Construction Economics Project: Feasibility Study for 5 Star Hotel

Construction Project

Yared KEBEDE1, Gediyon ADDIS2, Betelehem SOLOMON3

1
Yeka Sub City, Integrated Infrastructure Development Construction Permit and
Control Office, Addis Ababa; +251 922 761 594; [email protected],
GSR/5367/13

2
Addis Ababa Water and Sewerage Authority, Addis Ababa, +251 921029015,
[email protected] GSR/0617/11

3
Addis Ababa Water and Sewerage Authority, Addis Ababa, +251 910603726,
[email protected] GSR/0617/11

ABSTRACT
This paper discusses about the preliminary analysis of 5 star hotel feasibility
studies. The paper describes briefly the investor profiles and the macroeconomic
analysis of the country, Addis Ababa city and the hotel sector. Furthermore the paper
states key point areas the next feasibility study includes.
Table of Contents
ABSTRACT.......................................................................................................I
Table of Contents..............................................................................................II
List of Figures...................................................................................................V
List Of Tables..................................................................................................VI
1 Introduction.................................................................................................1
1.1 Investor profile.....................................................................................1
1.1.1 General...........................................................................................1
1.1.2 Awards and wining of the company..............................................1
1.1.3 Sub Companies..............................................................................2
1.2 Scope and Coverage of the study.........................................................3
1.2.1 Components of the feasibility study..............................................3
1.3 Project Details......................................................................................6
1.3.1 Location.........................................................................................6
1.3.2 Project Assignment........................................................................7
1.3.3 SWOT Analysis of Proposed Company........................................8
1.3.4 Competitors Analysis...................................................................10
2 Macro - Economic analysis of the country...............................................13
2.1 Introduction Ethiopia’s Key facts......................................................13
2.2 History...............................................................................................14
2.3 Political System.................................................................................14
2.4 Economic Growth..............................................................................14
2.5 Investing in Ethiopia..........................................................................15
2.6 Air Transportation and Tourism........................................................16
2.7 Macro-economic analysis with regard to inflation............................16
2.8 Unemployment...................................................................................17
3 Macro - Economic Analysis of the Region Addis Ababa.........................18
3.1 General...............................................................................................18
3.2 The History of Addis Ababa..............................................................19
3.3 Tourist Attractions of Addis Ababa...................................................20
3.4 Best Things to Do in Addis Ababa, Ethiopia.....................................20
3.4.1 Investing on hotel.........................................................................20
3.4.2 Export coffee................................................................................20
3.5 Museum.............................................................................................20
3.5.1 National Museum of Ethiopia (NME).........................................20
3.5.2 St. Raguel church museum..........................................................22
3.5.3 St. George’s Cathedral and Museum...........................................22
3.5.4 Meskel square..............................................................................23
3.5.5 Holy trinity cathedral (Kidist Selassie) and museum..................24
3.5.6 Ethnological museum..................................................................24
3.6 Ethiopian Food and drink..................................................................25
3.7 Administrative Centre of Africa........................................................26
3.8 Addis Ababa urban Development Indicators.....................................26
3.9 Addis Ababa's Economic Performance..............................................27
3.10 Addis Ababa's City Revenue Structure..........................................28
4 Hotel X Project..........................................................................................29
4.1 Project Description and Identification...............................................29
4.2 Project Details....................................................................................29
4.2.1 Location.......................................................................................29
4.2.2 Owner...........................................................................................29
4.2.3 Capital..........................................................................................29
4.2.4 Capacity and service....................................................................30
4.2.5 Project statement..........................................................................31
4.2.6 Market Strategy of the company..................................................32
4.3 Technical Study of the Project...........................................................34
4.3.1 Hotel design.................................................................................34
4.3.2 Physical appearance.....................................................................34
4.3.3 Major Facilities............................................................................34
4.3.4 Materials Cost estimation............................................................36
5 ORGANIZATIONS AND MANAGEMENT...........................................56
5.1 Organizational Structure....................................................................56
5.2 Management.......................................................................................59
5.3 Manpower Requirement....................................................................59
5.4 Training Requirement........................................................................61
6 Financial Study..........................................................................................62
6.1 Operating Costs Estimation...............................................................62
6.1.1 Manpower cost (wages and salary)..............................................62
6.1.2 Direct and indirect costs..............................................................63
6.1.3 Fuel and Lubricant.......................................................................66
6.2 Financial Projection...........................................................................66
6.2.1 Bank Loan....................................................................................66
6.2.2 Total Investment Cost..................................................................67
6.2.3 Depreciation.................................................................................68
6.3 Revenue Determination.....................................................................68
6.3.1 Income from room rental.............................................................68
6.3.2 Assumptions to other costs..........................................................69
6.3.3 Income from Food and Beverages...............................................70
6.3.4 Income from conference hall.......................................................70
6.3.5 Income from gym Service............................................................70
6.3.6 Income from laundry service.......................................................71
6.3.7 Income from SPA service............................................................71
6.3.8 Income from Revenue from cultural and business service..........71
6.4 Summary of Revenues.......................................................................71
6.5 Projected Profit/loss statement...........................................................72
6.6 Projected cash flow statement............................................................73
6.7 Net Present Value with Different Interest Rate.................................74
6.8 Balance sheet.....................................................................................75
6.9 Internal Rate of Return and Other Parameters...................................75
6.9.1 Internal Rate of Return................................................................75
6.9.2 Net Present Value........................................................................75
6.9.3 Break Even Analysis....................................................................76
6.9.4 Pay Back Period...........................................................................76
7 Sensitivity Analysis...................................................................................77
7.1 Sensitivity 1: - Sales decrease by 10%..............................................77
8 Risk Analysis............................................................................................79
9 Conclusion and recommendation..............................................................80
9.1 Conclusion.........................................................................................80
9.2 Recommendation...............................................................................80
10 Reference...............................................................................................81
List of Figures
Figure 1-1 Project Surrounding.......................................................................13
Figure 1-2 Project Site.....................................................................................13
Figure 1-3: Competitors Location...................................................................16
Figure 1-4: Competitor 1 Gion Hotel..............................................................17
Figure 1-5: Competitor 2 - Hyatt Regency......................................................17
Figure 1-6: Competitor 3 - Marriott Executive Apartments............................18
Figure 3-1 National museum of Ethiopia in Addis Ababa..............................27
Figure 3-2 Ethnological Museum at Sidist kilo...............................................28
Figure 3-3 St. Raguel church...........................................................................28
Figure 3-4 St. George cathedral church...........................................................29
Figure 3-5 New constructed Meskel square....................................................30
Figure 3-6 Holy trinity cathedral church.........................................................30
Figure 3-7 Monuments, lion of Judah, derg monument..................................31
Figure 3-8 Ethiopian food and coffee..............................................................32
Figure 3-9 Population and population pyramid of Addis Ababa....................33
Figure 3-10: Addis Ababa economic performance.........................................33
Figure 6-1 Organizational structure of Hotel..................................................63
List Of Tables
Table 4-1 project rooms...................................................................................36
Table 4-2 building cost estimation of the project............................................44
Table 4-3 cost for gymnasium equipment.......................................................45
Table 4-4 Kitchen and Restaurant item...........................................................46
Table 4-5 Hotel Rooms and Kitchen Items.....................................................53
Table 4-6 Laundry equipment items................................................................56
Table 4-7 Electrical fixture items....................................................................57
Table 4-8 Soft furnishing items foreign supplier............................................57
Table 4-9 Soft furnishing item local supplier..................................................58
Table 4-10 Hotel Furniture items....................................................................58
Table 4-11 Set furniture items.........................................................................59
Table 4-12 vehicle cost data............................................................................59
Table 4-13 Generator cost...............................................................................60
Table 5-1 Manpower requirement...................................................................65
Table 6-1 Human resource and annual salary.................................................67
Table 6-2 Direct and indirect cost list.............................................................68
Table 6-3 Fuel and lubricate cost....................................................................70
Table 6-4 Bank Loan Replay Schedule...........................................................70
Table 6-5 investment cost................................................................................71
Table 6-6 Deprecation value...........................................................................72
Table 6-7 Hotel price in Addis Ababa.............................................................73
Table 6-8 Hotel rental service income.............................................................73
Table 6-9 Income from foods and beverage....................................................74
Table 6-10 Income from conference hall........................................................74
Table 6-11 Income from gym service.............................................................74
Table 6-12 Income from laundry service........................................................75
Table 6-13 Income from SPA service.............................................................75
Table 6-14 Income from Revenue from cultural and business service...........75
Table 6-15 5.4 Summary of Revenues............................................................75
Table 6-16 Project Profit/Loss Statement........................................................76
Table 6-17 Project Cash Flow Statement........................................................77
Table 6-18 Net Present Value with Different Interest Rate............................78
Construction Economics Semester Project

1 Introduction

1.1 Investor profile

1.1.1 General
Since 1984, with an extensive portfolio of renowned real estate developments, road
constructions, hotel developments, laundry services, Beauty and Spa services and corporate
social responsibility, Sunshine Investment Group is one of a diversified conglomerate in
Ethiopia.
Sunshine construction celebrates its 33 years by being the leading construction company
in Ethiopia achieved through hard work, teamwork, and efficiency. Sunshine Investment Group
will resume its strong growth strategy by capturing the opportunities within the countries priority
sectors.

1.1.2 Awards and wining of the company

Global African Business Awards are an annual business awards that were created to give
public recognition for the great contribution of business man/women and organization in Africa.
For the year 2018, the Global African Business Awards was held at Radisson Blu Hotel in Addis
Ababa on the 13th of July. More than 1 million people participated on the voting process via
GABA website. Seminars and panels were held on this grand event.
Sunshine Investment Group, its CEO (Mr.Samuel Tafesse) and subsidiary companies
won the Global African Business Awards in four different categories.
 African Entrepreneur of the Year
In this category, 14 nominees were competing to win the title and the winner became
Sunshine Investment Group CEO Mr. Samuel Tafesse.
 Best Social Enterprise
Sunshine Philanthropy foundation was recognized for its immense effort to provide
education and care for destitute children and elders. More than 10 nominees were available in
this award category.
 Employer of the year
Five large companies were nominated in this part and the winner became Sunshine
Construction Plc.
 Best Large Business
Sunshine Investment Group wins this title from 6 nominees in the category.

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1.1.3 Sub Companies

Sunshine Construction Plc
Sunshine Construction Plc was founded in 1984, as a sole proprietorship and later in
1993 transformed into a private limited company. In the early years of its establishment, the
company had started to engage itself in minor construction and water proofing works with less
than ten employees. Currently the company has over 3000 employees and the 34 years milestone
career of the company enabled it to build a reliable capacity and exhibit practical excellence in
the construction sector. Sunshine construction has attained a prestigious role position at the helm
of the sector and become a bloodline to the establishment of other businesses and philanthropic
entities under Sunshine Investment Group.
 Gerji Apartments
 Bole Beshale Apartments
 CMC No.2 Residential
 Meri Luke On Going Project and
 Many other Road Projects
Sunshine Business PLC
The business PLC has three missions upon its establishment; To manage our assets by
maximizing our benefits while minimizing our risks, to provide comfort for our guests,
commitment to our employees and to bring consistent growth to our country, and finally to show
guests the peak of hospitality through delivering excellent services that promote loyalty.
Marriott Executive Apartments Addis Ababa is international, upscale, service apartment
properties intended primarily for expatriate executives whose business purposes require them to
stay more than 30 nights. The apartments are designed to provide comfortable up market
residential living, with personalized service and the assurance of the Marriott experience.
Besides the apartments, Marriott Hotel with 4,200 Square meter land in front of Bole
Medhnialem Church, walking distance from the Bole International Airport, the five stars
Marriott Hotel is currently under construction by Sunshine Construction Plc.
Hawassa Hilton Resort and Spa is Located on the banks of Lake Hawassa, in the Great
Rift Valley and stretching beyond Amora Gedel National Park, the property will feature 169
guest rooms and villas, with an outdoor swimming pool and spa complex acting as its
centerpiece. The construction of the 30,000 square meter Hilton Hawassa Resort & Spa was
commenced in 2016 and many other commercial buildings can be mentioned.
Sun-Sisters Trading PLC
Sunshine laundry is widely known for the excellent and dedicated service for more than
20 years. Currently, it has 19 branches all around the city and provides laundry service to
Marriott Executive Apartments, ECA and AU. The Laundry uses ECOLAB cleaning products
and chemicals that ensure a safe environment. In addition, the laundry has certified employees in
general hygiene and chemical safety. In 2017, Sunshine Laundry has successfully entered into
the commercial dry cleaning industry with its new highly sophisticated facility located in Jakros
area.

