PROJECT PROPOSAL

ON
Hotel And Guest house

PROMOTER – JEMAL ABDUREHIMAN

LOCATION:-Addis Ababa Bole bulbula sub city

july, 2023

Addis Ababa , Ethiopia

 TABLE OF CONTENTS

I. EXECUTIVE SUMMARY

1. INTRODUCTION………...................................................................................................…..4
2. Background…………………..……………………………………………………………..…5
2.1 The Industry of the Project……………………………………………………..……........5
2.2 The project Sites..................................................................................................................6
2.3 Project Benefits/Project Justification………………………………………………..….…9
2.4 The Promoter…………………………………………………..………………….…......10
3. General Description of the Area………………………………………………………...…...10
3.1 Location…………………………………………………………..……………………...10
3.2 Topography…………………………………………………………………..…...……...10
3.3 Soil Type…………………………………………………………………..……………..11
3.4 Economic Activity………………………………………………………………......…...11
4. The project description……………………………………………………………………....11
4.2 Object of the Project…………………………………………………………………......11
4.3 Technology and Techniques to be used……………………………………………….....12
4.4 Service Provision capacity and capacity Utilization…………………………………......13
5. Market study and plant capacity
5.1 International and Domestic demand for Hotel services………………………………….13
6. Land use plan and action plan……………………………………………………………..…15
6.1 Land Use Plan……………………………………………………………...…….………15
7. Organization and management………………………………………………………...….…16
7.1 Organizational structure …………………………………………………………………16
8. Financial study………………………………………………………………………….……19
8.1 Project capital and sources of finances…………………………………………..………19
8.2 Initial working capital estimation of the project …………………………………...……22
8.3 Estimated costs of salary expense…………………………………………………...…...22
8.4 Revenue and Revenue projection…………………………………………………..……24
8.5 Depreciation of the Fixed Assets……………………………………………………...…25
8.6 Basic Assumption’s ……………………………………………………………...…...…26
9. Financial Analysis……………………………………………………………………………27
10. Brief Environmental Impact Assessment (EIA) …………………………………………….28
Anne x I: 4-Star International Hotel Project Action Plan/ Gantt chart………………………29
 EXECUTIVE SUMMARY

1. Project title – International Standard Hotel and Guest house

2. Promoter – Jemal Abdurehiman

3. Project Location:-Addis Ababa bole bulbula sub city

 Addis Ababa city

 Bole bulbula sub city
4. Total Proposed Land Area (M2) = 7, 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.
1. Introduction

I
n history of mankind and in no measure a particular country or society subdue itself to a humiliating
and grinding poverty as poverty is the indication of deprivation of basic necessities. Ethiopia, the
country with immense natural resource potential, is always cited as one of the home of the people
on the face of the earth stricken with famine, drought and poverty. What so ever the past and whether it
was desecrate or blessing, the existing situations in this country is the most important one. Today in
Ethiopia the gleaming hope for development is quite encouraging, the government policies concerning
the private investments are invigorating and to indicate some major steps taken the country in private
investment policy endeavors;

 Capital goods and building materials may be imported duty-free by star designated hotels and
international standard restaurants.
 Buses for tourist use may be imported duty free.
 Four-wheel-drive passenger vehicles of the Land Cruiser type may be imported duty-free subject to
the conditions that Five brand new vehicles must be purchased within a period of one year in a
maximum of two consignments.
 Any investor may employ duly qualified expatriate experts required for the operation of the business
and so on. Furthermore, to some extent the living standards of country’s citizens are improving. In
line with social changes people are trying to pull out themselves from primary economic activities to
civilized activities and improving their income. As income increases many people start to change
their living habits and tastes: with social changes facilities and type of social services should be
changed and modernized. One of the modern versions of social services is the development of
modern hotels and tourism sector. But due to known reasons there is no or very few hotels in many
medium and small towns of the country in general and the region in particular. A few existing ones
are with backward or poor facilities which are nuisance to customers and undesirable for country’s
image. Owing to this realities and the increasing demand for such facilities, this project is proposed to
be established in the area where there is no such hotel at all.
2. Background
2.1. The industry(Hotel and Tourism sector)
The development of hotel and tourism can be categorized in the third stage of traditional economic
development of a particular country. But today the existing situations are changing as a number of
countries in the world are holistically the whole economic growth endeavors at the same time not
necessarily giving focus to a particular sector of the economy for achieving fast and sustainable economic
growth.
Thought, Ethiopia’s economic policy is ‘agriculture led industrialization’; the country is working on all
strategic areas including the tourisms sector and the income being earned from the sector is increasing
from time to time. Furthermore, as the country has able to make register nine historical and natural world
heritage centers by UNESCO, the hotel and tourism sector is becoming one of the focus areas for
achieving the five year GTP of the country.

