Contents

6. MARKET- DEMAND & SUPPLY ANALYSIS AND STRATEGY ............................................................................................... 7

6.1. Customers /Target market/ ............................................................................................................................................ 7

6.2. Demand and Supply Gap Analysis ................................................................................................................................... 8

National Demand ............................................................................................................................................................ 8

Specific Demand in Nazareth ........................................................................................................................................ 10

National Level................................................................................................................................................................ 12

Existing Supply of Hotel room service at Nazareth ....................................................................................................... 14

Demand Gap ................................................................................................................................................................. 14

6.3. Potential Market and Strategy ...................................................................................................................................... 14

6.3.1.Potential market .......................................................................................................................................................... 14

Market strategy..................................................................................................................................................................... 15

6.4. TECHNICAL ANALYSIS .................................................................................................................................................... 18

6.4.1.Land and Location ........................................................................................................................................................ 18

6.5. Infrastructures .............................................................................................................................................................. 18

6.6. Service Capacity ............................................................................................................................................................ 19

1
 1. EXECUTIVE SAMMARY

The project is intended to establish in East Shoa Zone Adama Town with the objective of
establishing modern Hotel and Recreation center. The hotel provides fully hotel services and
pension service and pension services for weeding and fully 24 hours services the people of
Addis Ababa as Well as for the passenger comes from Oromia and Amhara Regional state to
the Town. The promoter Dr.Aseffa Abera

Project has been accumulates Wealth experience in business the economic liberalization of
1991.

The total investment requirement of the project is Birr 20,000,000.00 of which 30% is own
equity and 70% financed from bank loan .The project will be expected to create jobs
opportunity for 100 people temporal of which 20 people are permanent workers with the
working capital of 5,393,092.00

The project is expected to be located in East Shoa Zone in Adama Tawon in the plot 240 m²
of land scored through base Oromia Region state

The project is primarily to intend provide full hotel and recreation services for all tourists
come from all country and primarily for the residence for Addis Ababa those who are going
out of Addis Ababa for weekend recreation and foreign Tourist.

2
 2. INTRODUCTION

In Ethiopia tourist industry has not been well developed even if with a total population is high
due to lake adequate modern hotel and recreation this sector has been utilizing the smaller
portion of the resources. To this effect the government in courage investor’s tourist in this
sector so as to create employments opportunities and raise the revenue in from tax to the
government. Since in coming to the current government to the power the economy
prosperity has been champed to free market. Which has been given chance of the

development tourist industry.

The conducive economic policy of free market economy encouraged the private sector
investment in tread and commerce. It is in fact now land cannot be hold private but can be
acquired through a lease system.

The auction of land for industrial, hotel and agricultural projects is simple country is general
and Oromia Regtion as well. The existing system encourages private investments and as
resulted economic growth has been apparent in the industrial, agricultural and other sectors
of economy.

The investment laws of the country and the agricultural led industrialization policy have put
radical improvement in mobilizing the resources and encourage private sector in all
economic and service sectors

The relatively better economic and social infrastructure, facilities that available around Addis
Abeba in Oromia Region initiate private in vector to invest in Oromia.

The crude statistic that the percentage contribution tourist industry in to the grow domestic
product 5 it share in the total production employment it provides and 5 revenue it fetches in
the form of foreign tourists generates foreign currency earning play in important leading role
in the Ethiopia economy.

3
The liberalization of economy plays which was completely, dominated by the government has
left open the door for participation of the private investors.

The development technological advancement on machinery and equipment and the

availability raw materials as well as the demand for hotel and recreation center in East Showa
Zone Adama Twon around the center of the town.

The existing potential market have convinced and attracted this Dr.Aseffa Abera
entrepreneur to decide to invest to establish hotel and risers center and encourage geed by
conducive atmosphere created by the Oromia Government and awere of potential market
and confident of rich experience in the field Dr.Aseffa Abera has decide to establish its
modern hotel and recreation finally transforming the tourist industry sector to modern and
development sectors to achieve this objective it is necessary to have complete infrastructure
components of the factory.

Adequate space for hotel real development and recreational areas and adequate space for
raw materials and, store, administration building and parking lot are believed appropriate for
the plant.

Generally, this project conceived and proposed hopping that Oromia state provides the land
so that the project is actively participate in the establishment of hotel reaction center to
provide all hotel services for tourists and visitors .there by attain its sect objectives.

4
 3. BACKGROUND OF THE PROMOTOR

Dr. Aseffa Abera is one of the leading trading businessmen; it has its roots in his own
business, which has been operation since many years ago.

Following the changes, in the economic business sector and Ethiopia a adoption to tree trade
free trade policies .Dr.Aseffa Abera is newly established promoter is currently involved in
various activities related to local trading and investment.