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Sunshine Beauty Center has grown to become the leading beauty and aesthetic center in
Addis Ababa. The Beauty center is continually introducing new beauty concepts and
technologies to make sure that it maintains a leading position. Sunshine Beauty Center offers a
full range of beauty and spa facilities. There is also another business called “World Spa” that’s
going to start soon.
Sunshine Philanthropy Foundation
With an aim of achieving corporate social responsibility, Sunshine Philanthropy
Foundation was founded under the civil societies and charity Agency of Democratic Republic of
Ethiopia with registration number 1729 in 2009. The foundation is committed to enhancing lives
of socially disadvantaged, children with inadequate family support, young adults as well as
families with low income. Sunshine Philanthropic Foundation has invested over 55 million Birr
to build three schools in three regional states of Ethiopia, while the 4th school is under
construction in Amhara regional state, Mehal-Meda town. Sunshine Philanthropy Foundation
Elderly Care Center will be a home for 500 homeless elderly people when it starts its function in
2020. Currently, there are 1200 children and young adults from which 556 are girls, who are
benefiting from the Philanthropic and social support that Sunshine Philanthropy Foundation
provides.
 2010- Nekemte Sunshine Philanthropy School -Oromia Region
 2011- Axum Sunshine Philanthropy School -Tigray Region
 2012- Agena Sunshine Philanthropy School -Southern Region
 Under construction-Mehal-Meda Sunshine Philanthropy Foundation School
-Amhara Region

Sunshine Philanthropy Foundation Addis Ababa’s Elderly Care Center is under

construction at 67 million budget. 70% of the construction work is complete; the center will be a
home for 250 Christian and 250 Muslim homeless elderly people. The Center will open its door
in 2020 to provide the holistic social support for the elderly.

1.2 Scope and Coverage of the study

The main goal of the feasibility study is to acquire an impartial, professional and
qualified opinion and a thorough analysis of the current project plans. All assumptions in this
feasibility examine regarding the undertaking itself with respect to size, layout and design, in
addition to operator selection are based totally on plans formerly presented via the proprietor.
These plans are measured and evolved with the aid of design crew. The study examines site and
marketplace instances on the time of site inspection, market research, all relevant monetary
problems as well as financial estimations for the proposed hotel project. Moreover, the study is
predicated upon statistics furnished via the proprietor and the analysis of secondary data
available on the market.

1.2.1 Components of the feasibility study

Area, demographic, and neighborhood analysis

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The area, demographic, and neighborhood analysis evaluates the local economy
surrounding the proposed hotel. The area analysis focuses on the social, economic,
governmental, and environmental forces that influence the performance and valuation of a hotel
property. Demographic information, including population, households, income levels,
employment levels, etc., should be reviewed in detail to calculate the number of people and
potential customers who live within the local and regional areas. The following are some
questions the study should answer:
 Population trends: What is the area population and is the number increasing or
decreasing?
 Household growth:  How large is the typical household?
 Household economics: What is the unemployment rate?  What is the median income?
How much disposable income do area households have?
 Area economics: Which large corporations are based in the area? Who is growing or
shrinking? What is office vacancy rate?
 Attractions: Are there tourist attractions in the area?  What are the demand generators
for leisure and group travelers?
 Area transportation: How is access to airports, interstate and local highways, and rail
stations compared to competition?
A neighborhood analysis of nearby commercial and tourist establishments is important
since many successful hotel projects are proposed in areas with complementary real estate uses.
Successful hotels are developed in neighborhoods where overnight guests are already traveling
and looking for places to stay.
Site review
The site review evaluates the subject parcel’s size, access and visibility, topography,
availability of utilities, and other site-related attributes necessary for a successful hotel project.
The hotel’s proximity to demand generators is an important consideration since hotel guests
appreciate convenient access from area highways, employers, and their destinations. The
following are some questions the study should answer:
 Site: Is the site large enough to support the planned hotel?  Is there room for future
expansions?
 Amenities: Are there nearby amenities that would complement the proposed project?
 Governmental impacts: How do the subject’s ad valorem taxes, zoning, sales
history, governmental restrictions, environmental regulations and other factors affect
the subject property?
Proposed development recommendations and costs
The consultant will review plans for the facility, the scope of the development and
projected costs to make recommendations for the proposed hotel. The scope of recommendations
includes the number of guestrooms, number of restaurants and lounges, amount of meeting
space, recreational and aquatic features, retail shops, spa and other amenities to include.

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The consultant may estimate a range of costs for the proposed development based upon
recently-constructed projects, or the client may hire an architect and/or engineer for formal cost
estimate for the proposed hotel. The following are some questions the study should answer:
 Physical plant information: Have any architectural plans been developed?
 Facility size: How many rooms should the hotel offer? How many food and
beverage outlets should be developed within the hotel?
 Branding: Should the hotel have a franchise affiliation or be an independent
property?

Market analysis
A thorough market analysis of the local and regional hotel market is essential as the
projections of financial performance will depend heavily upon the data gathered. The consultant
will analyze occupancy, average daily rate (ADR), and revenue per available room (RevPAR) of
a market area. A hotel market report from STR and interviews with management of competitive
hotels will help the consultant gain a greater understanding of the state of the hotel market.
 Hotel competitors:  How many competitors are in the market and to what degree are
they competitive in terms of amenity offerings, affordability, etc.?  How have they
performed in past years in terms of occupancy, ADR?
 Employer analysis: Who are the major employers that utilize hotels in the market? What
are their training needs? Are there many meetings in the market?
 Recent hotel openings:  How many hotels have opened in recent years and how have
they impacted the market?
 Potential hotel openings:  How many hotel projects are in the works?  What types of
hotels will they be?  How many rooms will they have?  What is their projected impact on
the current supply and demand in the market?
 Market segmentation and market penetration: What is the market segmentation and
penetration of each competitor in the market?  The consultant will review all market
segments, including corporate, leisure, group, and contract markets. Hotels in the area
that garner the largest share of the most relevant market segments will be the subject
property’s main competitors.
 Projections:  Based on the current market situation, how will the subject likely perform
in terms of occupancy, ADR, and revenue per available room?  What are its potential
penetration rates and market segmentation?
Proposed development occupancy and ADR
In estimating the performance of a hotel, the study will project the number of occupied
rooms, ADR, and revenue per available room for the proposed hotel property. A detailed supply
and demand model that calculates the historical performance of the market and makes
projections for the subject property should be presented. The following are some questions to
consider:
 Occupancy and ADR: What are the historical and projected performances of
competitive hotels in the market? How will the subject property penetrate the existing

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demand in the commercial, group, leisure, and contract segments? What is the projected
ADR by segment?
 Demand:  What is the projected performance of the subject property?  How plentiful are
demand generators in the area?  Will the projected demand for the hotel be spread among
numerous organizations and attractions or will it be concentrated on a few demand
generators?
Financial analysis
The financial analysis estimates a property’s capacity to generate income and makes
financial projections for the property. Estimating annual operating results for the subject property
involves an analysis of the subject’s scope and characteristics compared with comparable
properties and industry standards. The general steps include the following:
 Estimate the potential gross revenues for the subject property based upon an examination
of the prior operating history of the subject property (if available), operating history of
comparable properties in the subject market area and on a national basis, and an analysis
of industry trends.
 Analyze departmental, undistributed, and fixed expenses, and project appropriate
amounts in each category.
 Project the resultant net operating income (cash flow before debt service) over an
appropriate holding period.
Total investment cost
Estimating the total investment cost which construction cost, operation cost and other
related costs.
Total construction cost
Estimate the total construction cost based on Ministry of culture and tourism
requirements for three star hotels

1.3 Project Details

1.3.1 Location
The hotel project around UN ECA Office area, Addis Ababa. The project is located close
to the central LRT station

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Figure 1-1 Project Surrounding

The site is found on Guinea Conakry Street just to the East and in front of the Qatar
Airways. There is a rail way station 140 m to the south. Out of 4,500 m² square meters, of which
3000 is to be dedicated to the hotel project and the remaining 1500 will be for a green and
swimming pool area, car parking and other structures like guard house.

Figure 1-2 Project Site

1.3.2 Project Assignment

Sunshine corporations assigned the agreement to prepare a quick feasibility study for the
deliberate hotel in Addis Ababa with writing on 1st, July 2021. The scope of this work is to
broaden a business plan for Sunshine organization taking in consideration the implementation of
a five star hotel in Addis Ababa, Ethiopia. This marketing strategy consists of the elaboration of
the important guidelines to enforce the business. A marketplace evaluation is elaborated in this

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marketing strategy in which the hotel will be carried out, and the main elements related to the
advent of this hotel is elaborated, specifically its macroeconomic, microeconomic environment,
task description and provisional monetary statements .financial elements of the hotel sector were
taken in attention, as well as the execution of an evaluation of the Ethiopian macroeconomic
context.
The analysis consists of all factors mentioned in chapter 1.2 Scope and coverage of the
study which includes
 Location Analysis
 Market Analysis Product Analysis
 Forecast Analysis  department revenue, overheads, personal cost etc.
 Sensitivity Analysis
The project was carried out at the end of July of 2021. The researches of the Ethiopia
market and of the proposed area become conducted at some point of July, 2021. The study
consists of the site and marketplace scenario at the time of the marketplace studies. It is primarily
based at the maximum recent facts to be had. The legally required audit concerning company and
financial terms isn't always part of the assignment. The study is based on fashionable terms and
situations of doing commercial enterprise. This piece of work consists of the abilities of a neutral
professional and is being organized to the exceptional of 1's knowledge. The research became
completely prepared for the consumer’s use and could not be forwarded to any third party.

1.3.3 SWOT Analysis of Proposed Company

Internal Environments
Strengths:
 Comprehensive, concise and clear tourism development policy and community-based
ecotourism guideline developed;
 Well educated and research based Business plan is proposed and set in to action.
 Sufficient amount of budget and Finance is allocated
 Ministry of culture and tourism established;
 Ethiopian tourism development council established;
 Prevailing situation of the tourism industry in Ethiopia well documented:
 The responsibilities and roles of different stakeholders are well defined;
 Best practices of community-based ecotourism development included in the guideline;
 Adaptation of responsible and sustainable tourism approach appreciated;
 Integration of tourism into key development policies and strategies proposed;
 Participatory approach and active community participation appreciated;
 Development of the existing and new tourist attractions in variety, scale and quality
proposed;
 Expansion of infrastructure and tourist facilities essential for tourism development
proposed;
 Undertaking promotional work, encouraging domestic tourism, establishing strong
tourism marketing organization, using ICT in promoting tourism, and strengthening
collaborative relationship among stakeholders encouraged and proposed.

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Weaknesses:
 Stakeholders are not well informed about their responsibilities in the guideline:
 Reliable financing source mechanism for tourism development is not clearly stated;
 The policy and the guideline is not well communicated to the stakeholders through ICT;
and
 The policy, the strategies, and the guideline developed are not implemented with the
desired pace.

External Environments
Opportunity
 Unmet demand - It is a cliché to state the obvious that today Addis Abeba is home to
numerous UN offices, including the UN Economic Commission for Africa (UNECA),
countless international companies and NGOs. The city is also dotted by the more than
100 diplomatic missions accredited to the government in Ethiopia, the UNECA, and, of
course, the African Union (AU), which is headquartered in Addis Ababa.
 Poor hospitality: - Decent hospitality starts at every Ethiopian home. It is embedded in
the very fabric of the Ethiopian culture: Ethiopians are hospitable by nature. We like
visitors; we are very anxious about making visitors in our home happy; we are trained by
our parents and guardians to be nice and kind to all, including strangers; we open our
doors to strangers and travelers so they can spend a night and share our food; we even go
as far as packing food for those travelling or passing through our village.
 Unpractical building technicalities: - The major problem towering the Ethiopian hotel
industry, infant as the industry is, begins from elementary details developers prefer to
avoid, such as architectural looks. It is not enough that buildings rise high, or are located
within five minutes’ drive from the airport.
 Overrated price: - Anyone who stays in one of the many self-rated hotels in Addis Ababa
leaves with one thing to remember these hotels by: eye watering bills.
Treat
 The treat of Covid-19 is still have high influence on hospitality industries
 The inflation rate
 The political disturbance
 War and instability
 There are several new hotels proposed and/or under construction in Addis Ababa,

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1.3.4 Competitors Analysis

Figure 1-3: Competitors Location

Gion Hotel: -
Unassuming rooms in a laid-back hotel offering gardens, 3 eateries & an Olympic-size
outdoor pool. The Four Star hotel has 3.6 rating from 217 reviews. The costs 1,765 birr per
room.

