PROJECT PROPOSAL

FOR MOTEL AND

FUEL STATION PROJECT BUILD

PROJECT LOCATION: ADDIS ABABA , AKAKI KALITY SUB-CITY

04 WOREDA

PRMOTER- Mr.DAJANE TEMESGEN

Oct, 2023

ADDIS ABABA/ETHIOPIA
TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
EXECUTIVE SUMMARY.............................................................................................................4
1. INTRODUCTION....................................................................................................................5
1.1. Objective of the project.....................................................................................................6
1.2. Profile of the Promoter......................................................................................................6
1.3. The Economic Significance of the Project........................................................................7
1.4. Location and Premises Required.......................................................................................8
2. MARKET STUDY.................................................................................................................11
2.1. Scope of the Market Study..............................................................................................11
2.2. Market Demand...............................................................................................................11
2.3. Market Supply.................................................................................................................13
2.4. Target Customers............................................................................................................13
2.5. Market Prospects.............................................................................................................13
2.6. Marketing Promotion and Strategy.................................................................................13
2.7. Service program..............................................................................................................14
2.8. Sales Plan/Capacity.........................................................................................................14
3. SERVICE MIX AND CIVIL WORK OF THE PROJECT...................................................15
3.1. Service mix.....................................................................................................................15
3.2. Civil Engineer Building and Civil Works.......................................................................16
4. ORGANIZATION AND MANAGEMENT..........................................................................17
4.1. Organization and Management.......................................................................................17
4.2. Man Power......................................................................................................................17
4.3. Organizational Structure.................................................................................................17
5. FINANCIAL REQUIRMENT AND ANALYSIS.................................................................20
5.1. Total Initial Investment Cost...........................................................................................20
5.1.1. Fixed Investment.....................................................................................................20
5.2. Annual Service (Production) Cost at Full Capacity........................................................22
5.3. Financial Analysis and Statements.................................................................................23
5.3.1. Underlying Assumption...........................................................................................24
 5.3.2. Sources of Fund.......................................................................................................25
5.3.3. Loan repayment Schedule........................................................................................25
5.3.4. Depreciation Schedule.............................................................................................25
5.3.5. Revenue Projection..................................................................................................26
5.3.6. Balance Sheet...........................................................................................................27
5.3.7. Income Loss Statement............................................................................................28
5.3.8. Cash Flow Statement...............................................................................................29
5.3.9. Profitability..............................................................................................................29
5.3.10. Break-Even Analysis...............................................................................................29
5.3.11. Pay-Back Period......................................................................................................29
6. ENVIRONMENTAL IMPACT OF THE PROJECT............................................................30

3
EXECUTIVE SUMMARY
1. Project Name Motel and Fuel Station Project

2. Project Owner Mr.DAJANE TEMESGEN

3. Nationality Ethiopian

4. Project location Akaki Kality sub-city 04 woreda

5. Project Composition Fuel station service (Diesel, Gasoline, Kerosene, LBG
gases, Engine oils, Lubricant and Car wash service)
6. Premises Required 5000m2

7. Total Investment Br100,000,000million of which 30% equivalent to 30

Cost
million financed by the owners equity and the react
80% equivalent to 70.0 million financed through bank
loan
8. Employment A total of 32 employees ,14 are permanent the rest 18
Opportunity
are temporary and contractual employees
9. Benefits of the Provide better service, Revenue generation, Employment
project For The
Opportunity, benefits local economy and stimulate local
region/ country
economy.
 1. INTRODUCTION

The Ethiopian economy has been registering extraordinary, double digit, and economic growth for the last nine
years. When there exist fast economic growth in one nation, the income of the citizen also increase this
phenomena changes the life style and modernization of the citizen.

In order to keep the economic growth long lasting there should be parallel growth and linkage in all sectors of
the economy such as manufacturing and service (tertiary) sector. The development of hotel as one part of
service sector has a great contribution to the economy in different ways.

However, the implementation of the hotel project is concentrates in main woreda of the nation. Hence, further
investments in these areas are very vital for better service provision for the citizens through that it supports the
economic development.

The government of Ethiopia has developed a conducive investment policy packages and other sectoral reforms
at federal and regional level to attract a huge private investment for the wellbeing of the nation and its citizens
as a whole. Besides, it is also currently implementing the five years growth and transformation plan (2010/11-
2014/15) that gave a space for the development industrialization and tertiary sector by private sector.

Like the federal government investment policy packages and incentives, the Oromia regional state government
has been exerting its maximum effort to expand investment opportunities in the region, so as to foster the
economic development of the region and subduing the region’s big enemy that is the trap of poverty. Therefore,
the regional government has been prepared a viable business environment to attract many domestic and foreign
investors so that the dream of making poverty history turns to be true.

Furthermore, this region is the largest regional state in terms of area and population. The total area of the
Region is 363,136 km2, accounting for about 34.3 percent of the total area of the country. Administratively, the
Region is divided into 18 administrative zones, 304 woredas (out of which 39 are towns structured with the
level of woredas and 265 rural woredas), more than 6,342 peasants and 482 Urban Dwellers Kebeles. (ONRS,
PPACC, 2011).