Dr. Aseffa Abera will be among the promising ones, when will be capable of providing all
hotel services for tourist and visitors in Oromia.

To achieve this objective it is help full to get investment villages given by the Regional
Government of Oromia.

Hotel and recreation center to provide all hotel services for tourist and visitors require land
on lease basis in which the promoter should be encouraged. Hotel and tourism has great
contribution in the development of the economy the project should be envisaged in view of
solving the unemployment and generate foreign currency for the country.

The establishment of the project as proposed to be justified that:-

I. Hotel and recreation center to provide all hotel services for tourist and
visitors
II. It enables the nation to build local strong hotel and tourism industry.
III. It creates job opportunity for 20 people, Permanent and 100 Temporary and
generates income for government in the form of vat and profit tax.

Proposed in order to enable to plant actively participate in the hotel and tourism there by

attain its set of the following specific objectives.

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 4. OBJECTIVES OF THE PROJECT

The major objective of the project and its core for establishment is to provide all hotel
services for tourist and visitors

To provide all hotel service for tourist an visitors

 To create job opportunities for the people around the project

 To enable the promoters to have full ware of the market and total of the projects.
 To provide adequate wedding services

5. LOCATION OF THE PROJECT

The factory is expected to be located on open plot of land to be secured on lease system
where the Oromo Government has already allocated and reserved as hotel zones, in vicinity
of Dr.Aseffa Abera town in East shewa zone.

The total requirement of project 240M2 meter squire of land a site accessible for recreation
center with adequate spare for parking and manufacturing trucks is required.

The investor has secured sufficient funds for land lease and also has a strong interest of
commitment of start the construction as soon the set hand over has completed.

In general, the names of the site with the relatively developed area of the region make this
site highly suitable for easily access for tourists from east and Addis Ababa and foreign
tourist and visitors;

6
 6. MARKET- DEMAND & SUPPLY ANALYSIS AND STRATEGY

To undertake the demand and market analysis both primary and secondary data was
collected from primary and secondary sources. The primary data was collected by personal
observation, and interviewing different peoples who work in similar business in Nazareth.

Secondary data was collected from governmental institutions such as investment office,
ministry of tourism and culture. This collected information are about market potential and
shares, demand of community for both satisfied and unsatisfied portions, pricing strategies
and related impacts.

6.1. Customers /Target market/

In light of market research and previous experience of other businesses in the industry, our
target markets are international tourists, transit tourists and Addis Ababa residents. The
complete description of our target market is as follows:

Foreign tourists: - the existence of many tourist attraction sites of the country in general and
that of the city in particular are attracting a large number of tourists to the country. Hence,
these tourists prefer international standard hotel services.

In addition, participants of international conference (seminars), business travelers, transit

passengers, foreign diplomats, officials of different international organizations, NGOs and
Ethiopian diasporas who came home for different reasons are the users of our hotel services.
Based on the information obtained from the Ethiopian tourism commission, the number of
tourists visiting Ethiopia is growing fast from year to year.

Residents of Addis Ababa and Nazareth (local tourists):- The hotel is located at Nazareth
town which is the commercial center far only by 85 kilometers from capital Addis, where most
of expatriates, Diasporas, icon business men and high rank politicians are residing.

Nazareth is an important site for tourist attraction in the eastern direction of the country.
Awash National park which has different species of wild life found in the proximity of
7
Nazareth. It is also the commercial capital of Oromia Regional State several private and
government institution are there which can be potential customers to hotel projects. Several
National and International meetings and symposiums held in Nazareth.

The private and government universities and colleges attract professionals and scholar
worldwide for either research purpose or teaching at the universities. These professionals,
teaching staff, the students and visiting lecturers present great opportunities to the Hotel
business at Nazareth.

Moreover, Nazareth is the juncture to the routes of different zonal towns like Assela, Robe,
Zeway, Harar and Dire Dewa. So that, passengers from these cities create market
opportunities to Hotel in Nazareth. Its location in the rift valley and the geothermal that
sends huge smoke screens in to the sky from the plateaus and lake Langano and Sodere
resorts are also an important tourist attraction at the week end for vacation in groups using
private vehicles and renting buses from the National Tour Operation (NTO) and other tour
operators has shown persistent increase. As information obtained from these tour operators,
one of the important problems they face is the shortage of hotels at Sodere and Langano
resorts. So, hotels established in Nazareth have opportunities to cater this demand. Realizing
the gap and the opportunities for hotel business in light of the growing interest of tourist to
travel to the area for game viewing resorts and rich cultural heritages. TEFERI- BEL Business
plc is committed to invest on modern tourist class hotel equipped with all facilities and
amentias to provide comfort to tourists and also prolong their stay time.