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Figure 1-4: Competitor 1 Gion Hotel

Hyatt Regency Addis Ababa

Elegant quarters in an upmarket hotel with an outdoor pool & a spa, plus dining, bars &
city views. One of the top rated hotels with 4.5 rating from 350 reviews and costs 14,076 birr per
room

Figure 1-5: Competitor 2 - Hyatt Regency

Marriott Executive Apartments Addis Ababa

It has polished apartments in an upscale hotel offering an outdoor pool, Mediterranean dining &
a bar. This Five Star hotel has a very good of 4.5 rating from 219 reviews and costs 9459 per
room.

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Figure 1-6: Competitor 3 - Marriott Executive Apartments

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2 Macro - Economic analysis of the country

Economic growth is forecast to slow markedly in the current fiscal year due to the fallout
from the pandemic and locust swarms, while intensifying domestic political tensions will further
weigh on activity. Moreover, the balance of risks is tilted to the downside amid possible further
waves of Covid-19 infections in the country and a sizable twin deficit. Focus Economics
panelists see the economy growing 2.1% in FY 2020, which is down 0.7 percentage points from
last month’s forecast, and 6.7% in FY 2021.

2.1 Introduction Ethiopia’s Key facts

With more than 112 million people (2019), Ethiopia is the second most populous nation
in Africa after Nigeria, and the fastest growing economy in the region. However, it is also one of
the poorest, with a per capita income of $850. Ethiopia aims to reach lower-middle-income status
by 2025.
Ethiopia’s economy experienced strong, broad-based growth averaging 9.4% a year from
2010/11 to 2019/20, Ethiopia’s real gross domestic product (GDP) growth slowed down to 6.1%
in 2019/20 due to COVID-19 (coronavirus pandemic. Industry, mainly construction, and services
accounted for most of the growth. Agriculture was not affected by the COVID-19 pandemic and
its contribution to growth slightly improved in 2019/20 compared to the previous year. Private
consumption and public investment explain demand-side growth, the latter assuming an
increasingly important role.
Here are some interesting Ethiopia facts
 Population: 111 million people (2021)
 Capital: Addis Ababa with 5 million inhabitants
 Name: Ityop'iya (Ethiopia). The name is said to come from the founder of Aksum. The
country was referred to as Abyssinia previously. Other sources say the name stems from the
Greek word “Aethiopia” which in ancient times was used to refer to the land to the south of
Egypt.
 Government: Federal Parliamentary Republic
 Language: Amharic
 Religion: predominantly Christian 61% (Ethiopian Orthodox 43% and Protestant 18%),
Muslim 34%
 Currency: 1 Birr = 100 Santim
 National Day: 28 May (Derg Downfall Day)
 National Animal: Abyssinian lion
 National Colors: green, gold and red

 National Flag: Three bands in green, yellow and red with a blue field/circle in the center of
the flag with yellow pentagram and five rays of light
 National Anthem: 'March Forward, Dear Mother Ethiopia.' Listen to the instrumental
version.
 Ethiopian Prime Minister Abiy Ahmed - Abiy Ahmed, winner of the 2019 Nobel Peace
Prize

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 History: Ethiopia is the oldest independent country in Africa and the only African country
that evaded colonial rule. For five years from 1936 - 1941, Ethiopia was occupied by Italian
forces. The country was ruled as a socialist state by a Military junta from 1974 - 1991. Only
in 1994, Ethiopia adopted a constitution and the first elections with participation of several
parties took place in 1995.

2.2 History
Hotel and tourism are inseparable sectors. To boast of a developed tourism and
hospitality sector, a country needs to own modern hotels, lodges and other recreational centers.
When we trace back to the history of hospitality sector in Ethiopia, we get Itegue Taitu Hotel,
built in the early 1900s, believed to be the first modern hotel in Ethiopia. It was named after its
founder Empress Taitu Betul, the wife of Emperor Menelik II. It was built mainly for the purpose
of providing service to foreigners as a cozy place to rest and dine. Taitu Hotel is found in the
middle of Addis Ababa commonly known as Piazza. The ancient hotel has 264 historic
bedrooms, equipped with various important facilities. It is famous in the West as the setting for
Evelyn Waugh's 1938 satirical novel Scoop is based on it.
In recent years the hotel's Jazzamba Lounge gained an international reputation as part of
the revival of the 1960s and early 1970s Ethiopian jazz scene. The founder of Ethiopian
Jazzmender, Mulatu Astatke and his colleagues has been performing in front of many jazz
lovers.

2.3 Political System

Ethiopia is undergoing a turbulent period of political change set off by the 2018
appointment of Prime Minister Abiy Ahmed, who came to power after Prime Minister
Hailemariam Desalegn resigned in the face of mass protests at which demonstrators demanded
greater political rights. Abiy pledged to reform Ethiopia’s authoritarian state and has overseen a
revision of some laws used by his predecessors to suppress dissent. However, long-awaited
August 2020 general elections were postponed due to the COVID-19 pandemic, posing an
obstacle to the country’s democratic transition. Moreover, Abiy’s ruling Prosperity Party—a
reconfiguration of the ethnoregional coalition that ruled Ethiopia since 1991—has partly reverted
to authoritarian tactics, jailing opposition leaders and limiting media freedom in the face of
growing regional and intercommoned violence. Most notably, the Ethiopian military has been
engaged in a prolonged conflict with the security forces of the Tigray Region in a bid to arrest
senior members of the Tigrayan People’s Liberation Front (TPLF).

2.4 Economic Growth

Ethiopia’s economy grew by 6.1% in 2020, down from 8.4% in 2019, largely because of
the COVID–19 pandemic. Growth was led by the services and industry sectors, whereas the
hospitability, transport, and communications sectors were adversely affected by the pandemic
and the associated containment measures to prevent the spread of the virus. The fiscal deficits:
including grants, increased slightly during 2020, financed mainly by treasury bills. Tax revenue
increased by 16%, but the tax-to-GDP ratio declined to 9.2% in 2020 from 10% in 2019 due to
delayed implementation of tax reforms. Total public spending remained stable, in line with the
country’s fiscal consolidation strategy. In 2020 inflation reached 20.6%, well above the 8%
target, due to pandemic-induced supply chain disruptions and expansionary monetary policy. In
November 2020, the official exchange rate was devalued by about 8% to 35.0 birr per US dollar.

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Export revenues increased by 12% in 2020, as exports of gold, flowers, coffee, and chat
increased while imports declined by 8.1%. This helped narrow the current account deficit to
4.4% in 2020 from 5.3% in 2019. Service sector exports declined by about 6%; mostly because
of lower revenue from Ethiopian Airlines. Foreign direct investment (FDI) fell 20% to 2.2% of
GDP, and personal remittances declined by 10% to 5.3% of GDP. Poverty was projected to
decline from 23.5% in 2016 to 19% by end of 2020. But pandemic-driven job losses, estimated
at as many as 2.5 million, will impede poverty reduction.

2.5 Investing in Ethiopia

Ethiopia has become a preferred destination for foreign direct investment and emerging
hub for manufacturing in Africa due to its:
Political stability and committed government
 Stable socio-economic governance with sustained peace and security.
 High level political commitment for investment promotion and protection;
investment
 policy making is led by the Ethiopian Investment Board chaired by the Prime
Minister
 Ranked 34th /138 economies for impartial public decision making (Global
Competitiveness Report, 2016).
 Wide-ranging incentive packages for priority sectors and export-oriented
investments.
 Bold initiative in the development of state-of-the art industrial parks, electric-
powered railway connecting the capital and other economic corridors to the port
of Djibouti.
Conducive economic factors
 An average of about 11% annual GDP growth for the last 14 years, one of the
 Fastest growing economies in the world during the same period (World Bank
Global Economic Prospects).
 Stable and conducive macroeconomic environment.
 Implementing phase II of its Growth and Transformation Plan (GTP II) which
aims to realize a structural transformation of the economy.
 46% growth in FDI inflow– one of the most dynamic and largest FDI
recipients in Africa (UNCTAD World Investment Report, 2017).
Favorable market factors
 Africa’s second most populous nation with a population size close to 100 million.
 54 million active labour force, trainable and available at competitive wage rate.
 Duty-free, quota-free access to the USA and EU markets through AGOA and
EBA, respectively
 Duty-free, quota-free access to Japan, Canada, China, Turkey, Australia and New
 Zealand – covering substantially all export goods from Ethiopia. Preferential
market access to India.

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 Member of COMESA with preferential market access to a regional market of 400

million people.
 Strategic location with proximity to the Middle East, Europe and Asia.
Well-developed infrastructure
 Newly built Addis-Djibouti electric-powered railway
 Africa’s world-class and Star Alliance member Ethiopian Airlines flying to about
100 international passenger and 36 dedicated cargo destinations; also flies to
over 20 domestic passenger destinations
 Huge investment potential in renewable energy including hyrdo, wind and
geothermal;
 Grand Ethiopian Renaissance Dam – the largest hydroelectric power dam in
Africa under construction (close to 60% completed), expected to generate
additional 6,000MW electricity.
 Expanding telecommunication services.
 Expansive road networks connecting national and regional markets.
 Two operational and seven upcoming government industrial parks; eight private
industrial parks in the pipeline.

2.6 Air Transportation and Tourism

Thanks to the measures promoted by the Ethiopian Ministry of Culture and Tourism back
in 2020, Ethiopia has been able to safely open its borders to international visitors and ensure
safety for residents, travellers and workers in the tourism value chain. Along with other 12
African countries, Ethiopia has just been recognized as one of the Safe Travels country.

2.7 Macro-economic analysis with regard to inflation

Addis Abeba, June 23/2021 – A recent report by the Central Statistics Agency (CSA)
indicates that the rate of inflation in Ethiopia increased by 19.7% in May 2021 compared to the
same month last year. The report indicated the overall inflation rate surged by 19.9 percent.
According to the report, food inflation accounts for the biggest inflation rate standing at
22.6%, while non-food inflation rose by 16.5% as of May 2021. The CSA reported that the 12
months moving average inflation rate suggests a longer-term high inflationary projection in the
country.
“Cereal prices continued to increase in the current month which has a great contribution
to the rise in food inflation. In addition, the continued increase in the prices of edible oil, meat
(showed fast price increase), butter, spices and coffee during the current month has contributed
to an increase in the rate of inflation,” the report states.
CSA reported that the inflation for non-food items rose by 14.8% compared to the same
period last year. Price increase in Alcohol and Tobacco, Stimulants (Chat), Clothing and
Footwear, Housing Repair and Maintenance (Cement and Corrugated Iron sheets), Energy
(Firewood and Charcoal), Medical care, Transport (fuel) and Jewelry (Gold) were the causes for
such spike in inflation.

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Abis Getachew is an independent economist and researcher who have done research
about the inflation in Ethiopia. While answering questions about the driving factors that bring
change in inflation right now, he explained that the context of inflation in Ethiopia is linked with
many factors. According to him, most of the consumer goods are imported which demand a lot
of forex but he argued even goods that are produced in Ethiopia are affected by non-existent and
ineffective chains of distribution.