5
Therefore, the visible market gap, attractive investment policies and deep interest to contribute for the
development of birth town attracts the owners of the envisioned project to establish Motel and Fuel Station
Company in, Akaki Kality Sub-city .
Addis ababa city the capital Ethiopia is O4which is on the way of the roads Addis Ababa to Southern Ethiopia,
main asphalt road and rail way, and the district capital, Bote town is endowed with different crop production
mainly irrigated vegetable and fruit production.

The owners of this envisaged project has a good business experiences and very ambitious to establish the
company by expecting a good support and facilitation from the regional government.

1.1. Objective of the project

The main objective of this project is to establish Fuel Station in Addis Ababa city Akaki KAality 04 Woreda .

1.2. Profile of the Promoter

The promoter of the project Mr.Mr.DAJANE TEMESGEN is a known business entrepreneur in the area and
also engaging in different business in Bote town and surrounding area. In addition the owner of this project
hope this project to be the first of many other developmental projects to follow as they look forward to share
the responsibility of fighting poverty, reducing unemployment here in Ethiopia. The promoter accumulated
diversified skills in the area and also adopted working with many people. Thus, it is these experiences which
primarily motivated this investor to develop the inception of this project idea.

The feasibility of the project has been carefully assessed and the promoters are confident that it will be a total
success. The business will be run by a team of competent management professionals who have acquired
practical achievement in related business fields. The marketing oriented approach to placement of products and
distribution will be primarily based on the need and preference of the customers and end users.

The promoter also is visionary and ambitious business, who is committed to make a difference in traditional
business practice by approaching it in an innovative way. The promoter is currently seeking to establish Motel
and Fuel Station project which shores up the development base the country is looking for; as well as meets the
growing demand of the service in most wide ranging like hotel and tourism sectors.

6
 1.3. The Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the region in general and the
district/zone in specific with following ways:

1. Provide better service

By providing quality services, the project will satisfy the demand of the customers.
2. Source Of Revenue

As public policy of any nation, the government collects different forms of taxes from different business
organizations and individuals. Among the different forms of taxes, business income taxes and payroll taxes are
collected from undertaking business activities. Therefore, the project has been serving sources of revenue for
regional government.

3. Employment Opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of the
government is working on tackling the problem of unemployment and fostering the development process either
through creating self employment or employment in other organization. In this regard, project will hire
32employees.
Besides, during the construction work of the project extra jobs will be created particularly for local community
in construction part

4. Benefit For Local Community

Apart from employment opportunity for local community, as a corporate responsibility the project has been
engaged in different development activities. This will better worth the community in particular and contribute
for the development of the nation as a whole

5. Stimulate The Local Economy

The project will increase economic relationship and transactions among different actors in the local economy.

7
 1.4. Location and Premises Required

A. Project Location

Addis Ababa was founded in 1886 as a capital city of Ethiopia. It is located almost at the center of the country
within an altitude of about 2,400 meters above sea level. The City has an estimated population of about 4.5
million people. Addis Ababa contains 22.9% of all urban dwellers in Ethiopia, with an estimated area of 530.14
Square Kilometers (204.69mi). The current urban growth rate in Ethiopia is estimated at 4.1%; however, others
have estimated an annual growth rate as high as 8% for the city of Addis Ababa. Therefore, it is the largest and
the most populated city in Ethiopia. The city is divided into 10 sub-cities which are run by the City
Administration. Furthermore, Addis Ababa City is the seat of the United Nations Economic Commission for
Africa (UNECA) and the African Union (AU), what makes call Addis Ababa as the capital of Africa. Various
investments undertaken have been attracted to the area to utilize the available demand potential for services,
which is because of the existence of vast end users. Availability of physical and social infrastructure facilities
such as; access of main asphalt road, telephone service and others, make the project effective. Based on the
above facts, the following points taken by the owner as a project justification behind selection of this project
area:
The main justification behind selection of this city generally, and the selected project area particularly are;- 1)
Owner interest to invest at the selected area; 2) Available demand potential for the envisioned types of services
(urbanization, dwellers income level, etc.); 3) High economic growth and investment activities of the selected
area and the surroundings; 4) Existence of different similar business types; 5) The coming of the building in to
view will be a plus in promoting the image of the city. 6) Large population of the city and the surrounding area
which is the potential market for the envisioned project; 7) Location importance of the project area (the most
central part of the city); 8) It is among well infrastructure area of the country as well as city; 9) Investment land
use plan of the city’s Administration;
Therefore, the concerning bodies of the City/Sub-city Administrations are expected to take the due
considerations of the Company’s commitment and partnership in promoting motel and fuel station and
investment will grant the plot of land at the preferred area with fair land lease price

The total land requirement of the project is about 5000M2. Out of which the built-up area is 2000M2, whereas,
the remaining 3,000M2 for other purposes.
Table 02: Land Use Plan:

8
 S. No. Description Area in M2

1) Buildings Motel and Fuel station 3,000

2) Parking 700
3) Green Area 700
4) Communal (Office & Other Administration) 200
5) Guard House (4 Corridors) 100
6) Generator House 50
7) Others (Children Playing Area, etc.) 700
Total 5000

Design

The project bring innovation that enables cost and time efficiency (including design, construction technology, project planning
and management technique/technology, etc.).

According to the Federal Legislation on the Lease Holding of Urban Land (Proclamation No 272/2002) in principle, urban
land permit by lease is on auction or negotiation basis. However, the time and condition of applying the proclamation shall be
determined by the concerned Addis Ababa City Administration, depending on the level of development.