6.2. Demand and Supply Gap Analysis

 Demand- represents the level of need that exists for hotel service.

 National Demand

Ethiopia is endowed with unique cultural heritages, striking scenery, favorable climate, rich
flaura fauna, as well as important archeological sites. These blessings coupled with the

8
government’s initiative to promote the tourist attraction centers demanded the country to
invest on hotel constructions as more tourist arrival is expected in the future.

As it is well known, there are a number of factors affecting the demand of hotel catering
service. Mainly the factors are disposable income of the population, its size, willingness and
preference of the customer, quality and availability of competitors in the sector. There are
also implicit factors attributable to the general political, economical and social activities of the
country in general.

In such circumstances, it is difficult to know the exact magnitude of demand especially for
local customers and hence what could be worked out is demand forecasts based on historical
tourist’s inbound trend to Ethiopia as tourism and hotel business have a strong linkage.

Per ‘Ethiopian Tourism Commission ‘statistical abstract of the year 2008, (Latest issue).

 The actual International tourist arrivals to Ethiopia for the year 2008 were 383,399.

 An average annual growth rate of 7.9% over the next 10 years is expected.

 A few numbers of domestic customers and domestic resident diplomatic missions would

use the services. For this project purpose, it is assumed that about 10% of the number of

tourists is billed to the expected number of domestic customers-own estimate.

 Based on the above facts and figures, the tourist forecast for the coming 10 years is

presented below.

9
 Projected Tourists Inbound, Customers (Ethiopians Total Expected no.
Project 7.9% growth rate per annum and Foreign residents) of customers
life Year A B =A x 0.1 C= A+B
Actual 2,014 383,399 383,399
2,015 413,688 41,369 455,056
2,016 446,369 44,637 491,006
2,017 481,632 48,163 529,795
1 2,018 519,681 51,968 571,649
2 2,019 560,736 56,074 616,809
3 2,020 605,034 60,503 665,537
4 2,021 652,831 65,283 718,115
5 2,022 704,405 70,441 774,846
6 2,023 760,053 76,005 836,058
7 2,024 820,097 82,010 902,107
8 2,025 884,885 88,489 973,374
9 2,026 954,791 95,479 1,050,270
10 2,027 1,030,219 103,022 1,133,241

There would be from minimum 571 thousand to maximum 1.1 million tourist arrival in the
years between, 2014-2023.

 Specific Demand in Nazareth

A large increase in the influx of tourists registered by the country over the last few years has
overwhelmingly surpassed the capacity of hotels in Addis Ababa and the very few hotels that
are found at tourist attraction sites in the country. This has inspired the private sector to fill
the demand supply gap through investing on hotel projects.

The market survey on potential for room service demand and restaurant service at Nazreth,
Lanagano Arbminch, and Lalibela location frequented by both foreign and domestic tourists
due to their endowment with attraction resources indicate that there is great scope for room
service demand at all these locations. There is a critical shortage of tourist standard hotel in
these areas.

This shortage is aggravated particularly in peak seasons when tourists arrive in large numbers
in tourist attraction sites in the northern and southern parts of the country. Many factors
contribute to these circumstances:

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a) Persistent growth in the number of tourists: As discussed earlier in this report, the

annual inflow of international tourists into the country has shown dramatic increase. But

this has not been supported by placing adequate infrastructure such as hotel at a

required level to cope with the demand for room service particularly outside of Addis

Ababa.

b) Development of domestic tourism: there is a great attitude by many Ethiopian towards

tourism. Many Ethiopian under the banner, ''Agrehen Ewek '' travels in groups and with

their families to these tourist attraction sites in the north, south and Rift valley lakes

resorts for leisure. The number from time to time has continued to grow. These

domestic tourists also require hotel accommodations.

c) Conservation of wildlife and Awash National parks conservation efforts to protect the

wildlife with its natural habitat has resulted in better results. The number of wildlife and

the biodiversity increased substantially. This has attracted many tourists to National

parks for game viewing. These parks are predominantly located in the proximity of

Nazareth and rift valley and tourists travel to these areas in large number.

These are general factors that reinforce the demand for adequate room and restaurant
service at tourist attraction sites. Despite the above facts, the magnitude of demand for hotel
service for Nazareth town in particular is unknown as there is no organized statistical data.

However, per the tourism statistical bulletin No.9, about 14% of total tourist arrived in the
country visit the site outside of Addis Ababa, out of which 8% visit northern historic route-
Lalibela, Axum, etc and the southern lakes-Langano, Zeway and Abijata, and Awasa, etc.