COMPANY DESCRIPTION

Offering a luxurious atmosphere, Jemal Abdurhimnan 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 Bole Bulbula sub-city , it will conform to all city of addis
ababa city regulations, as well as any required by Mono County and the state of Addis
ababa region. Below is a thorough account of our services,
Opportunities, competitive sales and marketing strategies provided by Jemal guest
house. .

2.1.1. Justifications of the Industry:

As explained by Roe, Ashley, Page & Meyer (2004, the following points are deserving attention for
justifying what the sector for poor countries mean;
 Tourism is generally labor-intensive – although less than agriculture – and therefore can impact on a
large number of lives through the labor market;
 Tourism has considerable potential linkage, especially with agriculture and fisheries, which can
minimize the ‘leakage’ effect. Due to the high income elasticity of demand for international tourism,
it can offer a relatively rapidly growing market;
 Tourism provides opportunities for off-farm diversification, particularly in areas that do not attract
other types of development options;
 Tourism can provide poor countries with significant export opportunities where few other options are
viable;
 It may create initial demand for a good or service that can itself develop into a growth sector;
 Tourism products can generate demand for assets such as natural resources and culture, to which the
poor often have access;
 Tourism delivers consumers to the product rather than the other way around; and
 Infrastructure including hotels associated with tourism development can provide essential services for
local communities.

2.2. The project

The envisaged project is the development of hotel services in Addis Ababa city . The development of
hotels in the country is now gaining momentum as more focuses are being given to the sector. Beyond
the envisaged perceptions, development of standard hotel facilities in all towns of the country in general
and the region in particular would enhance the development of domestic and foreign tourist flow in all
areas of the country as the country is endowed with numerous historical and natural tourist attraction
sites.

1.1. Project description and Justification

The hotel is high class hotel where services like bedroom, catering, meeting
rooms, multipurpose assembly hall, sauna and massage, other sports facilities
like tennis or squash court, min- golf or badminton, bowling, table tennis 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, , 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 Ethiopia, a hotel is required by law to serve food and drinks
to all guests within certain stated hours.

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.3.4. Mission and goal
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 75 permanent and 25 causal
 To achieve standard tourist hotel and give quality service.
2.2.1. Expected Standards of Five Star Hotels
As hotel and Guest house is the lowest level of international standard hotel, expectations at this level
include a degree of luxury as well as quality in the furnishings, decor and equipment, in every area of the
hotel. Bedrooms will also usually offer more space than at the lower star levels, and well designed,
coordinated furnishings and decor. The en-suite bathrooms will have both bath and fixed shower. There
will be a high enough ratio of staff to guests to provide services like porter age, 24-hour room service,
laundry and dry-cleaning. The restaurant will demonstrate a serious approach to its cuisine.

2.2.2. Required notifications in Five star designated hotels

The following notifications required due attentions in Five star designated hotels.

 Restricted Service
Some hotels operate a restricted service during less busy months. This may be a reduction of the
restaurant service, or some leisure facilities may be unavailable. Please check when booking.

 No Dogs
No dogs allowed in bedrooms. Guide dogs for the blind may be accepted as an exception to this rule.
However, even where hotels allow dogs, they may exclude some breeds, and may exclude dogs from
certain areas of the hotel, especially the dining room. It is essential to check the conditions before
booking.

 Night Porter
At some hotels, the night porter may be there only between certain hours or on certain nights . However,
four and five star hotels must have a night porter always on duty.