Table 02: Initial Land Lease Rate in Addis Ababa

Sr. No. Location of the land Land Grade Initial Price in m2

1 Central Business zones 1 1167.3
2 1062.9
3 916.2
4 751.5
5 619.2
2 Places That are Under Transit 1 716.4
2 647.1
3 559.8
4 472.5
5 384.3
3 Expansion Zones 1 245.7
2 207
3 150.3
4 132.3

Addis Ababa City Administration, Agency of Urban Land Development and Management are directly responsible in
dealing with matters concerning land. Accordingly, the initial land lease rate in city set by the Authorized
body’s’ is as shown in table below.
Table 02: Standard of Land Lease
9
 S. Location Zone Land Initial Price Land Total Cost (Birr)
No. /Town Grade Per M2 (Birr) Required
(M2)

1) Addis Ababa Expansion 1st 245.70 11,500 279,729,450.00

Source: Addis Ababa City Administration, Urban Land Management and Development Agency

As can be seen from table above the initial land lease rate is Birr 245.70 per m2 for 1st Grade Land. Currently,
most of the industrial facilities in Addis Ababa City are located on the central business zones of the city.
Therefore, expansion zones are recommended as the best locations for the project. Accordingly, the average of the
land lease rates in the expansion zones which is Birr 245.70 per m2 is adopted.
The Federal Legislation on the Lease Holding of Urban Land legislation has also set the maximum on lease period
and the payment of lease prices (See the tables below).
03: Land Lease Period
S. No. Service Type Lease Period (Year)

1) Residential area 99

2) Industry 80

3) Education, cultural research health, sport, NGO 99

and Religious
4) Trade 70
5) Urban Agriculture 15

6) Other service 70

Table 04: Land Lease Payment Period

S. No. Service Type Period of Payment

1) Private residential are obtained through tender 50 - 60 years

or negotiation

2) Trade 40 - 50 years

3) Industry 40 - 50 years
4) Real estate 40 years

5) Urban Agriculture 8 - 10 years

10
 6) Trade and social service 40 - 50 years

7) Others 40 years

Moreover, advance payment of lease based on the type of investment ranges from 5% to 10%. For this project, it
will be assumed 5%. For those that pay the entire amount of the lease will receive 0.5% discount from the total
lease value and those that pay in installments will be charged interest based on the prevailing interest rate of
condominiums. Moreover, five years grace period shall also be provided. The lease price is payable after the
grace period annually.
Regarding, the terms and conditions of land lease the Addis Ababa City Administration have adopted Article 6 of
the Federal Legislation with very minimal changes. Therefore, for the purpose of this project profile since the
project is engaged in Residential (Apartment), 99 years lease period, 40 years lease payment completion period,
10% down payment and seven years grace period is used.
Accordingly, the land lease cost of the project, at rate of Birr 245.70 per m 2 for 99 years of holding is estimated at
Birr 279,729,450.00. Assuming 10% of the total cost (Birr 27,972,945.00) will be paid in advance as down
payment and the remaining Birr 251,756,505.00 will be paid in equal installments within 40 years, at which the
annual lease payment is estimated at Birr 6,293,912.63

11
 5.1. SERVICE PROGRAM
Considering the projected demand, competition and minimum economies of scale, at a Double Shift of 8 hours a
day and 300 working days per year. Its capacity utilization will be 50%, 75% and 99% in the first, second and third
years, respectively. Assuming that, 300 annual working days and double shift/sixteen hours per day operation (For
service giving businesses). Such start-up of business at less capacity is very important in order to facilitate the
development of market outlets. The annual rated capacity of the business is assumed as follows:

Table 06: Service Program

Production Year

S. No. Description 3rd Year and then

nd
1st 2
after

1. Capacity Utilization (%) 50 75 99

The envisaged business will have a service capacity of selling & renting 84, 126 & 166 living Rooms on the
First, Second & Third Year, respectively.

Table 07: Service Capacity (For Living Rooms)

Production Year
Description
1 2 Above 3

Rooms (Sell) 42 63 83

Rooms (Rental) 42 63 83

12
 Capacity (%) 50 75 99

Table 08: Service Capacity (For other services)

Unit of Service Per
S. No. Description & Floor Annual Service Remark
Measurement Day

Rental (G+0/Ground Floor)

Shops & Markets M2 507 6,084

Service Per
Café, Bar & Restaurant
Day
Coffee Piece of Cup 100 36,500
Tea Piece of Cup 100 36,500
Macchiato Piece of Cup 100 36,500
Milk Piece of Cup 80 29,200
Soft Drinks Piece of Cup 100 36,500
Juices Piece of Cup 50 18,250
Different Food types Piece 56 20,440
Different Alcoholic Drinks Piece 56 20,440
Out Door Services
Number of Served
Children’s Playing Center 400 146,000 X2/Day
Children
No. of Served
Parking 200 73,000 ×2/Day
Vehicles
Other Similar Services Piece 6 2,190

