capital = Br. 66,081,991
b. Fixed Capital = Br. 42,052,176
7. Source Fund
a. Own Equity (30%) = Br. 36,044,723
b. Bank loan (70%) =Br. 84,104,352
8. Foreign exchange requirement =Br. 22,309,065
9. Net Revenue at Full Capacity = Br. 20.01million/year
10. Tax payment at full capacity operations =Br. 10.78 million/year

Hence, the project is feasible and important to be undertaken being the first of its kind in the sub-
urban area of the country having international quality and standard. Furthermore, the project
would contribute immensely to the development of tourism industry in particular and the country
in general

Dereje Asnake
Page 2
G
1.1EXCUTIVE SUJMMARY
The project feasibility study proposed on international tourist hotel investments
has been promoted by Dereje Asnake in Addis Ababa kirkos sub city. Addis
Ababa is a fast growing regional economic center and the capital of Ethiopia. It is
home to the African Union, the UN Economic Commission for Africa, foreign
missions, regional NGO’s and the UN Conference Centre. Due to its regional
political status Addis Ababa is often referred as the political capital of Africa.
Ethiopian Airlines has become a major demand driver, servicing 101
destinations from Bole International Airport. Economic growth is further
increasing demand at +8% per annum this is therefore Dereje Asnake hotel
investment founded its base on it
Project justification: International standard tourist hotel is high class hotel
where services like standard bedroom, catering, conference hole, Spa (Hot
Spring), gymnasium, sauna and massage, other sports facilities like tennis or
squash court, min-golf or badminton, bowling, table tennis and children
playground, night club with dancing to live music or discotheque or cabaret etc

The demand and supply of hotels and its bed rooms service in Addis Ababa has
high gab the supply of Addis Ababa has a quality 32 hotels and a total of 3,174
bed rooms currently in the market, giving an average number of 100 rooms per
hotel. Branded supply is very low; due to this demand and supply analysis
Dereje Asnake hotel wants to participate and minimizes the gab of demand and
supply standard hotel in Addis Ababa
In this profile study international tourist standard hotel is considered to
following provides:-
• 10 King size luxury rooms, 20 standard double bed rooms and 50 single
standard bed rooms totally 80 standard bed rooms services

Dereje Asnake
Page 3
G
  International and national restaurant service
 Standard massage and sauna bathe service
 Physical fitness room
 Conference hole and others important needs The total area of the
international tourist hotel investment is about 1000 meter square
The area covered and develop the following infrastructures such as
main building (g+8) hotel service and, store, gourd house, , parking
area and other necessaries facilitie
The total investment capital of the project is estimated at birr 120,419,075 of
which birr 84,104,352 (70%) is for fixed investment cost of which 70 % of the fixed
cost is need foreign currency while the remaining balance of birr 36,044,723 (30%)
will be working capital Income statement: According to the projected income
statement, the project will generate profit beginning from the first year of
operation. Based on the 10 years financial projections the projects average
annual net profit after payment of bank interest, depreciation and tax amounts
to birr 13,593,732
Cash flow statement: The cash flow statement also shows a substantial amount
of cash surplus right from the first year of project operation life. The cash
balance grows from birr 21,685,936 in the first year to cumulative balance of
birr384,396,352 during the 10th year of operation indicating the capacity of the
project to finance itself and generate cash surplus for further investments.
 FIRR Computation: The computation of the project FIRR shows that the
project will profitably generate reasonable return on investment. Before
tax financial internal rate of return is calculated to be 33.9%. This
indicates the project is financially viable with an internal rate of return
(IRR) of 33.9 % and net present value (NPV) 102.2 million at discount rate
35 %.
 Socio economic benefits: The socio economic benefit of the project is also
very high. The project will provide:- 125 permanent employs, Generate

Dereje Asnake
Page 4
G
 revenue to government in the form of taxes, Facilitate and give a good
service for local and international tourists
Conclusion and recommendation:
The Project is found to be operationally profitable, viable & has significant socio-
economic benefits. We recommended that according to this attractive financial
and economic benefit of the project all concerned offices & financial institutions
should give their support to facilitate the implementation of this plan

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

The Project 3.1

.Project description and Justification International standard tourist hotel is high
class hotel (from three to fivestar level) where services like bedroom, catering,
meeting rooms, multipurpose assembly hall, swimming pool, Spa (Hot Spring),
gymnasium, sauna and massage, other sports facilities like tennis or squash
court, mingolf or badminton, bowling, table tennis and children playground,
night club with dancing to live music or discotheque or cabaret etc. A hotel is an
establishment that provides paid lodging on a short-term basis. Facilities
provided may range from a modest-quality mattress in a small room to large
suites with bigger, higher-quality beds, a dresser, a refrigerator and other
kitchen facilities, upholstered chairs, a flat screen television and en-suite
bathrooms. Small, lower-priced hotels may offer only the most basic guest
services and facilities. Larger, higher-priced hotels may provide additional guest
facilities such as a swimming pool, business center (with computers, printers

Dereje Asnake
Page 5
G
and other office equipment), childcare, conference and event facilities, tennis or
basketball courts, gymnasium, restaurants, day spa and social function services.
Hotel rooms are usually numbered (or named in some smaller hotels and B&Bs)
to allow guests to identify their room. Some boutique, high-end hotels have
custom decorated rooms. Some hotels offer meals as part of a room and board
arrangement. In the United Kingdom, a hotel is required by law to serve food and
drinks to all guests within certain stated hours. In Japan, capsule hotels provide
a tiny room suitable only for sleeping and shared bathroom facilities

1.2 Products and Services

Dareje Asnaku is offers a “homey, yet luxurious” feel for guests looking for
somewhere other than a mundane hotel, motel or condo. We will offer guests
breakfast, set dinners, activities, and spa specials.

1.3 Target Markets

The Manor will be directed at the baby boomer generation. This is one of the
largest demographics and as their ability to travel increases, we expect to see
occupancy rates rise. Targeting this market, we may be neglecting young
travelers, but want to offer the “exclusive” feel for guests.

1.4 Competition
The location of the project area is a destination for numerous travelers throughout the year;
because of this, competition is high. There are currently a number of hotel and tourism
accommodations available to potential travelers; however there is currently nothing specifically
designed for this demographic. By offering guests everything we expect to, we see no problem
with local competition.
Profitability: The financial analysis of the envisaged project is carried out for the
following ten years. Based on the 10 years financial projections using the income
statement, cash flow statement and financial internal rate of return (FIRR), the
following results are obtained

Dereje Asnake
Page 6
G
1.5 Marketing and Sales Strategy
In order to create an established bed and breakfast (B&B) in the area, it will be imperative to start
with an aggressive marketing plan. Marketing on social networks, travel sites, and magazines
baby boomers frequently use will generate our exposure helping to gain market share. Setting
room rates at competitive prices in relation to the competition will allow us to compete in the
market.

1.6 Operations
The Manor will be owned and operated by the delegated emplyee. Additional employees will be
hired as needed throughout the year. In order to keep costs low, most of the work will be done by
the owner.

1.7 Financials
The financial strategy for Deraje Asnake will be to keep costs as low as possible to keep business
profitable in short period. Because of this the new venture, acquiring any type of loan for
renovations or expenses will be difficult. However, an optimistic sales strategy will provide banks
the opportunity to see how the money will be spent and where we expect to see positive numbers.

2 General Background
Ethiopia is one of the fastest growing economies in Africa and often cited as an attractive
destination by business leaders because of its 90m population and vast agricultural resources.

Dereje Asnake
Page 7
G
Though, the country's has fertile national parks, 3,000 year-old archeological history and nine
UNESCO world heritage sites are also a big attraction for tourists. Ethiopia has a significant
shortage of quality hotel rooms. There are only limited numbers of five star hotels, likely only 5.
This is set to change by other players seeking to enter the market.

Though, the country's has fertile national parks, 3,000 year-old archeological history and nine
UNESCO world heritage sites are also a big attraction for tourists. Ethiopia has a significant
shortage of quality hotel rooms. There are only limited numbers of five star hotels, likely only 5.
This is set to change by other players seeking to enter the market.