The rest 6% of them visit the sites like eastern historic route-Harar & the surrounding, Awash,
Nechsar, Omo, etc parks. With conservative assumption, from the tourist who visits the

11
eastern historic route, 50% will pass their night in Nazareth town. Thus, we can reasonably
estimate the number of customers as follows.

Project life Year Total no. of customers Demand for Nazareth

1 2014 571,649 2,401
2 2015 616,809 2,591
3 2016 665,537 2,795
4 2017 718,115 3,016
5 2018 774,846 3,254
6 2019 836,058 3,511
7 2020 902,107 3,789
8 2021 973,374 4,088
9 2022 1,050,270 4,411
10 2023 1,133,241 4,760

The above demand is determined assuming a tourist will pass a single night. But in practice
shows us on average a tourist will pass 3-5 days and hence the level of demand wills
definitely increase more than what we have seen in the table above.

 Supply- in this context refers available bedrooms needed by tourists.

 National Level

Ethiopia has a limited supply of Star and tourist standard hotels and accommodations. The

existing star hotels in the country are highly slanted towards the capital city. Hotel and

accommodation service in Ethiopia is characterized by among others, the following features:

 Low educational qualification and training system,

 Poor service quality and limited domestic consumption,

 Limited supply of star hotels and over-pricing of the existing hotels for what they offered

 Less access to market information and poor infrastructure,

12
Supply of hotels service is not a mere forecast of the number of available rooms, it includes
assessment of establishment and constructions, expansions, quality of the service and factors
that deal with the process of service delivery.

The distribution of tourist class hotels by Region.

REGIONAL STATES NUMBER OF HOTELS Rooms Beds

1- ADDIS ABEBA 88 4449 5916

2- AFAR 9 174 221

3- AMHARA 66 1781 2429

4- BENSHANGUL 6 122 133

5- DIRE DAWA 16 551 712

6- GAMBELA 4 61 85

7- HARARI 9 251 314

8- OROMIA 115 3083 3706

9- SOMALI 11 215 245

10-SPNN 70 1661 1910

11-TIGRAI 43 1335 1546

12-TOTAL 437 13,683 17,217

Source: Ministry of Culture & Tourism Statistical Bulletin, 2008

As shown in table above the total number of star hotels room in Ethiopia in the year 2008 is
only 13,683 out of which 4,449 are found in Addis Ababa. Including the recommended and
unclassified hotel rooms, the national supply of rooms and beds is 13,683 and 17,217,

13
respectively. The supply at national level is unparallel with the national demand for the
service. The demand is far more than the supply.

 Existing Supply of Hotel room service at Nazareth

Organized data indicating the number of tourist standard hotel with their room capacity,
charge, etc, is not available to determine the level of supply in Nazareth town. However, it is
confirmed that there is no hotel catering similar service in Nazareth since the hotel under
consideration is committed to invest on modern tourist class hotel equipped with all facilities
and amentias to provide comfort to tourists and also prolong their stay time.

Thus, we have a competitive advantage over the hotels rendering common services targeting
the niche market.

 Demand Gap

Due to lack of supply data the level of demand gap cannot be quantified.

6.3. Potential Market and Strategy

6.3.1. Potential market

So far more emphasis was given for international tourist and the local tourists were somehow
neglected in the hotel services. Now a day, gathering events like, symposium and trainings,
etc are common and become potential market for hotels in Addis Ababa and other major
towns, Adma is not an exception.

Adama is found 85 Kms from Addis Ababa. It is an important site for tourist attraction in the
eastern direction of the country. Awash National park which has different species of wild life
found in the proximity of Nazareth. It is also the commercial capital of Oromia Regional State
several private and government institution are there which can be potential customers to
hotel projects. Several National and International meetings and symposiums held in Nazareth.
14
a. The private and government universities and colleges attract professionals and scholar

worldwide for either research purpose or teaching at the universities. These

professionals, teaching staff, the students and visiting lecturers present great

opportunities to the Hotel business at Nazareth.

b. Moreover, Nazareth is the juncture to the routes of different zonal towns like Assela,

Robe ,Zeway, Harar and Dire-Dewa. So that, passengers from these cities create market

opportunities to Hotel in Nazareth. Its location in the rift valley and the geothermal that

sends huge smoke screens in to the sky from the plateaus and lake Langano and Sodere

resorts are also an important tourist attraction at the week end for vacation in groups

using private vehicles and renting buses from the National Tour Operation (NTO) and

other tour operators has shown persistent increase. As information obtained from these

tour operators, one of the important problems they face is the shortage of hotels at

Sodere and Langano resorts. So, hotels established in Nazareth have opportunities to

cater this demand. Realizing the gap and the opportunities for hotel business in light of

the growing interest of tourist to travel to the area for game viewing resorts and rich

cultural heritage.