PROJECT DESCRIPTION
The proposed project envisions the establishment of a new Motel and Fuel; station that will give
different services in addition to living home. Hence, it decided to invest I motel and fuel station
Building at City. Public Private Partnerships (PPP) is any type of institutionalized collaboration
between the public and the private sectors that aims to develop the investment returns of the
workforce or of the general public. PPP is medium to long term (legally-binding) arrangements
with a clear agreement on shared objectives. While some PPPs entail many different types of
activities that last for many years and involve significant financial resources. Benefits of Public
Private Partnerships: For the government, the benefits of the establishment of PPPs are the pace,
efficiency and effectiveness associated with private sector business practices for public service
delivery in order to ensure value for money. Among others, this is due to transparent and
competitive procurement processes. The long-term costs of the housing delivery under the PPP
framework, which in turn promotes more efficient use of resources. For the private sector, PPP
brings in new experiences to work in parallel with government for both sustainable development
and economic gains. Through PPPs the private sector is enabled to introduce improved
technologies, apply innovative business practices and create efficiency to boost profits. The
project requires a project site (building and land) and modern equipment and furniture. With the
purchase of the required equipment, and a complete construction of the site, service can begin
soon. Different types of living Rooms, retail space and recreationalservices shall be available for
occupation once the construction of the building is complete. Several residential activities such
as private living home, super market, laundry, ground tennis playing area, etc will thus be carried
out within the compound. Hence, it is this viable investment policy which invited "Mr.DAJANE
TEMESGEN

Process of Construction
The promoter will use low cost and environmentally friendly construction materials. Most of
input materials used will be locally produced materials and only steel and some finishing
materials will be imported. These types of Apartments are primarily designed to the higher and
medium class costumers. The promoter prepares design of houses and services by the consultant;
acquire building permit from the municipal office; develops the house and sells or rents the
Rooms, and services through its marketing branch or brokers. It collects its sales revenues and
transfers property right to its customers.

Theborrowed capital will be returned upon the sale of developed homes and services. The
primary building material will be provided by the promoter in the form of advance payment to
the contractors. This is mainly to support the contractor accomplish all construction activities in
accordance with pre defined schedule. Building Process: Minimum of one block per year for a
local developer and Minimum of two blocks built per year for an international developer. The
number of housing will be decided as per the building height regulation. Main steps in the

14
construction phase include (for typical slab & brick construction): Site preparation This involves
clearing of the site and pegging out of the site by the surveyor. Sometimes retaining walls will
also be built at this stage if required. Slab The plumber will need to lay plumbing that will be
located beneath the slab of the development. This needs to be done before the slab can be formed
up. The slab piering is then completed as per the engineer’s specifications and plans and then the
slab can be poured. It’s very exciting to see the slabs go down. Frames and roof trusses The
frames are generally prepared before being delivered to site and can be erected very quickly with
a day or so. It’s great to walk around the site once the frames are up and get a feel for each room.
Roof tiling of metal roofing Some builders prefer to complete the roof before starting the
brickwork and other builders work the other way around. Predominately builders want to get the
roof on as quickly as possible to protect the frames.
Brick work This stage really gives the development true structure, and 0ne can feel the
development making good progress when he/she sees the brickwork completed. Rough in This
involves the electrical and plumbing wiring and pipes to be installed before the internal linings to
the frames. Internal linings After the rough in are complete, the insulation will be installed into
the wall and ceilings and then the plaster will start on lining the walls and ceilings. You really
get a good sense of space within the dwellings at this stage. Waterproofing and tiling The wet
areas will be water-proofed in preparation for the tillers to start work, generally after or even
during the timber mould out. Timber mould out This stage involves the carpenters installing the
skirting boards, architraves, door jams and doors and kitchens. Lock up is when all external
doors including garage doors are o
P.C. Fit out. P.C. is a term for a prime cost item and includes tapware, bath, mirror, vanities and
other accessories, which are installed at this stage. Practical completion. This is the point in
time when an inspection is conducted when builder is almost finished. You will walk through
the development with the site manager and point out any items that still need attention.
Handover This is when the promoter are happy the construction has been completed to its
satisfaction and to the plans and after paying the builder’s final invoice, keys will be handed
over to you. Once handover is completed and it has received the occupation certificates from
the council, it can lease the dwellings out. They may be sold subject to approval or registration
of the subdivision. Seeing your development emerge from the dust and dirt and slowly take

15
shape until it resembles exactly what you have planned is one of the most exciting and
satisfying moments you could experience as a property developer

B. Land Requirement
The total land required by the project is estimated to be 5000 M 2. The premises required and land
use plan is indicated in table below;
Table. Premises required and land use plan
SN Description Land m2

Ground 1st 2nd Floor 3rd Floor 4th Floor

Floor
1 Building (G+4)

1.1 Ground (Business Center) 400

1.2 First Floor(Business 350
Center)
1.3 Second Floor(Bar, Café
and Restaurant ) 350
1.4 Different Offices
350
1.5 Third Floor(Assembly 350
Hall & Admin Office)
2 Guard house 20
3 Store 50
4 Generator House 50
5 Fuel Station area 600
6 Parking, green area and
200
road
Total 1000

16
 2. MARKET STUDY

2.1. Scope of the Market Study

The project is targeted for Bora district cross the vicinity and surrounding area. Hence, the scope
of market study of this project concentrates on the Bote town and surrounding rural villages in
general and the kebele in specific scenario.