2.8 Unemployment
According to the International Labor Organization’s (ILO) 2016 World Employment and
Social Outlook, last year, the youth unemployment rate was 10.9% in Sub-Saharan Africa, with
the working poverty rate among youth standing at 70%. In Northern Africa the unemployment
rate was 29.3%, with one in four working youth estimated to be living in extreme or moderate
poverty. ILO’s report essentially revealed that ‘unemployment continues to remain high in North
Africa while the number of young people in working poverty is expected to increase in sub-
Saharan Africa.’
In Ethiopia, the unemployment rate stands at 24%. As stated by the World Bank in 2007,
Ethiopia’s rural youth are becoming landless and lacking job opportunities, which often lead to
an increased migration to urban areas. In Addis Ababa, over 20% of households have an
unemployed adult and in other urban centers the rate is around 10%. Furthermore, low incomes,
unemployment, underemployment and poor working conditions are highest amongst young
people (15-29).
Reasons for high unemployment in Africa, and in particular in Ethiopia, include:
inadequate business skills, lack of regulatory frameworks and sustained administrative support as
well as lack of access to finance.
The high unemployment rates coupled with the increasing rate of the young population
on the continent calls for urgent action at all levels.
Unemployment Rate in Ethiopia is expected to reach 21.60 percent by the end of 2021,
according to Trading Economics global macro models and analysts’ expectations.

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3 Macro - Economic Analysis of the Region Addis Ababa

3.1 General
Addis Ababa is the capital city of Ethiopia with many ethnics groups. It is established
during emperor Menilik II before 125 years ago. It is the seat of the Ethiopian federal
government. As a chartered city, Addis Ababa has the status of both a city and a state. This city
is the African Union headquartered and other many world organization like headquarters of
the United Nations Economic Commission for Africa (ECA), as well as various other continental
and international organizations. Addis Ababa is therefore often referred to as "the political
capital of Africa" for its historical, diplomatic and political significance for the continent. The
city is populated by people from different regions of Ethiopia. City is found at elevation of
2,355m with coverage area of 527km2.
Addis Ababa, Ethiopia’s sprawling capital in the highlands bordering the Great Rift
Valley is the country’s commercial and cultural hub. Its National Museum exhibits Ethiopian art,
traditional crafts and prehistoric fossils, including replicas of the famous early hominid, "Lucy."
Addis Ababa is urbanizing at an exponential rate, and is expected to transform into a megacity of
almost 10 million people by 2037. Recent growth has been sprawling with low density, with the
rate of spatial expansion outpacing the rate of population growth. This has implications for the
cost of infrastructure and service delivery, traffic congestion, land management, social inclusion,
and overall liability. AACG’s institutional capacity and resources are also being stretched thin by
the pressures of rapid urban growth, and the city is struggling to provide basic services to all of
its residents. At the same time, the city core has extremely high density (from around 15,000-
30,000 people per km), concentrating around 30% of the population on 8% of the land in Addis
Ababa, generally with poor living conditions.
The climate of Addis Ababa is forecasted to have an increase in precipitation variability
and temperature. This will likely induce a wide range of hazards in the city including flooding
and landslides in addition to droughts and fires which have been the most common hazards in
rural and urban areas. The geographic location and topographic features of Addis Ababa,
compounded by the existing state of the drainage system, road network and sewerage system,
exposes the city to street and riverine flooding as well as landslides. However, the degree of
sensitivity to anticipated climate change varies from community to community within the city
due to variations in topography, poverty levels, access to basic services, quality of housing and
settlement patterns. Landslides are becoming a major threat in some parts of the city due to
frequent digging related to the construction boom. Urban fire has also been identified as an
existing shock. With increasing temperatures due to climate as well as to land-use changes in the
city, combined with poor housing standards, fire incidents could be further amplified. However,
there is little information about the scale of the challenge and the causal factors. One of the
issues seems to be the low capacity and lack of coordination of the Fire Prevention unit. This, in
combination with lack of appropriate road access and overcrowded traffic, exacerbates the
problem. Addis Ababa is only 75-100 km away from the western edge of the Main Ethiopian
Rift Valley, which is a hotbed of tremors and active volcanoes. According to a risk assessment
project focusing on seismic activities in urban areas including Addis Ababa, the city could be
severely impacted by earthquakes. If an earthquake was to occur at about 27 km away from the

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city (at similar magnitude of historic earthquake events in the 20th century), it was estimated that
15% of buildings could suffer collapse as well as a high number of fatalities (UNISDR, 1999).
Addis Ababa is urbanizing and growing at a rapid pace. The city faces potential shocks
and stresses that could hinder it from achieving its development goals. These include urban
flooding, fire, earthquakes, rapid urbanization, water scarcity, unemployment, and social
vulnerability.

3.2 The History of Addis Ababa

Before founding of Addis Ababa capital city of emperor Menilk II kingdom is Ankober
which is located 160km north of Addis Ababa. After some time Menelik, as Negus of Shewa,
had found Mount Entoto a useful base for military operations in the south of his realm. In 1879,
Menelik visited the reputed ruins of a medieval town and an unfinished rock church that showed
proof of an Ethiopian presence in the area prior to the campaigns of Ahmad Gragn. His interest
in the area grew when his wife Taytu began work on a church on Entoto. In addition, Menelik
endowed a second church in the area. In 1881, Menelik moved the capital of Shewa from
Ankober to Entoto.
The immediate area around Entoto did not encourage the founding of a town due to the
lack of firewood and water. In 1886, the actual settlement began in the valley south of the
mountain. Taytu initially built a house for herself near the Filwoha hot mineral springs, where
she and members of the Shewan royal court liked to take mineral baths. Soon, other members of
the Shewan nobility and their staffs and households settled the vicinity. Negus Menelik expanded
his wife's house to become the Imperial Palace, which remains the seat of government in Addis
Ababa today. Between 1889 and 1891, Addis Ababa became Ethiopia's capital when Menelik II
became Emperor of Ethiopia.
So Its history begins with the founding of the city in the 19th century
by Ethiopian Emperor Menelik II and his wife Empress Taytu Betul. Before the advent of Addis
Ababa, there were many towns in the surrounding areas that had been used as temporary capitals
for the Kingdom of Shewa. Ankober, a site about 160 km north of Addis Ababa, served as the
capital of the kingdom of Shewa during the second half of the 18th century. As evidence, the
ruins of the palace are still found on the lip of the great escarpment, which is popular in its
breath-taking view. The village of Aliyu Amba, which was the most important market center of
the Shewa Kingdom, is also located below Ankober palace at one of the broken hills. Other
areas, like Wechecha, Yerrer and Entoto were also temporarily used as capitals of the Shewan
Kingdom.
After becoming the capital of Ethiopia, Addis Ababa grew by leaps and bounds and took
on the character of a boomtown. By 1910, the city had approximately 70,000 permanent
inhabitants and also had between 30,000 and 50,000 temporary inhabitants. Addis Ababa became
the site of many of Ethiopia's innovations. Because of the sizeable population of Addis Ababa, a
degree of labor specialization not seen elsewhere in the empire was possible. [4] The rapid
growth of Addis Ababa, especially soon after the Battle of Adwa, was accompanied by the
construction of some of Ethiopia's first modern bridges.
On 5 May 1936, Italian troops occupied Addis Ababa during the Second Italo-Abyssinian
War, making it the capital of Italian East Africa. Addis Ababa was governed by the Italian

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Governors of Addis Ababa from 1936 to 1941. After the Italian army in Ethiopia was defeated
by the British army (with the help of Arbegnoch [ 2]), during the Liberation of Ethiopia,
Emperor Haile Selassie returned to Addis Ababa on 5 May 1941—five years to the very day
after he had departed—and immediately began the work of re-establishing his capital.
Emperor Haile Selassie helped form the Organization of African Unity in 1963, and
invited the new organization to keep its headquarters in the city. The OAU was dissolved in 2002
and replaced by the African Union (AU), also headquartered in Addis Ababa. The United
Nations Economic Commission for Africa also has its headquarters in Addis Ababa. Addis
Ababa was also the site of the Council of the Oriental Orthodox Churches in 1965.
3.3 Tourist Attractions of Addis Ababa
Addis Ababa is headquarter to the African Union and having United Nations branches
office, and with many national and international office so those city is often referred to as
the capital of Africa. Due to good weathering condition, marvelous array of local and
international food, ancient churches, and fascinating museums, visitor satisfied in Addis Ababa.
There is plenty to see and do in Addis Ababa, but the journey to the attractions is frequently
more interesting than the sights themselves. This is particularly the case should you choose to
walk the city and navigate your way to the main museums and buildings yourself.
3.4 Best Things to Do in Addis Ababa, Ethiopia

3.4.1 Investing on hotel

Addis Ababa is capital city of Ethiopia and headquarters of Africa union so there are
many people who come to those cities so investing on hotel is more profitable. In addition to
those many tourists come to visit museum found in Addis Ababa.

3.4.2 Export coffee

Since Addis Ababa is capital city of Ethiopia and it connect country with other foreign
country buying coffee from rural area and export it is also profitable business.
3.5 Museum
This museum has a varied range of exhibits displayed across three floors and covering a
wide scope of Ethiopian history from the prehistoric to the contemporary. The museum is not
world-class in terms of its facilities or exhibition space, but it does contain some genuinely
fascinating artifacts’ and gives visitors a good historical overview of Ethiopia. The following are
best museum found in Addis Ababa:

3.5.1 National Museum of Ethiopia (NME)

The National Museum of Ethiopia (NME), also referred to as the Ethiopian National
Museum, is a national museum in Ethiopia. It is located in the capital, Addis Ababa, near the
Addis Ababa University's graduate school. The museum houses Ethiopia's artistic treasures. It
contains many precious local archaeological finds such as the fossilized remains of early
hominids, the most famous of which is "Lucy," the partial skeleton of a specimen of
Australopithecus afarensis. Recently added to the basement gallery is a display on Selam, found
between 2000 and 2004. This archaic fossil is estimated to date to 3.3 million years ago. In 1936,
the concept of a museum was first introduced in Ethiopia when an exhibition was opened,
displaying ceremonial costumes donated by the Solomonic dynasty and their close associates.

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The current NME grew from the establishment of the Institute of Archaeology, which was
founded in 1958. The institute was founded to promote and facilitate the archaeological research
mission in the northern part of Ethiopia by French archaeologists.
The museum started its activities by exhibiting objects from these excavation missions.
With the establishment of the Ethiopian Cultural Heritage Administration in 1976, the idea came
up to open a National Museum, which was supported by the Government? The NME began to
operate under the National Act which provides for the protection and preservation of antiquities,
and has legislative authority governing all sites and monuments throughout the country of
Ethiopia. Later, the National Museum diversified its activities and organized into three working
department, i.e. the conservation department, the documentation department and the exhibition
and research department. The NME at present has four main exhibition sections. The basement is
dedicated to archaeological and pale anthropological sections. These areas show the previously
mentioned hominids. The first floor contains objects from ancient and medieval periods, as well
as regalia and memorabilia from former rulers, who include Emperor Haile Selassie. The second
floor shows art work in a chronological order, from traditional to contemporary works. Afewerk
Tekle's massive African Heritage is one of the most notable pieces. Another painting depicts the
meeting of Solomon and Sheba. The second floor contains a collection of secular arts and crafts,
including traditional weapons, jewellery, utensils, clothing and musical instruments. Finally, the
third floor has an ethnographic display. Here, the museum tries to give an overview of the
cultural richness and variety of the peoples of Ethiopia.

Figure 3-7 National museum of Ethiopia in Addis Ababa

Another great museum in Addis Ababa, ten minutes’ walk from the National Museum, is
the Ethnological Museum inside the main university campus at Sidist Kilo; the two museums are
easily combined on a morning of sightseeing.

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Figure 3-8 Ethnological Museum at Sidist kilo

3.5.2 St. Raguel church museum

It is found on entoto hill about 2.5km from entoto St. Mary church.it is the oldest church
in Addis Ababa founded by emperor Menilik II about 140 years ago.it is an ideal church for
visitor who want to see typical Ethiopian orthodox Christian’s painting art in Addis Ababa as the
church interior wall is decorated with beautiful hand painting as old as the church. It is amazing
how the colors are still bright and vivid.

