SAMPLE PROJECT PROPOSAL ON

STABLISHMENT OF

FIVE STAR HOTEL

Abstract

The main idea is designing a hub of distinctive spaces which will have the power of
healing it‘s users. It will provide the facilities of a five star hotel and beside that it
will give the guests an opportunity to heal themselves. It will be a symbol of peace
and calmness in the middle of the chaotic city life, as a very close representative of
nature with the elements like – foliage of trees, water, hill etc. The essence of the
tropical hill forest will soothe the both, body and mind. An experience of the light,
height and sound will begin to write a new poem of life. It will not be a hotel only, it
will be more, more towards the nature, more inside the nature.

BACK GROUND OF THE PROPOSED PROJECT

Ethiopia has abundant heritage tourism resources, for which it has been ranked
highly globally at position 38, at par with Egypt which is well known globally for its
predominantly heritage-based tourism resources, including the pyramids. Despite
the high ranking of both destinations in 2008, for instance, there were 12.2 million
international tourist arrivals to Egypt compared to 330 000 to Ethiopia (UNWTO,
2012).

Hotel X Private Limited., intend to Construct 5 Star Hotel project with Restaurants,
Banquet Hall, Coffee Shop, Health club & bar at (place X).The Total Plot Area of the
project is (Sq. m). The built up area of the project is(x SQM).

With the expansion of Ethiopia's economy, the demand for hotels is increasing. The
existing luxury hotels are inadequate to fulfil demands of the growing number of
guests in Ethiopia. Not long ago, the highly capital intensive hospitality industry in
Ethiopia was dependent on public sector investment as the private sector was very
shy of investing large amounts of funds in the sector. Now few local private
investors have come forward to build international luxury chain of hotels in order to
lure the growing number of business tourists to Ethiopia. Ethiopia has a thriving
economy, with the country's gross domestic product (GDP) growing at about 6.0
per cent a year for the past five years. Considering the increasing trend of
commercial, tourism and entertainment activities, a number of commercial hotel
and other accommodation facilities have been developed in last few years in
Ethiopia. There are few good standard hotels in the city, however most of these
have very high occupancy rate and few of these offer 5 star standard hotel
facilities. To cater or the needs of this vibrant and growing city, the company has
decided to establish a 5-star hotel in its unused land at X .The project has been
planned to be established as a 5-star standard hotel with particular focus on
environment friendliness.

1.2 Aims& Objectives of the Project

This city can lead us to a very bright future on our commercial and tourism sector.
Tourism is considered as the largest and fast growing industry of the modern
business world. It can surely play a very vital role in our country‘s economy.
However, in Ethiopia this industry fails to reach its destination for insufficient
investments, marketing practices etc.
- The aim of the project is to provide an international standard five star hotel
facility for the tourism and business travelers.

- The whole project will ensure all the aspects regarding the international
standards.

- This project is an opportunity to draw the attention of the travelers around the
world and change their conception about the country.

- The travelers will find here the essence and reflection of the art, culture, history
etc. of Ethiopia. Especially, the business travelers.

- The major factor about tourism is it‘s a service industry which is mainly labour
oriented than any other sectors of production. We know that the industry of tourism
offers more employment opportunities with the growth of population in the country
where the problem of unemployment has become acute day by day. The economy
of Ethiopia is labour intensive and the creation of more working opportunities are
essential. So, I hope, this will surely be a bit helpful to the unemployment problem.

- The landscaping and plantation pattern will be planned according to the change
of seasons and environment. The project will give the feel of being in nature within
the urban fabric.

- To increase the revenue earning potential of Ethiopia.

- To ensure efficient utilization of Assets

1.3 Given Programme

According to the international standards the programme is designed. In this

project, we will go through these programs which are given by the authority.
Reception and information counter should be placed near the main entrance. An
extravagantly spacious lobby can bring the comfort and difference, the concept in
lighting can take the experience to another level, it make the guests and their
feelings more lively, an atrium can be included behind the grandness of the space.
Conference facilities fully air conditioned Conference / Banquet halls must be given.
The quality of the space and environment inside the Banquet hall contributes
greatly to the reflection of its purpose. Separate access through lifts and stairs can
be provided specially for this area.

