Investment Project

PROPOSAL ON Three STAR

Islamic HOTEL

Project Location: - halaba Kulito Town, SNNPR,

Ethiopia

Promoted by: Muna Lulu Seidmeki

July 2020
 Contents
Basic Information.......................................................................................................................4
1. EXECUTIVE SUMMARY...............................................................................................5
2. INTRODUCTION.............................................................................................................8
2.1. Investment in Ethiopia.................................................................................................8
2.2. Hotel and Tourism sector in Ethiopia..........................................................................9
2.3. Promoter Background................................................................................................10
2.4. Ambition of creating the hotel project.......................................................................10
2.5. Purpose and Amount of Loan....................................................................................11
3. The Project......................................................................................................................12
3.1. Project description and Justification..........................................................................12
3.2. Project Objective.......................................................................................................12
3.3. Project location and justification...............................................................................14
3.3.1. Location..............................................................................................................14
3.3.2. Climate...............................................................................................................14
3.3.3. Demographics:...................................................................................................15
3.3.4. Infrastructure and economic status.....................................................................15
4. MARKET STUDY..........................................................................................................18
4.1. General Overview......................................................................................................18
4.2. Present supply in Addis Ababa..................................................................................19
4.3. Demand for hotel services.........................................................................................21
4.4. Demands Evaluation Mechanism..............................................................................23
4.5. Pricing................................................................................................................ 25
4.6. Capacity and service programme.............................................................................25
4.6.1. Capacity......................................................................................................25
4.6.2. Service Programme.....................................................................................26
4.7. Marketing strategy.....................................................................................................26
4.8. Competitors Overview...............................................................................................27
5. TECHNICAL STUDY....................................................................................................28
5.1. Design and particulars...............................................................................................28
5.2. Physical appearance...................................................................................................28
5.3. Core facilities.............................................................................................................28
5.4. Hotel Furniture and Equipment’s..............................................................................33

Page 2
 5.5. Inputs/ raw materials and utilities..............................................................................34
5.5.1. Raw Material cost..............................................................................................34
5.2.2. Utilities...................................................................................................................34
5.6. Machinery and equipment.........................................................................................35
5.7. Land, Building and civil work...................................................................................43
5.7.1. Land lease...........................................................................................................43
5.8. Environmental impact assessment.............................................................................44
5.9. Implementation Schedule..........................................................................................45
6. ORGANIZATIONS AND MANAGEMENT.................................................................46
6.1. Organizational Structure............................................................................................46
6.2. Management..............................................................................................................47
6.3. Manpower Requirement............................................................................................47
6.4. Training Requirement................................................................................................48
7. FINANCIAL STUDY.....................................................................................................49
7.1. Classified Investment cost.........................................................................................49
7.1.1. Fixed costs..........................................................................................................49
7.1.2. Operational cost costs........................................................................................51
Summary of Operational cost...........................................................................................53
7.2. Project Capital and financing....................................................................................54
7.2.1. Project Capital....................................................................................................54
7.2.2. Financing............................................................................................................54
7.3. Revenue projection....................................................................................................57
7.4. Financial statements..................................................................................................58
7.4.1. Projected Profit/loss statement...............................................................................58
7.4.2. Projected cash flow statement...............................................................................59
7.4.3. Balance sheet......................................................................................................60
7.5.3. Viability and other measurement.......................................................................61
8. SENSITIVITY ANALYSIS............................................................................................63
9. RISK ANALYSIS...........................................................................................................63
10. MONITORING AND EVALUATION..........................................................................65
11. CONCLUSION AND RECOMMENDATION..............................................................65

Page 3
 Basic Information

 Name of the Promoter: Muna Lulu Seidmeki

Contact Address: +251911……

 Type of the Project: 3 Star Islamic Hotel

 Type of Business: Sole proprietor ship

 Project Location: Halaba Kulito Town, SNNPR, Ethiopia

 Project capital: The total investment capital of the project is

estimated at birr 10,000,000.00 of which:-

 Birr 6,500,000 (65%) is for fixed investment cost

 Birr 3,500,000 (35%) will be assign for working capital

 Source of finance: The total investment capital of the project is to be

financed from the promoter’s equity .

 Man power requirement: 120 employees will be benefited within this

project, out of which 80 permanent (20 skilled & 60 unskilled 8 th grade)

and 40 casual workers during construction phase .