Figure 3-9 St. Raguel church

3.5.3 St. George’s Cathedral and Museum

St George's Cathedral was founded by the great Emperor Menelik to commemorate his
1896 victory over the invading Italian army. A relic of St George was carried into battle by the
Ethiopians and the emperor built the cathedral to pay tribute to the saint that ensured his victory.
The cathedral is a holy place of pilgrimage for Rastafarians. It has a traditional Ethiopian design
and octagonal shape and the outer walls of the building are covered in wonderful artwork and
mosaics, including work by Afewerk Tekle. Inside beautiful stained glass windows enhance the
sacred atmosphere. In 1930 the church hosted the coronation of Emperor Haile Selassie and he

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and Empress Menen are two of the famous Ethiopians buried here. Attend a service (enquire for
times) to experience the wonderful singing and prayerful chanting so typical of Coptic
Christianity. If you do attend a service - visitors are welcome - then be aware that the
congregation stands for the duration of the service with men to the left and women to the right.
Visitors must take off their shoes before entering the church.
There is a small museum at the church which has some useful information and interesting
displays. You can also get some great views of the city by climbing the museum's tower.

Figure 3-10 St. George cathedral church

3.5.4 Meskel square

Meskel Square is a square in the city of Addis Ababa, Ethiopia. It is often a site for public
gathering or for demonstrations and festivals, notably, the Festival from which it takes its name.
The Meskel Festival has been celebrated for over 1,600 years. The word "Meskel" means "cross"
and the festival commemorates the moment when the crucifix was revealed to Empress Helena
of Constantinople, mother of Constantine the Great. Thousands gather at the Square annually on
17 Meskerem in the Ethiopian calendar (September 27 in the Gregorian calendar), with
celebrations in Addis Ababa beginning in the early afternoon when a procession bearing flaming
torches approaches Meskel Square from various directions. A burning pyramid (demera) is
located in the center and is circled by priests in brightly colored cloaks, students, brass bands,
and the army carrying around giant crosses and torches. They set the pyramid alight with their
torches, and the burning pyramid is kept ablaze until dawn until the celebrations through the
night have ended. The square is often used for secular purposes. Concerts, parades, car races, and
various other government and public events are held there. Political parties often hold rallies in
the square. Part of the public ceremonies surrounding the re-burial of Emperor Haile Selassie
took place in the square as well. The national monument in memory of those massacred by the
Derg regime in the "Red Terror" of the 1970s has been built at the eastern entrance to the square,
and the remains of many victims from that period have been buried there: the Red Terror Martyrs
Memorial Museum has been inaugurated in February 2010Addis Ababa city municipality

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Figure 3-11 New constructed Meskel square

3.5.5 Holy trinity cathedral (Kidist Selassie) and museum

While St. George’s Cathedral is one of the most famous in Addis Ababa, the Holy Trinity
Cathedral is the most sacred Ethiopian Orthodox church in the city, and one of the most sacred
sites of worship in Ethiopia after the churches of Lalibela.
The Holy Trinity Cathedral has a real medieval feel to it, the grounds surrounded by
weeping pine trees and the cathedral decorated with statues and carvings. At the back of the
cathedral is another museum, where you can see more Ethiopian historical memorabilia, crowns
of former Ethiopian Emperors and a selection incredibly well preserved Amharic Bibles and
religious writings. At the front of the cathedral, if you ask the priest to open the gate, you can see
the tomb of Emperor Haile Selassie

Figure 3-12 Holy trinity cathedral church

3.5.6 Ethnological museum

Just a short distance from the National Museum of Ethiopia, located within the lush
university campus, is the Ethnological Museum. If you’re into museums, both the National and
Ethnological Museums shop be priorities on your list of things to do in Addis Ababa.

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The museum first introduces some of the major tribes of Ethiopia, goes through the
history and importance of coffee in Ethiopian culture. There’s also an impressive collection of
Ethiopian Orthodox paintings, triptychs, and Orthodox crosses. But the best part about the
Ethnological Museum is being able to go into the former bedroom and bathroom facilities of the
highly regarded Emperor Haile Selassie (Ras Tafari).

Figure 3-13 Monuments, lion of Judah, derg monument

Ethiopia, with its ancient history, religious beliefs, and struggles against colonization
(Ethiopia was never officially colonized like many surrounding African nations), is full of
monuments and sculptures in remembrance. There’s the Derg Monument, located on Churchill
Avenue, which represents the North Korean presence in the country. It’s not the well-kept
monument, it was quite overgrown, and there were zero other people there apart from a few
random people sleeping and a pair of guards when I stopped by.
There’s the Statue of the Lion of Judah, in front of the old Railway Station in Addis
Ababa, representing the Ethiopian pride and the emperor. And also there’s another Statue of the
Lion of Judah made from black stone that sits outside the National Theater (pictured).With its
wealth of history and pride as a nation, Addis Ababa is filled with monuments at nearly every
public square, place of importance, or within the large road roundabouts throughout the city.
Many of the monuments are worth stopping if you happen to be driving by. Driving up the steep
road, you’ll pass homes and small villages, highland growth, and as you gain elevation you’ll
start to get great views of Addis Ababa (on a clear day). Menelik II built his palace on the Entoto
Hill and used it as his headquarters during the founding of Addis Ababa.

3.6 Ethiopian Food and drink

Along with injera, Ethiopian food consists of spice filled curries, vegetables, and lots of
meat (if you choose it). Eating Ethiopian food is easily one of the best things to do in Addis
Ababa. First of all, with a gigantic platter of a feast placed before you, and eating with your
hands, eating is just so extremely fun in Ethiopia. The staple is injera, a spongy great pancake
made from teff grain flour. It’s fermented to become sour, and feels like a pancake.

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Coffee lovers, you’re in for a real treat when you travel to Ethiopia. The traditional
Ethiopian coffee which is roasted by hand, ground using a mortar and pestle, and brewed in a
traditional clay coffee pot known as a jebena. You’ll find traditional Ethiopian coffee at nearly
all Ethiopian restaurants and all over the streets.

Figure 3-14 Ethiopian food and coffee

3.7 Administrative Centre of Africa

Addis Ababa is a major administrative center, not just for Ethiopia but for the whole of
Africa. It is home to the third largest diplomatic community in the world, hosting the United
Nations Economic Commission for Africa (UNECA) which was established in the city in 1958.
It is also the founding city in 1963 of the Organization of African Unity (OAU), renamed in 2002
and now re-organized and known as the African Union (AU). It hosts the largest World Bank
office in Africa, with over 80 staff members. There are over 300 nongovernmental organizations
(NGOs) and up to 100 embassies in Addis Ababa - more than in any other African capital.

3.8 Addis Ababa urban Development Indicators

Addis Ababa, like any other metropolis, faces the usual urban challenges of insufficient
and substandard infrastructure provision, insufficient public facilities, a shortage of housing,
poor sanitation, high unemployment, and expensive transportation fares, all these coupled with a
countrywide population growth rate of 4.42 per cent, considerably higher in the capital due to
inward migration. In order to mitigate these challenges the Addis Ababa city government, in
collaboration with the Federal Bureau of Finance and Economic Development and the United
Nations Habitat Organization, established a plan that highlights strategies; such as:
 Demography: Bringing the development of the urban area into harmony with its
environment and the overall system of settlements is one of the basic tasks to be
undertaken in order to achieve the general goal of sustainable human settlements in an
urbanizing world. The current metro area population of Addis Ababa in 2021 is5006000
4.42% increase from 2020. The metro area population of Addis Ababa in 2020 was
4794000 4.4% increase from 2019. The metro area population of Addis Ababa in 2019
was 4592000 4.36% increase from 2018.

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Figure 3-15 Population and population pyramid of Addis Ababa

 Poverty: Significant numbers of households live below the absolute poverty line, average
salary in Addis Ababa is 726,691 ETB per year. Indicating that strong poverty reduction
schemes are of the utmost necessity.
 Unemployment: Unemployment rate in Ethiopia is expected to reach 21.6% by the end
of 2021 according to trading economic global macro models and analysts expectations.
 Health: In Addis Ababa, physician to population and nurse to population ratios were 1:3
and 1:1 respectively in 2013. HIV prevalence was at 12.4 per cent - a serious problem for
the country, but lower than infection rates in southern Africa of above 20 per cent - and
overall health coverage was 68 per cent.

3.9 Addis Ababa's Economic Performance

Studies initiated by the Bureau of Finance and Economic Development
macroeconomic indicators for Addis Ababa show that the cities estimated gross value added
almost doubled from US$728 million in 2004 to US$1.4 billion in 2013. According to the
study, Addis Ababa's economy grew since 2009 at an annual rate of seven per cent, with the
services, industrial and urban agriculture sectors growing on average at seven per cent, five per
cent, and one per cent respectively. The service sector is the mainstay of Addis Ababa's
economy, contributing 77 per cent of the total annual value of production. It is a strategic sector
with the potential to grow the economy through employment creation and revenue generation.
The industrial sector contributed 22 per cent and agriculture 1 per cent.

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Figure 3-16: Addis Ababa economic performance

The small agriculture share is mainly from the contribution of residents of Addis Ababa
suburbs engaged in animal husbandry and cultivation of gardens which is irrigated land on
which vegetables are cultivated. There are currently more than 6,500 investors with a total
capital of above US$5.7 billion dollars invested in the city. The completion of all projects is
estimated to create approximately 435,000 jobs.

3.10 Addis Ababa's City Revenue Structure

The City of Addis Ababa's revenue grew from year to year in 2020 US$663 million was
collected, with direct and indirect taxes total revenue.

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4 Hotel X Project

4.1 Project Description and Identification

Hotel X is a luxury hotel based in Addis Ababa, Meskel Square area with over 450 hotel
rooms. Hotel X will occupy services that offer their guests the highest levels of luxury through
personalized services, a vast range of amenities, and sophisticated accommodations.
Facilities given may extend from a modest-quality sleeping pad in a small room to huge
suites with greater, higher-quality beds, a dresser, a refrigerator and other kitchen facilities,
upholstered chairs, a flat screen television and en-suite washrooms. Little, lower-priced inns may
offer only the most essential visitor administrations and offices. Bigger, higher-priced lodgings
may provide extra visitor offices such as a swimming pool, commerce center (with computers,
printers and other office hardware), childcare, conference and occasion offices, tennis or ball
courts, recreation center, restaurants, day spa and social work administrations.
Guest rooms must be plush and inviting—especially the bed. (Ideally, there is a memory
foam bed with high thread count sheets).
 Pillow menu
 Blackout shades
 Bathrobes, slippers, luxury toiletries, and large fluffy towels
 Night lighting in walking areas and bathrooms
 Poolside daybeds, umbrellas, lotions, ice water, attendants, and food and beverage
service

4.2 Project Details

4.2.1 Location
The planned project of five star International hotel can planned to be set in capital of
Ethiopia Bole sub city Woreda eleven. According to the 2021 population census, town
encompasses a total population of 5,005,524 inhabitants. The entire land size the promoter
requesting for the implementation of the project is calculable at 4500 sq. meters, which will be
obtained from investment commission of Addis Ababa administration therefore the owners
choose capital of Ethiopia for the planned project by looking each aspects of business integrity
tourist flow.

4.2.2 Owner
Sunshine with an extensive portfolio of renowned real estate developments, road
constructions, hotel developments, laundry services, Beauty and Spa services and corporate
social responsibility, Sunshine Investment Group is one of a diversified conglomerate in
Ethiopia.

4.2.3 Capital
The sunshine group is willing to invest above 1 billion birr for the project, the rest of the
money is developed from bank loan.

