PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

PREPARED BY TSEGA FIKRE

PHONE:-0906777747
 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

1. Basic information

Name of the promoter: -MEREHED NASIR

Contact address:-0911534595

Type of the project:-G+4 three star hotel and mixed used business center

Type of business: - sole proprietor ship

Project location: -Wolkite town, Gurage Zone, SNNPR, ETHIOPIA

Project capital:- 25,987,525

Source of finance:-the total investment capital of the project is to be financed from the promoter’s
equity and bank loan of birr

Man power requirement:-120 employer will be benefited with in this project out of which 45
permanent (25 graduate and 20 above 8th grade) and 75 casual workers during construction time

Land requirement:-the total area of 500m2 of land required for the project.

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Executive summary
The project feasibility study proposed G+4 three-star hotels and general business center has been
promoted by Merehed Nasir in south nation nationality people region Gurage zone Wolkite town

Wolkite is one of the fast-growing local towns and one of zonal level city found in south nation
nationality people region Gurage zone. We provide in our hotel were service like standard bed room
catering beauty men’s and women bed room game zone bar and restaurant.

In this profile study a three star tourist standard hotel is considered to provide the following service

1.15 standard double bed room 20 standard single bed room totally 35 standard bed room

2. Cultural and modern restaurant

3. Standard bar and cafeteria

4. Standard game zone

5. Beauty salon, laundry

6. Conference hall

7. Rental room for banking

8. Swimming pool

9. Parking

The total area of this investment is about 500m 2 the area covered the following infera structure such
as main building (G+4) hotel service ,store, gourd house, parking (basement),and on the important
activity. This land will be acquired from Wolkite city administration

The total investment capital of the project is estimated at birr 25,987,525 of which 80% birr
20,790020 is fixed investment and 20% birr 5,197,505 will be will be financed bank loan

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Profitability:-the financial analysis of the envisaged project is carried out for the following ten year
based on the 5 year financial projections using the income statement, cash flow statement and
financial internal rat.

Income statement:-according to the project income statement the project will generate profit
beginning frame first year of the operation

Cash flow statement:-also show substantial amount of cash surplus right from the first year of
project operation life the cash flow balance for birr 9,747,525 in the first year to cumulative balance
of birr 16,780,500 during five year of the operation

Firr computation:-the computation of the project internal rate of return shows the project will
profitability generate reasonable return on investment. Before tax financial internal rate of return is
calculated 80% this net present value 1104999.25 discount rate 20%

Socio economic benefit:-the socio economic benefit of the project is also very high the project will
provide job opportunity for 40 permanent employees generate revenue to government in the form of
taxes facilitate and give good service for local and international customers.

Conclusion and recommendation:-the project is found to be operationally profitable, viable and has
significant socio economic benefits. We recommended that according to this attractive financial and
economic benefit of the project all concerned office and financial intuition should give their support
to facilitate the implementation of this plan.

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

2. Introduction

2.1 hotel and tourism investment in Ethiopia

Ethiopia has had its own share of political and social up heals in the as that both destroyed social
cohesions and threatened peace however a lot of strides have been mad and the country is now
generally peaceful and politically stable as result the number of tourists visiting the country has
gone up. This has paved way for the formulation and implementation of the truism transformation
plan. Give the country’s present peace full environment the ministry of culture and tourism has put
in place a strategic plan to make Ethiopia atop tourist destination by 2024.

The government of Ethiopia has devised a long term strategy that gives due regarded to the
preservation development and promotion or the country’s tourist attraction. This include plan for
expansion of tourist facility and necessary infra structures. ended in the wider sense the country has
a good potential for the development of high standard hotels, recreation and market center and there
is growing realization that this sector hold significant development perspective, which should be
fully exploited in the planned and controlled manner.

2.2 back ground of the promoter

The promoter Merehed Nasir has a long-time work experience in hotel business activities in
Ethiopia during this time the promoter gained a vast knowledge and skill. With this reliable
experience Merehed Nasir knows how to manage and lead hotel business organization to generate
profit.

2.3 purpose and amount of loan

The purpose of the loan is built G+ 4 hotels and general business center. Beside this the promoter
believes that the loan will strengthen and relations ship between the investors and the bank. The
source of the project finance is from the promoter’s equity and bank loan. Out of the total
investment capital of birr 25,987,525 birrs 20,790020 80% contributed by the promoter (Merehed
Nasir) while the remaining balance of 5,197,505 20% is covered by local bank

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

3. The company

3.1 project description

The long term goal of the project is to become the best choice in Wolkite and its surrounding area
by creating a differential experience capitalizing on personal service .the proposed project will have
a total area of 500m2, designed to reader hotel and general business center which will in turn plays
significant role toward solving shortage of hotel service and other business areas in Wolkite town.