 Entertainment
This indicates that entertainment should be available at least once a week throughout the year. However,
some hotels may provide entertainment in the summer season or at other specified times.
 No children
This indicates that children cannot be accommodated. A minimum age may be specified (e.g. No children
4yrs - no children under four years old). If this does not appear in the entry, it means that the hotel will
accommodate children, but may have no special facilities for them (e.g. no cots or high chairs). It is
essential to check when booking.
 Special Facilities for Children
This shows that establishments with special facilities for children, which will include baby intercom or
possibly baby-sitting, playroom or playground, laundry facilities, drying and ironing facilities, cots, high
chairs and special meals.

 Conference Facilities
This denotes that conference facilities are available with maximum numbers that can be accommodated
theatre style; classroom style; boardroom style and the minimum overnight delegate rate.

 Facilities for Travelers with Disabilities

Intending guests with any form of disability should notify proprietors in advance so that arrangements
can be made to minimize difficulties, particularly in the event of an emergency.

 Meals
Details of the style of food, last dinner orders, and likely price range are given. If there is a fixed-price
menu or menus, this is the price range quoted. V meals indicates that a choice of vegetarian dishes is
normally available.
In some parts of Britain, particularly in Scotland, high tea (i.e., a savory dish, followed by bread and
butter, scones, cake, etc.), is served in the early evening instead of dinner. However, the alternative of
dinner may be available on request. The last time at which high tea or dinner may be ordered is shown,
but there may be some variation at weekends. On Sunday some hotels serve the main meal at lunch time,
and only a cold supper in the evening.

 Morning Coffee/Afternoon Tea

Indicates that morning coffee and/or afternoon tea are served to chance callers. All four and five star
hotels serve morning coffee and, normally, afternoon tea to resident guests.

 Credit and Charge Cards Other Payment

The payment policies of hotels should be made clear to patrons on the point of booking. Not all hotels
will accept travelers' cheques, even those from leading banks and agencies. If a hotel accepts credit or
charge cards, the information is shown in its entry. It is advisable to publish and notify customer the
policy regarding the use of credit cards.

 Booking and cancellation procedures

These should be noted to all customers, inclusive of confirmation numbers. The cancellation policies of
the facility also have to be clearly stated.
  Complaints
A crisis management procedure is a must especially in the case of guest complaints. Fire and bad weather

 Smoking Regulations
Hotel should state clearly its policy on smoking. Ensure that where smoking is allowed there are
designated areas for non-smokers inclusive of rooms away from smokers.

 License to Serve Alcohol

Most Hotels and other accommodations with bars are licensed to serve alcohol. On many properties this
permission is clearly stated on entry to the bar area. Where there are exclusions for minors under 18 or 21
this should be pointed out to the relevant patrons.

2.3. Project Benefits

The envisaged project can be justified by the benefits it delivers to the country, the promoter and the local
communities. The main justifying points are explained as follows;

The project will contribute immensely to the tourism industry in particular and changing of country’s
image in general by creating internationally accepted standard facilities,
The investment will benefit the country in generating hard currencies and in boosting the GTP
program,
The project will benefit the local communities through creating job opportunities and markets for
their products to be supplied for the hotel.

Increase investment with multiplier effect to the national economy,

2.4. The promoter

The promoter of the project, Mokenen Ragesa is an Ethiopian nationality and we have same experience
in different business activities. Now he has decided to contribute in his country’s development
endeavors by investing in the sector he selected. His vision is to make the country one of the best tourist
destinations in the world through promoting the country’s tourism industry by being linked with tour
operators elsewhere.

3. General description of project area

3.1. Location

The proposed project of International hotel and Guest house 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

3.3.1. 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 International
Airport, 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

3.3.2. 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 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
3.3.3. 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]

Ethiopian Airlines has its headquarters on the grounds of Bole International

Airport in Addis Ababa
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 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.
 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.

4. The project
4.1. Project description
As mentioned above, the envisaged project is to establish international standard hotel and guest house in
Addis Ababa city on 7,000m2 of land to be secured from regional Investment Board.