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4.2.4 Capacity and service

Capacity
Facilities provided may range from a modest-quality mattress in a small room to large
suites with bigger, higher-quality beds, a dresser, a refrigerator and other kitchen facilities,
upholstered chairs, a flat screen television and en-suite bathrooms. Small, lower-priced hotels
may offer only the most basic guest services and facilities. Larger, higher-priced hotels may
provide additional guest facilities such as a swimming pool, business center (with computers,
printers and other office equipment), childcare, conference and event facilities, tennis or
basketball courts, gymnasium, restaurants, day spa and social function services. Hotel rooms are
usually numbered (or named in some smaller hotels and B&Bs) to allow guests to identify their
room. Some boutique, high-end hotels have custom decorated rooms.
Some hotels offer meals as part of a room and board arrangement. In the United
Kingdom, a hotel is required by law to serve food and drinks to all guests within certain stated
hours. In Japan, capsule hotels provide a tiny room suitable only for sleeping and shared
bathroom facilities. The same will follow to Hotel X broad serving capacity.
Services
Hotel X employees are polite, attentive, discreet, and can anticipate guests’ needs. All-in-
all, consistently flawless excellence is the expectation.
 Standalone concierge staff available at least 16 hours a day
 A high staff-to-room ratio—ideally above 2.5
 Multilingual staff
 24-hour reception, room service, valet parking, butler, doorman
 Nightly turndown
 Daily housekeeping that is also available upon request at any time
 Laundry, ironing, dry cleaning, and shoe polishing
 Guest elevators separate from staff elevators.
 Luggage storage in which bags are out of guest view
 Fine dining restaurant(s) and a standalone lounge and/or bar
 Transfers and executive or house car
 Childcare

Table 4-1 project rooms

No. Type of Service Feasibility Service Capacity

1 Bed Room 450 bed rooms
300 single rooms
30 suits
120 double rooms
2 Bar One bar – 350/head

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3 Restaurant
Modern 2 international – 300/head each
Traditional 1 traditional – 200/head
Coffee Shop 30 seats at time
4 Sauna and Steam bath 50 heads/day
5 Gymnasium 50 heads/day
6 Swimming Pool 2 swimming pool – 55 head/head for each
Small pools – 30 head/day
7 Meeting room 2000 seat capacity
8 Night Club 500 Heads

4.2.5 Project statement

Mission
Mission of the particular project is to expand the standard star hotel system and to give
quality service.
 To prove to other people that struggle for a better life and economic
independences can do business and bring change and can make a difference if
opportunities are given.
 To become financially liquid and guaranteed more than ever.

Objective
The main objective of the venture is pointed at to maximize the return on invested capital
within the form of benefit for the promoter. Be that as it may, its implementation will advantage
the representative, the consumer society and the government at diverse levels. In this regard the
venture is pointed to promote the following objectives:-
 To maximize the return on invested capital through modern Hotel
 services
 To raise the significance and importance of the sector and thereby
 raising its contribution to the national economic development  To give quality
and standard hotel service
 Effectively use local inputs and strengthening the linkage between
 agriculture and other sectors of the economy
 To provide gainful employment to a large segment of the population of
 The project area and augment earning capacity at the grassroots level, increase
government revenue through the different forms of taxes, which in turn used to
facilitate social and economic development.

Vision
The hotel's vision will be the following:
o To be pioneer in Addis Ababa and establish as a professional hotel in the upscale
market

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o To become a management success example in Ethiopia

4.2.6 Market Strategy of the company

The marketing strategies that have been adopted by 5-star hotels include leadership
marketing, personal contact marketing and extensive staff training marketing strategies which the
six 5-star hotels or organizations have an approach of highest extent . Marketing strategies on the
basis of quality customer service, physical attractiveness, range of product offerings ,unique
product features, safety and security systems, information technologies are also have been
approached by five 5-star hotels to the highest extent.
To maximize booking conversion rates, your luxury hotel marketing strategies must
target a specialized clientele that conceptualizes the travel experience in a unique way. The
challenges you face are distinctive, but with the right approach to marketing you can boost your
client base, enhance your brand and put your competitors on the defensive.
1. Optimize for all mobile devices.
This is fairly standard advice for hotel marketing departments nowadays. But luxury
hotels have been surprisingly slow to catch on, which is ironic considering luxury travelers use
mobile devices more frequently than the general public.
Successful entrepreneurs and highly-paid professionals are technologically savvy (and
proud of it), and they are leading the charge of the mobile revolution.
2. Establish relationships with industry influencers.
Influencer marketing is a blazing hot trend, and luxury hotel marketing departments can
make excellent use of it.
Partnering with a social media analytics company like Klout, you can identify the top
influencers in the luxury hospitality industry and form symbiotic relationships beneficial to both
parties. No quid pro quo is implied; offer them legitimate opportunities to sample your product,
and if they like what they discover they will spread the good word to their followers.
3. Blog away with educational and informative content.
Many (but not most) hotels have added blogs to their websites, and this is a fantastic
strategy for luxury hotels in particular.
Affluent individuals are readers. Author Steve Shields spoke with more than 1,200
wealthy men and women while doing research for his book “How Rich People Think,” and they
all declared their passion for reading as a method of learning and self-development. In another
study carried out by Thomas Corley, in preparation for his book “Rich Habits: The Daily Success
Habits of Wealthy Individuals,” 86 percent of high wage earners tabbed reading as one of their
greatest pleasures, and a key to their success.

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4. Don’t cut prices, add value instead.

Cheaper hotels can engage in pricing wars without damaging their reputation. But that is
not the case for luxury hotels, who risk degrading perceptions of their brand if they suddenly
start offering regular discounts. Your luxury travelers don’t expect that and won’t reward you for
pursuing that strategy.

This is a lesson many luxury hotels have yet to learn, and that can be used to your
advantage.
5. Market on the assumption that your competition is international.
Do you know what upscale hotels and resorts in Paris, London, Venice, Madrid, and
Rome are doing to attract customers?
If luxury hotel marketing is your game you should. You may not see these facilities as
your competition but they are since your potential clients can afford to travel anywhere and they
don’t have to limit themselves to any particular geographic area or budget.
6. Personalize the browsing and booking experience.
It’s a well-known fact that luxury travelers love perks and pampering. Hotels that treat
their customers like VIPs will get great reviews and repeat bookings, and that is something you
undoubtedly aspire to as well.

But why reserve the VIP treatment for onsite check-ins? Why not cater to their needs
when they visit your website, to let them know how much you value their attention?

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4.3 Technical Study of the Project

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

4.3.2 Physical appearance

The hotel would have G + 12 building placed on an area of 3000 m2. The architecture of
the buildings are influenced by the modern design setting holding the characters of attracting
customers from out ward and allowing the maximum comfort it can provide from service point
of view. Apart from the need to add a new look within the locality, exterior of the building will
be dominated by a glass panel at the strategic corners to provide a maximum opportunity for
guest to have, a look at the important land escape/scenery of the area. The outer space is
allocated to have an open garden, children’s playing ground, parking area, fountains and inter
campus paving with a medium size swimming pool adjoining the front side of the buildings.

4.3.3 Major Facilities

The envisaged hotel should have sufficient and comfortable space to accommodate the
core services as per the requirements of the Five star hotel. Actually this has been considered
seriously at the design stage of the building along with the allocation of appropriate area and
placement of each components with the building accordingly. On the other hand, it is also
important to figure out the layout of each component not only from the perspective of having
compliance for the standard but for the benefit exploring possibilities of bringing complementary
services under the same location and allow maximum convenience in the work processes. The
sizes (area) of each service, which will be explained below, determine the holding capacity of
guests as it determines the level and quality of service. Other than the critical factors mentioned
above the market aspect i.e. customers need and resource availability are considered in which
case they are the determinants to give the final set up of the facilities.
(a) Bed Rooms
A total of 450 classes are allotted for room services with options to avail three different
types of accommodations. In the interest of following the trend in the industry single, double and
suite bedrooms are provided in the project. Actually the standard requires allowing maximum
30% from the total while the rest can remain with big double bed rooms or any other smaller
rooms. On the bases of the above considerations under this component, the hotel will have 300
single, 120 double and 30 suit king bed rooms.
(b) Bars

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Standard Five star hotels must have at a bar with a superior comfort and service quality.
The furniture and equipment’s, as being the basic sources of customer’s attractions, need to be
fashionable of higher quality commensurate with the expectation of guests who happen to prefer
this class. Therefore, the envisaged hotel, having the requirements considered too, will have one
main bar at the ground floor adjoining the reception area. Another bar preferably with smaller
space but furnished with cozy furniture will be placed at top floor of the building. This is just to
add another attractive look for the hotel as it will be placed at a strategic location for customer to
have a panoramic view of the area. The minimum carrying capacity of the bars is estimated 350
persons per day.
(c) Main restaurant
Technically a hotel to be classified under Five stars of as such this one must have at least
two dining places having the size proportional to the guests who have checked in as normally
customers do not prefer to worry about going out once they have settled. The area determination
has to take into account this. Hence, the hotel must provide the maximum range of varieties at all
times.
The hotel will have the capacity entertaining 500 guests and allow maximum efficiency
in the service by having the restaurant located nearer to the main kitchen.
(d) Banquet/Conference hall
A hotel with five stars needs to have a conference/banquet hall of larger area which can
be used for banquet or conference interchangeably. This project considers this component as the
second important function next to the room services as this area has a higher potential for such
services. The holding capacity of the main conference hall will be 2000 persons.
(e) Business center (mini market shop)
A Five star hotel needs to have also a business center with the service that would the
customers need. For such a service, the envisaged project will allocate a relatively bigger area
preferably separate rooms at the ground floor. Rooms are allocated to secretarial service,
executive rooms for business meeting and shopping corners. The secretarial service will be
furnished with all the machines and equipment to handle any business enquiry that may be raised
by hotel guests. The shopping corner also accommodates mini boutique, cosmetics and d/t type
of shop
(f) Supports
Kitchen
Two kitchens, with the processes of multiple varieties of food preparation and a
proportional capacity to handle the maximum guests to be served in the main restaurant as well
as in banquet hall, is the critical requirement for the proposed hotel. It should be large enough
also to accommodate the working areas of cold and hot meals on the one hand and pastries and
bakery on the other.

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In order to allow reasonable space for workers to move around as well as to avoid the
possibility of contamination and spoilage, the pastries and bakery will be placed at the nearest
door joining the main buffet at the gate of the restaurant. On the other hand, the kitchen should
be provided with a space to add a small store with a flexible structure to contain butchery and
cold rooms. These are critical for easy facilitation of cooking’s. Moreover, the kitchen will have
a well-connected washing corner with at most margin of clearance to make the area safe and
clean.
Power House
For the service of the hotel to continue uninterrupted, a power house is already planned to
be placed in the underground or back to the building. Hence, the power house will be supplied
with a generator planned to be fixed for emergency service.
Store
Alike the capacity projection made on the kitchen, the envisaged project requires a store
as big as the varieties of items that are needed to be kept as stock. The store will need to have a
systematic management for stocks properly placed and identified at the time of delivery and
inventory. Hence, it is the required procedure to organize the stock items in separate sections so
that the proper handling of stocks shall be maintained. In view of this, the hotel requires a
number of stores with sections for food items, beverage, glass wares, silver wares, soft
furnishings, cleaning and sanitary materials, stationery materials all placed according to their
physical appearances. The store will be placed in locations nearer to kitchen or leisure service.
Car Parking
The hotel must provide the service of car parking with 24 hours protection at least for
those customers who have checked in. Again, it should be large enough to accommodate as
many vehicles as the hotel is going to entertain a large crowd. In view of this, a parking space for
about 17 vehicles is planned to be allocated with the standard width and height of the drive in
routes

4.3.4 Materials Cost estimation

1. Land Lease
The plot area is 4500 m2 of land acquired with a lease for 100 years. According to the
data taken from Kirkos Sub city land administration bureau, the average price of lease bid
winners is around 45,000 Birr/ m2.
Total estimated lease price for the hotel = 4,500 m2 X 45,000 ETB/ m2= 202,500,000 ETB
Assume the built up area of the hotel is 70% of the plot area, since we need land for other
amenities like swimming pool and parking area besides the parking in the basement floor.
Built up area = 70% X 4500 m2= 3,150 m2 According to Ethiopian Ministry of Culture and
Tourism hotel standard criteria draft, Ginbot 2003 E.C, For a 5 star hotel, the size excluding
bathrooms & corridor,
Single bed room = 31 m2
Double bed room = 35 m

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Suit bed room = 42 m2

And according to the criteria, the number of suite rooms shall be 5% of the total rooms.
Hence, our hotel will have suite (30rooms), double bed (120 rooms) and single bed
(300 rooms).