Due to this reason In mid 1990s, lack of hotel infrastructure in the city was a fact well exploited by
those who wanted to see the OAU relocated permanently to elsewhere in the continent. Until the
case was once and for all settled with the African Union Constitutive Act of article 24/1 which
declared “the headquarters’ of the Union shall be seated in Addis Abeba in the Federal Republic of
Ethiopia,” there had been at least four attempts to move the seat of the continental body out of
Addis Abeba, Ethiopia

Whilst the country had been busy experimenting with an array of political ideology from
feudalism to socialism to revolutionary democracy, chosen by successive governments since the
late 19th and early 20th century, the hotel industry throughout the country remained regrettably
muted. Even the onset of Sheraton Addis, the first hotel in the entire continent to join the luxury
collection, failed to inspire an immediate follow up.

Based on these premises and the boom tourists market in the country and additional Ethiopian Air
lines service that link Africa with the world leads to basic research on hotel sector of the country.
Finally a research has been done by a researcher of Awash International Bank team for market
projection demand for hotel nights will hit more than 1.3m in coming years. But the East African
nation, Ethiopia currently only has just three international hotel brands, namely Sheraton, Hilton
and Radisson Blu.

Dereje Asnake
Page 8
G
This is set to change following announcements at AHIF by other players seeking to enter the
market. Some of the new hotels, which are entering to these markets become increasing even if it
the rate of business in the sector is not satisfactory relative to the hotel market gap.

Ramada Addis, is one of the fourth international hotel brand to launch in “one of the most vibrant
and economically robust cities of Africa” will have an impact both on employment and investment.

At the mean time, Marriott International also plans to expand it’s hotel business into Ethiopia, as
well as grow its footprint in countries such as South Africa, Nigeria, Uganda, Ghana and Rwanda.
It recently acquired South Africa’s Protea Hotel Group. This first Hotel in Africa will give a multi
fold advantage over the other east African hotel business as well as African countries at large.

Sunshine Business plc, a company will open the “two five-star Marriott hotels with a total
expenditure of over US$100m”. The company is developing Courtyard by Marriott Addis Ababa
and the Marriott Executive Apartments Addis Ababa, which will be targeted at international
travelers and executive expats seeking luxurious apartment living with hotel services.

In addition to the above coming first classes hotel, both Best Western International and
InterContinental Hotels Group announced they will launch new properties in Ethiopia over the
coming two years.

“Addis Ababa is evolving at pace, with infrastructure such as the Bole International Airport now
serving almost 20m passengers a year,” “This being our first hotel in Ethiopia we will now have a
presence in 13 countries across Africa.”

This all business projection in the hotel industry indicate us Ethiopia's tourism sector is set for a
record year as number of visitors to the coffee producing East African nation increase buoyed by
increased number of high-end hotels built by Ethiopians in the Diaspora and improving
infrastructure.

According to Ministry of Culture and Tourism, the country generated more than $1.7 billion in the
first six months of its current fiscal year (2015/16). The country received 470,000 tourists during

Dereje Asnake
Page 9
G
the period, with each staying an average of 16 days. The visitor’s number was more than half of
the average 750,000 visitors it gets each year 12 percent higher than a decade ago.

According to Public Relations and International Affairs Director at the Ministry of Culture and
Tourism, Ethiopians living abroad have built more than 200 luxury hotels in the country making it
easier for the country to market itself as an up market tourist destination.

The Ethiopian government has for the past few years taken various steps to encourage Ethiopian
Diaspora community to play an active role in the development of their home country. The
country's fertile national parks, 3,000 year-old archeological history and nine UNESCO world
heritage sites are also a big attraction for tourists. The Ethiopian government now wants to triple
this number to more that 2.5 million each year by 2020, making tourism the leading sector in one
of Africa's fastest growing economies.

Tourism, which earned the country $2.9 billion in the 2014/15 fiscal year according to government
data, contributes about 4.5 percent of the country's GDP and generates about a million jobs
according to the World Bank. Ethiopia plans to boost revenue from the sector to over $3.5 billion
in the current fiscal year, which will be bigger than its more tourist established neighbors Kenya
and Tanzania.

Ethiopia's cultural wealth like its 13th century underground churches of Lalibela, hewn from solid
rock and the hill castles of Gondar are its big selling point. It's also grown more and more popular
for travelers as it's a safer and affordable destination.

The country has embarked on massive infrastructure spending that saw Africa's first light train
cutting though the sprawling city of Addis Ababa launched in last September. This has a
continuation construction of a train route from Djibuti to Addis or Dry port area Mojo, which is 20
km away from Deberezit, where our guest house is located. With the spirit of all these, growing
number Tourists, Big Conferences, international meetings and the favorable situation of the
infrastructure construction development in the country with annual GDP growth, which will
fueled the number of new construction hotels as part of the plan to make Ethiopia as one of the top
five tourist destination in Africa by 2020.

Dereje Asnake
Page 10
G
Despite an increase in the number of tourist arrivals, however, this strategic target “seems unlikely
to be achieved with the current rates of inbound tourist arrivals in the country,”

So, taking this demand and supply gap analysis and the country future opportunity with the new
boosting tourism business in the country the sector is still in of need additional investment in the
hotel sector.

Taking an opportunity of tourism and the study analysis carried out for this market situation and
other national opportunity our company take part an investment in the sector in order to be
benefited from local sporadic market conditions and be part of national development through
creating business opportunity to the professional, resource of foreign currency and tax payment
from the profit obtained from the service provided by the hotel. .

Dereje Asnake
Page 11
G
3 Project Background
Ethiopia is a political and commercial powerhouse of Africa and International organizations
including AU and UN. These days cities in the country including Addis Ababa, Regional cities and
nearby these cities thriving hotel market, both domestically as well as internationally. As a country
of distinct cultural and historical wealth it represents an important travel destination with a
balanced demand base in terms of corporate and leisure tourism. Basically, hoteliers in Ethiopia
and regional cities benefit from the very good market characteristics and hence reported
remarkable performance growth during the last decade

The hotel industry in Ethiopia is signified by a substantial gap between demand and supply. This
creates a big business opportunity for those planning to enter into the sector.
“The total number of international tourists arriving in Ethiopia is steadily increasing. As a gateway
to all international inbound, outbound and transit tourists/passengers, Addis Abeba has been taking
the lion’s share in the country’s tourist arrivals hosting an estimated 95-99% of the total
international tourist arrivals,” they said. Being a popular conference venue is also helping the city
attract more visitors each year. “Conference tourism has a great potential and is poised to gain
greater significance.”

While the conference tourism is in boom situation Ethiopia, cities specially Addis Ababa and
regional cities such as Awassa, Baherdar, Gonder and other surrounding nearby major cities have
not sufficient supply of hotels, guests houses and furnished living room for guests. According to
data obtained from World Hospitality Group, Ethiopia has only six internationally branded hotels
with just 990 rooms, a fact that is alarming news to the country that striving to make the country
main destination in Africa and hotel owners at large. “Most of the hotels that were built five or six
years ago didn’t have bedrooms more than sixty. There was uncertainty. It was only later that
investors began to dare in the amount and size of their investment.”

Dereje Asnake
Page 12
G
Though, Addis Ababa took the lion share in this sector, these opportunities in general are brining a
water fall or sprinkle down effect for regional and nearby addis Ababa cities down to the rift vally
and south of the country. The benficeries of south cities are: Awassa, Debrezit, Adama, Shasemene
and other small cities where the wild life are simply seen and visited.

Ethiopia overall growth and the continued progress in the tourism industry is forecast by the World
Travel & Tourism Council to be 4.8% per annum over the coming decade. Increasing the supply of
high-quality, top-end hotel accommodation through hotel construction is necessary for improved
competitiveness and the economic success of the sector.

The government vowed to reverse this unfortunate trend and help Ethiopia benefit from the
tourism sector. It was to reduce this dilemma that two organs, the Tourism Transformation
Counsel and the Ethiopian Tourism Organization were established. The former provides leadership
and set guidelines for the country’s tourism marketing initiatives while the later serves as a
secretariat for the former. The two new offices are tasked to transform the industry as the country
aims to earn around US$150 million in 2014/15 from the sector.