4.2. Objectives
The primary objective of the project has many folds, but targeting at the promotion of the country’s
tourism industry through modern families and contribute in making the country one of the best tourist
destinations in the world and encourage other Diasporas invest in their country. The common
objectives are;
 To establish and run modern a Five star hotel
 To help develop the tourism sector of the region/country
 To generate profit from invested capital
 To create job opportunities for local community
 To generate revenues for the country in the forms of taxations and rents.
4.3. Technology and Techniques to be used
Obviously, as this is 5-star designated hotel services, the project will utilize Five star standard hotel
industry’s technologies as indicated in the background of this project and techniques in serving the
customer. Hence, the following activity flow, technologies and techniques are common in hotel
construction and services operations.
 Preparation Resource
Start Site clearing
of design mobiliation

Supper Sub
Roofing
structure structure Excavation
works
works works

Doors, windows
Plastering Painting
works works
and other Finish
fininishing works

Start
Recruitment Furnish
operations

Fig1. Work process flow for hotel construction and service provisions

4.4. Service Provision capacity and Capacity utilization

The production capacity of the project is estimated based on the services the envisaged hotel is going
to provide and these are indicated in the following table.
Table1. Service Provision capacity of Hotel service project
No Main services Unit Full capacity operation
1 Bed rooms pcs 100
Bar
1. Alcoholic beverages Lit 2000
2 2. None alcoholic beverages Lit 5000
3. Hot beverages Cups 30000
4. Foods Dish 80000
Other services
3 1. Meeting /conference service Occasion 12(once a month on average)
2. Weeding service “ 24(twice a month on average)

The project will utilize 50% of its capacity in the first year of operation, 75% its capacity in the second
year and 100% in the third year of operations.

5. Market prospect
Marketing opportunities for hotel services are directly linked with the level of the country’s/regional/
economic and tourism development. As the region’/Country’s economy develops, the citizens’ income
improves and as income of the citizens improves they certainly start looking for knowing their
surrounding and their whole nation historical and natural attraction hence the domestic tourist travelling
culture will be developed. Similarly, as the country’s infrastructure developed and its stability and
security issues are insured, international tourist will develop interests in travelling in the country visiting
its historical and natural attractions. Currently, the country’s economic and social development is on the
right track and the future of this nation is shimmering and the hotel and tourism market development will
also do the same.

5.1. International and Domestic demand for Hotel services

5.1.1. International Demand For Ethiopian Hotel and Tourism
As aforementioned, Ethiopia is home for nine world historical and natural heritage sites and these sites
are to be visited by tourists coming from all-over the world. Based on the current information on tourism
market in the country, the demand for Ethiopian tourism market has been increased by more than double
as compared to the last ten years demands. This is because of;
1. Infrastructural development including quality hotels
2. Peaceful conditions of the country
3. Identification and promotion of more tourists attraction sites
4. Development of domestic tourists and so on. It is believed that this trend will continue for the years to
come and hence no marketing problems for Ethiopian tourism industry as long as strong promotion
works will continue for complete changing of the country’s image.
For example as study showed that the Inbound Tourist Arrivals in Ethiopia continued to grow from
76,844 in 1989, to 115,000 in 1999, 184,078 in 2004, 427,286 in 2009 and reaching 523,438 in 2011.
During the year 2011, Ethiopia witnessed a positive tourist growth of 11.8 % over 2010. The compound
annual growth rate in Inbound Tourist Arrivals in Ethiopia during 1989 to 2011 was 9.7%. Table 1
indicates the trends of tourist flows into the country and the growth rates over the period (1989-2011).
According to Ministry of Culture and Tourism (MOCT) Tourism Statistics Bulletin of 2009, the total
number of hotels in Ethiopia in the year 2009 was 426. Recent data on the number of hotels in the
country was unavailable. As a result, to estimate the total number of hotels taking 20% growth rate, it can
be estimated as 511 hotels in 2012, and 613 hotels in 2013 the country. This number includes all five
stars, four stars, Five stars, two stars, one star and not classified categories of hotels. Though it is clear as
can be seen from an annual growth of 20% in hotel industry, there are still a lot is to go at least to
compute with some African countries who are equally or less resource endowed as compared to Ethiopia.
If we see only Kenya and Morocco, we notice a big difference in number. According to The Embassy of
Japan in Ethiopia (2008), even by 2004 data the hotel stock amounted to more than 140,000 in Egypt, in
Morocco 80,000 and more than 65,000 in Kenya. Even though the international hotel classification
system is adopted in Ethiopia and hotels are classified into categories with stars from one to five and
hotels without stars as other countries do.
It is possible to see the number of hotels, the rooms they have and the number of beds they constitute in
the following table.
Table2: Existing Hotels in Ethiopia
No of No of Average Room/Bed