According to the criteria,

 The minimum bathroom area per room = 9m2
 Corridor per room = 6 m2

Now, calculating the room sizes according to the above information,

 Area of single bed room = 31 + 6 + 9 =46 m2
 Area of double bed room = 35 + 6 + 9 = 50 m2
 Area of suite = 42 + 8 + 10 = 60 m2
Total area required for the 450 rooms will be;
300x46 + 120x50 + 30x60 = 21600 m2
According to the book ‘Architect’s Data’ by Ernst and Peter Neufert, third edition,
accommodation facilities, including rooms, toilets, bath rooms, shower room etc., hallways and
floor service, should occupy 50 – 60% of the floor area.
Therefore, the rooms will have 60%*3150m2 = 1890 m2 per floor.
The number of floors required to hold all the 350 rooms or 16,690 m2 will be;
(21600 m2) ÷ (1890m2/floor) = 11.4 ≈ 12 floors.
Basement floor is for parking and the rooms will start from ground floor. Hence, our
building will be G+12. According to the criteria, the building will have three passenger lifts with
8 person capacities and one service lift for goods.
Compound
 Swimming pool
 Guard house
 Green area
Basement floors:
 Car Parking
 Laundry room
 Fitness & gym area
 Bar /night club
 Mechanical Room
 General Store

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Ground floor:
 Entrance hall,
 Reception area
 Lobby Bar
 Kitchen
 Restaurant
 Cultural shops
 Stationary rooms
First up to seventh floor:
 Different size and standard guest rooms
 Corridor
 Lift
 Stair
8th floor:
 Three meeting halls
 Wellness & spa area (including treatment rooms, sauna, steam bath, whirlpool)

Roof floor

 Roof top bar (wine cellar)

 Flat concrete roof for different festivity
 Water Tanker Stand

2. Source of Finance

The total cost of the project is estimated to be Birr 2,378,626,384.50 from the total this
investment cost 50% which is Birr 1,189,313,192.25 will be covered by the owner’s
contributions whereas the rest 50% which is Birr 1,189,313,192.25 expected to be financed from
the bank at a long term loan basis.
Thus the loan amount to be requested will be Birr 1,189,313,192.25 at interest rate of
14.5% per annum for a period of 20 years on monthly repayment period including 2 years grace
period.
3. Building Cost Estimation
According to Addis Ababa City Administration, the minimum construction cost estimate
for buildings with floor number 6-15 is 5,515 Birr/m2. But this price is not reasonable and we
have studied the current market price and it is about 50,000 ETB/m2
Table 4-2 building cost estimation of the project

Area Total cost

No Item measured Unit Unit cost (ETB)

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1 Site preparation * 4,500 m2 ETB 2.5% of 18,900,000.00

and development building cost

2 Building 3150 m2*12 floors ETB 50,000 ETB 1,890,000,000.00

= 37,800m2

Total 1,908,900,000

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4. Hotel Furniture and Equipment’

 Gym equipment
A summary of the facilities of each of the properties is provided in the following:
Table 4-3 cost for gymnasium equipment
Supplier :Fitness-superstore  
Currency:
Performa : July,,2021 USD
GYM Equipment
Qt Unit cost
No Item Description Unit y (USD) Total Cost
  Cardio        
11212. 5606
5 2.5
1 Life Fitness Integrity Series Treadmill Pcs 5
10315. 3094
Life Fitness Integrity Series cross 5 6.5
2 Trainer Pcs 3
5519.5 1655
Life Fitness Integrity Series Recumbent 4 8.62
3 Bike Pcs 3
5519.5 1655
Life Fitness Integrity Series Upright 4 8.62
4 Bike Pcs 3
2840.5 5681
5 Life Cycle GX Bike Pcs 2

  Strength    
8624.6 8624
Life Fitness Optima Series Dual 55 .655
1 Adjustable Pulely Pcs 1
5749.7 5749
Life Fitness Optima Series 7 .77
2 Biceps/Triceps Pcs 1
5749.7 5749
Life Fitness Optima series Lat Pull 7 .77
3 down /Low Row Pcs 1
6323.8 6323
5 .85
4 Life Fitness Optima Series Multi Press Pcs 1
5749.7 5749
Life Fitness Optima Series Leg 7 .77
5 Curl/Extension Pcs 1
3438
Life Fitness Optima Series adjustable 3438.5 .5
6 Bench Pcs 1
3438
3438.5 .5
7 Life Fitness Olympic Flat Bench Pcs 1

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4598.6 4598
2 .62
8 2-50kg Dumbbell with rack Pcs 1
2874.8 2874
85 .885
9 14Set of Discs Pcs 1
113.
113.62 62
10 Straight Bar Pcs 1
113.
28.405 62
11 Collars Pcs 4
113.
56.81 62
12 Stretching Mat Pcs 2
113.
56.81 62
13 Exercise Ball Pcs 2
20 34.385 6877
14 Pavigym Flooring Mat(per m2) Pcs 0
3438
10 34.385 .5
15 Pavigym Traffic Area (per m2) Pcs 0
2242
37.375 .5
16 Pavigym Wet Area(per m2) Pcs 60
8231
7.69
Sub Total  
1234
15% transaction cost(freight, insurance, bank charge, 7.65
transit)    
9466
5.34
Total FOB    
Exchange rate(As of July 2021, Source, National Bank of
Ethiopia)     55
5206
594
Total cost in ETB    
1561
97.8
Installation Fee(3%)    
5362
792
Grand total      
Source: fitness-superstore.co.uk

 Kitchen and Restaurant Items

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Table 4-4 Kitchen and Restaurant item

Supplier :Mobilspazio Proforma : Currency: USD

July/2021
Bar Ground and 5 Floors
No I Item description Unit Qty Unit cost Total Cost
1 Bar Chairs with black leather pcs 10.00 88.21 $ 882.05
2 Bar Chairs with black leather pcs 10.00 88.21 $ 882.05
Bed room
1 Desk Chair pcs 350.00 73.26 $ 25,639.25
2 Safe deposit box pcs 350.00 59.65 $ 20,877.68
3 Black out curtains for window H pcs 800.00 18.24 $ 14,591.20
29oxW 200 5ooqm
4 Hair dryer set with electric shaving pcs 350.00 13.46 $ 4,709.25
plug
5 Room Number Signature pcs 350.00 6.43 $ 2,249.98
6 Don't disturb -Clean sign pcs 350.00 4.34 $ 1,517.43
7 Dust Bin for Bedrooms and pcs 400.00 5.68 $ 2,272.40
Bathrooms
8 Single folding bed incl mattress pcs 10.00 118.11 $ 1,181.05
Lobby /Office
1 Cash register pcs 1.00 943.35 $ 943.35
2 CD Player pcs 2.00 708.18 $ 1,416.36
3 Computer with software pcs 4.00 527.14 $ 2,108.55
4 Printer pcs 4.00 275.38 $ 1,101.52
5 Photocopier pcs 1.00 590.08 $ 590.08
6 Scanner pcs 2.00 251.76 $ 503.52
7 Fax Machine pcs 1.00 148.01 $ 148.01
8 Card Lock System for rooms incl. pcs 30.00 104.65 $ 3,139.50
software
9 Desk with chair for the Reception pcs 4.00 239.20 $ 956.80
and Cashier and Office
10 Filling Cabinet and Shelf for the pcs 4.00 70.86 $ 283.45
Reception and Office
11 Telephone system for the hole hotel pcs 30.00 44.85 $ 1,345.50
incl. rooms
12 Dust Bin for Lobby/Restaurant/ pcs 10.00 5.68 $ 56.81
13 Vacuum Cleaner pcs 2.00 297.51 $ 595.01
14 Curtain for Lobby and stair case 300 pcs 300.00 9.42 $ 2,825.55
sqm
15 Overhead projector /Laser BeaTil er pcs 2.00 1808.95 $ 3,617.90
16 projector screen pcs 2.00 1794.00 $ 3,588.00
17 Microphone pcs 3.00 1729.72 $ 5,189.15

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18 Restaurant Table non scratch 80*8o pcs 10.00 179.40 $ 1,794.00

19 Restaurant Chair pcs 40.00 82.23 $ 3,289.00
20 Meeting table 80*140 pcs 10.00 224.25 $ 2,242.50
21 Meeting Table80*80 pcs 2.00 179.40 $ 358.80
22 meeting chair pcs 45.00 73.26 $ 3,296.48
23 sound system pcs 3.00 598.00 $ 1,794.00
24 Sound system stem box pcs 20.00 14.95 $ 299.00
25 Curtain Black out 160 sqm pcs 160.00 18.24 $ 2,918.24
26 Table cloths pcs 66.00 4.49 $ 296.01
kitchen/Restaurant Items
1 Flat Plate 25cm pcs 100.00 1.79 $ 179.40
2 Flat Plate 17cm pcs 50.00 1.20 $ 59.80
3 Flat Plate 3ocm pcs 50.00 2.09 $ 104.65
4 Flat Plate 19cm pcs 50.00 1.35 $ 67.28
5 Flat plate z8 pcs 30.00 1.94 $ 58.31
6 Oval plate 15cm pcs 20.00 2.39 $ 47.84
7 Oval plate 24cm pcs 20.00 2.99 $ 59.80
8 Oval plate 34cm pcs 20.00 2.44 $ 48.75
9 Tea cup and saucer pcs 30.00 2.14 $ 64.16
10 Espresso cup and saucer pcs 50.00 3.44 $ 171.93
11 Coffee cup and saucer pcs 30.00 3.74 $ 112.13
12 Sugar Bowl pcs 30.00 2.69 $ 80.73
13 Creamer pcs 30.00 2.69 $ 80.73
14 Bowl izcm with plate pcs 30.00 1.94 $ 58.31
15 Bowl 8cm with plate pcs 30.00 1.64 $ 49.34
16 Bowl to cm with plate pcs 30.00 1.79 $ 53.82
17 Bowl 23cm with plate pcs 30.00 2.69 $ 80.73
18 Salad Bowl 15cm pcs 30.00 2.99 $ 89.70
19 Egg plate pcs 10.00 1.35 $ 13.46
20 Tea Pot pcs 20.00 8.67 $ 173.42
21 Ice cream cup pcs 30.00 1.79 $ 53.82
22 Table knife pcs 50.00 0.75 $ 37.38
23 Dessert knife pcs 50.00 0.75 $ 37.38
24 D'oevre knife pcs 50.00 0.75 $ 37.38
25 Table fork pcs 50.00 0.75 $ 37.38
26 Dessert fork pcs 50.00 0.75 $ 37.38
27 Dessert spoon pcs 50.00 0.75 $ 37.38
28 Tea spoon pcs 50.00 0.75 $ 37.38
29 Soup spoon pcs 50.00 0.75 $ 37.38
30 Coffee spoon pcs 50.00 0.75 $ 37.38
31 Ice cream spoon pcs 30.00 0.75 $ 22.43
32 Serving spoon pcs 20.00 4.49 $ 89.70
33 Serving spoon 27 cm pcs 20.00 4.34 $ 86.71

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34 serving Tong pcs 15.00 1.50 $ 22.43

35 Spaghetti Tong pcs 10.00 1.50 $ 14.95
36 Pastry Tong pcs 15.00 1.50 $ 22.43
37 Small Ice Tong pcs 6.00 149.50 $ 897.00
38 Cheese knife pcs 2.00 2.99 $ 5.98
39 Bread knife pcs 2.00 2.99 $ 5.98
40 High Ball Glass pcs 75.00 0.75 $ 56.06
41 Beer Glass pcs 75.00 0.75 $ 56.06
42 White Wine Glass pcs 75.00 0.75 $ 56.06
43 Red Wine Glass pa 75.00 0.75 $ 56.06
44 Balloon Glass pcs 50.00 0.75 $ 37.38
45 Shot Glass pa 50.00 0.75 $ 37.38
46 Martini Glass pa 15.00 0.75 $ 11.21
47 Cocktail glass vs 15.00 0.75 $ 11.21
48 Cognac Glass pcs 15.00 0.75 $ 11.21
49 Glass pa 75.00 0.75 $ 56.06
50 Champagne Glass pcs 50.00 0.75 $ 37.38
51 Whisky Glass pcs 75.00 0.75 $ 56.06
52 Soft Drink Glass pcs 100.00 0.75 $ 74.75
53 Cheese plate 32,x-32,cm pcs 20.00 2.69 $ 53.82
54 Salt. Shaker pcs 20.00 0.30 $ 5.98
55 Pepper Shaker pcs 20.00 0.30 $ 5.98
56 Toothpick jar pcs 20.00 0.30 $ 5.98
57 Mustard pot and lid pcs 10.00 0.30 $ 2.99
58 Sauce pcs 15.00 2.69 $ 40.37
59 Bullet dish 7cm pcs 15.00 2.69 $ 40.37
60 Ashtray vs 15.00 1.20 $ 17.94
61 Napkin holder pcs 20.00 1.79 $ 35.88
62 Bread Basket pcs 20.00 2.99 $ 59.80
63 Wine Bucket pcs 3.00 2.99 $ 8.97
64 Ice Bucket pcs 3.00 1.79 $ 5.38
65 Cocktail shaker pcs 5.00 1.79 $ 8.97
66 Jigger 2/4 cl s/s pcs 5.00 1.79 $ 8.97
67 Cocktail spoon pcs 5.00 1.20 $ 5.98
68 Vacuum Jug 1.5 litre pcs 5.00 4.49 $ 22.43
69 Pepper Miller pcs 5.00 7.48 $ 37.38
70 Corkscrew pcs 10.00 1.20 $ 11.96
71 Punch Bowl 38cm pcs 4.00 17.94 $ 71.76
72 Service Trolley pcs 4.00 179.40 $ 717.60
73 foldable room service trolley pcs 2.00 127.08 $ 254.15
74 Glass rack pcs 3.00 11.96 $ 35.88
75 Rack base for plate and tray pcs 3.00 8.22 $ 24.67
76 Dirty dish collect tray pcs 2.00 43.36 $ 86.71