Modern hotel and restaurant are facilitating where food bed room drink and other services are
provided in an efficient and pleasant manner and style. Operating hotel and general business center
requires cleanliness and neatness of service to be provided and efficiency, cordiality and good
manner on the part of hotel and general business center workers.

3.2 project objects

The main objective of the project is aimed at to maximize the return on invested capital in the form
of profit of the promoter, however, its implementation will benefit the employee, the consumer
society and the government at different levels, in this project is aimed to promote the following
objectives.

 To maximize the return on invested capital through modern hotel services.

 To raise the significant and important of the sector and thereby raising its contribution the
national economic development
 To give quality and standard hotel related services
 Effectively use local inputs and strengthening the linkage between agriculture and other sector
of the economy.
 To provide gainful employment to a large segment of the population of the project area and
augment earing capital at the grassroots level,
 Increases government revenue through different forms of taxes, which in turn used to facilitate
social and economic development.

In general, the project is believed to have significant social and economic benefits that accrue to
that society, the region and the country beyond the financial returns to its owner.

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

3.2.1 Mission and goal

The of our hotel

 To provide outstanding hospitality facilities and services to our guest. Our hotel focuses on
individual business and leisure travel, as well as travel associated with groups meetings.
 We emphasize quality standard in our rooms and food and beverage division.
 We provide a fair return on investment for ours owners and recognize that this cannot be done
without well trained, motivated and enthusiastic employees.

Goal

Objective are the goal toward which activates of the business are directed and one of the most
important function the business owner must perform is setting objectives. These important aims of
this sole proprietorship business among others include the following highly interrelated general
goals with each other’s.

 Increase the hotels average occupancy level 2 percent above the previous year’s level
 Increase the volume of repeat guest business by 10 percent
 Increase the market share of our hotel by 5% by opening additional restaurant.

3.3 project location

Wolkite is a small city found in the southern Addis Ababa 150 KM, it is very near to Addis Ababa
so if your are thinking to have a weekly visit it is about 4 hours’ drive so you could start any time
during the day by transport. The city is under southern nation & nationality sate. The people live the
where are the Gurage people. You will be lucky if arrive there during meskel. This town has a
latitude and longitude of 8’17N 37 47’E and an elevation between 1910 and 1935 meters above
levels.

The climate

Subtropical highland climate or temperate oceanic climate with dry winters temperate, dry winter
warm summer the coldest month averaging above 0 Ct52. At month with average temperature
below 22 C716 F, and at least four month averaging above 10°c (50°f). AT least ten times as much
as rain in the wettest month of summer as in the driest month or winter tam alternative definition is
70% more of average annuals precipitations received in the warmest six months) .

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

4. Market study

4.1 General overview

In general the hotel industry composed of different services, including accommodation, cafes and
catering. The market for hotel industry, especially hotels in a developing country like Ethiopia, is
closed linked to the tourism industry, because a majority of consumers for the sector services come
from international counties. Therefore, except in one or two major urban centers of the zone are no
modern hotels and restaurants with acceptable standards in the whole zone. Most towns in all
woreda capital do not have hotels and restaurants which meet minimum standards. What they can
hotels and restaurant in these urban centers are filthy facilities with dirty bed rooms, unwashed bed-
sheets, unhygienic food preparation facilities, workers with dirty clothes and halls and rooms filled
with swarms of files. In short, almost all the so-called hotels and restaurants found in most urban in
the zone are well below accepted standards.

Clearly there is a need to establish modern hotel and restaurant at least in zone and woreda capital
of the region. Government employees, merchant and restaurant, travels in the region residents and
tourists will be the main customer of catering businesses.

4.2 demand for hotel services

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

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

4.3 demands evaluation mechanism

The following are some of the methods which can be used to evaluate the demand of the services.
By use of customer feedback follow up from high GDP growth and increasing corporate entry is
driving hotel demand in the business and conference segment

4.4 pricing

The pricing service depends considerably on the quality of services rendered and its location. In
Wolkite relatively there is no high standard hotel that charges high price of birr. For this envisaged
project a price of birr 200, for single bed and

300 for bed room per room per single night is proposed. The hotel service will also earn revenues
from the sale of good and other hotel services including from rent of offices for other business
sector.