2.2. Market Demand

There are a number of factors which creates demand for Motel and Fuel Station In the area. The
following major factors are identified;
 Economic activities
 Population
 Location Importance
 Infrastructure (road)
 Availability of different institutions
 Energy Demand

These major demand factors for the project are explained as follows

1. Economic Activities
According to responsible municipalities in the eight towns, the estimated population figure is
258,857. This is more than the figure provided by OUPI and CSA, which are 134,846 and
183,138, respectively. However, the figure demonstrated under the 2007 census survey is
228,420. On the other hand, the recent census result shows the total figure of the rural people in
the Special zone is 566, 069. On the contrary, figures provided by District Administration and
OUPI estimation/projection are 640,781 and 800,356 respectively.

2. Location Importance

17
The planned Hotel service use project will be established in Oromia regional state, East Shoa
Zone, Bora District, where the different construction is flourishing from time to time. Because
this cash crop area has easy access to the fundamental utilities and other facilities required for
construction area such as treated water supply, electric power, access to telephone line and easy
access for transportation and market outlet. Moreover, the regional government has been
undertaking various measures help boost the growth of investment endeavors in the area by
allotting land, and providing efficient municipal services

3. Infrastructure (Road)

In the district there exist asphalt all wheater and dry whether roads that connects different areas
that will create a demand for the hotel and restaurant services.

4. Availability of Different Institutions

In the district, there exist many governmental bureaus. Besides, there exist non government
organizations (NGOs) and private companies. All these institutions are potential market demand
for the project especially for restaurant, cafeteria, bed rooms and Meeting hall when the meeting
and workshop conducted.

5. Energy Demand
The major source of domestic energy supply is agri-wastes, followed by firewood, animals dung,
charcoal and kerosene. Hydro electric light services and more than 10 fuel stations were
available in the district (at Bote towns).

Hence, there will be a good market demand potential for the envisioned project (fuel station) in
consumption of fuels for vehicles, the district is an Intercept of the roads Addis Ababa to
Southern Ethiopia, Eastern way to main ,.

18
 2.3. Market Supply

In the Bote town there exist few service provider organizations. Standard restaurants, cafeterias,
pensions, assembly halls, play station and fuel station centers. Besides, all quality services in one
organization is almost non existence in the woreda kebele’s abroad.

2.4. Target Customers

The target customers of the envisioned project are

 The residents of the kebele and the surrounding area

 Merchants and drivers
 Business Community
 Different occasional guests
 Different institutions( Government, NGOs and Private)
 Domestic and Foreign tourists and visitors

2.5. Market Prospects

From the above analysis of market, it can be deduced that there is a huge gap between demand
and supply for Hotel business in the kebele as well as in the district that will give a lucrative
market for the envisioned project.

2.6. Marketing Promotion and Strategy

To reach customers different marketing ways will be used. Among the different marketing
strategies and tools for promotion controlling the market:

 Printed and non printed forms of advertising,

 Sponsorship of key government activities and public support mechanism.
 Seasonal discount pricing for guest houses and different others customer centric
marketing strategies will be used by the company.

19
The Hotel under discussion will have diversified marketing strategies that could enable it come
up with the different competitors in the market. Moreover, customer satisfaction will be the key
marketing strategy of the building. Generally the project has a competitive advantage since there
are no many standard Motels in the town.

2.7. Service program

The organization will initially operate at 70% of its capacity and will reach 100 %( full capacity)
service provision in the second year.

2.8. Sales Plan/Capacity

SN Description Measuremen Daily Monthly Annual

t Productio productio Productio
n n n
1 Motel Service
1.1 Coffee Cup 45 1350 16200
1.2 Tea Cup 55 1650 19800
1.3 Milk Cup 30 900 10800
1.4 Macchiato Cup 40 1200 14400
1.5 Soft Drink Bottle 60 1800 21600
1.6 Alcoholic Drink LS _ _ _
1.7 Juices Cup 30 900 10800
1.8 Cake No. 40 1200 14400
1.9 Beer No. 80 2400 28800
1.1o Food No. 45 1350 16200
2 Fuel Station
2.1 Kerosene Liter 60050
2.1 Benzene Liter 50030
2.3 Diesel Liter 100005
2.4 Lubricant and oil Liter 1500
3 Bed Rental No. 15 450 5400
4 Meeting Hall Hall/seat 80/1 80/10 80/120
5 Barbery Person 18 540 6480
6 Pool game No of game 25 750 9000
7 Supermarket _ _ _ _
8 Car Wash No of cars 5 150 1800

20
 3. SERVICE MIX AND CIVIL WORK OF THE PROJECT

3.1. Service mix

The Hotel and restaurant service will provide the following service mix’
1. Fuel Station

The project will provide different fuel energy (like kerosene, benzene and Diesel) for end users
by franchise based business from one of the oil company. Besides, the projects will also sale
different oil and lubricants for consumer. Moreover, service like car wash and parking will be
provided by the company.
2. Restaurant, Bar and Café Service

The restaurants will basically serve breakfast, lunch and dinner by providing daily menu, weekly
and other choices of customers. And the café will provide different hot and cold drinks with cake
and other light food items.