Shopping facilities

A travel agency, foreign exchange, bakery, pharmacy, flower shop etc. can be
provided and blended with the hotel function.

Exhibition facilities

Exhibition hall is needed for serving exhibitions. It should be designed carefully by

the quality of space, lighting, and accessibility. Must be well equipped.

Restaurants
Swimming pool

Communications Bar

Lighting

Bedrooms

Maintenance

Parking

Housekeeping

2.1 Site Analysis:

The site for this project is chosen in (place x), which is one of the most
commercially vibrant area in (place X). The land is very important and expensive
for its location, with the establishment of the project this portion of the land will
become more lively. The site is mostly covered with green and the land is flat with
a little ups and downs in the middle. Maximum portion of the site is vacant and
existing structures in the site are temporary.

2.2 SWOT Analysis:

Strength:

- Very good communication system for its location.

- Within the commercial area of (place X).

- Magnificent natural landscape.

- Good water facility. - Existing green. - Roads are wide and clean.

- Fresh environment.

Weakness:

- Lack of proper usage.

- Unplanned temporary settlement.

Opportunity:

- Scope of a Five Star Standard Hotel.

- To increase the arrival of foreign guests.

- Opportunity to improve our hospitality sector.

- To increase revenue earning potential of Ethiopia.

- To represent our culture to the world.

Threat:

- Trespassing.

3.1 Current situation of tourism in Ethiopia:

Ethiopia is the site of some of the oldest human settlements in Africa. Recorded
Ethiopian history begins around BC 1000 of King Solomon and the Queen of Sheba,
but relatively recent discoveries indicate the existence of a rich prehistory. Evidence
of Ethiopia’s culture and history is found in its ancient monuments, cities, and
prehistoric sites, while its living culture is reflected in the work of architects,
musicians, writers, artisans and crafts people.(Christie & Crompton;2001)

The country has abundant heritage tourism resources, for which it has been ranked
highly globally at position 38, at par with Egypt which is well known globally for its
predominantly heritage-based tourism resources, including the pyramids. Despite
the high ranking of both destinations in 2008, for instance, there were 12.2 million
international tourist arrivals to Egypt compared to 330 000 to Ethiopia (UNWTO,
2012). Although other factors could explain the difference in arrivals, the deduction
nonetheless suggests great potential for heritage tourism development in Ethiopia.

Ethiopia has a total area of (X sq. km), is surrounded to the west, north, south and
east by (w, x, y, z), and. The country has a population of about 100 million growing
at (x% per year), making it one of the most densely populated countries in Africa.

Ethiopia, apart from being strategically located close to the major tourism hubs of
eastern Africa, is blessed with beautiful rivers, archaeological and historical sites,
hills and mountains, forests and jungles and attractive countryside .The Perspective
Plan of Ethiopia 2010-2021 envisions developing Ethiopia as an exotic tourist
destination in Africa and targets to increase tourism‘s contribution to overall GDP.
The World Travel and Tourism Council has projected that by 2024, tourism sector
would contribute 4.7% to Ethiopia‘s GDP.