Take this big opportunity and have a benefit from all these big market situation our company is
constructed G+3 guest house living room in Beshoftu, which is only 30 minutes drive from Addis
Ababa to south of Ethiopia. The Beshoftu city is surrounded by more than five first class lodges,
which have all facilities including boat rent service for visitors and tourists who are board around.
These facilities are not even available except some swimming services in city big first class hotels.

Deraje Asnake hotel, considering this vast recreational facilities and the city location as an out let
for southern part of the country, where many business activities are pass through to Djibouti and
other public recreational zone are the opportunity for the intended investment.

Hence, this project is developing in order to get a market benefit from the fertile situation in
tourism sector in the country as well as to create an employment opportunity to women and youth
sector of the citzens

Dereje Asnake
Page 13
G
4 COMPANY DESCRIPTION

Offering a luxurious atmosphere, Deraje Asnake hotel will provide guests with a variety of reasons
to stay and enjoy the surroundings. Directed at the baby boomer generation and international
tourists, it will be an exclusive B&B for the travelers who do not want to be surrounded by young
adults or forced to stay in stuffy hotels. It is a privately owned sole-proprietorship and will
initially be run and managed by the owner.
As a new business venture in Addis Ababa it will conform to all city of Addis Ababa codes and
regulations, as well as any required by Mono County and the state Addis Ababa city. Below is a
thorough account of our services, Opportunities, competitive sales and marketing strategies
provided by Dereje Asnake hotel. .

4.4 PROJECT PROMOTER PROFILE SISTER COMPANIES

4.4.1 Promoter Profile

The promoter and owner of this project is working in different local investment sectors and stayed
in Ethiopian market for the last 10 years. The experience and owner investment is described as
follows.
The owner of the company has been working in different government and private companies for
the last 30 years. His work experience includes as Surveyor, project Supervisor & manager and as
Mayor of Addis Ababa Municipality.

Project description and Justification International standard tourist hotel is high class hotel (from
three to fivestar level) where services like bedroom, catering, meeting rooms, multipurpose
assembly hall, swimming pool, Spa (Hot Spring), gymnasium, sauna and massage, other sports
facilities like tennis or squash court, mingolf or badminton, bowling, table tennis and children

Dereje Asnake
Page 14
G
playground, night club with dancing to live music or discotheque or cabaret etc. A hotel is an
establishment that provides paid lodging on a short-term basis. Facilities provided may range from
a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a
dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat screen television and
en-suite bathrooms. Small, lower-priced hotels may offer only the most basic guest services and
facilities. Larger, higher-priced hotels may provide additional guest facilities such as a swimming
pool, business center (with computers, printers and other office equipment), childcare, conference
and event facilities, tennis or basketball courts, gymnasium, restaurants, day spa and social
function services. Hotel rooms are usually numbered (or named in some smaller hotels and B&Bs)
to allow guests to identify their room. Some boutique, high-end hotels have custom decorated
rooms. Some hotels offer meals as part of a room and board arrangement. In the United Kingdom,
a hotel is required by law to serve food and drinks to all guests within certain stated hours. In
Japan, capsule hotels provide a tiny room suitable only for sleeping and shared bathroom facilities.
I.2. Project Objective
The main objective of the project is aimed at to maximize the return on invested capital in the
form of profit for the promoter. However, its implementation will benefit the employee, the
consumer society and the government at different levels. In this respect the project is aimed to
promote the following objectives:
 To maximize the return on invested capital through modern Hotel services
 To raise the significance and importance of the sector and thereby raising its
contribution to the national economic development
 To give quality and standard hotel service
 Effectively use local inputs and strengthening the linkage between agriculture and other
sectors of the economy
 To provide gainful employment to a large segment of the population of the project area
and augment earning capacity at the grassroots level,
 Increase government revenue through the different forms of taxes, which in turn used
to facilitate social and economic development. In general, the project is believed to
have significant social and economic benefits that accrue to the society, the region and
the country beyond the financial returns to its owner

Dereje Asnake
Page 15
G
Mission
Mission of the particular project is to expand the standard star hotel system and to give quality
service.
 To prove to other people that struggle for a better life and economic independences can do
business and bring change and can make a difference if opportunities are given.
 To become financially liquid and guaranteed more than ever. Goal Objectives are the goals
toward which activities of the business are directed and one of the most important functions
the business owner must perform is setting objectives. This important aims of this sole
proprietorship business among others include the following highly interrelated general
goals with each other.
 To create employment opportunities for 125 permanent and 175 causal
 To achieve standard tourist hotel and give quality service.

4.3 Amenities include

 Executive rooms with King size beds and residential room.
 Complimentary personalized services.
 A common flat screen TV and pool table.
 Daily high tea sessions, and assortment of coffee blends.
 Daily breakfast and set dinners.
 Free wireless internet.
 Information on local activities, trails and neighboring attractions.
 Mini & luxurious film show hall for guests and nearby dwellers
 Medium size Meeting hall

5.1 The Building

The construction has been started in expansion before and construction is carried out accordingly.
Currently ,Dereje Asnake has planned to finalize the construction task in this year and inaugurated
the coming Ethiopia New Year.

Dereje Asnake
Page 16
G
The building has a total of 1000 square meter with having a potential area for expansion for further
development of the hotel building with additional facilities such as swimming pool and other
services for the customers.

The whole project site encompasses approximately 1000 square meters. The estimated net floor
space of 500. Square meters is spread over three floors above ground floors. The following
overview illustrates the elements foreseen within the framework of the project:

5.2 Main Entrance and Lobby

The main entrance established at the main road from the high way from surrounding addis ababa to
Addis Ababa city. The main road provides a highly exclusive access to the main city entrance with
having all facilities banking hall and to the lobby (see Diagram 11). The integration of a generous
lounge into the lobby will serve guests either arriving or departing but also visitors as a “meeting
point” of a special atmosphere due to the outstanding ceiling height and the imposing stairs which
lead to the restaurant in the mezzanine floor. Furthermore, the attractiveness of the ground floor is
enhanced by the integration of a state-of-the art best design of bar & café.
The ground floor contains the following different rooms internally & externally; the rooms are:

Internal Rooms are listed below

1 Rentable rooms for bank and other service provision

2 Restaurant
3 Kitchen
4 Reception

Externally

1 Verenad
2 Toliet

Dereje Asnake
Page 17
G
5.3 The Restaurant
In the mezzanine, a restaurant, a lounge and a bar will be integrated into the historic setting of
architecture of the building with grand interior design providing guests with a magnificent
atmosphere. The cozy medium size restaurant will offer the highest standards in terms of a
comprehensive, contemporary arrangement of food and beverages in combination with an
outstanding and unique service on a total of approximately 240.678 square meters, including the
bar with an integrated lounge area. A historic mezzanine floor plan is shown below.
Externally, this ground floor contain two parts verenda & toilet with having a total area of 51.1
square meter .

Fig 1.

5.4 First Floor Residential Bed rooms

The first floor of the building has a total area of 264 square meter surface with having total of 10
rooms on the floor with full facility 8 rooms for residential and 2 salon room irrespectively to give
full fledged service for the clients. The two rooms has wide area than the other 8 rooms on the
floor with its own salon for family stay or guest area, bed room, washing and balcony for having
fresh and over view the other side of the hotel. The rest 8 rooms are planned to occupy an
impressive view for the customer with a well built with b well-designed balcony and other private
provision facilities for private reason.

The floor contains the following rooms in the floor.

1 Private bed rooms

Bed room
Shower
Balcony
Built cupboard

2 Salon rooms

Salon
Bed room
Balcony

Dereje Asnake
Page 18
G
 Bath Room
Kitchen
Built cupboard

5.5 Second Floor Residential Bed rooms

The second floor of the building has the same set up as first floor design and has a total area of
264 square meter surface with having total of 10 rooms on the floor with full facility 8 rooms for
residential, and 2 salon room irrespectively to give full fledged service for the clients. The two
rooms has wide area than the other 8 rooms on the floor with its own salon for family stay or
guest area, bed room, washing and balcony for having fresh and over view the other side of the
hotel. The rest 8 rooms are planned to occupy an impressive view for the customer with a well
built with b well-designed balcon and other private provision facilities for private reason.
The floor contains the following rooms in the floor.