4.5 Capacity and services program

4.5.1 Capacity

From the market study, it is observed that there is a great demand gap between the demand and
supply of tourist standard hotel services.

Therefore, taking in to account the market study and economic scale provision the envisaged
international tourist hotel will have capacities as shown below.

Table 4, 51 services capacity of the envisaged hotel

S/N Type of service Feasible capacity

1 Bed room 25 rooms will be double & 15
will be singe
2 Bar & restaurant 100 at a time
3 Meeting room 200 seats
4 Room rent for other business/bank, shop etc. 10 rooms
5 Game zones Table tennis, pool
6 Children’s playing place and fountain area 270 m2
7 parking 100m2

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

4.5.2 .At the initial stage of the service provision period, the hotel would require some years to
penetrate in to the market and capture a significant market share. Therefore, in the first and second
year of services the capacity utilization rate will be 755 and 90%, respectively full services
provision shall be attained in the third year and then alter. The proposed services provision program
is shown in table 4.5.1

4.6 marketing strategy

As discussed earlier the major target group of hotel sector are local communities and tourists who
arrives the country for business, leisure, conference and other purpose. Providing quality services
and consistently improving with the changing situation should be the promoter’s objectives hence
according to the feasibility study, the promoter has the following marketing strategies.

Contacting government and private agencies affiliated with tourism on a regular basis informing the
of any corporate rate discount program availability of services etc.

Special effort will be made to emphasize the price value relationship of the services

Activity marketing the hotel prior to the completion and opening

Working with local people to establish a competitive amenity package responsive to specific
requirement

4.7 competition overview

As we know in Wolkite in there is few hotel those give standard service to their customers. That is
why we need to build tourist standard hotel in this town.so our hotel provide all the necessary
facilities to do quality and clean services.in conclusion my service compared to the competitors
look like

The promoter long term experience and good will that she has achieved from her respected
customer will allow me to win the competitor. In addition to the above, the failure stories that we
have observed from others and the comments collected from our customers will help us to wing our
competitors.

 I keep the promise I make

 Quality service is my motto

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

 Transparent price setting and fair price will be bases to win the competitors

5. Technical study

5.1 design and particulars

The project owner interest, as regards to how the overall building design looks like and the level of
services to be rendered by the envisaged project, independent on the area at which the building to
be placed the owner has already decided to commit self to construct a G+4 hotel having the full
knowledge what is required by the national and international standard of hotel in Ethiopia. The
standard by the way it’s exhaustive as well as being explicitly specific on the level of the services
excepted under the selected category determine also the physical and finical requirement of the
project. Hence, in effect the contents of project components to be described below are the derivate
of the requirement mentioned above.

5.2 physical appearances

The hotel have G+4 building plaice on an area of 500 m 2 the architecture of the buildings are
influenced by the modern design setting holding the characters of attracting customer from out ward
and allowing the maximum comfort it can be provide from services point of view. Apart from the
need to add a new look within the locality, exterior of the building will be dominated by a glass
panel at the strategic corners to provide a maximum opportunity for guest to have, a look at the
important lands escape scenery of the area the outer space is allocated to have an open garden,
children’s playing, ground parking area, fountains and inter campus paving with a medium size
swimming pool adjoining the front side of the building’s.

5.3 core facilities

The envisaged hotel should have sufficient and comfortable spare to accommodate the core services
as per the requirement of G+ 4 hotels. Actually this has been considered seriously at the design state
of the building along with the location of appropriate area and placement of each component not
only from the perspective of having compliance for the standard but for the benefit exploiting of
brining complementary Services under the same location and allow maximum convenience in the
work process. The size (area) of each service, which will be explained blow, determine the holding
capacity of guests as it determines the level and quality of services. Other than the critical factors

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

mentioned above the market aspect i.e. customer need and resources availability are considered in
which case they are the determinates to give the final set up of the facilities.

(A) Bed rooms

A hotel of 35 class are allotted for room services with option to avail two different types of
accommodation in the second and the third floor of the building in the interest of following the
trend in the industry dingle and double bedrooms. Actually the standard requires allowing
maximum 30% from the total while the rest can remain with big double bed rooms or any other
smaller rooms. On the bases of the above consideration under this component, the hotel will have
25 single and 10 double bedrooms.