3.2 (City X) as a tourist and commercial hub:

The city of (x) is the ---- largest city and main business center of Ethiopia. While
being a busy commercial hub for the ------ Region, the city and its surroundings
offer some of the most spectacular natural treasures of the country. City x also
offers some interesting museums and landmarks that preserve the history and
culture of Ethiopia, such as---------- .
3.3 Five Star Standard Hotel:

Many people are confused by the star rating system used for hotels. To make
matters worse, there is no consistent rating system from country to country. Most
classification schemes on the continent don‘t always take into account the sort of
attention to detail which makes the difference between a good hotel and a bad
hotel. They simply reflect the facilities and services available. But that doesn‘t
always give a very accurate impression of what you can expect from a hotel. In
Italy, where the regulations are extremely detailed – right down to the requirement
for a spare roll of lavatory paper (all stars) – a three-star hotel must offer porter
age for bags at least 12 out of 24 hours, but it doesn‘t indicate what the quality of
the service has to be. In Spain, room size is very important to classification and the
requirements are much more demanding than in France. So a double room in a
three-star hotel must be at least 15 square meters – that‘s 50% bigger than the
French system demands. But while this reflects a minimum standard that is applied
nationally, the exact details of what facilities are required vary, because each
region of Spain operates a slightly different system.

In the UK since 2006, and after decades of a highly confusing system, now they
have one that works very well. It has been adopted by England, Wales, Scotland
and Northern Ireland and assigns stars to reflect the facilities on offer but also
measures the quality of an establishment in line with its star rating. This means
that all hotels in the UK are assessed to the same criteria and gives a boost to
hotels which make an extra effort to improve and maintain service levels - to make
guests feel both comfortable and welcome.

The key differences:

● Five-star hotels must be open seven days a week all year round

● Five-star hotels must provide enhanced services such as valet parking, escort to
bedrooms, proactive attentive table service in bars and lounges and at breakfast,
concierge ‘service, 24-hour reception, 24-hour room service, full afternoon tea. At a
four-star this may be offered but is not compulsory.

● Five-star hotels must have at least one restaurant open to residents and non-
residents for all meals seven days a week. (A four-star hotel‘s restaurant doesn't
need to offer a full-on lunch service, however this may be offered.)

● Five-star hotels must have ensuite bathrooms with WC, and thermostatically
controlled showers, in each of its rooms. Only 20% of the rooms can have shower-
only facilities if the size and quality of the en-suites is exceptional. A four-star hotel
can offer thermostatically controlled showers only.

● Five-star hotels must have additional facilities, such as secondary dining, leisure,
business center, and spa.
 ● Five-star hotels must offer permanent luxury suites, comprising three separate
rooms – bedroom, lounge and bathroom. Four-star hotels may offer suites, but it is
not compulsory.

● Five-star hotels will have excellent staffing levels with well-structured and
dedicated teams with depth in management levels, as well as exceptional levels of
proactive service and customer care. A five-star establishment is based on
perfection, and extreme luxury and exceptional attention to detail.

● With four-star hotels, the service should come to the guest as needed, but with a
five- star hotel every need should be anticipated in advance of when the guest
wants them (ex, hotel staff of a five-star hotel will take control of luggage from
guest‘s arrival outside to prompt delivery in bedroom, full 24-hour room service and
24-hour reception and concierge services).

● With a five-star hotel, from the biggest chain to the smallest boutique hotel, the
customer is treated as an individual. The customer service experience is seamless.
The high caliber of professionally trained staff means that knowledge provided is
expert, whether it comes from bar staff, receptionists or any other department, and
is without detriment to other service areas.

● In order to maintain this exceptional level of service the guest would expect a
higher ratio of staff to guests. In a four-star they would expect the average ratio to
be one member of staff to three guests. In a five-star it could be as high as two
staff members to one guest.

● In most five-star hotels the guests would normally expect a renowned chef who
has achieved accolades ranging from Rosettes to Michelin stars.

● In a five-star hotel every physical aspect of 'look and feel' has been specifically
designed or chosen for that accommodation whether it's tableware, bedlinen,
fabrics, colour schemes, so even within a group of hotels it will still remain
individually designed.

Service in a five-star hotel is above average. The hotel should offer Reception,
Concierge, Housekeeping and Room Service 24 hours a day.

For a hotel to be rated with five stars, it must have expensive and quality furnishing
and decorations such as 400-count sheets. The rating also requires that in-room
video, a CD/DVD player and a bath and shower in the bathroom. The hotel itself
should have more than one restaurant at the location and the restaurants are
expected to offer a variety of gourmet dining options.