3. Bed Rooms Services

Bedrooms will be spacious allowing ample and generous ease of movement, comfort and
relaxation for guests, equip with technology. The Motel will have a total number of 15 bed
rooms. Among the features of the guest rooms the major ones are:
 Rooms with absolutely minimal internal and external noise levels,
 good quality beds with its accessories,
 LCD TV with remote control
 Quality of sanitary wares and fittings,
 Hot and cold water,
4. Meeting Hall

The proposed capacity of multi-purpose Meeting hall is 80 seats. The hall is planned to

accommodate and serve multiple purposes. It can be used for multi-purpose activities by

rearranging of seats and adding appropriate facilities on time and site.

21
 5. Play Station
Different playing games service will be given by the project under play station section. Games

such as pool will refresh the target customers.

6. Super market
The project will have a super market that can provide different goods including foods, cleaning

items, cosmetics, etc for the target customers.

7. Beauty Salons
The project will have a hairdressers section that would specialize in Women’s and men's hair.

Different hair and beauty services will be given for women’s and men’s in these beauty salons.

3.2. Civil Engineer Building and Civil Works

As indicated in part 1 the total land requirement for the project is estimated to be 1,0 00M2.The
buildings are planned to accommodate fuel station, restaurant, café, office, store, bed rooms,
Meeting hall, kitchen, supermarket, beauty salon, car wash center and other utility requirements
as well as green areas and parking.

In general the buildings must be capable of being kept clean and provision should be made for
keeping the sewerages drained out properly and room temperature is attained to keep healthy
environment. In most environments, equipment should be totally enclosed in a light structure:
where the climate is suitable. A concrete floor, which can be swept, is usual.

The site will be encircled by a chain linked fence fastened to concrete posts. The project
construction is designed by professional engineers and construction will be done under close
supervision and collaboration of the engineers.

22
 4. ORGANIZATION AND MANAGEMENT

4.1. Organization and Management

The organizational structure should be in a way that the motel and fuel station service can able to
achieve its objectives as well as the satisfaction of standard requirement.

4.2. Man Power

The total manpower required for the building will be 32 persons. The manpower list and the
corresponding labor cost are shown in Part five of this document.

4.3. Organizational Structure

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the Motel. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general
manager.

Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by the owner.

Owner

General Manager

Service Management Admin and Finance Marketing Department

Dept.
Fig Organization Structure of the Building Department

A. The General Manager’s

23
Fuel Station Restaurant & Bed Room Meeting
Café Hall
Play station & Supermarket
Barber
 The duties and responsibilities of the general manager are;
 He/she will plan, organize, direct and control the overall activities of the Motel and fuel
station.
 He/she will devise policies and strategies that will enable the organization profitable.
 He/she will plan, organize, direct and control the human and non-human resources of the
organization (other departments) so as to achieve the short and long run objectives of the
organization.
B. Service Management Department
This is the core department that has six main sections (Fuel station, Restaurant and café, Bed
Rooms, Meeting Hall service, Play Station and barber and supermarket)

The main duties and responsibilities of this department are

 To render those outlined services of the project and manage the overall service delivery
system of the motel and fuel station in line with the customer need and satisfaction.
 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the fuel station, barber, restaurant and café, bed rooms, assembly hall, play station
and supermarket services that will increase customer’s satisfaction.

C. Administration & Finance Department

The Admin & Finance Department of the Hotel is responsible for undertaking the following
activities:
 Manage the human resources and control employee’s activity
 Will manage non human resources of the organization, which include: effective handling of
the different inventories and devise strategies of controlling against fraud and damage.
 Will provide the right material or inventory to the center with right price at the right time.
 Will plan, organize direct and control the financial transaction of the building by using all the
necessary documents.
 Accountant and cashers that will collect money from the customers.
 Will develop sound financial control system by developing modern financial control systems.

24
 Will prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body.
D. The Marketing Department
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Will develop the marketing strategies.
 Will develop effective customer handling strategies
 Plan and execute the promotion mix

5. FINANCIAL REQUIRMENT AND ANALYSIS

5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged hotel is estimated to be Birr
100 million.
Table Total Initial Investment Capital

25
 Description Cost in birr
Land, Building & Construction 30985038.5
Machines & Equipments 1626750
Vehicles 14218750
Office Equipment 83250
Total Fixed Investment Cost 13913788.5
Working capital 16875766
Pre service Expense 8085.9375
Total 20797641
Contingency (10%) 2079764.1
Total Initial Investment Capital 100588834.04

5.1.1. Fixed Investment

A. Building & Construction

No Description Total cost in Br.
1 Restaurant, bar and Cafeteria 1054688
2 Kitchen 168750
3 Bed Room 1054688
4 Fuel Station 2109375
5 Car Wash 210938
6 Office 210938
7 Store 98438
8 Toilet 105469
9 Meeting Hall 632813
10 Supermarket 421875
11 Play station 421875
12 Barbery shop 379688
13 Guard rooms 126563
14 Parking, Recreation and Green area 105469
15 Fence 189844
16 Site Development 42188
17 Design and Supervision 105469
18 Fuel Station Installation 450000
19 Land lease Initial Fee 95976.563
Total 7985039.2

B. Machinery And Equipment

Machinery and Equipment required for the hotel service is estimated to be ETB 4,200,000.00
C. Vehicles

26
 Unit Price in Total Price in
No Description Qty Remark
br. br.
1 Mini Bus 1 500,000 500,000 Duty free
2 Bote Track 1 3,500,000 3,500,000
3 Generator 1 200,000 200,000
Total 4,200,000