 Land requirement: The total area of 5,000 m2 of land is required for the

project
 1. EXECUTIVE SUMMARY

The project feasibility study proposed on 3 star islamic hotel investment

and has been promoted by Muna Lulu Seidmeki in Halaba Kulito town.
Halaba Kulito is a fast growing city in the SNNPR. It is Center for SNNPR,
center for agricultural products trade, home for ancient mosques, historical
city for Muslim religion followers, and a home for natural hot water
resources.

Project justification: Three star Islamic hotels is high class hotel where
services like standard bedroom, Prayer room, Meeting hall, catering,
conference hole, Spa (Hot Spring), gymnasium, sauna and massage, other
sports facilities like tennis or squash court, table tennis and children
playground, restaurants and cafe are available.

The demand and supply In Halaba town which the Muslim society
represents the most share of the population the available standard Muslim
hotels is very low which includes providing Food, Prayer room, Islamic
branded rooms and so on so the Branded supply is very low; due to this
demand and supply analysis Muna lulu Seid meki three Star Islamic hotel
wants to participate and minimizes the gab of demand and supply standard
hotel in Halaba Kulito town.
In this profile study a Three star Islamic standard hotel is considered
to following provides:-
 5 King size luxury rooms, 10 standard double bed rooms and 20
single standard bed rooms totally 35 standard bed rooms
services
 International and national restaurant service
 Standard cafeteria
 Standard Prayer room
  Standard massage and sauna bathe service
 Physical fitness room
 Conference hole and others important needs

The total area of the 3 star Islamic hotel investments is about

5000 meter square the area covered and develops the following
infrastructures such as main building hotel service and, store, gourd
house, Prayer Area, parking area and other necessaries facilities

The total investment capital of the project is estimated at birr

10,000,000 of which birr 6,500,000 (65%) is for fixed investment cost of
while the remaining balance of birr 3,500,000 (35%) will be working
capital.

Profitability: The financial analysis of the envisaged project is carried

out for the following ten years. Based on the 10 years financial

projections using the income statement, cash flow statement and

financial internal rate of return (FIRR), the following results are

obtained.

 Income statement: According to the projected income statement,

the project will generate profit beginning from the first year of

operation. Based on the 10 years financial projections the projects

average annual net profit after payment of basic expenses,

depreciation and tax amounts to birr 1,593,732

 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
3,500,000 in the first year to cumulative balance of birr,
 26,000,000 during the 10th year of operation indicating the
capacity of the project to finance itself and generate cash surplus
for further investments.

 Socio economic benefits: The socio economic benefit of the project is

also very high. The project will provide:- 80 permanent employs,

Generate revenue to government in the form of taxes, Facilitate and give

a good service for local and international tourists

 Conclusion and recommendation: The Project is found to be

operationally profitable, viable & has significant socio-economic

benefits. We recommended that according to this attractive financial

and economic benefit of the project all concerned offices & financial

institutions should give their support to facilitate the implementation

of this plan.
 2. INTRODUCTION

2.1. Investment in Ethiopia

Ethiopia is now becoming more and more investment friendly country. The
Government is creating favorable condition that would highly encourage the
private Sector to be engaged in almost all areas of the economy. The
country with population of come 110 million offers significant domestic
market for locally for Locally produced goods and service the country
is also a member of the common Market for eastern and southern
Africa Comesa offering huge benefit of Exporting commodities in
preferential tariff rates to a wider regional market.
Privet investment should be encouraged to increase form year to year
and Investment constraints have to be alleviated in order to pave
development ways so That investment sector happens to be
determinant about factor of economic development of the country like
Ethiopia.
it is usually considered as the engine of the economy .both private
and government Bodies in many ways have commonly agreed this idea
.economic development in Any case needs both efforts of the privet as
well as the public sector. There are Investments that could not be
undertaken by privet sector due to its difficult nature I .e high initial
capital and long gestation period.

However, the passed command economy system and the lack of

experience Between both sides have made it so hard for a private
sector to flourish .
But now a day as Ethiopia follows free market economy ‘the roll of
private sector for the achievement of the economy policy. Accordingly, the
Ethiopia federal democratic government is encouraging investors to invest
their records to contribute to the development of the country in all sectors
by avoiding all barriers and facilitating all the mince for the investment
 2.2. Hotel and Tourism sector in Ethiopia

Ethiopia has vast potential for development of various economic sectors.