Market strategy

Product or service marketing is a fundamental job in business operation. The services to be

offered should be properly marketed so as to achieve the desired market share. The
marketing techniques to be followed are using the proper mixing up of the four marketing
techniques.

15
1. Price of the Services

The hotel is being constructed to fulfill the standards of a four star hotel. Hence, the service
price is to be taken in a four star hotel standard. In order to get the desired market share,
however, as entry prices shall be set at a lower. Depending on the market response to the
services and the price, periodical revision of service price is taken into consideration.

2. The Services to be Offered

The hotel will provide all the hotel services expected in a four star hotel. It will give foreign
exchange service, business centers, sporting facilities, accommodation, and restaurant & bar
services in a pleasant environment.

3. Promotion

Promotion is vital for any business. The services of the hotel should be advertised through the
electronic and print Medias. The hotel will also develop its marketing links with touring
companies, international organizations, and Airliners. The hotel’s name will be printed in a
specialized news papers such as Selamta, the Ethiopian Tourism and Culture Ministry
publications. Sponsoring of events, conferences and symposiums will also be the other
techniques to promote the hotel. Annual budget of birr 100,000 will be allotted for the
purpose.

4. Competitor’s Price Analysis

The proposed hotel project is going to operate with a high class hotel standard, it is,
therefore, ready to identify and monitor the price of its competitors to gain and maintain the
loyalty of the market. The best way for the project to grasp its competition is to take into
account the taste and behavior of the customers.

16
Price is the only element in the marketing mix that creates sales revenue. It is, therefore,
important to set reasonable price for all services by paying keen attention to cost, demand
and competition:-

To determine the price of the services we will:

 Assess the operating cost of the service

 Taking into account demand intensity and customers psychology

 Assess the price range and price movement of the hotel through time to support sales

and profit objective and marketing positions in the target group. The current bedroom

renting price in tourist standard hotels is very diverse even among hotels with similar star.

This is mainly due to the non-standardized nature of the service.

In order to analyze and propose the room price of the envisaged hotel, similar tourist
standard hotels were not found in Nazareth due to its unique services.

Unique service as a Competitive advantage

The hotel will have the following facilities for all of its customers.

 Unique and well furnished bedrooms of executive suite, junior suite and deluxe type
as per the choice of the customer.
 One special room for disabled customer.
 24 hours laundry service
 Library with cigar room
 Transportation services from and to air port and to the city.
 Recreational activities like swimming, horse riding, jogging and trekking,
 Massage beauty center and shopping center.

Although, there is no similar hotel in Nazrth, Kuriftu hotel from Bishoftu town, somehow,
approaches the service and hence the room charges of Kuriftu are used as a base price for
rooms as follows.

17
 Kuriftu charge

Room Type Bed Type Basic Price in US$ Considered charge

Executive Suite Extra king Size Bed 199.00 150

Junior Suite Extra king Size Bed 158.00 100
Deluxe Extra king Size Bed 299.00 200
http://www.kurifturesortspa.com/debre-zeit--rates/

The room charges are taken to be 150, 100 and 200 USD for executive suite, junior suite and
deluxe, respectively. For local customers an equivalent Birr will be charge using the existing
foreign exchange rate.

6.4. TECHNICAL ANALYSIS

6.4.1. Land and Location

The project is located in Nazareth town- 85 kilometers to south east of Addis showing fastest
growing. The project site is in front of the main asphalt road. A land holding area of 240
square meters allocated for the hotel project is adequate to accommodate the hotel building
with its facilities and enough for parking spaces.

6.5. Infrastructures

The project area is designed by professional engineers. The building designed was taken keen
attention for architectural, structural, sanitary and electrical layouts. The project site is availed
with water, electrical light and power with good access road.

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 6.6. Service Capacity

The Hotel is designed to rank a four-star hotel. It is designed to cater all hotel facilities from
its basement plus five floors building.

Accommodation and services

 Basement: - Kitchen, ball room/conference room, and employees change rooms.

 Ground: - reception and sitting hall, café with 3 bed rooms, public bath and offices.

 1st floor-Bed rooms

 2nd floor-Bed rooms, meeting room with library and cigar rooms

 3rd floor-restaurant and bed rooms

 4th floor-fitness center ,rooms and spa

 Terrace- three level terrace with respective bars

Adjacent to the hotel building there is about 15 hectares of land prepared for park and
sporting activities like booting, horse riding and golf.

EQUIOMENT AND AUXILIARY FACLILITIES

The list of equipment are facilities required for each type of service is shown in
annex 2.the summaries of the cost of items are shown in table 5 below.