D. Office Equipments
Unit Price in Total Price in
SN Description Measurement Oty
Br Br.
1 Chairs Unit 20 1500 30000
2 Tables Unit 20 10000 200000
3 Computer Unit 10 5000 50000
4 Printer Unit 2 3500 7000
5 Computer table with chairs Set 10 1300 13000
Managerial Chair with
6 Set 4 1800 7200
table
7 File Cabinet Unit 2 1200 2400
8 Self 3 2200 6600
9 Telephone Set Unit 2 1500 3000
10 Decoration Set 7000
Total 326,200.00

E. Initial Working Capital

The initial working capital is estimated to be birr. 3,266,000.00

F. Pre-Service Expense
No Description Cost
1 Project proposal 10,000.00
2 Licensing fee and others 1500.00
Total 1500.00

5.2. Annual Service (Production) Cost at Full Capacity

i. Raw Materials and Inputs
Total Annual cost
No Description Measurement
in Br.
1 Restaurant and café LS 1,850,000.00
2 Fuel station Liter 4,660,000.00
3 Super Market LS 582,000.00

27
 4 Other service LS 858,000.00
Total 7,950,000.00

ii. Salary Expense

Monthly Annual
SN Position No. Qualification
Salary Salary
1 General Manager 1 BA in Management 5000 60000
2 Acct & Admin head 1 BA in Acct/mgt 2000 24000
3 Marketing head 1 BA in Marketing Mgt 2000 24000
4 Service Mgt Service head 1 BA in Hotel Management 3000 36000
5 Accountant 1 Diploma in Accounting 2000 24000
6 Cashier 1 10+2 in Accounting 1500 18000
10+2 in Sales and
7 Marketing Officer 1 1500 18000
marketing
8 Waiters 5 10 completed 500 30000
10+1 in purchasing and
9 Purchaser 1 1500 18000
supplies mgt
10 Store Keeper 1 12 completed 1200 14400
11 Guards 2 Basic 500 12000
12 Janitors 3 Basic 500 30000
10+2 in Sales and
13 Sales person 1 900 10800
marketing
14 Barista 2 10 completed 750 18000
15 Cooking Chief 2 10+2 in food preparation 1500 36000
16 cookers 2 10 completed 800 19200
17 Supermarket Supervisor 1 10+1 in sales management 1500 18000
10+1 in reception
18 Recipients 1 850 10200
management
19 Driver 1 10 completed 800 9600
20 Meeting Hall Supervisor 1 10+1 in Management 900 10800
21 Room worker 2 10 completed 750 18000
22 Barber 1 10+1 in barber 800 9600
25 Gardner 1 Basic 800 9600
Total 32 23,550.00 478,200
Benefit(20% of the basic
95,640
salary)
Grand Total 573,840

iii. Other Operating Expenses

Annual
SN Description Assumption Used
Cost in br

28
 1 Property Insurance 10,898 1% of Fixed Investment Cost
2 Audit & Legal Fee 750 400 per month
3 Uniforms 938 30*200br
4 Telephone, fax and postal 1,500 800 per month
5 Cleaning goods supplies 1,875 1000 per month
6 Repair and maintenance 21,796 2% of the Fixed Investment Cost
7 Advertisement 9,375 Lump sum
Stationery and other office
6 656 350 per month
supplies
8 Electricity 3,984 0.85*30,000KW per year
9 Water 703 1.5*3,000m3 per year
10 Fuel 7,813 2500 lit*20 per year
11 Oil and lubricant 781 10% of fuel cost
12 Miscellaneous Expense 4,688 3000 per month
Total 65,757

29
5.3. Financial Analysis and Statements

5.3.1. Underlying Assumption

The financial analysis of the envisioned fuel station and is based on the data provided in the
preceding sections and the following assumptions.

A. Construction and Finance

Construction period 22 months

Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10 %
Operating Costs Increase by 1%
Salary and wages increase by 1%
Operating Costs and raw materials Increase by 1%
Raw materials increased by 1%
Sales 10% increment after 2nd year

B. Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%

C. Working Capital

Accounts receivable 30 days

Raw material local 30days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days

30
5.3.2. Sources of Fund
Amount(in
SN Description % share
birr)
1 Owners Share 30 30,000,000
2 Bank Loan 20 70,000,000
Total 100 100,000,000

5.3.3. Loan repayment Schedule

Principal Total Annual Remaining
Year Interest (10%)
Payment Payment in br Balance
0 0 0 0 70,000,000.00
1 7,000,000 7,000,000 3,600,000.00 16,200,000.00
2 7,000,000 1,620,000.00 3,420,000.00 14,400,000.00
3 7,000,000 1,440,000.00 3,240,000.00 12,600,000.00
4 7,000,000 1,260,000.00 3,060,000.00 10,800,000.00
5 7,000,000 1,080,000.00 2,880,000.00 9,000,000.00
6 7,000,000 900,000.00 2,700,000.00 7,200,000.00
7 7,000,000 720,000.00 2,520,000.00 5,400,000.00
8 7,000,000 540,000.00 2,340,000.00 3,600,000.00
9 7,000,000 360,000.00 2,160,000.00 7,000,000
10 7,000,000 180,000.00 1,980,000.00 0