Although agriculture is the mainstay of the country’s economy the opportunity
to invest in other sectors especially in Hotel, Tourism and various recreation
activities are there.

Although Ethiopia is endowed with many natural and manmade tourist

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

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

The government of Ethiopia has devised a long term strategy that gives due
regard to the preservation, development and promotion of the country’s
tourist attraction. This includes plan for expansion of tourist facilities and
the necessary infrastructure.

Indeed in the wider sense the country has a good potential for the
development of high standard hotels, recreation and market center and
there is a growing realization that this sector holds a significant
development perspective, which should be fully exploited in the planned and
controlled manner.
In adopting a planned and regulated approach the country is in a position to
expand its hotel and tourism sector in a way that emphasizes environmental
conservation and enhances the quality of the overall tourist experience. This
will contribute substantially towards improving the standard of living and
the quality of life of the population.

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

By taking this encouraging as an opportunity the promoter project plan to

establish 3 star Islamic Hotel service in halaba kulito town for the
benefit of the promoter, the district community as well as the country as a
whole.

2.3. Promoter Background

The promoter, Muna Lulu Seidmeki has been born and grew in Halaba
Kulito town and has been participated in different business activities.
During this time, the promoter gained a vast knowledge and skill.
With this reliable experience, Muna Lulu Seidmeki knows how to
manage and lead any organization to profit and also know how to handle
different challenges in the working environment.

2.4. Ambition of creating the Islamic hotel project

According to the preliminary market research, the demand for Islamic hotel
service is very high and yet the supply is limited leaving a huge service gap
to the customer. Unfortunately there is no 3 star Islamic hotel in the area in
which most of the population is a muslic religion follower , so huge gap is
there in between demand and supply in the town. Due to this, it has become
imperative to build and maintain 3 star Islamic hotels service for the
mankind in prevailing conditions.
2.5. Purpose and Amount of Land lease required

Purpose and amount of Land Lease requested: The purpose of the Land
required is for opening the Islamic hotel in the town . Beside this the
promoter believes that, the Land Lease which will be given will strengthen
the relationship between the investor and the town administration.
Furthermore, the investor gets strength to advance to various viable
economy sectors in the town.

The source of the project finance is from the promoter’s equity . all the total
investment capital of birr 10,000,000 is to be contributed by the promoter
(Muna Lulu Seidmeki) .
3. The Project

3.1. Project description and Justification

Three star Islamic hotels is high class hotel where services like standard
bedroom, Prayer room, Meeting hall, catering, conference hole, Spa (Hot
Spring), gymnasium, sauna and massage, other sports facilities like tennis or
squash court, table tennis and children playground, restaurants and cafe 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.

3.2. 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 minimize the unemployment rate of the town by creating job

opportunities for the Halaba Kulito society
 To raise the significance and importance of the sector and thereby
raising its contribution to the national economic development
 To give quality and standard Islamic 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.3.4. Mission and goal
Mission
 Mission of the particular project is to expand the Islamic hotel system
and to give quality service for the Islam religion followers.
 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 60 permanent and 20 causal
 To achieve standard Islamic hotel and give quality service.
 3.3. Project location and justification

3.3.1. Location

The proposed project of 3 star Islamic hotel will planned to be located in

Halaba kulito Town. Halaba kulito is one of the fast growing city of SNNPR
and Ethiopia. According to the population census, the city has a total population
of aroung 60,000 to 80,000 inhabitants. The total land size the promoter
requesting for the implementation of the project is estimated at 5000 square
meters, which will been obtained from Halaba Kulito city administration Hence
the owners select Halaba kulito for proposed project by looking every aspects
of business integrity.
Furthermore the reason for the promoter to open The 3 star Islamic hotel is
most of the population lives in Halaba Kulito town is Islamic religion follower
and don’t have a standard Islamic hotel for getting the services like Food, bed,
cafeteria, Meeting hall and so on.

4. MARKET STUDY

4.1. General Overview

The hotel industry consists of many different services, including

accommodation, restaurants, cafes and catering. The market for the hotel
industry, especially classified hotels in a developing country like
Ethiopia, is closely linked to the tourism industry, because a majority of
consumers for the sector services come from international tourists.