No Category of Hotels No of Hotels Rooms Beds per hotel category

1 Five Star 3 794 1264 265Rooms & 422beds

2 Four Star 13 921 1197 71Rooms & 92beds
3 Five Star 37 1691 2314 46 Rooms & 63beds
4 Two Star 40 1465 1898 37 Rooms & 47beds
5 One Star 23 698 941 31 Rooms & 41beds
6 Not Classified 310 8549 10322 28 Rooms & 32beds
Total 426 14118 17936

Source: MoTC magazine

5.1.2. Domestic Demand For Ethiopian Hotel and Tourism
The domestic market for tourism industry is untouched and not promoted as required. In the country with
more 80 million populations, there are less than 5000 domestic tourist coming to the industry in a year.
Hence, this trend should be changed through strong promotion works by concerned organs and by the
same token, the infrastructures form domestic tourists like reasonably priced hotels and accommodations,
tour guide with adjusted domestic tours and strong collaborations among tour guides and the hotel
systems should be tantamount for the development of this industry and increase in domestic market
demand for the industry.

2. TECHNICAL STUDY

2.1. 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 furnish a 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.
 2.2. Core facilities

The envisaged hotel should have sufficient and comfortable space to accommodate
the core services as per the requirements of the 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 80 classes are allotted for room services with options to avail two different
typesof
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.

Bars
Standard hotels must have at least one bars 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 bar at the
ground floor adjoining the reception area. Another bar preferably with smaller space
but furnished with cozy furniture will be placed at top floor of the building. This is
just to add another attractive look for the hotel as it will be placed at a strategic
location for customer to have a panoramic view of the area. The minimum carrying
capacity of the bars is estimated 100 persons per day.

(b) Main restaurant

Technically a hotel to be classified under service 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 bedroom, and allow maximum
efficiency in the service by having the restaurant located nearer to the main kitchen.

(c) Banquet/Conference hall

A hotel with Five 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 500 persons.
Business center (mini market shop)
The project needs to have also a business center with the service that would the
customers need. For such a service, the envisaged project will allocate a
relatively bigger area preferably separate rooms at the ground floor. Rooms are
allocated to secretarial service, executive rooms for business meeting and
shopping corners. The secretarial service will be furnished with all the machines
and equipment to handle any business enquiry that may be raised by hotel guests.
The shopping corner also accommodates mini boutique, cosmetics and d/t type
of shop

(d)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 generer 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.
 2.3. 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 i.e. Five star hotel. To the extent that the engineering design of the building
align with the requirements of the standard, the projection of furniture and
equipment’s has to be consistent with the size and number of rooms, bars,
restaurants and leisure center. However, one has to be realistic in the sense that the
forecasting trend to link with the technical feasibility particularly with that of the
envisaged service capacity. Moreover, the balance to be between image building and
income generation capacity has the same level of influence as said above.

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:
 bed rooms,
 king size luxury bed rooms
 standard Double bedrooms
 standard Single bed rooms
 Special Bar and cafeteria
 Traditional and international restaurant
 conference rooms,
 Massage room
 Sauna and steam bath room
 Physical fitness room
 Night club (dancing area)
 Management office and store
 “A Five Star Hotel ”

 Other civil works including land escaping, parking area,

fountains and inter campus paving.
Secondly, in order to fulfill the basic requirements of hotel service, the
quantities forecasted for the above facilities have to be reviewed against the
national standard. Such consideration gives the benefit of consciously
sorting out what item goes with what kind of facility or service. Once this is
determined the forecast of quantity will follow accordingly. The project
detail design work has already been undertaken and the planned facilities of
the project and the required quantities are forecasted in section 5.