1 Private bed rooms

Bed room
Shower
Balcony
Built in cupboard

2 Salon rooms

Salon
Bed room
Balcony
Bath Room
Kitchen
Built cupboard

Dereje Asnake
Page 19
G
5.6 Roof Conference, Meeting Film show area
In addition to previously mentioned gourmet facilities, the hotel will integrate a splendid roof top
bar on the attic floor of the building, providing a magnificent view of the new growing city.
The conference and banqueting facilities are planned to be located, which has an exceptionally
high ceiling, hence providing space as well as unique atmosphere for glamorous and grand events
and festivities (See Diagram 12). Moreover, parts of the meeting hall is also designed and will
provide a variety of smaller conference and banqueting rooms in order to assure private and
exclusive
Accommodation for medium, but also small, meetings.
The majority of the conference and banqueting rooms will possess balconies providing attractive
views onto city. Furthermore, this meeting room is designed to serve not only for meeting purpose
but also for film shoe reason for guests and nearby dwellers will be featured with a generous pre-
function area with the assembly hall has a capacity of 218 people for meeting and film show. The
rooms on this floor are:

1 Assembly hall
2 Cafeteria
3 Lobby bar
4 Rest room
5 balcony

5.7 Executive Rooms

From the first floor and second floor, the hotel will be equipped with 4 special guest rooms and
suites, all featuring the highest international luxury standards in terms of size, layout, furnishings
and equipment. Approximately 75 per cent of the total amount of guest rooms will be designed as
superior double rooms with an average size of approximately 26 square meters. Apart from that,
these 130 superior double rooms are planned to be distributed over the floors one to three
providing interiors of the highest international luxury standards in terms of size, layout, furnishings
and equipment.

Dereje Asnake
Page 20
G
Furthermore, the remaining 25 per cent of all guest rooms will be designed as suites. In order to
attract the very high-end clientele, these 43 suites will be of classic and timeless design in
accordance with the historic features of the building. Depending on type and size, the suites will
feature spacious living and dining areas, one to three bedrooms, state-of-the-art bathrooms
equipped with wellness and spa facilities as well as splendid balconies. Furthermore, the terraces
of the presidential suites will be equipped with outdoor whirlpools and lounges.

5.8 Spa & Wellness Area

Plans to include in coming one year time in the place allotted for the expansion. In future exclusive
spa and wellness area offering all types of treatments, therapies and further amenities as well as
recreation facilities such as sauna and herbal steam bath. The generous spa and wellness area is
planned to be spread across the entire so terrain floor on approximately 1,850 square meters. An
indoor pool and a whirlpool will be integrated on the same floor, but separated by a reasonable
distance from the “Health club”. This area will cover approximately 700 square meters. In
addition, an exercise room including a gym will be attached, which will occupy some 570 square
meters.

5.9 Car Parking Facilities

In order to guarantee advanced service for the luxury seeking guest, a drop-off zone will be
integrated in the generous drive-up zone in front of the hotel entrance. Car parking possibilities
will be provided in the neighboring public garage occupying approximately all room rented clients
parking spaces. This garage will be directly connected to the property via a throughway on the
underground floor.

5.10 Hotel Area Programming

The following table summarizes the general outline of rooms and suites with the percentage of the
total number of rooms, the square meters of each room and suite as well as the total square meter
number of all rooms and suites. In total the hotel will occupy 173 keys including 130 rooms and a

Dereje Asnake
Page 21
G
total of 43 suites. The foundations for this layout are recommendations and guidelines introduced
by the hotel owner and the responsible architect.

No No of Rooms % covered Sq. meter Total

1 Ground floor & restaurant
2 8 residential room
3 4 executive rooms
4 Meeting & Cinema hall (Top)

6 Location Analysis
6.1 Physical Setting

6.1.1. Location & Physical description

Addis Ababa was founded in 1886 as a capital city of Ethiopia. It is located almost at the center of the
country within an altitude of about 2,400 meters above sea level. The City has an estimated population
of about 4.5 million people. Addis Ababa contains 22.9% of all urban dwellers in Ethiopia, with an estimated
area of 530.14 Square Kilometers (204.69mi). The current urban growth rate in Ethiopia is estimated at
4.1%; however, others have estimated an annual growth rate as high as 8% for the city of Addis Ababa.
Therefore, it is the largest and the most populated city in Ethiopia. The city is divided into 10 sub-cities
which are run by the City Administration.

Furthermore, Addis Ababa City is the seat of the United Nations Economic Commission for Africa
(UNECA) and the African Union (AU), what makes call Addis Ababa as the capital of Africa

Various investments undertaken have been attracted to the area to utilize the available demand potential
for services, which is because of the existence of vast end users. Availability of physical and social
infrastructure facilities such as; access of main asphalt road, telephone service and others, make the project
effective.

Based on the above facts, the following points taken by the owner as a project justification behind
selection of this project area:

Dereje Asnake
Page 22
G
the proposed project of hotel will planned to be located in Addis Ababa Bole sub city woreda 11
Town. Addis Ababa is the capital and largest city of Ethiopia. It is the seat of the Ethiopian federal
government. According to the 2007 population census, the city has a total population of 2,739,551
inhabitants. The total land size the promoter requesting for the implementation of the project is
estimated at 974 square meters, which will been obtained from investment commission of Addis
Ababa city administration Hence the owners select Addis Ababa for proposed project by looking
every aspects of business integrity tourist area. As a chartered city (ras gez astedader), Addis
Ababa has the status of both a city and a state. It is where the African Union is and its predecessor
the OAU was based. It also hosts the headquarters of the United Nations Economic Commission
for Africa (ECA) and numerous other continental and international organizations. Addis Ababa is
therefore often referred to as "the political capital of Africa" for its historical, diplomatic and
political significance for the continent

Climate:

Addis Ababa has a subtropical highland climate. The city has a complex mix of highland climate
zones, with temperature differences of up to 10 °C (18 °F), depending on elevation and prevailing
wind patterns. The high elevation moderates temperatures year-round, and the city's position near
the equator means that temperatures are very constant from month to month. As such the climate
would be maritime if its elevation was not taken into account, as no month is above 22 °C (72 °F)
in mean temperatures.

Geography:

Addis Ababa lies at an elevation of 2,200 metres (7,200 ft) and is a grassland biome, located at
9°1′48″N 38°44′24″ECoordinates: 9°1′48″N 38°44′24″E. [14] The city lies at the foot of Mount
Entoto and forms part of the watershed for the Awash. From its lowest point, around Bole
InternationaAirport, at 2,326 metres (7,631 ft) above sea level in the southern periphery, the city
rises to over 3,000 metres (9,800 ft) in the Entoto Mountains to the north 3.3.3. Demographics: As
of the latest 2007 population census conducted by the Ethiopian national statistics authorities,
Addis Ababa has a total population of 2,739,551 urban and rural inhabitants. For the capital city

Dereje Asnake
Page 23
G
662,728 households were counted living in 628,984 housing units, which results in an average of
5.3 persons to a household. Although all Ethiopian ethnic groups are represented in Addis Ababa
because it is the capital of the country, the largest groups include all nation nationality 3.3.4.
Infrastructure and economic status Economy:

The economic activities in Addis Ababa are diverse. According to official statistics from the
federal government, some 119,197 people in the city are engaged in trade and commerce; 113,977
in manufacturing and industry; 80,391 Homemakers of different variety; 71,186 in civil
administration; 50,538 in transport and communication; 42,514 in education, health and social
services; 32,685 in hotel and catering services; and 16,602 in agriculture. In addition to the
residents of rural parts of Addis Ababa, the city dwellers also participate in animal husbandry and
cultivation of gardens. 677 hectares (1,670 acres) of land is irrigated annually, on which 129,880
quintals of vegetables are cultivated.[citation needed] It is a relatively clean and safe city, with the
most common crimes being pickpocketing, scams and minor burglary.[37] The city has recently
been in a construction boom with tall buildings rising in many places. Various luxury services
have also become available and the construction of shopping malls has recently increased.
According to Tia Goldenberg of IOL, area spa professionals said that some people have labeled the
city, "the spa capital of Africa."[38]