Table 5 Summary of cost of major machinery and equipment

No. Kind of service Pastry Bar and pension Total In’000’

restaurant Birr%
1 Plant& Machinery 133.00 113.80 52.44 477.54 41.08

2 Office equipment 36.00 84.92 120.92 10.40

19
3 vehicle 135.00 140.00 455.00 39.14

4 Other fixed assets 34.50 74.50 109. 00 9.38

Total 338.50 413.22 52.44 1162.46

The total machinery and equipment cost necessary to provide the intended services amount
to birr 1,162.46 thousand the major cost component in this category is plant and machinery,
which amount to 41.08 percent of the total cost. The second major component is vehicles,
which amounts to 39.14 percent. Office, which are 10.4 % and 9.38 % respectively.

Restaurant and bar service account for major cost of plant machinery and equipment
amounting to 35.55% followed by laundry with 30.82% pastry with 29.12% ranks third while
the least cost share of 4.51 % goes

7. TYPES AND PRICES OF SERVICES TO BE RENDERED ROOM

All bedrooms will fulfill the minimum size standards required by the Ethiopia Tourism

Commission and other concerned authorities

All bed will have two separate beds with 100X 2000 cm size. One writing table, one easy chair

per guest, affixed cupboard with hangars and shelves, mirrors, ashtray waste basket luggage

rack. Beside table and other necessary utilities equivalent for a three star hotel will be

provided.

In all Bed rooms electrical with indication of voltage independent light for ceiling and bed

side reading light for each guest is provided in the plan.

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All bed rooms will have natural lighting through windows, excluding day light is arranged by

means of thick and thin double curtains.

Label doors with acceptable standard will be fitted to each room. All room will be numbered

so as to identify and show its position in relation to other bed rooms on the premises.

Internal telephone will be fitted to each bed. All room will be numbered so as to identify and

show its position in relation to other bed rooms on the premises.

Internal telephone will be installed in all bed rooms which will be connected to the external

telephone network through the hotel switch board. Radio and central music system will be

providing in each bed room. Vacuum jugs /fasts/containing cold drinking water and glasses

in each bed room will be provided state lilt TV program will each every gust’s room.

Room Prices in Birr

Type of service foreigners Ethiopians

Suite 550 40

Double 420 60

Double as single 325 70

In each room, tariffs, service and other special charges may be applicable will be

displayed. In addition to not ices for services / respective charges / offered by

the hotel fire-exit guilders and house rule guests including meal hours and

21
charges will be put in place stationery will be provided in each bed room All

room will have sound proof system.

For the projected proof & loss statement purpose average prices for the

terrace bar, the main bar & the lounge will be taken at Birr 20 and Birr 25 & 40

respectively. It is assumed that an average consumption by a guest in each bar

will be 2.5 times the average price of the respective bar

Telephone

Types of call Average price in birr

International call 50.00
Local call 10.00

Hall rent prices in Birr

Hall Rent Average price in Birr

Cocktail 15 Birr/ person
Meeting 15 Birr/ person
Buffet 15Birr/person

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1. RAW MATERIALS AND INPUTS
1.1 PASTRIES

Item Birr Qty Unit cost Total Cost

Major in puts 365 146,000

Flour 73 ,000

Egg, honey butter and other in put 500 3,500

Tea cup 500 2,500

Coffee Coup 100 900

Glass for water 100

Glass for juice 36,500

Oranges 40 4,000

Dishes 13,304

Tea +Sugar 20,808

Sub total 297,412

Soft Drinks 1 case/day 10,950

Ambo water 1 case day 10,950

23
 Sub Total 22,900

Other Consumables 1 1,200

Tyre and tube 5 liter 200

Oil 1 month 600

Car Wash 6 year 1,200

Service 3 year 3,000

Maintenance 401 day 36,500

Fuel 42,500

Sub Total 95,840

Rent

Utilities

Water 18,600

Electricity 15,000

Telephone 3,600

1.2 Restaurant

For the projected profit &loss statement purpose average prices for the trace
bar, the main bar & the lounge will be taken at birr 20 birr, 25 birr and 40 birr
respectively. It is assumed that an average consumption by a guest in each bar
wills 2.5 times the average price of the respective bar