(B) Bar, cafeteria and M restaurant

This hotel one bar, cafeteria and restaurant with a superior comfort and services quality. The
furniture and equipment, as being the sources of customer attraction, need to be fashionable of
higher quality commensurate with the expectation of guest who happen to prefer this class.

Therefore, the envisaged hotel, having the requirement considered too, will have one bar cafeteria
and restaurant at the first floor.

Hence the hotel must prove the maximum range of varieties at all times the hotel will have the
capacity entertaining 50 guests and allow maximum efficiency in the service by having the
restaurant located nearer to the main kitchen.

(C) Conference hall

In this hotel the conference hall if found in the third floor of the building which can be used banquet
or conference interchangeable. This project considers this component at the second important
function next to the room services as this area has a higher poetical for such services, the holding
capacity of the conference hall will be 200 person.

(D) Business center (mini market shop)

The ground floor of the used for business center with the services that would the customer need for
such a services, the envisaged project will allocate a relatively bigger areas preferably separate
rooms at the ground floor. Rooms are allocated to secretarial services, executive rooms for business

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

meeting and shopping corners the secretarial services will furnished with all the machines and
equipment to handle any business enquiry that may be raised by hotel guest. The shopping corner
also accommodates mini boutique, cosmetic and d/t type shop to generate additional income for the
hotel.

(E) Indoor game zones (pool, table tennis D5 TV)

The hotel provide indoor games its customers

(F) Children’s playing spaces

The hotel provide a spaces for children’s to play

(G) Supports

Kitchen
Two kitchens ,with the process of multiple varieties of food preparation and proportional capacity
to handle the maximum gusts to be served in the main restaurant as well as in banquet hall, is the
critical requirement for the proposed hotel is should be large enough also to accommodate the
working area of cold and hot meal on the one hand and pastries and bakery on the other.in order to
allow reasonable space for worker to move around as well as to avoid the possibility of
contamination and spoilage, the pastries and bakery should be proved with a space to add a small
store with flexible structure to contain butchery and cold room.

Power house
For the service of the hotel to contain uninterrupted, a power house is already planned to be placed
in the under gerund or back to the building hence, the power house will be supplied with a general
planned to be fixed for emergency service.

Store
Alike the capacity projection made one the kitchen, the envisage project requires to a store as big as
the varieties of items that are needed to be kept as stock. The store will need management for stock
properly placed and identified at the time of delivery and inventory hence; it is required procedure

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

to organize the stock items in separate sections so that the proper handling of stock shall be
maintained.

Car parking
The hotel must provide the service of car parking with 24 hours protection at least for those
costumer who have checked in again, it should be large enough to accommodate as many vehicles
as the hotel is going to entertain a large crowed in view of this a parking space for about 10 vehicle
is to be allocated with the standard width and height of the drive in routes.

Hotel furniture and equipment

Furniture and equipment required to furnish the envisaged hotel depend on the space to be available
as well as on the quality and volume of service to be rendered. Normally the quantity required will
also depend on the standard. There for for this particular category of forecasting to level of
consideration are taken in to account. One by the fact that the design of building directly determined
the space available for every items, size will be governed by this and again the quality required
furniture will, determined based on the kind of facilities available.in any case the requird quantity
are forecasted based on the component stated bellow.

 35 bed room that is ,20 standard double bed rooms and 15 standard single bed rooms
 Special bar and cafeteria
 Traditional and modern restaurant
 Conference room
 Rental room for different business purpose
 Indoor and outdoor game facilities
 Children’s playing space
 Management office and store
 Other civil work including land escaping parking area fountain and inter campus paving.

5.5 inputs/raw material and utilities

5.5.1 Raw materials

The annual cost and list of row material are indicated in table 5.1

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Table 5.1 annual requirements of raw and auxiliary materials

s/n Raw materials Quantity Annual cost

1 Food material raw Lamp sum 70,000
cost
2 d/t types of Lamp sum 70,000
beverage raw cost
3 Cleaning material Lamp sum 20,000
and other
miscellaneous uses
total 160,000

5.2.2 Utilities
Annually requirement of electricity water and fuel is estimated at 240,000birr from which 6,000 birr
5,000 and 6,000 birr are electric city water fuel and telephone and broad band internet respectively
the total cost of utilities are, therefore about birr 270,000birr per annum.