Tourism: Tourism is a growing industry within Addis Ababa and Ethiopia as a whole. The
country has seen a 10% increase in tourism over the last decade, subsequently bringing an influx of
tourists to Addis Ababa. In 2015, the European Council on Tourism and Trade named Ethiopia the
#1 tourist spot in the world

Development: The city hosts the We Are the Future center, a child care center that provides
children with a higher standard of living. The center is managed under the direction of the mayor's
office, and the international NGO Glocal Forum serves as the fundraiser and program planner and
coordinator for the WAF child center in each city. Each WAF city is linked to several peer cities
and public and private partners to create a unique international coalition. Launched in 2004, the
program is the result of a strategic partnership between the Glocal Forum, the Quincy Jones Listen

Dereje Asnake
Page 24
G
Up Foundation and Mr. Hani Masri, with the support of the World Bank, UN agencies and major
companie

Education: Addis Ababa University was founded in 1950 and was originally named "University
College of Addis Ababa", then renamed in 1962 for the former Ethiopian emperor Haile Selassie I
who had donated his Genete Leul Palace to be the university's main campus in the previous year. It
is the home of the Institute of Ethiopian Studies and the Ethnological Museum. The city also has
numerous public universities and private colleges including Addis Ababa Science and Technology
University, Ethiopian Civil Service University, Admas University College, St. Mary's University,
Unity University, Kotebe Metropolitan University and Rift Valley University. Transport: Public
transport is through public buses from Anbessa City Bus Service Enterprise, Light Rail or blue and
white taxis. The taxis are usually minibuses that can seat at most twelve people. Two people are
responsible for each taxi, the driver and a weyala who collects fares and calls out the taxi's
destination.

Transport: Public transport is through public buses from Anbessa City Bus Service Enterprise,
Light Rail or blue and white taxis. The taxis are usually minibuses that can seat at most twelve
people. Two people are responsible for each taxi, the driver and a weyala who collects fares and
calls out the taxi's destination.

Road: The construction of the Addis Ababa Ring Road was initiated in 1998 to implement the
city master plan and enhance peripheral development. The Ring Road was divided into three major
phases that connect all the five main gates in and out of Addis Ababa with all other regions
(Jimma, Debre Zeit, Dessie, Gojjam and Ambo). For this project, China Road and Bridge
Corporation (CRBC) was the partner of Addis Ababa City Roads Authority (AACRA). The Ring
Road has greatly helped to decongest and alleviate city traffic

Dereje Asnake
Page 25
G
7. SWOT Analysis

7.1 Strengths

 One of a kind Bed and Breakfast

 Intimate feeling with low number of rooms
 Directed at older generation so they do not have to deal with kids and young adults
 Provides amenities comparable to competitors at affordable price (Dinner and breakfast)
 Luxury atmosphere

7.2 Strengths
 Reputation as a city of historical importance
 Great variety of culture & arts
 Visionary and first to none market product, instant beer provision
 Great number of events & entertainment
 Perfect infrastructure & high density of restaurants, bars & cafés,
 Shopping facilities in the luxury segment
 Member of UNESCO World Heritage List
 Favorable economic development Clean & safe
 City of highest quality life
 Easily accessible (public transport, motorways, airport)
 Numerous possibilities for excursions in the surrounding area
 Important centre of research and science

7.3 Weaknesses
 With only little no rooms, it will be difficult to satisfy the market.
 Already numerous lodging accommodations in Addis Ababa and surrounding areas.
 New venture could have disadvantages
 Typical age group is young adults.

Dereje Asnake
Page 26
G
7.4 Opportunities
 Increase in services in the future
 Expand property to add on more rooms
 Two peak seasons and short off seasons will allow for constant occupancy
 Visitor number to area is appealing & increasing
 Guests have ability to mingle with other guests and meet new people.
 Increase of international flight
 Greater number of visitors and delegates for meeting from regional cities & abroad

7.5 Threats
 Competitor hotels
 Already established hotels can offer more facility
 Financial backing may prove difficult in beginning.
 May be difficult to gain market share in the beginning with competitive pricing

8. MARKET STUDY
8.1 General Market View

Ethiopia’s Growth and Transformation Plan (GTP II), a second five year grand plan, the Ministry
of Culture and Tourism has a vision to make Ethiopia one of the top five tourist destinations by
2020. Despite an increase in the number of tourist arrivals, however, this strategic target “seems
unlikely to be achieved with the current rates of inbound tourist arrivals in the country,” say Ebisa
and Andualem.

A report released in June 2014 by Fast Market Research, a distributor of market research and
business information, states that the number of domestic trips within Ethiopia has reached 8.1
million people while international trips were merely more than 660 000 with the main source
countries being China, the US, Nigeria and Sudan. The number showed a 12% increase from the

Dereje Asnake
Page 27
G
previous year. For a country which has its own fair share of historical, cultural and natural
attractions in the continent, and is one of the safest destinations, this is not a performance to pride
with.
Third only to Brussels (185) and Washington DC (176), Addis Abeba is home to 118 diplomatic
missions accredited to both the government in Ethiopia, the AU and the UN¬ECA, which adds to
the increasing trend in the number of conventions held year in, year out.

One familiar month when Addis Ababa becomes crowded with diplomats, lobbyists, journalists,
and aid workers is the month of January, when the AU hosts its bi-annual summit for heads of state
and government. The 86 hotels, according to Ministry of Culture and Tourism, and 118 B & B
Inns, and 18 specialty lodgings, according to Trip Advisors, become utterly short of the demands,
forcing conference participants to book at expensive lodges and resorts outside of the city.
Although the January AU summit is the landmark of huge gathering in the city, Addis Abeba is
never short of other small and medium range regional and international conferences. “This
unfortunate gap of demand and supply often leads to not only unethical exploitations by hotels of
desperate customers, but also the provision of substandard service which forces many customers to
think twice before boarding a flight bound for Addis Ababa,” said Elias. and the quest for
professionalism
According to unofficial estimates from the AHA, approximately one hotel joins the market every
month and that number may rise up to 1.5 hotels a month in the coming few years. Thanks to both
local and international architects commissioned by developers, a number of dazzling buildings are
giving the city a new look. However, there are cases in which the scene behind the glamour is not
so attractive.
“It is not the building that makes a hotel a hotel. It is the flawless combination of the right people,
the right prices and the right technology providing an Projection of Tourist Arrival (projected and
unsatisfactory demand) unforgettable service,” says Elias.

No Year Projected Tourist Room night Demand Gap

Arrival Demand

1 2015 758,039 3,032,156 1,253,876

Dereje Asnake
Page 28
G
2 2016 831,569 3,326,276 1,547,996

3 2017 912,231 3,648,924 1,870,644

4 2018 1,000,718 4,002,872 2,024,592

5 2019 1,097,787 4,391,148 2,612,8682

6 2020 1,204,273 4,817,092 3,038,812

Source: Ebsa & Andualem

8.2 MARKET SEGMENTATION

Using typical markets data from city we can observe the visitor trends during the in different
periods. Looking at this data, we can analyze the number of visitors from Addis Ababa & Other
nearby cities, first timers, and repeat visitors; as well as, the number of visitors that use the internet
to book trips, weather information, or learn about the area.
Finally, we can analyze the average amount of spending each household incurs during their visit
and what their spending on. This information will help in evaluating the market and what
customers are willing to pay for which will help us in determining fair prices and services. Key
points are looked at here, while the full data can be viewed in Exhibit 5.

8.3 MARKET STRATEGY

The market strategy for the Dereje Asnake is essential in getting the name out to the public and
creating demand. In order to do this, the initial advertising budget is large in hopes to oblige
travelers to take notices of the bed and breakfast. The promoter’s will therefore position itself
among comprehension travel sites such as Expedia, Travelocity, Priceline, Kayak, etc. In
registering the business in the city, it will also apply to be recognized on city and county websites
so that travelers who do not know exactly where they want to go will be able to find us. Magazines
aimed at the target market will also be utilized such as Addis Ababa Hotel Directory, Addis Ababa
Tourism Directory, Ethiopia Tourism Directory and using many similar private and public
promotional Medias, weekly journal and broachers.