6. Land use plan and action plan

6.1. Land use plan
The envisaged project is considered to be established on an area covering 7,000m 2. This land size
will be distributed as per international hotels’ standard and be utilized for main building of hotel
services and other accessory works. Hence, the following land use pattern is proposed for the
project.

Table3: Land use Plan for Hotel and Guest house

N Types of Land Use Proposed land size (m2)

o
1 Main Hotel building 1,200
Parking, Loading/ unloading
2 1,400
area
3 Storage for hotel services 1,000
4 Cozy conference hall 1,000
5 Generator room 100
6 Incinerator 100
7 Guard/Janitor room 200
8 Green area 1,000
Total 7,000

*Please see Annex I for action plan

Jemal abdurehiman
Page 24

G
 “A Five Star Hotel ”

7. Organization and management

7.1. Organizational structure
An organization is an entity established to organize activities, resources and manpower so as to
achieve the intended objectives in a given time.
Organizational structure is a tool designed to allocate the planned activities, responsibilities and
accountabilities to manpower of the organization based on their qualifications and experiences.
Hence, the following organizational structure is designed for the proposed project management.
Fig2. Organizational Structure Hotel Project

General Manager

Reception

Hotel manger Administration &

Finance

Marketing manager Human resources

Catering
Accountant

Accomodation Procurement
and sales

Hotel Security

7.2. Manpower requirement with qualification & level of education

Based on the volume and weight of the job to be assigned the following manpower with relevant
qualification is proposed.

Jemal abdurehiman
Page 25

G
 “A Five Star Hotel ”

Table4: Manpower and specific qualifications for Hotel

N Description of Required Level of Unit Required Monthl Annual

o manpower qualification education Number y salary salary
(Br.) (Br.)
1 General Manager Management BA & above No 1 6000 72000

2 Hotel manager Hotel management BA. “ 1 4500 54000

3 Receptionist Reception Dip. “ 2 2000 48000

4 Admin.& Finance Management BA 2 3000 72000

head
5 Human resource Personnel Dip. :” 3 2000 72000
officer management
6 Accountant Accounting or Dip. “ 2 2500 60000
Business
7 Marketing manager Hotel management BA “ 2 3000 72000

8 Cashier Accounting/ Dip. “ 2 1500 36000

Business
9 Hotel/bar operators Catering Level III “ 20 1200 288000

10 Maintenance workers TVET Level III “ 3 1500 54000

11 Security workers Literate 8th “ 6 800 57600

12 Logistic and TVET Dip. “ 2 1500 36000

Procurement workers
13 Store keeper TVET Level I “ 2 800 19200

14 Cleaner/Janitor Literate 4th “ 5 600 36000

15 Driver Literate 8thand> " 2 1500 36000

16 Health Professional Nursing/ HO Dip/Bsc " 1 4000 48,000

17 Laundry and salon Literate 4th and > " 2 1800 43,200
worker
Total 58+120 1104000

NB:- No of manpower is estimated considering two shift (24hrs) services as it is star designated hotel

Jemal abdurehiman
Page 26

G
 “A Five Star Hotel ”

8. Financial study
8.1. 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.
8.1.1. 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.
8.1.1.1. 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
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

Jemal abdurehiman
Page 27

G
 “A Five Star Hotel ”

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

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

Jemal abdurehiman
Page 28

G
 “A Five Star Hotel ”

8 Area to be taken by fence 100 350 35,000

“
9 Guard/Janitor room 70 900 63,000
“
10 Green area development 4,000 400 1,600,000
“
11 Deep well drilling 1 35,000 35,000
“
12 Purchase of water tanks 6 100,000 600,000
“
13 Intra-road construction 1 800,000 640,000
km
14 Power/ water installation 1 350,000 350,000
Ls
Total 63,918,000

Depreciation of fixed assets

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

values of Rate of Amount of

No Capital Assets Capital assets depreciation Depreciation
(Br.) (%) estimated (Br.)