According to the United Nations Statistical Commission, Tourism

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

4.2. Present supply in Halaba Kulito town

According to Current 2020 Information Halaba Kulito has not a quality supply
of Islamic Hotel service.
 4.3. Demand for hotel services

The feasibility study conducted for this project deals with the demand and
supply analysis for the Islamic hotel project to be established in the area by
taking the number of international and national tourist, investors,
employers and government directly related with the level of development of
the economy in general and the tourism sector in particular. It is a function
of the number of both domestic and foreign tourist travelers in the area,
travelers for the commercial or business purposes, travelers for conference
and other assembly purposes, residents in the area (in fact it depends up on
the standard of the hotel and the living status of the residents) etc. Demands
Evaluation Mechanism

The following are some of the methods which can be used to evaluate the
demand of the services. By use of Customers feedback follow up form

High GDP growth and increasing corporate entry is driving hotel demand in
the business and conference segment.

4.4. Capacity and service programme

4.6.1. Capacity

From the market study, it is observed that there is a great demand

gap between the demand and supply of 3 star Islamic hotel service in the
town. Therefore, taking in to account the market study and economic
scale of service provision the envisaged 3 star Islamic standard hotel will
have capacities as shown below:
Table service capacity ofthe envisaged internationaltourist standardhotel

Sr. No. Type of Service Feasible Service Capacity

1 Bedroom 35 rooms, 10 will be double
rooms, 20 single rooms and 5 suits.

2 Restaurant
• Restaurant (Modern 50 at a time each
and traditional
 • Cafeteria 10- 15 seats at a time
3 Sauna and steam bath 10 heads/day
4 Gymnasium 15 heads/day
5 Meeting room 50x3 seats
6 Prayer Room 50 at a time

4.6.2. Service Programme:

At the initial stage of the service provision period, the hotel would require
some years to penetrate into the market and capture a significant market
share. Therefore, in the first and second year of service the capacity
utilization rate will be 75% and 90%, respectively. Full service
provision shall be attained in the third year and then after. The proposed
service provision program is shown in Table 4.7.

Table 4.5 service provision programe

Sr. Service Service Year

No. 1 2 3- 10
1 Service provision rate (%) 75 90 100

4.5. Marketing strategy

As discussed earlier the major target groups for our hotel are the Muslim
Society live in the town and the Tourists which is going to come to the town
to visit the Ancient mosques and natural resources. Providing quality
services and consistently improving with the changing situations should be
the promoters’ objective. Hence, according to the feasibility study, the
promoter has the following marketing strategies:

 Contacting government and private agencies affiliated with tourism

on a regular basis, informing them of any corporate rate, discount
programs, availability of services, etc.
  Emphasizing the access of the proposed hotel to support client’s
attractions, as well as the services and amenities available,
 Special effort will be made to emphasize the price-value relationship of
the service available,
 Actively marketing the hotel prior to the completion and opening,
 An aggressive local marketing effort and promotion of the hotel market
to enable the hotel to capture a more than proportionate share of
support within the market,
 Working with local people to establish a competitive amenity package
responsive to specific requirements.

4.6. Competitors Overview

As discussed earlier although there is no Islamic Hotel in the town and no

specific competition for the business we will use different marketing
strategies and quality policy to attain new customers and keep our
customers satisfied,
In addition to the above, the failure stories that I have observed from others
and the comments collected from my customers will help me to win my
competitors.
In conclusion, my service compared to the competitors looks like:
 I keep the promise I make
 Quality service is my motto
 Transparent price setting and fair price will be bases to win the
competitors
 The promoter long term experience and goodwill that he has achieved
from his respected customers will allow me to win the competitor. In
addition to the above, the failure stories that we have observed from
others and the comments collected from our customers will help us to
win our competitors.
5. TECHNICAL STUDY

5.1. Design and particulars

The project owner interest, as regards to how the overall building design
looks like and the level of service to be rendered by the envisaged project, is
dependent on the area at which the buildings to be placed. The owner has
already decided to commit himself to construct a three star Islamic hotel
having the full knowledge what is required by the national and international
standard of Hotels in Ethiopia. The standard by the way its exhaustiveness as
well as being explicitly specific on the level of the service expected under the
selected category, determines also the physical and financial requirement of
the project. Hence, in effect the contents of project components to be
described below are the derivatives of the requirements mentioned above.