Dereje Asnake
Page 29
G
Once guests have made reservations or have stayed at the Manor, a quarterly newsletter will be
sent to each guest as a way to let customers know what is going on, new specials, and continually
keep them informed and aware of the Manor. Looking at typical general spending, we can select
rates that are all inclusive and guests are likely to pay for throughout the year. Finally, it will be
important to establish deals with the mountains, golf course, and local attractions in order to be
able to create packages.
As travelers become more „thrifty‟ this will help to create opportunities for those who may not
want to pay for everything on a solitary basis.
The baby boomer generation encompasses the greatest number of travelers that can share their
experience with friends and family. Their referrals will also bring in more guests giving us the
opportunity to give repeat visitors discounts for referring friends and family.

8.4 Market & Guest Matrix

8.1.1 Promotion
 Personal website
 Travel Sites
 Establishing link or Partnership with Big hotels in Addis Ababa and other area
 Public Media
 Producing booklet & Publication

8.1.2 Product
 Modern, clean rooms
 competitive prices
 New and full fledged service provision style
 Breakfast
 Amenities

Dereje Asnake
Page 30
G
8.1.3 Place
 Right of Main St.
 Walking distance to shopping center

8.1.4 Price
 Reasonable & fair
 Negotiable market conditioned

8.1.5 Guest Matrix

The following guest matrix shows the assessment of the suitability of the project site for different types of
hotels, related to guest segmentation.

Guest segment

Purpose of

Business Business traveler

Fair/congress attendees
Conference/seminar attendees
Long distance drivers

Leisure Individual tourists

Group tourists Weddings

Miscellaneous Long-stay guests

Potential B&B guests travel for many reasons: business, change of scenery, recr
eation activities, sports, cultural events, or a chance to see new communities or
sites.
The strongest market segment in many Bishoftu communities is the business tr
aveler.This segment includes construction workers, education professionals, gov

Dereje Asnake
Page 31
G
ernment agencies, service workers, and geological and social surveyors. Althoug
h Natives traveling for council meetingss, training, and cultural events stay with
local friends and relatives, they could be an additional market.

8.5 Promotion and Advertising

A B&B operator on a limited budget must think creatively about how to get the word out. Marketing is not
about spending money on fancy brochures, but figuring out how to convince a guest to stay at your B&B. S
ome strategies include:
 Flyers
 Internet
 Trade shows
 Newspaper ads
 Direct mail to targets
 Yellow pages
 Press releases
 E-newsletter
 Referral program

8.6 CHALLENGE/OPPORTUNITY
The challenges promoter’s faces are numerous but can be offset with opportunities that will give it
a competitive advantage over existing accommodations in the area.
As the Dereje Asnake is a new establishment, it will be difficult to gain recognition in the first
year; however being directed at the older generation of tourists, it will be designed to take into
consideration their wants and needs and provide exceptional quality service.
While this generation is the core target market, recent environmental trends may limit the initial
number of guests. However, research shows that this is the greatest traveling market in history,
even though many baby boomers may face economic struggles making leisure vacation a luxury.

Dereje Asnake
Page 32
G
In order to fight this trend, directing the Manor at the largest traveling market will make it easier to
draw in those guests that can afford to vacation. Low prices will also provide incentives for them
to enjoy a getaway.

Competitors in the area are numerous and it is therefore essential that the Dereje Asnake stand Out
with reasonable affordable price and special kind of package for our customer, which makes our
service provision became something different from other hotels and guest houses. Marketing
through similar lines will allow the bar & restaurant to get its name next to the already
established lodging. There are numerous competitors in the market, targeting this niche of the
market is intended to limit opposition from other opponents.

As Addis Ababa, seems to be a very seasonal destination, it will be imperative that the Promoter’s
capitalize during these months in order to make it through the slow months. Because the Manor
only offers five rooms, it is more than likely that full occupancy will not be a problem during these
seasons. Offering additional promotions and specials during the off season will entice visitors as
well.

Another Major Challenges of the Hospitality Industry in Ethiopia, “ is finding the right people to
the industry. Like many other sectors in the country, the hotel industry is a sector suffering from a
lack of professionalism. This identified by professionals and reported that a human resource
management and worker turnover as major problems. “An excellent hospitality business cannot be
excellent in its operation and service without professional employees in the field. What is observed
[so far] in the hospitality industry is employment based on kinship, ethnicity or religion; paying
very low wages and salaries,” to overcome such problem in Our hotel we had planned in advance
to train our own staff in renown hotel training center followed by on job training in our locality
hotels. .

Dereje Asnake
Page 33
G
8.7 SHORT AND LONG TERM PROJECTIONS

8.7.1 Short Term

Major short term goals for the Dereje asnake include establishing a presence in the area, gaining
market share of tourists, and beginning to earn a profit.
Gaining recognition in the area will take some time, however it is imperative that we use this time
to our advantage by advertising everywhere available and building anticipation for prospective
guests. With a strong marketing campaign we will be able to reach target markets and establish a
presence. This goal will be met when we begin to occupy the rooms and receive feedback from
guests. An increase in occupancy rates will demonstrate our successful
Establishment.

To gain presence, we must secure some of the market. In order to do this, we will come out with a
marketing campaign that will focus on the younger generation who mostly spent leisure time in
nearby cities and other many recreational area in the Addis Ababa cities of the countries as part of
a place dedicated to them.
Looking at the target markets in the next section, we can concentrate our attention on country
tourists and first time visitors. By gaining market share and a constant flow of visitors, we will be
able to reach our final goal of earning a profit.
Though, The first year seems be the bit difficult till the marketing and promotion activities are
done, but due to the nearness of the location to the main city Addis Ababa, availability of number
of resorts’ which have cost around our location, the pass by travelers to the southern cities of the
country and most recreation area of the country such as and many other recreational centers favors
our market niche to be stable and makes our products demandable. Asanke it will be the most
costly and revenues appear to challenge the stability during the off seasons. The financial plan
shown previously shows that

It is not the building that makes a hotel a hotel. It is the flawless combination of the right people,
the right prices and the right technology providing an unforgettable service will bring our profits
will be achievable. Taking all these challenging and opportunities, however we expect to see some

Dereje Asnake
Page 34
G
profit within the first and consecutive working years at our estimated occupancy rates. This profit
can then be used for further investments into long term projections.

8.7.2 Long Term

Long term projections allow Dereje Asnake to develop a foundation that gives the establishment a
history, clientele who will refer their experience to friends, creating a profitable bed and breakfast
that will have the opportunity for expansion.
Creating a history for the bed and breakfast allows Dereje Asnake to form memories that guests
will enjoy. The atmosphere and the guest services can then be recreated so that returning visitors
know what to expect.
Amenities and extras will give the bed and breakfast a reputation of quality service that will entice
visitors and repeat guests. Being a new, establishment, we can adapt to what customers are
looking for and continue to make that a part of who we are.
Referrals are one of the best marketing techniques because it allows guests to convey their
experience towards friends and family, who will also like to stay at our B&B. As our B&B is
directed at the young generation and tourists for short period, we will rely somewhat on initial
referrals as this demographic is the greatest traveling. We feel that this generation will continue to
grow economically from the country GDP indication as more people continue to enter to the
market, providing us with a greater market long term; whether it be leisure travelers, or by pass
individuals and winter time vacation clients. .

Generating greater occupancy rates will lead us to our next projection which would be to make the
B&B and profitable business. After paying off the commercial loan, we will be able to direct
funds to paying down the mortgage at a quicker rate and using revenues to invest back into the
B&B. Starting with 5 bedrooms, we hope to expand in the future. This will allow for an increase
In property value and revenues with nothing more than renovating the property or building a new
structure, inside the hotel premises.

Dereje Asnake
Page 35
G
Further, at the back side of the hotel there is an area with total of 1000 Sq meter free space for
expansion. In coming three or less years depending the market condition we had a plan to construct
Ground 2 + 5 building for three or more star standard hotel.
The hotel will have enough parking area for the cars and swimming Olympic standard pool
between the corridors of two blocks.
In addition the hotel has started leasing process for some additional areas around the hotel for
additional land requirement.

9. Required Equipment & Utilities

As it is defined in the literature and business description Dereje hotel is built to give Bed and
Breakfast service for the customers in Dereje Asnake city. Since the hotel is start business to
provide all demand based facilities the following items are required to full fill the hotel status. The
equipment and other elements are listed as follows.