Table 5.2 utilities

s/n description Monthly cost Annual cost

1 Electricity, KWh 6,000 72,000
2 Water m3 5,000 60,000
3 Diesel, liter 4,000 48,000
4 Telephone and 5,000 60,000
broad band internet
Total 240,000

5.6 machinery and equipment

Machinery and equipment required for this hotel are mentioned below in the following table

Table 5.3 list of machinery and equipment

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

S/N DESCRIPTION quantity Unit cost Total cost

1 Guest chair 30 1000 30,000
2 V21 inch 15 5000 75,000
3 Telephone 15 500 7,500
apparats
4 Bed 150*180 15 10,000 150,000
5 Coffee table 15 2500 37,500
6 Spring mattress 15 5000 75,000
7 Cup board 30 3500 105,000
8 Bed sheet 15 600 9,000
9 Bed cover 15 500 7,500
10 Blankets 15 1200 18,000
11 pillow 30 250 7500
TOTAL 522,000

Furniture and equipment required for double bed rooms (qty 20 beds)

s/n DESCRIPTION Qty/month Unit cost Annual cost

1 Guest chair 20 1000 20000
2 V21 inch 10 5000 50000
3 Telephone apparats 10 500 5000
4 Bed 150*180 10 10000 100000
5 Coffee table 10 2500 25500
6 Spring mattress 10 5000 50000
7 Cup board 10 3500 35000
8 Bed sheet 20 600 12000
9 Bed cover 10 500 5000
10 Blankets 10 1200 12000
11 pillow 20 250 5000
total 319000

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Furniture’s and equipment required office, reception, leisure and others)

s/n description Qty/month Unit cost Annual cost

1 Arm 20 1500 30000
chair(swivel)
2 V21 inch 1 5000 5000
3 Telephone 3 5000 15000
apparatus &DSL
4 Shelf 5 2000 10000
5 Coffee table 3 2500 7500
6 Cash safe 1 10000 10000
7 Desktop 3 7000 21000
computer
8 Printer 1 10000 10000
9 Cash register 1 7000 7000
machine
total 102000

Furniture and equipment required office, reception, leisure’s and others)

s/n description quantity Uint cost Annual cost

1 table 50 12000 60000
2 chair 200 600 12000
3 Balcony &shelf 1 25000 25000
4 TV 54 inch 1 24000 24000
5 Tv 43 inch 1 16000 16000
6 stool 10 1000 10000
7 Coffee machine 1 35000 35000
8 refrigerator 2 22000 44000
9 Draft beer 1 20000 20000
machine

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

10 DVD player 1 1000 1000

11 Satellite dish with 2 3000 6000
receiver
12 Tea cup 200 25 5000
13 Coffee cup 110 25 2750
14 Milk cup 110 25 2750
15 Makiyato cup 110 25 2750
16 Water glass 110 50 5500
17 Draft glass 110 50 5500
18 Wine glass 110 50 5500
19 Beer glass 110 50 5500
20 Whisky glass 50 100 5000
21 Local gin glass 50 35 1700
22 service tree 200 50 10000
23 Sauce pot big 10 40 400
24 Sauce pot medium 10 30 300
25 Metallic pot big 10 110 1100
26 Metallic pot 10 100 1000
medium
27 Metallic pot small 10 85 850
28 Normal alloy 20 60 1200
29 flat rim round 10 50 500
total 430000

Kitchen materials

s/n description Quantity Unit cost Annual cost

1 stove 1 15000 15000
2 toaster 1 10000 10000

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

3 oven 1 22000 22000

4 Aluminum table 3 1500 1500
5 Washer sink 2 3500 7000
6 refrigerator 2 18000 36000
7 Cup board 2 5200 10400
8 shelf 2 3500 7000
9 Kitchen cabins 1 25000 25000
10 Potato chopper 1 8500 8500
11 Onion chopper 1 8500 8500
12 Kachin top 3 7500 22500
stainless steel
13 Spaghetti plate 100 50 5000
14 Dinner plate 100 50 5000
15 Dessert plate 100 50 5000
16 Table fork 100 50 5000
17 Table knife 100 50 5000
18 Chopper knife 50 50 2500
19 Table spoon 100 50 5000
20 Cook pot big 5 150 2250
21 Cook pot medium 5 250 1250
22 Cook pot small 10 120 1200
23 generator 1 15000 15000
230000