The proposed Five Star Hotel at Ethiopia is envisaged as a mixed functional project
focused on the Hospitality, can also be focused on the cultural wealth and diversity
of the country. So, the components will be:

. Hospitality
 Cultural promenade

Any other permissible commercial & institutional development etc.

4.1 Planning and Programming:

Programming is the process of defining the activities that will be conducted within a
hotel, allocating the requisite space, and establishing relationships between the
spaces. This is one of the first steps in the development process. While the
developer may work with an architect in developing the program, the developer is
responsible for creating the program and for ensuring that the building is designed
to accomplish the goals set out in the program. In addition to detailing the
activities, space allocations, and relationships within the building, a successful
program helps to establish the way the building or buildings are situated on a site,
the onsite automobile and pedestrian flows, and connections to the external world.
In almost all cases, the activities are the starting point. Once the activities are
defined, relationships among them are established.

The role of the lobby is a central gathering point serving both the public areas and
the back-of- house areas. Once the activities and relationships are established, you
can allocate appropriate space to the activity, both direct activity space and space
needed to support the activity. For example, a hotel needs space not only for its
guestrooms, but also for infrastructure such as the plumbing, mechanical systems
(heat and air-conditioning), vertical transportation (stairs and elevators), horizontal
circulation (corridors), and service areas for housekeeping. The summary of all the
activities, relationships, and space allocations in a hotel is called a building program
or design brief.

5.1 CONCEPT:

The hotel has been visualized as an architectural realm with the ability to physically
and mentally heal it‘s guests. As such, it has grown out the natural elements of
light, water and predominantly, the foliage of trees and the hill that define the
holistic experience of the hotel.

Main Entrance and Lobby

The main entrance established at the “Am Hof” square provides a highly exclusive
access to the historic main banking hall and to the lobby. 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 champagne bar & café.

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 restaurant will offer the highest
international standards in terms of a comprehensive, contemporary arrangement of
food and wine in combination with an outstanding and unique service, including the
bar with an integrated lounge area.

Wine Cellar

The former safe vaults located on the first underground floor, just below the
souterrain, are planned to occupy an impressive wine cellar with a great number of
famous and well-known wines and possibilities for private wine tasting.

Roof Top Bar

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 city (x).

Conference and Meeting

The conference and banqueting facilities are planned to be located in the first floor,
which has an exceptionally high ceiling, hence providing space as well as unique
atmosphere for glamorous and grand events and festivities. Moreover, parts of the
ballroom will provide a variety of smaller conference and banqueting rooms in order
to assure private and exclusive accommodation for large-scale, but also small,
meetings.

Guest Rooms

From the first floor to the attic floor, the hotel will be equipped with 170 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 44 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.

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.

Spa & Wellness Area

Plans include an 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 souterrain floor. An indoor pool and a whirlpool will be integrated
on the same floor, but separated by a reasonable distance from the “Health club”.

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 “Am Hof”
occupying approximately 600 parking spaces. This garage will be directly connected
to the property via a throughway on the underground floor.

6.1 Hotel Area Programming

In total the hotel will occupy 173 keys including 130 rooms and a total of 43
suites. The foundations for this layout are recommendations and guidelines
introduced by the hotel owner and the responsible architect.

7. Financial Analysis

According to the market analysis, Ethiopia represents a solid hotel market with
strong growth rates not only prior to the economic crisis but also during the first
years after.

During recent years there have been particularly many outperforming hotels in the
Ethiopian market due to their strong tradition and the high proportion of suites.

However, the market in Ethiopia does not consist of an individual market leader
which achieves a considerable rate premium as seen in other African countries.