5.2. Physical appearance

The hotel would have G + 3 building placed on an area of 5000 m 2. The

architecture of the buildings are influenced by the ancient islamic home
styles design setting holding the characters of attracting customers from out
ward and allowing the maximum comfort it can provide from service point
of view. Apart from the need to add a new look within the locality, exterior
of the building will be dominated by a glass panel at the strategic corners to
provide a maximum opportunity for guest to have, a look at the important
land escape/scenery of the area.

The outer space is allocated to have an open garden, children’s playing

ground, parking area, open air cafeteria and so on.

5.3. Core facilities

The envisaged hotel should have sufficient and comfortable space to

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

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

(a) Bed rooms

A total of 35 classes are allotted for room services with options to avail two
different types of
accommodations. In the interest
of following the trend in the
industry single and double
bedrooms. Actually the
standard requires allowing
maximum 30% from the total
while the rest can remain with
big double bed rooms or any
other smaller rooms. On the bases of the above considerations under this
component, the hotel will have 20 single ,10 double and 5 suit king bed
rooms

(b) cafe
Standard Three star hotels must have at least one cafe with a superior
comfort and service quality. The furniture and equipment’s, as being the
basic sources of customer’s attractions, need to be fashionable of higher
quality commensurate with the expectation of guests who happen to prefer
this class. Therefore, the envisaged hotel, having the requirements
considered too, will have one main cafe at the ground floor adjoining the
reception area. The minimum carrying capacity of the bars is estimated 200
persons per day.

(c) Main restaurant

Technically a hotel to be classified under three stars of as such this one must
have at least two dining places having the size proportional to the guests
who have checked in as normally customers do not prefer to worry about
going out once they have settled. The area determination has to take into
account this. Hence, the hotel must provide the maximum range of varieties
at all times.
The hotel will have the capacity entertaining 200 guests and allow
maximum efficiency in the service by having the restaurant located nearer to
the main kitchen.

(d)Prayer room
The Islamic hotel will have a prayer room for Muslim religion followers to
pray in each time, the Islamic hotel will have a capacity of 100 prayers at a
time.

(e) Banquet/Conference hall

A hotel with Three stars needs to have a conference/banquet hall of larger
area which can be used for banquet or conference interchangeably. This
project considers this component as the second important function next to
the room services as this area has a higher potential for such services. The
holding capacity of the main conference hall will be 150 persons.
 (f) Supports
Kitchen
Two kitchens, with the processes of multiple varieties of food preparation
and a proportional capacity to handle the maximum guests to be served in
the main restaurant as well as in banquet hall, is the critical requirement
for the proposed hotel. It should be large enough also to accommodate the
working areas of cold and hot meals on the one hand and pastries and
bakery on the other.

In order to allow reasonable space for workers to move around as well as to

avoid the possibility of contamination and spoilage, the pastries and bakery
will be placed at the nearest door joining the main buffet at the gate of the
restaurant. On the other hand, the kitchen should be provided with a space
to add a small store with a flexible structure to contain butchery and cold
rooms. These are critical for easy facilitation of cooking’s. Moreover, the
kitchen will have a well-connected washing corner with at most margin of
clearance to make the area safe and clean.

Power House
For the service of the hotel to continue uninterrupted, a power house is
already planned to be placed in the underground or back to the building.
Hence, the power house will be supplied with a generator planned to be
fixed for emergency service.

Store
Alike the capacity projection made on the kitchen, the envisaged project
requires a store as big as the varieties of items that are needed to be kept as
stock. The store will need to have a systematic management for stocks
properly placed and identified at the time of delivery and inventory. Hence,
it is the required procedure to organize the stock items in separate sections
so that the proper handling of stocks shall be maintained. In view of this, the
hotel requires a number of stores with sections for food items, beverage,
glass wares, silver wares, soft furnishings, cleaning and sanitary materials,
stationery materials all placed according to their physical appearances. The
store will be placed in locations nearer to kitchen or leisure service.
Car Parking
The hotel must provide the service of car parking with 24 hours protection
at least for those customers who have checked in. Again, it should be large
enough to accommodate as many vehicles as the hotel is going to entertain a
large crowd. In view of this, a parking space for about 17 vehicles is
planned to be allocated with the standard width and height of the drive in
routes.
 5.4. Hotel Furniture and Equipment’s

Furniture and equipment required to furnish the envisaged hotel depend on

the space to be available as well as on the quality and volume of service to
be rendered. Normally the quantity required will also depend on the
standard of the hotel