Summary of furniture and equipment

s/n description Annual cost

1 For single bed room 522000
2 For double bed room 319000
3 For office and reception 102000

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

4 For restaurant, bar 430000

&cafeteria
5 For conference room 220000
6 For kichin material 230000
total 1597200

5.7 land, building and civil work

The overall land required is about 500 square meters

A properly designed building construction starting in last year before and insures smooth
functioning of all operation. The building will have well ventailed appropriate standard hotel
service are at the structures includes separate service and other different activity the detail show as
follow

Table 5.4. description of land use plan

S/N Description QTY AV.UP TP

1 Main building G+3 700 m2 5,000.00 3,500,000.00
including all hotel parts
2 Children’s play area and 270 m2 470.00 126,900.00
game zone, fountain area
3 Rental serves rooms (bank, 300 m2 3,450.00 1,035,000.00
office shops etc.)
4 Store services 50 m2 500.00 25,000.00
5 Parking area 100 m2 300.00 30,000.00
6 Generator house 50 m2 401.00 20,050.00
Guard house 30 m2 435.00 13,050.00
Total 10000 m2 5,200,000.00

5.8 environment impact assessment

The project will seriously involve itself protecting conserving and developing the natural and flora
of the project area in line with the millennium development goal. For this to will play a vital role in

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

participating the varies organization and the community around the project area to from an
environmental commute in charge of all environmental issues to be handled in accordance to
varies environmental and water polies of 97/99. The owner of the project believes to undertake
several environmental issues for the conservation development and creation of sustainable
environmental around the project area.

5.9 implementation schedule

The actual implementation of this hotel is planned to begin immediately after we have got the land
on 2022. The major activates envisaged are processing of land preparation, constriction and
delivery installation and commissioning undertaking of civil design work and execution of
construction work.

Which will be carried out by side which opening and processing of L/C will take 3 months. The
delivery of plant machinery and equipment will take 4 month. Allowing additional one month for
sea freight and clearing, the delivery of plant of project site and thus commencement of installation
requires 9 month. Plant installation and commissioning will take place for 4 month. His provision
of infrastructural facilities such as electric power and water will be carried out in the course of
project implementation schedule. Other activities such us man power recruitment and
development, and procurement of raw and other supplies will also be duty performed to ensure that
everything is in place by the time the plant is ready for operation. All in all the project is expected
to take 12 month for completion as per the below detailed implementation schedule.

Table 5.6 implementation schedule

Month to be started

Description 10 11 12 1 2 3 4 5 6 7 8 9
Acquisition of investment land October 2020 X
Opening & processing of letter of credit X X X
Building construction X X X X X X X X X X X
Delivery materials & clearing X X X X X X X
Installation & commissioning X X X X
Recruitment of human power arranging tor other X X X X X X

Customer, timely availability all the week including week end days, customer care, and quick response
to the feedback from client
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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

6. Organizations and managements

6.1. Organization structure

Internal audit Owner Advisor

G/manager

Secretary cashier

Building Administration & Marketing & sales

administration finance department

As depicted on the structure, the integrated project center has mainly the owner, the internal auditor &
the advisor directly contact with him and under the general manager there are three departments and
secretary cashier. All departments have their own human resources under them.

6.2 Management

As to management of the project is concerned the owner will be responsible for the overall project
planning co-ordination, and implementation. After project implementation the promoter serves as a
top management body and frequently visits and supervise the organization. As explained in the first
section of this proposal the owner has more than five years experiences in managing this business and
other related business activates. Therefore, the extensive experience she has enables her to organize and
properly manage the envisaged hotel services.

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

6.3 human power requirements

For smooth and efficient operation of the organization, it has been anticipated that each unite will
have adequate number of qualified and human power. The qualified and experienced G/manager is
hired by the owner and whose main responsibility is to coordinate the overall activity of the project,
the distinct units have their own operational teams under them and recruited accordingly for all the
necessary vacant posts.

The project will provide 111 employees for these 31 permanent (20graduate & 11 above 8th grade
compiled) and 80 casual skilled and unskilled workers, for smooth operation of the project,
employees will be given on job training, clear duties and responsibilities under the direct supervision
of their respective units.