7.1 Assumptions

The proposed hotel should be able to position itself as market leader, providing a
consistently generous guest room product, a state-of-the-art spa in a prestigious
location. The hotel will differentiate itself from its key competitors with a unique top
luxury product of contemporary design in a historic building and truly excellent
service. Hence it is allegeable that this hotel is estimated to be able to achieve
occupancy of 75 per cent in the first stabilized year.

Sizes as well as the number of rooms and suites offered are considered to be a
strong and unique selling proposition. With a size of 220 square meters the hotel
will offer one of the most generous presidential suites in the city. Some hotels in
the country support the examples for the proposed strategy to operate considerably
ahead of the competition.

The hotel will appeal to the business- as well as the affluent leisure traveler. With
high-quality services of an exclusive brand and all aforementioned assets of the
property, it can be assumed that the hotel will be able to represent an alternative
for quality-sensitive guests seeking a high level of privacy, comfort and luxurious
surroundings, which they are less likely to find at another luxury hotel in the
market. Moreover, the hotel will benefit from the fact that it is newly built and
hence will better meet the requirements of the experienced international traveler,
who tends to stay in the world’s best hotels rather than traditionally designed and
refurbished existing hotels.

Furthermore, the generous in-house fitness and spa, which offering whirlpool,
steam bath, indoor pool as well as treatment rooms, will be a strong competitive
advantage, helping to achieve premium average rates in comparison to the existing
competition.

7.2 Hotel Trading Estimates

The financial forecast depends partly upon key assumptions. The forecasted income
reflects the most likely future development from today’s point of view assuming
that the hotel is operated by an exclusive luxury brand. External circumstances
such as economic crises may have a considerable impact on the financial
performance. The stated values are partly subject to rounding. In some cases,
rounding differences may apply since calculations were conducted upon exact
figures, but rounded figures are displayed.

The forecast is based on the following parameters:

- Positioning of the hotel: Five star luxury

- Number of keys: 173

- Management: international luxury hotel brand

- Inflation after stabilization period: 3.9 per cent per annum (estimations by the
author referring to globalrates.com)

- Stabilization phase after four years; 2024 is calculated as the first full business
year after the end of the start-up phase on the price basis of 2021.

The late stabilization reflects the current hotel market situation in Ethiopia.
According to the market analysis, it is expected that rates and occupancy of five
star hotels in Ethiopia will increase only slightly due to further hotel supply.

8. Hotel Market Analysis

8.1 General

Ethiopia, the political and emerging commercial powerhouse of eastern Africa, is a

thriving hotel market, both domestically as well as internationally. As a city 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 benefit from the very good market characteristics and hence
reported remarkable performance growth during the last decade.

According to statistics, over the last years the country has become a continentally
leading convention- and conference destination with a large number of visitors.
 During recent years the city has built up a firm foundation with a high number of
multinational institutions and corporations and a well-established travel public,
which positions Ethiopia as a major internationally orientated destination.

The country also greatly benefits from new source markets, with strong growth
rates in demand, from different parts of the world. This is mainly due to the country
being home to AU and associated organizations. The AU (meetings, incentives,
conventions and events) segment is estimated to remain of significant importance
for tourism to Ethiopia, indicating great future opportunities associated with these
source markets. Thus, the city’s exceptional infrastructure is anticipated to continue
to attract large-scale conventions on a regular basis even though competition may
intensify due to the development of new MICE destinations within the next years.

8.2 Hotel Market in the Five Star Segment

8.2.1 Current Hotel Supply

To establish the existing supply condition, it was important to visit the varies stake
holders in tourism and Hotel sectors. Accordingly, different government & sectorial
association (organization) are approached .The main source of information used are
Addis Ababa tourism office, which is operating under trade & industry sector; Addis
Ababa investment bureau, as well as Addis Ababa hotel owners trade sectorial
association (AHA ).The information obtained from this different source are
examined to establish the current stock of hotel rooms.

However, it is important to acknowledge that the data obtained are not that
organized in sense that it did not show an updated current condition, the last
update of the data in case of tourism office is done at list two years back .in order
to establish the current and future room supply condition certain adjustment
estimation is made.