Therefore, for this particular category of forecasting two levels of

considerations are taken into account. One, by the fact that the design of
building directly determines the space available for every item, size will be
governed by this and again the quality required furniture will determine
base on the kinds of facilities available. In any case the required quantities
are forecasted based on the components stated below:
 35 bed rooms,
o 5 king size luxury bed rooms
o 10 standard Double bedrooms
o 20 standard Single bed rooms
 Special cafeteria
 Prayer Room
 Traditional and Modern restaurant
 conference rooms,
 Massage room
 Sauna and steam bath room
 Physical fitness room
 Management office and store,
  Other civil works including land escaping, parking area, fountains
and inter campus paving.

 Inputs/ raw materials and utilities

5.5.1. Raw Material cost

The annual cost and list of raw materials are indicated in Table 5.1.
Table 5.1 Annual requirements of raw and auxiliary materials

S/N Raw materials Quantity per cost per per year

month month
Food materials raw costs lamp sum 100,000.00 1,200,000.00
d/t type Beverage raw costs lamp sum 100,000.00 1,200,000.00
massage, sauna bath and other lamp sum 6,000.00
related cost 72,000.00
Cleaning materials and other lamp sum 7,000.00
miscellaneous uses 84,000.00
Total 2,556,000.00

5.2.2. Utilities
Annual requirement of electricity, water and fuel is estimated at 236,000
birr from which, 50,000 kwh, 30,000 m3 and 2000 liters, a r e electricity,
water and fuel respectively. The total costs of utilities are, therefore, about
Birr 236,000 per annum.
Table 5.2 utilities
Description Qty. Cost per
unit cost Year
Electricity, kWh 50000 1.25 62500
Water, m3 30000 4.5 135000
Diesel, lt 20000 18 38500
Total 236000
 5.5. Machinery and equipment

Machinery and equipment required for jute bags manufacturing plant are given in Table
Table 5.3 list of machinery and equipment
Furniture and equipment's required for Suit bed rooms (2 )

S/n Description Quantity Unit price Total (birr)

1 Sofa single 2 2,500 5,000
3 TV 29” 2 8,000 16,000
4 Telephone stand 2 500 1,000
5 Telephone apparatus 2 750 1,500
6 small Refrigerators 2 4,000 8,000
8 Coffee table 2 1,500 3,000
9 French Bed (120 x 180cm) 2 20,000 40,000
10 Cupboard built in 2 5,000 10,000
11 Head lump 2 1,000 2,000
12 Writing table with chair set 2 2,500 5,000
13 Chest drawer 2 1,500 3,000
14 Spring mattress 2 5,000 10,000
16 Bed sheets 4 500 2,000
17 Bed cover 2 800 1600
18 Pillow 6 250 1,500
Total - 109,600

Furniture and equipment's required for double bedrooms (10)

S/n Description Quantity Unit price Total (birr)

1 Sofa single 20 2,500 50,000
3 TV 21” 10 8,000 80,000
4 Telephone stand 10 500 5,000
5 Telephone apparatus 10 750 7500
6 Refrigerators 10 4,000 40,000
7 Standing lump 10 1,000 10,000
8 Coffee table 10 1,500 15,000
9 French Bed (120 x 180cm) 20 12,000 240,000
10 Cupboard built in 10 5,000 50,000
11 Head lump 10 1,000 10,000
12 Writing table with chair 10 2,500 25,000
13 Chest drawer 10 1,500 15,000
14 Spring mattress 10 5,000 50,000
15 Bed sheets 40 500 20,000
16 Bed cover 40 800 32,000
18 Pillow 40 250 10,000
Total 659,5000

Furniture and equipment's required for single bedrooms 20

S/n Description Quantity Unit price Total (birr)

1 Sofa single 40 2,500 100,000
2 TV stand 20 2,000 40,000
3 TV 21” 20 5,000 100,000
4 Telephone stand 20 500 10,000
5 Telephone apparatus 20 750 15,000
6 Refrigerators 20 4,000 80,000
7 Standing lump 20 1,000 20,000
8 Coffee table 20 1,500 30,000
9 French Bed (150 x 180cm) 20 20,000 400,000
10 Cupboard built in 20 5,000 100,000
11 Head lump 20 1,000 20,000
12 Writing table with chair 20 2,500 10,000
13 Chest drawer 20 1,500 30,000
14 Spring mattress 20 3,000 60,000
15 Bed sheets 40 250 10,000
16 Bed cover 40 500 20,000
17 Blanket 40 1,000 40,000
18 Pillow 40 100 4,000
Total - - 1,089,000
Furniture and equipment's required for office, reception, leisure and others