Table 6.1 human power requirement

Salary Salary
S/ Job title position Qualification QT month annual
N Y
1 General manager BA in hotel management 1 7,000.0 84,000.0
0 0
2 Internal auditor BA in accounting 1 5,000.0 60,000.0
0 0
3 Advisor & supervision BA in business adm./mgts 1 5,000.0 60,000.0
0 0
4 Secretary & cashier BA in secretarial science 1 3,000.0 36,000.0
0 0
5 Receptionist Diploma in management 2 2,000.0 24,000.0
0 0
6 Waiter Diploma /certificate (any) 10 10,000. 120,000.
00 00
7 Cooker diploma in food 4 12,000. 144,000.
preparation 00 00
8 Coffee machine 10th / 12th 1 2,000.0 24,000.0

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

operators 0 0
9 Janitor 6 to 8 grade
th th
4 4,000.0 48,000.0
0 0
10 Game zone entertainer 10th grade & above 1 1,000.0 12,000.0
0 0
11 Children’s playing Certificate in child care 1 1500.00 18,000.0
area keeper 0
Guard Trained in military 4 4,000.0 48,000.0
0 0
Total 31 56,500. 678,000.
00 00

6.4 training requirement

The hotels provide the basic orientation for all recruited staffs at the time of they are hire. In addition
if there is new technological changes existed related to with hotel management and services the
owner facilitates training for the concerned staffs to upgrade their knowledge.

7. Financial study

Financial analysis of the proposed project of hotel & general business will be protected to test
financial visibility the investigated organization quantifying both project cost and benefits assumed
project life, which is five years, made the project visible. Besides it has been tried to realistic
forecasting or costs and the benefits based in current market price of all necessary materials. Once
the anticipated hotel business operation has been attained both projects cost and revenue is estimated
to be consuming to be compensated by increasing in sales revenue.

7.1 classified investment cost

The cost of the project is classified as fixed investment cost and initial working capital with regards
to fixed investment cost of the project, construction of building and civil work cost machinery and
equipment cost, office furniture cost and fuel costs will be required. As to working and operating
cost and the other related cost.

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

7.1.1 Fixed cost

Fixed cost that include constructing the building and civil work, machinery equipment and vesicles
and office furniture are estimated birr 8,047,200.00

Table 7.1.1.1 building and civil work

S/ Description QTY AV.UP TP

N
1 Main building G+3 including all hotel pars 200 m2 5,000.00 9,500.00.00
2 Children’s play area and game zone, fountain 100 m2 470.00 126,900.00
area
3 Rental services rooms bank, office, shops etc. 90 m2 3,450.00 1,035,000.00
4 Store service 30 m2 500.00 25,000.00
5 Parking service 50 m2 300.00 30,000.00
6 Generator house 30 m2 401.00 20,000.00
Guard house 10 m2 435.00 13,000.00
Total s 500 m2 11,200,000.00

Table 7.1.1.2 list of summarized machinery and equipment and cost

S/N Description Annual

1 For single bed room 522,000.00
2 For double bed room 319,000.00
3 For office and reception area 102,000.00
4 For restaurant, Dar and cafeteria 415,600.00
5 For conference room 220,000.00
For kitchen materials 218,000.00
Total 1,797,200.00

Table 7.1.1.3 procurement of vehicles

S/N Description QTY AV unit cost Total cost Remarks

1 Mini bus 1 600,000.00 600,000.00 Duty free
2 Pick up motor vehicle 1 850,000.00 850,000.00 Duty free
3 Computer 3 7,000.00 21,000.00 local Mkt

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

total 1,471,000.00

Table 7.1.1.4 summary of fixed assets

S/N Estimated cost in birr Remarks

1 Building & construction 5,200,000.00 30% duty free imported
2 Machinery, equipment & furniture’s 1,797,000.00 20% duty free imported
3 Procurement of vehicles 1,450,000.00 100% duty free imported
4 Computer 21,000.00 Local market
Total 8,468,000.00

7.1.2 Operational cost

Production cost of the project includes direct production and costs, the major cost item under this
category includes cost of material and labor, inputs fuel and lubricants, repair and maintenance,
employee’s salary and benefit, insurance, office supplies and other miscellaneous expense, the total
estimated production cost is birr 3,797,200,000.00 project.