24
2. FIXED INVESTMENT

2.1. Pastry

Item Birr Qty Unit cost Total Cost

A total fade investment cost

Plant machinery and equipment 1 39,000 39,000

Bread and pastry making machine 1 16,000 16,00

Mixer 1 7,500 7,500

Sheerer 1 6,600 6,600

Egg mixer 20 200 200

Batter 1 6,400 6,400

Ice cream machine 1 36,000 36,000

Coffee machine 1 8,000 8,000

Refrigerator 3 4,000 12,000

Juice press 2 13,000 26,000

Office Equipment 36,000

Shelves and balcony 1 25,000

25,000

Chairs 100 70 7,000

Table 40 100 4,000

Vehicle 135,000

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 Minibus 1 135,000 135,000

Other fixed assists

T.V and Deck 2 15,000 30,000

CD player 1 4,500 4,500

1.4 pension

Consumables

Rent 40,000

Soap 2000 12=24000

Water 6,000

Electricity 15,000

Telephone 1,200

Item Birr QTY Unit COST Total COst

Raw material &

Consumables

Consumables

Draft birr glass 100 5 500

Tea Cap 100 5 500

Glass for beer 100 10 1,000

Whisky glass 50 10 500

Types 1 set 300*4 1,200

Oil 5 liter 40* 5 200

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Car wash 12 50*12 600

Services 6 200*6 1,200

Maintenance 3 1000*3 3,000

Fell 4 liters/day 2.50/1*365 36,500

Whisky 43,800

Food items 109,000

Coffee sugar 5,686.7

Tea+ Sugar 9,668.52

Such total 175,250

Rent 26,400

Utilities 6,000

Water 3,600

Electricity 13,200

Telephone

Tem I Birr Qty Unit Cost Total Cost

Coffee & tea machine 1 26,000 26,000

Draft beer machine 1 28,000 28,000

Draft barrel 6 800 800

Refrigerator (draft) 2 8 ,000 8 , 000

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 Refrigerator (SOFT Drinks 2 4,000 4 , 000

Gas stove 1 11,000 11,000

Gas Cylinder 10 500 500

Generator 1 15,000 15,000

Equment

Chairs 100 100 10,000

Tables 40 110 4,400

Shelves& balcony 25,000

Cashier & ister 1 20,000 20, 000

Trays 50 40 2,000

Fork and spoon 100 5 500

Cooking pots 20 2,000

Knife 50 500

Beer creates 100 12,000

Soft drinks creates 60 4,200

Mineral water creates 60 4,320

84,920

Other fixed assets 184,500

Vehicle[pick up ] 1 140,000 140,000

T.V +Deck 3 15,000 15,000

CD player 1 4,500 4,500

Satellite dish 1 25,000 25,000

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 Item Birr Qty Unit Cost Total Cost

Other equipment

2.4 Bed Rooms

Fixed investment

Bed 12 2,500 30,000

Blanket 36 2,500 30,000

Bed sheet 84 250 9,000

Comedian 12 60 5 ,000

Carpet 12 200 5,040

500 2,400

6,400

52,400
Total

7. ORGANIZATTIONAL SET UP AND MAN POWER REQUIREMENTS

The Project to meet is could have organizational structure that could enable the project
to meet is target. In this regard the project will hire a general manager under the project will
employs production technical manager, mare tin and account in manager secretary, other
staff members and accounting manager,

Secretary, other staff members and daily labors.

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 In general, the plant hire a total of 120 workers, out of which 20 permanent workers and 100
temporary labors.

7.2. Organizational Chart

General Manager

Secretary

Finance Section Administration Commercial Dept

Technical section Purchase

Store

Sales

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 7.3. Manpower Requirement

No Post No Monthly Annual

Required Salary (birr) Salary (birr)
1 General Manager 1 2000 24000
2 Secretary 1 630 7560
3 Production & technical 1 1000 12000
4 Marketing & accounting 1 1000 12000
5 chief 1 800 9600
6 Accounting clerk 1 630 7560
7 Cashier 1 450 5400
8 Store Man 1 400 4800
9 Sales Man 1 400 4800
10 Machin operter 1 400 4800
11 Driver 2 1600 38400
12 Cleaner 2 250 6000
13 DailyWorker 5 250 15000
14 Guard 1 250 3000
Total 20 9260 154920

And in additional to the above table it will require 100 temporary workers.

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 8. INVESTMENT AND FINANZING
8.1. Investment Plan

The Investment out lay of a project may be classified as out lay on:-

A. Tangible fixed asset investment: Consists of real estate buildings

equipment vehicles, machinery and so.

B. Intangible fixed asset investment: Consists of out lays on decencies, engineering fees.

Rudimentary and per-operatives expenses.

C. Working Capital:-This represents out lays on current assets like raw

materials, stores utilities as blow costs.