S/n Description Quantity Unit price Total (birr)

1 Executive double redistill desk 1 20,000 20,000
2 Executive swivel arm chair 1 5,000 5,000
3 Double pedestal desk 5 4,000 20,000
5 Secretarial desk 2 3,500 7,000
6 Guest chairs 8 600 4,800
7 Safe box 4 4,000 16,000
8 Shelf 4 3,000 12,000
9 Reception desk 2 40,000 80,000
10 Cash register with stand 1 7,500 7500
12 Telephone apparatus 2 300 600
13 Pc with printer and stand 1 15,000 15,000
14 Emergency power generator 1 300,000 300,000
Total - - 487,900

Furniture and equipment's required for cafe

S/n Description Quantity Unit price Total (birr)

1 Tables 30 2,500 75,000

2 Chairs 100 750 75,000
5 TV stand 2 5,000 10,000
6 TV set 55” 2 25,000 50,000
7 Casher box 2 5,000 10,000
 9 Coffee machine stand 1 50,000 50,000
10 Refrigerator big 1 20,000 20,000
11 Refrigerator medium 1 12,500 12500
12 Coffee roaster 1 7,500 75,000
13 Ice maker 1 5,000 5,000
14 Pastries stand 1 15,000 15,000
15 Juice maker 1 5,000 5,000
16 Satellite dish with receiver 1 2,500 25000
17 Shelf with drawer 1 20,000 20,000
18 tea cup 100 25 2,500
19 coffee cup 100 25 2,500
20 Milk cup 100 25 2,500
21 Makiyato cap 100 25 2,500
22 water glass 100 15 1,500
23 service tree 100 150 15,000
Total - - 474,000
6. ORGANIZATIONS AND MANAGEMENT

6.1. Organizational Structure

The organizational structure of the project is designed by including all the

necessary personal under the right division. At the top of the organizational
structure, there will be a general manager with the responsibility of
supervising the overall activity of plant. Depending up on the nature of the
center and the amount of work to be performs under each will be supervised

Sales & technical Unit

CEO

Adviser G/Manager Internal Auditing & Inspection

Manager/supervisor
Coordinator
Marketing Unit

Secretary
Admin & finance Unit

by the unit head that is accountability for general manager

As clearly shown the organizational structure, the integrated projected
center has CEO three Departments under the general manager, Addition
and the internal Auditing and inspection. The departments are the
production Department, the marketing department and the general service
department under each department there are different section which are
undertaking different activities
 6.2. Management

As to the management of the project is concerned the owner will be

responsible for the overall project planning, co-ordination and
implementation. After project implementation the promoter serves as a top
management body and frequently visits and supervises the organization.
Cattle fattening farm a business man who has a long year experience in
managing business activities. Therefore, the extensive experience he has
enables him to organize and properly manage the envisaged International 5
star hotel Service.

6.3. Manpower Requirement

For smooth and efficient operation of the organization, it has been

anticipated that each units will have adequate number of qualified and
experienced manpower. The labor component of the Islamic 3 star hotel
Service G/manager will hire qualified and experienced in management whose
main responsibility is to coordinate the overall activity of the project. The
distinct units have their own operational teams under them. To fill in all these
work units with the required manpower The project will provide 80 employees,
60 permanent (20 skilled & 4 0 unskilled) and 20 casual skilled and
unskilled workers. For smooth operation of the project, employees will be
given on job training, clear duties and responsibilities under the direct
supervision of their respective units.
 Table 6.1: Manpower Requirement