Buildings and Civil 63,918,000 8,195,900

1 5
works

Utensils, Equipment and 63918000 4,380,000

2 20
machines

3 Vehicles and others 127836000 20 1,470,000

Computer and office 450,000 90,000

4 20
equipment

Jemal abdurehiman
Page 29

G
 “A Five Star Hotel ”

Total 450000 14,135,900

Repair and maintenances

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
values of Amount of
Repair and
No Capital Assets Capital assets estimated R&M
Maintenance
(Br.) (Br.)
(%)

1 Buildings and Civil works 63,918,000 5 8,195,900

Utensils, Equipment and 63918000 1,095,000

2 5
machines

3 Vehicles and others 127836000 5 367,500

Computer and office 450,000 45,000

4 10
equipment

Total 450000 9,703,400

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
 Standard------------------------------40 rooms
 Economy------------------------------30 rooms
 Bedrooms will be rented for 300days per year
 Assumed service prices:

Jemal abdurehiman
Page 30

G
 “A Five Star Hotel ”

 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 160000

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
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

Jemal abdurehiman
Page 31

G
 “A Five Star Hotel ”

8.1.2. 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 154680 232020 309360

Jemal abdurehiman
Page 32

G
 “A Five Star Hotel ”

8.1.3. 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

 Miscellaneous 1 833

Total 26014

Jemal abdurehiman
Page 33

G
 “A Five Star Hotel ”

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 63918000 63918000

Vehicles and others 0 7,350,00 127836000

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

Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance
0 0 0 0 84,104,353
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

Jemal abdurehiman
Page 34

G
 “A Five Star Hotel ”

8.1.4. 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

Jemal abdurehiman
Page 35

G
 “A Five Star Hotel ”

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

Jemal abdurehiman
Page 36

G
 “A Five Star Hotel ”

9. Financial Analysis
9.1. 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

Jemal abdurehiman
Page 37

G
 “A Five Star Hotel ”

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
Purchase of Raw Material 24,029,815 265,075,095 265,075,095
- -
Gross profit 11,593,185
211,640,595 195,389,095
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
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

Jemal abdurehiman
Page 38

G
 “A Five Star Hotel ”

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 37,404,150 48,780,200
Total inflow 120,149,075 31,664,448 44,132,498 55,508,548
B. Cash outflow 0
· Fixed capital 66,081,991
· Working capital 42,052,176
. Contingency (Lump 12,014,908
sum) 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) 0 23,254,013 36,563,106 54,667,505
Cumulative balance 0 23,254,013 36,563,106 54,667,505

10. Brief Environmental Impact Assessment (EIA)

Traditionally, tourism industry is considered to be environmentally friendly venture as it
is commonly called “smokeless industry”. But unfortunately one of the tourism facilities,
hotel, is not free from environmental pollutions as the hotel establishment pollutes the
environment during its construction and implementation phases.
1. Preconstruction phase: -In this phase most of the time the environmental and social
issues of the surround environs are not taken into considerations. And as a result the
probable pollutions of the surrounding surface and ground waters, vegetation, soils
and impacts on societal livelihoods are immense and unavoidable.
2. During construction phase: -In this phase the major part of the environmental
disturbances occur while excavations and construction of hotel structures. Dust
emissions, water and soils pollutions are the major and unavoidable activities where
the incumbent investor would exercise maximum efforts to minimize negative
environmental and social impacts.

Jemal abdurehiman
Page 39

G
 “A Five Star Hotel ”

3. During operation phase:- This phase is the phase at which the hotel started
providing the intended hotel services. In providing hotel services, the major polluting
factors are the improper disposal of liquid and solid wastes, depletion of water, sound
pollution and others. Hence, the planned project should consider the proper drainage
systems that have alignment with the surrounding major drainage systems and
minimize the sound pollutions through construction of sound proofing structures for
building and partitions of building. In doing so such standardized hotel investment
would make immense contributions for the country’s tourism development in general.

Jemal abdurehiman
Page 40