A. Tangible fixed asset investment

1. Real state: This consists of the cost of land, including registration,

Fences cleaning and leas cost paid lease period this will be estimated depending on
the proposed plot size 240 squire sq-meter

2. Building and civil works: - these included them would depend on the kinds of structures
of design required. Therefore, given the design of the design of the building cost estimate are
based on built up area and rates for various categories of structures. This will be estimated by
taking total built up area 200 it the rate of 40 meter square, will be the total building cost,
then the construction cost is estimated to be birr 6,000,000.00

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3. Miscellaneous

A. Tangible Assets:-These consist of costs machineries, vehicles, furniture fixtures and office
equipments.

B. Vehicles

No Description Unit Qty Unit Price Total Price

1 Pick-up Pcs 2 455,000

Total 910,000

C. Office Equipment

The project will have its offices furnished with modern types of equipments and furniture’s
with an estimated cost of 120,920.

D. Intangible Fixed asset investment:-

1. Preliminary expense: - This includes the cost of preliminary studies; preparation of

feasibility report and detailed report, etc the cost required to cover those expenses may

be estimated to 1% of the building cost.

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2. Pre-operative expenses:-These are expenses incurred before the commencement of

commercial production. This may include interest burden and running in period. It may

be estimated to 2% of the building cost.

E. Working capital:-

Raw materials the annual requirement of raw material running cost of the project are
estimated to be 2,969,540.

8.1.2. Project Cost Summary

No Cost component F.c L.c Total cost

1 Fixed investment

Land cost 250,000 250,000

Building cost 6,000,000 6,000,000

Machinery 477,540 477,540

vehicles 455,000 455,000

Equipment 120,920 120,920

Sub Total 932,540 6,370,920 7,303,460

2 Working Capital 2,696,540 2,696,540

Total Cost 932,540 9, 067 460 10,000,000

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 8.1.3. Financing plan

Investments are to be covered by means of a financing plan. Therefore the expected sources
of financing for this project would be promoters won capital and credit available from the
bank loan. The proportion of this financing schedule would be out lined as below:-

8.1.4. Source of Finance

The total initial investment requirement including working capital is birr 20,000,000.

It is expected that 30% will be financed by a long –term loan from local bank. It is future
assumed that

A) Investment of loan capital will be 7.5% and will be calculated on outstanding capital
and will be paid yearly on June 30th

B) The principal is repayable in 10 equal yearly instatements.

C) All investment and operating costs all based on the estimation year 2011 prices

No source Share in % Birr

1 Own Equity 30 6,000,000

2 Bank loan 70 14,000,000

Total 100 20,000,000

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 8.2. Estimate of economic efficiency
8.2.1. Estimate of Revenues

The revenues expected from the project will be generated from bed room, food beverage, tea
and coffee charge from parks and recreation, and for first year operation revenue will be
13,201,000 could be obtained. As the plant is a project activities gradually at as full capacity
would be are used to generate 16,400,000 birr revenue at third years of its operations

8.2.2. project Revenue projection

The revenue projection of the project is present in the table below. Total Revenue of the
project Birr 2000

No Year Total Amount

1 2016 32,800,000
2 2017 16,400,000
3 2018 8,400,000
4 2019 16,200,000
5 2020 16,400,000
6 2021 16,400,000
7 2022 16,400,000
8 2023 16,400,000
9 2024 16,400,000
10 2025 16,400,000

8.2.3. Production expenses

Cost are considered to be permanent expenditure for raw material, energy, water supply wear
and tear of fixed assets loan interest, administrative and general over heads, etc thus the
estimated level of cost for the first business Year of this project is 6,600 ,400 birr sis shown in
the table below

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No Items Amount in Birr

1 Administrative over head 803,840

2 Raw materials an inputs 2,000,00

3 Utilities& Fuel 1,000,000

4 Depreciation 462,000

5 Land rent 14,000

6 Land rent 100,000

7 Insurance 140,000

8 Adverting and sales promotion 100,000

Total 6,966,000

8.2.4. Depreciation and Amortization

year Equipment (10%) Building (10%) Vehicles (20%)

1 5000 600,000 80,000
2 5000 600,000 80,000
3 5000 600,000 80,000
4 5000 600,000 80,000
5 5000 600,000 80,000
6 5000 600,000

7 5000
8 5000 ……………………………………………………
600,000

9 5000 600,000

10 5000 600,000

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9. ECONOMIC BENEFIT OF THE PROJECT

The project is a strategic, which designed to promote Tourist industry in country.

Moreover, it can created employment opportunity for 20 people permanent and 100
temporary in addition to increasing the supply of food staff to the domestic market the
project will generate Birr 16,400,000 in the form of revenue per year.

Moreover the city government can collect employment and income tax and vat from the
project thereby in ceasing its tax base.

The project has a forward linkage to the agricultural sector. It could have also potential
linkage to other service sectors.

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