Table 2 Equipments

The following listed equipments are mainly required for the hotel service provision. These are:

 • Ventilation system
 • Prep and steam table
 • Heat lamp
 • Utensil rack
 • Roll warmer
 • Fryer
 • Griddle top range with an oven
 • Refrigerator/freezer
 • Dishwasher
 • Three-compartment sink
 • Microwave oven
 • Dry storage shelving
 • Coffee-making equipment

Dereje Asnake
Page 36
G
  • Garbage disposal
 • Sink-sprayer unit
 • Toaster
 • Other kitchen appliances as needed

10 MANPOWER REQUIREMENT

Dereje Asnake Hotel is mainly planned to take the management and supervision by the owner and
Major share holder of the company and sister company, Dereje Asnake Construction enterprise.
Additional selected board members from outside partners and in house employee’s representatives
will be delegated in board committee. Routine Dereje Asnak activities and related tasks are
managed by recruited Top management & Line managers.

The hotel has four sections and sub section under the supervision of general manager of the hotel.
The sections are divided as follows;

1. Reception
1.1. House keeping

1.2. Laundry

1.3. Cinema & meeting Hall

2. Food & Beverages

2.1. Bar

2.2. Restaurant

2.3. Store keeper

3. General Service

Dereje Asnake
Page 37
G
 3.1. Transport

3.2. Guard & janitors

The company Organogram is shown below;

e
General Manager

Receptions Food & Beverages General Service

6. Financial study
6.1.Project capital and sources of finances
The project capital estimations are done based on procurements, building and civil works, and routine
operating expenses. The fixed costs are estimated from machineries and equipment procurement and
buildings and civil works and variable costs (working capitals) are estimated from routine day to day
activities of the project. Both costs are estimated in the following sub-sections.
6.1.1. Fixed costs
As mentioned above, fixed capital is estimated from machineries and equipment procurements and
building and civil works and hence estimated in the following tables.
Machinery and equipment of the project
The major costs for star designated hotel are purchase of world class utensils, equipment and
furniture. These are estimated in the following table.
 The first and major expenses of the investor will be construction of esthetically attractive world
class 4 story building. In fact this will be given to contractor and experienced consulting firm

Dereje Asnake
Page 38
G
 having rich experiences and exposure in the area. These costs are estimated in the next table
below.
Table5: Estimated costs of Utensils, Equipment and furniture for
Unit cost
No Particulars Unit Qty Total cost (Br.)
(Br.)
I Equipment and Machines
1 Boiler Pcs 1 250,000 250,000.00
2 Assorted Kitchen utensils and - -
equipment 1,500,000.00
3 Beds and bed clothes Psc 100 40,000 4,000,000.00
4 Bar and restaurant furniture - - 600,000 600,000.00
5 Bed room chairs (2 in each) Pcs - 1,750 350,000.00
6 Bed room tables “ - 2,250 225,000.00
7 Lobby equipment “ - 375,000.00
8 Bathing room, Jacuzzi and psc -
swimming pool equipment 750,000.00
9 Sauna, steam bathing equipment 400,000.00
10 Massaging equipment 375,000.00
11 First aid equipment 250,000.00
12 Mini Refrigerator " 100 2,500 250,000.00
13 Communication apparatus " 100 1,250 125,000.00
14 Other related expenses “ - 500,000.00
15 Security equipment " 1,000,000.00
Sub. Total “ 10,950,000.00
II Vehicles and related machines
1 Van carrier pcs 2 375,000 750,000.00
2 Service midi bus for guests " 2 600,000 1,200,000.00
3 Service mini bus for workers " 1 600,000 600,000.00
4 Trolleys and Carts for luggage "
moving - 250,000.00
5 Generator (>200hp) " 1 250,000 250,000.00
6 Water pump(>120hp) " 1 125,000 125,000.00
7 Laundry machine set 1 250,000 250,000.00
8 Beauty salon equipment " 250,000 250,000.00
Sub Total 3,675,000.00
III Computers and Office furniture “ - 225,000.00
Sub Total 225,000.00
Total 14,850,000.00
Table6: Building and Civil works for Hotel

Dereje Asnake
Page 39
G
 No Particulars Unit Size Unit cost Estimated
required (Br.) total cost (Br.)

1 Main Hotel G+4 building 2,500 4,000 50,000,000

M2
2 Parking, Loading/ unloading 3,000 1,500 4,500,000
“
area
3 Cozy conference hall 1,000 3,000 3,000,000
“
4 Storage 300 1,200 360,000
“
5 Other accessory buildings 1,700 1,500 2,550,000
“
6 Generator room 50 500 25,000
“
7 Incinerator 80 2,000 160,000
“
8 Area to be taken by fence 100 350 35,000
“
9 Guard/Janitor room 70 900 63,000
“
10Green area development 4,000 400 1,600,000
“
11Deep well drilling 1 35,000 35,000
“
12Purchase of water tanks 6 100,000 600,000
“
13Intra-road construction 1 800,000 640,000
km
14Power/ water installation 1 350,000 350,000
Ls
Total 63,918,000

Deprivation For Fixed Asset

The wears and tears of capital assets are calculated as depreciation of capital assets and are included in
the expenses of the project as follows;
Table7: Depreciation of Capital Asset for Hotel
Rate of
values of Capital Amount of Depreciation
No Capital Assets depreciation
assets (Br.) estimated (Br.)
(%)
Buildings
1 and Civil works 63,918,000 5 8,195,900

Dereje Asnake
Page 40
G
 Utensils, Equipment and 21,900,000 4,380,000
2 20
machines
7,350,000 1,470,000
Vehicles
3 and others 20
Computer and office 450,000 90,000
4 20
equipment
93,618,000 14,135,900
Total

Deportation

Repair and maintenances are very important scheme for prolonging the lives of capital assets. It is
commonly calculated and the planned budget is maintained in the business entity. Hence the repair
and maintenance of the project’s capital assets are calculated as follows.

Table8: Repair and Maintenance for Hotel

Rate of Repair
Amount of
values of Capital and
No Capital Assets estimated R&M
assets (Br.) Maintenance
(Br.)
(%)
63,918,000 8,195,900
Buildings and Civil works 5
Utensils, Equipment and 21,900,000 1,095,000
5
machines
7,350,000 367,500
Vehicles and others 5
Computer and office 450,000 45,000
10
equipment
93,618,000 9,703,400
Total

Basic assumptions
 300 effective working days in a year and 24 effective working hours in a day are taken,
 11% of annual bank interest is assumed
 Bedroom classification
 Deluxe/Suit/--------------------------30 rooms

Dereje Asnake
Page 41
G
  Standard------------------------------40 rooms
 Economy------------------------------30 rooms
 Bedrooms will be rented for 300days per year
 Assumed service prices:
 Deluxe/Suit/ bedrooms per day---------------------------------Br. 2500
 Standard bedroom per day---------------------------------------Br,1800
 Economy bedroom per day---------------------------------------- -Br. 1400
 Average selling price of alcoholic beverages per liter---------- -Br.2500
 Average selling price of none alcoholic beverages per liter-- -Br. 80
 Average selling price of hot beverages per unit----------------- --Br. 30
 Average selling price of foods per dish--------------------------- --Br. 150
 Meeting hall rental per meeting----------------------------------- --Br 3000
 Weeding service per weeding------------------------------------- --Br. 3500

Table9: Input expenses for Hotel

N Descriptions Unit QTY Average Unit Total Cost
o cost (Br.) (Br.)
1 Alcoholic beverages Lit 1200 1500 1,800,000
(Whisky, brandy, Jin and other
drinks)
2 None alcoholic beverages “ 5000 20 100,0000
(water, soft drinks, juices etc)
3 Ingredients for Hot beverages Cups 30000 12 360,000
(Milk, coffee, tea, etc)
4 Ingredients for Foods Dish 60000 60 3,600,000
(Cultural, fast, and assorted)
5 Sanitary materials Ls 80,000
(Soaps, Shampoos, conditioners etc)
6 Others 80,000
Total 6,920,000