Direct cost

Table 7.2.1 direct raw material

S/N Description items QTY Total price Remarks

1 Food items Lump sum 50,000.00
2 Beverages Lump sum 50,000.00 All types of alcohols
3 Cleaning & sanitation Lump sum 15,000.00
Total 115,000.00

Table 7.2.2 utilities

S/N Description items QTY Average unit Total prices Remarks

price/month
1 Electricity 6,000.00 72,000.00
2 Water 5,000.00 60,000.00
3 Telephone & broad 5,000.000 60,000.00
bane
4 Fuel & lubricants 4,000.00 48,000.000
total 240,000.00

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Administration cost

- Employee benefits; it includes medical expense, uniform and other incentive package and
assumed to 25% of annual salary expense = birr 165,000.00
- Travel expense; it is assumed to be 2% of annual salary i.e. birr 13,200.00
- Repair and maintenance 0.2% of building & construction cost birr 10,146.20

S/N items Cost estimate per year

% Price
1 Building & construction 2 104,000.00
2 Machinery & equipment and furniture’s 3 53,316.00
3 Motor vehicle 5 75,200.00
Total 230,416.00
 Insurance : it is assumed to be 1% 0f construction & building cost = birr 52,000.00
 Office supplies:- including stationary and sanitary supplies annual of birr 25,000 is
considers
 Miscellaneous expanse : it includes cost of land rent, audit, legal and license fees And other
miscellaneous expenses are estimated to be birr 50,000.00 year

Summary of operational cost working capital

Table 7.8 determination of initial working capital requirement

S/N Items Annual cost

1 Direct cost
1.1 Raw materials cost 115,000.00
1.2 Unities 240.000.00
Sub total 355,000.00
2 Administrative cost
Salary and wage 678,000.00
Employee benefits 169,500.00
Travel expense 13,560.00
Repair and maintenances 10,400.00
Insurance 52,000.00
Advertising expense 30,000.00
Office supplies 25,000.00
Miscellaneous 50,000.00

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

Sub total 1,028,460.00

Grand total for initial working capital 1,383,460.00

7.2 project capital and financing

7.2.1 Project capital
The total investment capital of the project is estimated at birr 9,034,500.00n of which birr
8,047,200.00 is fixed cost and the remaining balance of birr 98,300.00 will be initial working
capital. The detail of investment capital of the project is given below.

Table 7.9 project capital and source of income

S/N Description items Investment capital Source of income Remark

(birr)
1 building & construction 5,200,000.00 30% duty free Duty free
imported
2 Machinery equipment & 1,797,200.00 20% duty free Duty free
furniture’s imported
3 Motor vehicles 1,450,000.00 80% duty free Duty free
imported
4 Computer 21,000.00
Sub total 8,468,200.00
5 Working capital 1,358,460.00 Local market Local market
Total 9,826,660.00

7.2.2 Sources of finances

The required finance to materialize the establishment of the envisaged project will be mobilized
mainly from two sources. Equity contribution is one and dominant source of finance to be solely
contributed from the promoters' pocket. However, in case the land acquired and other related
factors lead to investment of the large magnitude, the portion of the investment cost will be
covered through bank loan in the form of long -term loan facility. The proportion of fund is 80%
own equity and 20% will be bank loan. The information gathered from all the private and
governmental institutions indicates that all are ready to finance such projects which would be
instrumental in cutting foreign currency expenditure, and helping the development endeavor of the
country .the loan procedure at private financial institutions is found to be relatively easy to go

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 PROJECT PROPOSAL OF MID STAR HOTEL PROJECT IN THE WOLKITE CITY

through than those of the government financial institutions. The loan payment will be at long term
basis with interest rate of 8.5% according to the payment policy of Ethiopian Commercial bank.

8. RECOMMENDATION

Experiences from many developing countries have proved that increasing with the economy of the
people and increasing living standard of the people small shops and small markets are replaced by
single building unit which not only give the facilities to the people but also became the good public
place where thousands of people gather and work in a single roof. In our town context also, many
commercial buildings projects has proved it as successful business for both the users and investors.
In the light of this, our project would bring this dream in to reality as a model of good and
profitable commercial complex and paved the way for the future built environment of
Wolkite town as a promising city.

In our context also Commercial Center may prove as the good investment for the business house
and better for the users by giving a one stop service also.

Hence, the project is very much feasible from both technical as well as financial purpose in wolkite
city center.

8.1 CONCLUSION

Many responsible private sector investors are hesitating to come in this sector due to
various constraints such as restrictive land ceiling, not beneficiary by laws for the investors,
less public awareness, different laws and restriction by Municipalities and very narrow road
condition. These problems should be addressed and appropriate amendments should be made
in related rules and regulations to increase the efficiency and effectiveness of private
sectors in commercial center development.

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