Annual
S/n Description of Job Qualification No. Monthly Salary(Br)
1 General Manager BSc in Hotel management 1 10000 10000
2 Coordinator/supervisor BSc in Hotel management 2 6000 12000
2 Receptionist diploma in Accountant 2 5,000 10000
3 Pastry and Staff Cafeteria diploma in food preparation 4 7,000 28000
4 Cafeteria supervisor diploma in Hotel management 2 5,000 10000
5 Waiter diploma and Certificate 10 2,000 20000
6 Cooker diploma in food preparation 5 7,000 35000
7 Coffee machine operator 12th complete 2 3,000 6000
9 Pastry attendant Certificate 2 5,000 10000
11 Dessert attendant skill professional 2 1,500 3000
12 Massage expert Certificate 2 5,000 10000
17 Casher diploma in Accountant 4 2,500 10000
18 Cleaner vice 8th grade complete 10 1,500 15000
19 Plumber diploma in electrical 2 2,000
engineering 4000
20 Electrician diploma in electrical 2 2500
engineering 10000
21 Gardener skill professional 2 1000 2000
22 Guards gardener 6 1,000 6000
Total 60 - 201,000

6.4. Training Requirement

Since the machinery and equipment and services are easy to operate, a
special training arrangement is not needed. But operators, chemists,
mechanics & electricians need a two weeks training during erection,
commissioning period on the production process, raw material and product
quality and operation and maintenance of machinery and equipment by the
expert of machinery supplier..
7. SENSITIVITY ANALYSIS

Sensitivity analysis is variant of scenario analysis in which each scenario

represents a change in only one variable, rather than a number of variables.
For the proposed project, the sensitivity of the project has been computed at
30% and 35% for sales reduction, operating cost increase and investment
cost increased accordingly, as described in table 7.16 the result shows that
IRR at 33.9% operating cost increase and 30 and 35% investment cost
increase and 30% service sales reduction. Predicting among these sales
reduction is more sensitive to the project and it should further expand after
the project proposed life time because in this case NPV equal zero at
IRR=33.9
8. RISK ANALYSIS

The major risk of this project shall be high market price fluctuation and
turnover the skilled and trained man power. These risks can be mitigated.
The high staff turnover may be lessened by creating conductive working
atmosphere and providing some benefits. For this project, 25% benefit is
proposed for the permanent employees
Characteristic (Personal) Risk: This is the most important risk, which
should be seriously considered? As to this company, the promoter have
sufficient years of work experience in both government and private
organization (leading private business by engaging themselves), so personal
risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable.
The demand- supply analysis exhibits the need of the service of the business

63
 Project Proposal on 5 star international /tourist hotel

organization. According to the overall demand the effect of competitors in

the sector would not be an immediate alarming threat at least for the
coming few years. In additional to this Long year experience of the owner in
the field will help to react against any adverse situation in the business.
However, the reaction of competitors should be attended. In additional to an
advanced promotional work and sustainable goodwill development by
creating new and best quality products with good service deliveries

Collateral Risk: Since the owners of the project are engaged on different
related business, there is no any risk related to collateral. In this regard, the
proposed building and other proposed equipment and the business as a
whole are dependable securities. The experience and skill of the owner as
well as the manager and the other expertise add confidence to the lenders.
Therefore, there is no risk regarding collateral in general.

Construction Risk: Construction risk is one of the most important areas

of risk that need great consideration during project implementation. In the
case of 5 star international hotel services, the construction work of the
proposed building will be made by phase with self-response supervision.
Hence, there is no as such serious risk related to construction work.

All the identified risks, which are related to the universally accepted lending
policy, are to the acceptable level that keeps the lender’s interest in safe
position. Furthermore, the quality of the assets of the company is
dependable and the projected finical reports show that the company will
have a capacity to pay the principal and interest without any problem with
in short period of time.
 Project Proposal on 5 star international /tourist hotel

9. MONITORING AND EVALUATION

Monitoring and Evaluation (M&E) has long been recognized as a vital

aspect of development projects generally and of industrial and services
projects in particular. The monitoring of project performance consists of
the tracking of human, physical and financial resources and the recording
of how they are converted into outputs (project goods and services), and in
turn, outcomes and impacts.

10. CONCLUSION AND RECOMMENDATION

Conclusion: The Project is found to be operationally profitable & has

significant socio-economic benefits. According to the projected income
statement, the envisaged project starts earning profit from the first year of
production. The income statement and other profitability indicators show that
the project is viable. The project is believed to have significant social and
economic benefits that accrue to the society beyond those financial returns
to its owner. The most remarkable social benefits can be expressed in terms
of job creation that leads to reduction in the level of unemployment.

Recommendation: The project directly employs 80 persons; therefore,

considering the attractive financial and economic benefits the project is to
produce, the promoter has made the necessary preparation hoping that all
the concerned offices & financial institutions should give their support to
facilitate the implementation of this plan.