Supply data;

The data obtained from Addis Ababa culture &tourism bureau (AACTB), shows that
there are 108 hotels listed in Addis Ababa (data was last updated in 2012) ,the data
shows the hotels has different category it includes from basic service up to five star
level. However the classification was not done based on established standard.
Currently the Ministry of culture & tourism has established standards is doing a
concerted effort of assessing & classifying the hotels in Addis Ababa. The number of
available room from these hotels are indicated as 5320. However, it is important to
note that although the data provides good reference point, it cannot be considered
as exhaustive list of hotel rooms in the city.

The data obtained from Addis Ababa hotel sectorial association indicates similar
figure in fact it looks like the same the source of the data is used, however AAHS
has adjusted the figures to the list of license issued.

Establishing current stock of hotel rooms; based on the information obtained from
Addis Ababa tourism office as well as Addis Ababa hotel association (AAHA) ,it is
understandable that the data miss or did not reflect the current stock of hotel
rooms due to exclusion of newly open hotels in Addis Ababa as 2013.There for it is
reasonable to agree with the estimate given by AAHA which sets the current
inventory to 6000 bed rooms .This figure is considered to reflect the status in
2013.since the construction activity to build the hotels take at minimum four
probably five to six years considering Addis Ababa construction sector activity. The
hotel project which has taken license as of 2012 is expected to be finalized&
contribute to room stock as of 2016. Considering the star of hotels assuming at
minimum 100 -120 rooms per hotel (efficiency to run hotel operation require at list
to have such room numbers per hotel), these hotels are expected to contribute
additional 2000-2400 rooms up to 2020. This is assuming the factors which
influence the sector activity did not change much (cateris paribus), the same
amount of additional hotels rooms can be expected beyond 2020 towards 2025.
Which will have an effect of pushing AAHA estimate of 10,000rooms towards 2025.

Fig 1: Gap analysis: Room supply and demand.

Supply vs. demand Different case scenario Year

2015 2020 2025
Supply vs. demand gap (actual trend) 1000639 1154101 1307564
Supply vs. demand gap (negative intervention 1043291 1265532 1487772
scenario)
Supply vs. demand gap (positive intervention scenario) 957986 1042671 1127357
Supply vs. demand gap (stretched intervention 894233 947598 1000963
scenario)

8.2.2 Competitive Analysis

From today’s perspective the proposed hotel will face approximately seven main
competitors. The list of competitors summarizes the assessment of the main
leading hotels in Addis Ababa, which are most likely to be the chief competitors of
the hotel “x” . This assessment was conducted by an evaluation of the most
prominent features and facilities of these hotels in terms of location, size of hotel,
size of rooms, pricing, product attributes, strengths, specials, key accounts, market
segmentation as well as average occupancy rate. After assessing all venues within
the five star segment in Addis Ababa, the following hotels are identified as the most
important competitors on the market:

- Sheraton Addis, a Luxury Collection Hotel

-Hyatt Regency Addis Ababa

-Ethiopian Skylight Hotel

-Capital Hotel and Spa

-Radisson Blue Hotel, Addis Ababa

-Marriott Executive Apartments

-Intercontinental Hotel

-Hilton Addis Ababa

-Addisina Hotel

Having said that the previously mentioned the first five existing hotels need to be
regarded as primary competitors, it needs to be acknowledged that further five star
houses may be of interest to the consumer segment targeted by the hotel “x”.
These hotels

Long-established five star hotels in Vienna, such as the Sheraton Addis hotel and
the Radisson Blue hotel, may be perceived as luxury accommodations although,
due to their overall appearances and technical standards, these houses are not able
to compete with the standards of a newly opened five star luxury hotel.
Furthermore, many of these establishments have the disadvantage of relatively
small guest room sizes.