Other overhead costs estimations

1. Land lease @ Br. 600/m2 (10,000m2)-----------------------= Br.6,000,000/year
2. Property insurance (2% of fixed capital) ------------------ = Br. 1,872,360/year
3. Utilities (water +power +phone) --------------------------- = Br. 80,000/year
4. Stationery and postage --------------------------------------- = Br. 5,000/year
5. Audit and license fee ----------------------------------------- = Br. 15,000/year

Dereje Asnake
Page 42
G
6. Uniform working clothes ------------------------------------ = Br. 30,000/year
7. Fuel, lubricants and oils--------------------------------------- = Br. 60,000/year
8. Pension pay (9% of basic salary)----------------------------=Br. 99,360/year
9. Miscellaneous expenses--------------------------------------=Br. 20,000/year

2.1.1. Operating cost

Operating costs are recurrent costs occurring every time and are calculated as follow;
Table10: Project operating costs for Hotel
Years of Operations
Cost Component I II III-XI
 Input expenses 3,460,000 5,190,000 6,920,000

 Salary and wages 552,000 828,000 1,104,000

 Property insurance 936,180 1,404,270 1,872,360

 Repair and maintenance 4,851,700 7,277,550 9,703,400
 Utilities 40,000 60,000 80,000
 Stationery and postage 2,500 3,750 5,000
 Audit and license 7,500 11,250 15,000
 Uniform working clothes 15,000 22,500 30,000
 Expenses on fuel and lubricant 30,000 45,000 60,000
 Pension pay 49,680 74,520 99,360
 Miscellaneous 10,000 15,000 20,000
Total 9,954,560 14,931,840 19,909,120

Dereje Asnake
Page 43
G
 6.3.Working Capital determination
In calculation of most project working capital, it is customary to consider the first year operating costs.
Hence, these costs (capital) are determined in the following table.
Table11: Working Capital Determination for Hotel
Required minimum
Cost Component coverage time (month) Required amount
of WC (Br.)
 Input expenses 1 288,333

 Salary and wages 1 46,000

 Property insurance 6 468,090

 Repair and maintenance 6 2,425,850

 Utilities 1 3,333

 Stationery and postage 1 208

 Audit and license 12 7,500

 Uniform working clothes 6 7,500

 Expenses on fuel and 1 2,500

lubricant
 Pension pay 1 4,140

Dereje Asnake
Page 44
G
  Miscellaneous 1 833

Total 3,254,287

Table12: Project Cost Summary for Hotel

Cost Category Total Investment
Description LC (Br.) FC (Br.) Cost (Br.)
63,918,000 0 63,918,000
Buildings and Civil works

Utensils, Equipment and machines 900,000 21,000,000 21,900,000

Vehicles and others 0 7,350,00 7,350,000

Computer and office equipment 450,000 0 450,000

6,000,000 0 6,000,000
 Pre operating cost 50,000 0 50,000
Total Fixed Costs 71,318,000 21,007,350 99,668,000

Initial working cost 1,952,572 1,301,715 3,254,287

Total investment capital 73,270,572 22,309,065 102,922,287

Financial structure
Equity capital (30%) = Br. 36,044,723
Bank loan (70%) =Br. 84,104,353

Table13: Bank Loan Repayment Amortization Hotel

Principal Interest Total Annual Remaining

Year
Payment (10%) Payment Balance
0 0 0 0 84,104,353

Dereje Asnake
Page 45
G
 1 8,410,435 8,410,435 16,820,871 75,693,917
2 8,410,435 7,569,392 15,979,827 67,283,482
3 8,410,435 6,728,348 15,138,783 58,873,047
4 8,410,435 5,887,305 14,297,740 50,462,612
5 8,410,435 5,046,261 13,456,696 42,052,176
6 8,410,435 4,205,218 12,615,653 33,641,741
7 8,410,435 3,364,174 11,774,609 25,231,306
8 8,410,435 2,523,131 10,933,566 16,820,871
9 8,410,435 1,682,087 10,092,522 8,410,435
10 8,410,435 841,044 9,251,479 0

Dereje Asnake
Page 46
G
6.3.1.Revenue and Revenue projection
Table14: Project Revenue and Revenue forecasting

Product/Service and Revenue forecast

Services Selling Revenue from sales (Br.)
No Particulars
YI YII YIII-XI price/Unit YI YII YIII-XI
-50% -75% -100% (Br.) -50% -75% -100%

1 Accommodations service

1. Deluxe/Suit/ rooms (No) 15 23 30 2500 11250000 16875000 22500000

2. Standard rooms(No) 20 30 40 1800 10800000 16200000 21600000

3. Economic rooms(No) 15 23 30 1400 6300000 9450000 12600000

Sub total 50 75 100 28350000 42,525,000 56,700,000

2 Hotel services

1. Alcoholic beverages (lit/year) 1000 1500 2000 2000 2000000 3000000 4000000

2. None alcoholic beverages (lit/year) 2500 3750 5000 50 125000 187500 250000

3. Hot beverages(lit/year) 15000 22500 30000 20 300000 450000 600000

4. Foods (Dish) 40000 60000 60000 120 4800000 7200000 7200000

Sub Total 7,225,000 10,837,500 12,050,000

Dereje Asnake
Page 47
G
 Other services

1. Meeting services (occasion) 6 9 12 3000 18,000 27,000 216,000

3
2. Weeding services(occasion) 12 18 24 2500 30,000 45,000 720,000

Sub Total 48,000 72,000 936,000

Total
35,623,000 53,434,500 69,686,000

Depreciation

Original Value Depreciation Depreciation Per

SN Description
In Birr rate in % year
Construction and Civil
1 33,641,741 5 1,682,087
Work
2 Machines & Equipment’s 26,432,797 15 3,964,919
3 Vehicles 3,604,472 20 720,894
4 Office Equipment 2,402,982 15 360,447
Total 66,081,991 6,728,348

Dereje Asnake
Page 48
G
7.Financial Analysis
7.1.Financial statements

Balance Sheet
Asset
Current Asset
Cash 18,022,361
Inventory of raw materials and inputs 24,029,815
Total Current Asset 42,052,176
Fixed Asset
Land, Building and Construction 33,641,741
Machineries and Equipment’s 26,432,797
Office Equipment 2,402,982
Vehicles 3,604,472
Total fixed Asset 66,081,991
Total Asset
Liability
Account payable 84,104,353
Owners Equity 36,044,723
Capital
Total Liability & Owners’ Equity 120,149,075

Income Loss Statement

Revenue Year 1 Year 2 Year 3-10
Sales 35,623,000 53,434,500 69,686,000
Sales expenses (5%)* 1,781,150 2,671,725 3,484,300
265,075,09
Purchase of Raw Material 24,029,815 265,075,095
5
-
Gross profit 11,593,185 -211,640,595 195,389,09
5
Expenses
Salary Expense 12,014,908 12,615,653 13,246,436
Operating Expenses 3,604,472 3,784,696 3,973,931
Pre-operating Expense 2,402,982 2,523,131 2,649,287
Deprecation Building 1,682,087 1,682,087 1,682,087
Deprecation machine 3,964,919 3,964,919 3,964,919
Deprecation Vehicles 720,894 720,894 720,894

49 | P a g e
Deprecation office Equip 360,447 360,447 360,447
Lease Expense 1,000 1,000 1,000
Interest Expense 8,410,435 7,569,392 841,044
Total Expense 33,162,145 33,222,219 27,440,045
Profit Before Tax 35,623,000 53,434,500 69,686,000
Tax(30% ) 10,686,900 16,030,350 20,905,800
Net Profit 24,936,100 37,404,150 48,780,200

Cash Flow Statement

Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0
· Own equity 36,044,723
· Bank loan 84,104,353
· Depreciation 0 6,728,348 6,728,348 6,728,348
· Net profit 0 24,936,100 37,404,15 48,780,20
0 0
Total inflow 44,132,49 55,508,54
120,149,075 31,664,448 8 8
B. Cash outflow 0
· Fixed capital 66,081,991
· Working capital 42,052,176
. Contingency (Lump sum) 12,014,908
10%
· Loan repayment 8,410,435 7,569,392 841,044
Total outflow 120,149,075 8,410,435 7,569,392 841,044
Net inflow (A-B) 36,563,10 54,667,50
0 23,254,013 6 5
Cumulative balance 36,563,10 54,667,50
0 23,254,013 6 5

50 | P a g e