5.3.4. Depreciation Schedule

Original Depreciation
Depreciation
SN Description Value In Per year in
rate in %
Birr Birr
Construction and
1 5,083,366 5 254168.32
Building
Bldg. Machines &
2 74,050.54 10 7,405.05
Equipments
Assembly Hall
3 126,853.37 10 12,685.34
Equipments
4 Vehicle 549,141.50 10 54,914.15
5 Office Equipment 203,200 10 20,320.00
Total 6,036,612 349,493

31
5.3.5. Revenue Projection
Based on the production capacity and program of the Motel indicated in previous (Chapter 2),
the revenue of the organization projected as indicated in the table below;
No Description Measuremen Annual Unit Total price Assumption
t Productio Pric
n e
1 Motel Service
1.1 Coffee Cup 16200 5 81000
1.2 Tea Cup 19800 2 39600
1.3 Milk Cup 10800 6 64800
1.4 Macchiato Cup 14400 5 72000
1.5 Soft Drink Bottle 21600 8 172800
1.6 Alcoholic Drink LS _ 140000 Lump Sum
1.7 Juices Cup 10800 10 108000
1.8 Cake No. 14400 10 144000
Beer No. 28800 10 288000
1.9 Food No. 16200 25 405000 Average Price
Sub Total 1,515,200.00
2 Fuel Station 5400 100 540000
2.1 Kerosene Liter 60050 16 960800
2.1 Benzene Liter 50030 20 1000600
2.3 Diesel Liter 100005 17 1700085
2.4 Lubricant and oil Liter 1500 55 82500
Sub Total 4,283,985.00
3 Bed Rental No. 5400 200 1,080,000.00
4 Meeting Hall Hall/seat 120 500 60,000.00 10 day reserved per month
5 Barbery Person 6480 30 194,400.00
6 Pool game No of game 9000 10 90,000.00
7 Supermarket LS _ _ 396000 Gross sales(br.1100/day)
8 Car Wash No of cars 1800 80 144000
Total 7,763,585.00

32
5.3.6. Balance Sheet
Current Asset Value in Br.
Cash 1,109,273
Inventory of raw materials and inputs 6875766
Total Current Asset 7,985,039
Fixed Asset
Land, Building and Construction 30,985,039
Machineries and Equipments 16,626,750
Vehicles 4,218,750
Office Equipment 83,250
Total fixed Asset 13,913,789
Total Asset 21,898,827
Liability
Account payable 70,000,000
Owners Equity
Capital 30,000,000
Total Liability & Owners’ Equity 100,100,000

33
5.3.7. Income Loss Statement
Revenue Year 1 Year 2 Year 3-10

Sales Revenue 8,950,000.00 9,845,000.00 10,829,500.00

Purchase of Raw Material 2,932,941.18 3,226,235.29 3,548,858.82

Gross profit 6,017,058.82 6,618,764.71 7,280,641.18

Expenses

Salary Expense 1,654,800.00 2,566,800.00 3,208,500.00

Other Operating Expenses 450,000.00 495,000.00 544,500.00

Deprecation Building 180,300.00 180,300.00 180,300.00

Deprecation Vehicles 450,000.00 450,000.00 450,000.00

Deprecation Machineries
120,700.00 120,700.00 120,700.00
& Equip.
Deprecation office Equip 21,115.00 21,115.00 21,115.00

Interest Expense 595,030.28 535,527.25 476,024.22

Total Expense 3,471,945.28 4,369,442.25 5,001,139.22

Profit Before Tax 2,545,113.55 2,249,322.46 2,279,501.96

Tax(30% ) 763534.0646 674796.7375 683850.5869

Net Profit 1,781,579.48 1,574,525.72 1,595,651.37

34
5.3.8. Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10

Equity Capital 2,000,000.00
Loan principal 8,000,000.00 1,958,664.21 3,710,274.65
Net sale 0 8,950,000.00 9,845,000.00 10,829,500.00
Total cash in flow 10,000,000.00 8,950,000 11,803,664 14,539,775
Cash payment
Purchase of raw
0 2,932,941 3,226,235 3,548,859
materials
Salary expense 0 1,654,800.00 2,566,800.00 3,208,500.00
Other Operating
0 450,000.00 495,000.00 544,500.00
cost
loan repayment 0 1,190,060.55 1,130,557.52 1,071,054.50
Tax payment 0 763534.0646 674796.7375 683850.5869
Total payment 10,000,000.00 6,991,336 8,093,390 9,056,764
Cash surplus /
10,000,000.00 1,958,664.21 3,710,274.65 5,483,010.75
Deficit
Cumulative
1,958,664.21 3,710,274.65 5,483,010.75
Balance

5.3.9. Profitability
According to the projected income statement, the project will start generating profit in the 1st
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.

5.3.10. Break-Even Analysis

The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 3) is estimated by using income statement projection.

5.3.11. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered with in 6 year of operation.

35
 6. ENVIRONMENTAL IMPACT OF THE PROJECT

Currently the issue of environment and envelopment get due emphasis and thus every citizen
called exert their maximum effort for fighting against any negative impacts on the environment
so as to result in a win-win solution on common agenda that is creating environmentally friendly
business environment. Therefore, this Hotel project does not cause a negative impact on the
environment.

36