8.2.3 Hotel Demand

Real GDP growth is said to decrease from 8.0% in 2016 to 7.5% in 2017. Over the
last decade, Ethiopia has had one of the fastest-growing economies in the world,
with average annual growth rates ranging between 8% and 11.8%. This has been
accompanied by the emergence of a growing middle class with increased
purchasing power.

However, Ethiopia continues to face social unrest, and this has been aggravated by
the government’s aggressive use of force in subduing dissent amid accusations of
committing human rights abuses.

Unrest has been seen in particular among the Oromo (the largest ethnic group in
the country) and the Amhara groups as they have begun to express unhappiness
over their perceived economic marginalization.

The national tourism sector contributes less than 5% of Ethiopia’s GDP and the
government has taken action from a branding and marketing perspective to
position Ethiopia as a tourist destination.

International arrivals come from a wide range of sources. It is a relatively diverse

market catering for businesstravellers and tourists. With vast natural attractions, a
rich cultural history and archaeological finds dating back more than three million
years, the government is actively promoting Ethiopia’s nine UNESCO world heritage
sites and intangible cultural heritage in its international marketing campaign.
Total arrivals in Ethiopia from 2015 to 2016 increased from 817 860 to 868 780.
Provisional data from Ethiopia’s Ministry of Culture and Tourism puts visitor
numbers for the first three months of 2017 at over 200 000, while tourism receipts
are reported to have exceeded US$870 million.

Tourist arrivals in 2017 are forecast to increase by 5.7% on the previous year to
918 010.

Other East African countries are the main source of visitors to Ethiopia, followed by
Europe. The European Council of Tourism awarded Ethiopia the World’s Best
Tourism Destination Award in 2015.

Addis Ababa will continue to grow as a regional business hub, supporting expansion
in the hotel sector. Hotels in the city currently have a 60% occupancy rate.

Addis Ababa is host to numerous conferences owing to the fact that it has the third-
largest diplomatic community in the world, after New York and Geneva. Delegates
to these events often seek high- end accommodation and there is ample
opportunity for luxury hotel brands looking to establish themselves in the market.

In 2016, only two international hotel brands, Ramada Addis (Wyndham Hotel
Group) and Marriott Apartment Hotel, joined the market. There are five
international hotel brands under construction.

The Wyndham Hotel Group has announced plans to build three luxury properties
over the next few years. Two are to be in Addis Ababa and one is aimed at nature-
seeking travelers on the shores of Lake LunganoAccorHotels has also announced
plans to build three hotels in Addis Ababa by 2021.

InterContinental Hotels Group as well as Carlson Rezidor have commenced

construction of a Crowne Plaza and Radisson Blu Plaza Hotel in the capital city.
Marriott International and Starwood Hotels and Resorts are also on track with their
own developments.

The growing presence of international brands in the country demonstrates

confidence in Ethiopia’s tourism growth, particularly opportunities linked to business
and diplomatic travel

8.2.4 Hotel Trading Estimates

The detailed trading estimates for the proposed “Hotel x” project are illustrated
and. The financial forecast depends partly upon key assumptions. The forecasted
income reflects the most likely future development from today’s point of view
assuming that the hotel is operated by an exclusive luxury brand. External
circumstances such as economic crises may have a considerable impact on the
financial performance. The stated values are partly subject to rounding. In some
cases, rounding differences may apply since calculations were conducted upon
exact figures, but rounded figures are displayed.
The forecast is based on the following parameters:

- Positioning of the hotel: Five star luxury

- Number of keys: 173

- Management: international luxury hotel brand

- Inflation after stabilization period

- Stabilization phase after four years; 2024 is calculated as the first full business

Year after the end of the start-up phase on the price basis of 2021. According to the
market analysis, it is expected that rates and occupancy of five star hotels in
Ethiopia will increase only slightly due to further hotel supply.

 Timeline

The financial forecast reflects the first ten years from 2021 to 2032. The first four
to five years of operation will constitute the hotel’s start-up phase, hence the first
stabilized year of operation is assumed to be 2024. The first four to five years are
all trading years representing full calendar years. Leap years are not taken into
consideration.

 Inflation rate

The inflation rate is assumed to be at approximately 6 per cent per annum for the
projected period up to the end of 2024.

 Rooms

Based on the assumption of 173 guest rooms and suites, an average room
occupancy is estimated to be at 55 per cent in the first year and is rising continually
during the first four years. In 2024, the start-up phase ends with an average room
occupancy rate of 75 per cent. The anticipated occupancy levels are above historic
levels in the luxury segment due to the special type of project.

 Food & Beverage

Food and Beverage revenue is composed of income from the restaurant and bar in
the mezzanine, the lounge and champagne bar in the main floor, the roof top bar,
the wine cellar, conference/banqueting division as well as from room service
including minibar. As the hotel is anticipated to attract a high number of external
guests for business dinners and drinks, the total income of F&B is estimated to
stabilize. The unique design of the conference and banqueting facilities will attract
high-quality functions and events, hence contributing the high F&B income of
approximately 30 per cent of total room revenue.
 Minor Operated Departments

MODs are expected to carry revenue of approximately $2 million, accounting for

about three per cent of the total revenue in the first stabilized year. The majority of
this income represents revenue from the generous spa and recreation facilities but
also from minor services such as laundry and telephone.

 Departmental Costs

These expenses are expected to stabilize at approximately 40 per cent in the fourth
operating year. Departmental costs are calculated with assumed parameters as a
percentage of total revenue.

 Operating Expenses

Operating costs are:

- Administrative & General expenses

- Sales & Marketing

- Repairs & Maintenance

- System costs

- Heat, Light & Power

 Fixed Expenses

The fixed expenses include the property tax & insurance, a base management fee,
an incentive fee and the FF&E reserve.

9. ENVIRONMENTAL MANAGEMENT PLAN

The Environmental Management Plan (EMP) is aimed at mitigating the possible

adverse impact of a project and ensuring the existing environmental quality. The
EMP covers all aspects of planning, construction and operation of the project
relevant to environment. It is essential to implement the EMP right from the
planning stage continuing throughout the construction and operation stage.
Therefore the main purpose of the Environmental Management Plan (EMP) is to
identify the project specific activities that would have to be considered for the
significant adverse impacts and the mitigation measures required.

The construction phase impacts are mostly short term, restricted to the plot area
and not envisaged on the larger scale. In the operational phase the environmental
impacts are due to continuous operation of the project, hence, the emphasis in the
Environment Management Plan (EMP) is to minimize such impacts. The following
mitigation measures are recommended in order to synchronize the economic
development of the project area with the environmental protection of the region.
The emphasis on the EMP development is on the following;

 Mitigation measures for each of the activities causing the environmental Impact.

 Monitoring plans for checking activities and environmental parameters and

monitoring responsibilities.

 Role responsibilities and resource allocation for monitoring; and

 Implementation of the Scheduled plan.

10. CONCLUSION

Generally speaking, there are only a limited number of hotels in the entire market
of Ethiopia which actually are able to achieve a rate premium far higher than
competing luxury hotels. Admittedly, the basis for the success of an individual
market leader is the right location. Hence, not every city is suitable for hotels
performing in this segment with respective prices. Referring to section one of this
study, Addis Ababa is ready for a new signboard, a truly unique development,
bringing national and international capital to the market. The city is well-positioned
as a destination for business as well as leisure travelers.

By following the concept of combining tradition and history with latest trends and
innovations, exceptional services, furnishings of the highest standards, traditional
architecture with contemporary interior design, and private and historic location
with an exclusive luxury brand, the hotel will be able to secure the highest position
in the market and target the upper premium business and leisure market.
Additional Information:

Hotel Construction cost Per Room

Hotel Type Average Cost Per

Room to Build
Motel $75,000
3-star $221,000
4-star $318,200
5-star $604,200