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77 Weighing scale pcs 1.00 14.80 $ 14.80

78 Heavy duty ladle 9cm pcs 2.00 0.75 $ 1.50
79 Heavy duty ladle 6.5cm pcs 15.00 0.75 $ 11.21
80 Stainless steel heavy duty ladle 8cm pcs 2.00 0.75 $ 1.50
81 Stainless steel heavy duty ladle locm pcs 2.00 0.75 $ 1.50
82 Stainless steel heavy duty ladle Fs 2.00 0.75 $ 1.50
12cm
83 Stainless steel heavy duty ladle pcs 2.00 0.75 $ 1.50
14cm
84 Butchers knife pcs 15.00 13.46 $ 201.83
85 Butchers knife 2ocm pcs 1.00 29.90 $ 29.90
86 Sauce boat small pcs 15.00 4.34 $ 65.03
87 Sugar box pcs 15.00 1.50 $ 22.43
88 Set Oil & Vinegar pcs 30.00 5.38 $ 161.46
89 Candle holder pcs 30.00 1.20 $ 35.88
90 Order holder pcs 30.00 1.50 $ 44.85
91 Order holder socm Fs 2.00 1.50 $ 2.99
92 Serving Tray 36x46cm pcs 10.00 4.49 $ 44.85
93 Serving Tray 4361cm pcs 10.00 6.28 $ 62.79
94 Serving Tray 37x53cm pcs 10.00 5.68 $ 56.81
95 Soup kettle pcs 2.00 59.80 $ 119.60
96 Stock Pot 16)05 satin finished pcs 2.00 11.96 $ 23.92
97 Stock Pot 24)20 satin finished pcs 2.00 12.71 $ 25.42
98 Stock Pot 28)28 satin finished pcs 2.00 13.46 $ 26.91
99 Stock Pot 36x36 satin finished pcs 3.00 14.65 $ 43.95
100 Stock Pot 32x27.5 satin finished pcs 2.00 14.20 $ 28.41
101 Stock Pot 40x32 satin finished pcs 2.00 14.95 $ 29.90
102 Stock Pot 45x45 satin finished pcs 2.00 1614.60 $ 3,229.20
103 Stock Pot 50x50 satin finished pcs 2.00 1514.50 $ 3,029.00
104 Sauce Pot 16xn satin finished pcs 2.00 11.96 $ 23.92
105 Sauce Pot 2on3 satin finished pcs 2.00 12.71 $ 25.42
106 Sauce Pot 24)05 satin finished pcs 2.00 13.46 $ 26.91
107 Sauce Pot 28)07 satin finished pcs 3.00 14.65 $ 43.95
108 Sauce Pot 32)09 satin finished pcs 2.00 14.20 $ 28.41
109 Sauce Pot 40)25 satin finished pcs 2.00 14.95 $ 29.90
110 Sauce Pot 50x30 satin finished pcs 2.00 1614.60 $ 3,229.20
111 Casserole Pot 20x9 satin finished pcs 5.00 23.92 $ 119.60
112 Casserole Pot 28)02satin finished pcs 2.00 26.16 $ 52.33
113 Casserole Pot 24)00.5 satin finished pcs 2.00 25.27 $ 50.53
114 Casserole Pot 36)07 satin finished pcs 2.00 26.91 $ 53.82
115 Casserole Pot 40xi9 satin finished pcs 2.00 28.11 $ 56.21
116 Casserole Pot 45x2.z satin finished pcs 2.00 28.70 $ 57.41
117 Casserole Pot 50o20 satin finished pcs 2.00 29.90 $ 59.80

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118 Casserole Pot 60x25 satin finished pcs 2.00 32.89 $ 65.78
119 Dome lid 28 cm satin finished pcs 5.00 1.50 $ 7.48
120 Dome lid 36 cm satin finished pcs 3.00 1.50 $ 4.49
121 Dome lid 20 cm mirror finished pcs 5.00 1.50 $ 7.48
122 Whisk 30 cm pcs 2.00 1.50 $ 2.99
123 Whisk 35cm pcs 2.00 1.50 $ 2.99
124 Whisk 40cm pcs 2.00 1.50 $ 2.99
125 Whisk 45 cm pcs 2.00 1.50 $ 2.99
126 Whisk so cm pcs 2.00 1.50 $ 2.99
127 Stainless steel whisk 45cm pcs 2.00 1.50 $ 2.99
128 Stainless steel whisk 50 cm pcs 2.00 1.50 $ 2.99
129 Stainless steel whisk 60cm pcs 2.00 1.50 $ 2.99
130 Stainless steel whisk 65cm pcs 2.00 1.50 $ 2.99
131 Stainless steel whisk 70 cm pcs 2.00 1.50 $ 2.99
132 Stainless steel whisk 95cm pcs 2.00 1.50 $ 2.99
133 Stainless steel whisk 40cm pcs 2.00 1.50 $ 2.99
134 Toaster pcs 1.00 118.11 $ 118.11
135 Chafing dish pcs 2.00 42.61 $ 85.22
136 Chafing dish roll top pcs 2.00 58.31 $ 116.61
137 Chafing dish roll top stackable pcs 2.00 74.75 $ 149.50
138 Thermo set flat plate 17cm pcs 50.00 2.24 $ 112.13
139 Thermo set flat plate 26cm pcs 50.00 2.99 $ 149.50
140 Thermo set deep plate 21cm pcs 50.00 2.69 $ 134.55
141 Corn flakes dispenser 3 piece set pcs 3.00 28.41 $ 85.22
142 Juice dispenser pcs 2.00 28.41 $ 56.81
143 Poly carbon Vase 269cm pcs 4.00 9.12 $ 36.48
144 Display unit 26)95 H5 cm pcs 3.00 5.38 $ 16.15
145 Display unit 26x35H10 cm pcs 3.00 5.98 $ 17.94
146 Display unit 26)(35 H15 cm pcs 3.00 6.28 $ 18.84
147 Poly carbon 3 stand with foot pcs 1.00 20.33 $ 20.33
148 Tea stand pcs 2.00 10.76 $ 21.53
149 Rectangular serving dish pcs 10.00 14.80 $ 148.01
150 Round serving dish pcs 10.00 11.66 $ 116.61
151 Aluminum Fry pan non -stick coated pcs 2.00 10.47 $ 20.93
26cm
152 Aluminum Fry pan non -stick coated pcs 2.00 11.21 $ 22.43
28cm
153 Aluminum Fry pan non -stick coated pcs 1.00 11.96 $ 11.96
32cm
154 Aluminum Fry pan non -stick coated pcs 1.00 12.71 $ 12.71
4ocm
155 Chinese colander 25cm pcs 1.00 2840.50 $ 2,840.50
156 Wired Skimmer 22cm pcs 2.00 0.75 $ 1.50

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157 Wired Skimmer 19cm pcs 2.00 0.75 $ 1.50

158 Wired Skimmer 14cm pcs 2.00 0.75 $ 1.50
159 Wired Skimmer 24cm pcs 2.00 0.75 $ 1.50
160 Wired Strainer in cm pcs 4.00 0.75 $ 2.99
161 Stainless steel heavy duty Perforated pcs 4.00 2.99 $ 11.96
Skimmer
162 Mono block Perforated Sauce Spoon pcs 2.00 1.50 $ 2.99
163 Mono block serving spatula no.1 pcs 2.00 1.50 $ 2.99
164 Mono block serving spatula no.2 pcs 2.00 1.50 $ 2.99
165 Perforated serving spatula no.2 pcs 2.00 1.50 $ 2.99
166 Serving fork pcs 2.00 1.50 $ 2.99
167 Spatula 35cm pcs 2.00 1.50 $ 2.99
168 Grill brush pcs 2.00 1.50 $ 2.99
169 Stainless Steel Measuring scoop pcs 2.00 1.48 $ 2.96
no.z wog
170 Stainless Steel Measuring scoop pcs 2.00 2.08 $ 4.16
no.4 5oog
171 Stainless Steel Measuring scoop pcs 2.00 4.17 $ 8.34
no.6
172 Funnel iscm pcs 3.00 1.50 $ 4.49
173 Stainless steel 4 sided box grater pcs 2.00 1.50 $ 2.99
174 Potato Peeler pcs 4.00 1.50 $ 5.98
175 Can Opener pcs 6.00 1.50 $ 8.97
176 Pizza cuter pcs 10.00 1.50 $ 14.95
177 Zuccini cute pcs 4.00 1.50 $ 5.98
178 Colour Code HD Polyethylene pcs 2.00 13.46 $ 26.91
Grooved cutting board 5
179 colour Code HD Polyethylene pcs 2.00 15.70 $ 31.40
Grooved cutting board 6
180 Stainless Steel cutting board rack pcs 1.00 25.12 $ 25.12
29x28.5x33cm
181 Rolling Pin pcs 2.00 1.50 $ 2.99
182 Creme Caramel single mold pcs 15.00 1.50 $ 22.43
183 Egg brush No.3 pcs 5.00 1.50 $ 7.48
184 Egg brush pcs 5.00 1.50 $ 7.48
185 Non stick pizza pan 3ocm pcs 10.00 1.50 $ 14.95
186 Gondol salt shaker pcs 5.00 1.50 $ 7.48
187 0.5 litre pcs 2.00 1.48 $ 2.96
188 1litre pcs 2.00 2.08 $ 4.16
189 2 litre pcs 2.00 2.53 $ 5.05
190 5 litre pcs 2.00 3750.50 $ 7,501.00
191 chefs knife 20cm pcs 1.00 17.94 $ 17.94
192 Chefsknife 3ocm pcs 1.00 28.41 $ 28.41

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193 Fillet knife pcs 1.00 28.41 $ 28.41

194 Boning knife pcs 2.00 37.38 $ 74.75
195 Sliding knife pcs 2.00 37.38 $ 74.75
196 Power fish knife pcs 1.00 7.48 $ 7.48
197 General use knife pcs 1.00 7.48 $ 7.48
198 Stainless steel meat cleaver No.2 pcs 2.00 9.10 $ 18.20
199 Scaling knife pcs 2.00 2.84 $ 5.68
200 Poultry scissors pcs 2.00 2.84 $ 5.68
201 Garment luggage trolley pcs 1.00 252.66 $ 252.66
202 Flat lid satin 40cm pcs 5.00 42.90 $ 214.50
203 Garbage container with pedal pcs 3.00 22.43 $ 67.28
204 Dust cart pcs 2.00 0.75 $ 1.50
205 Handle brush small pcs 3.00 0.75 $ 2.24
206 Linen dump with two pocket pcs 1.00 1.50 $ 1.50
207 Mobile garment rail pcs 1.00 148.01 $ 148.01
  Sub total $
149,163.82
  15% Transaction cost ( freight, transit, insurance, bank charge, etc) $
22,374.57
  Total in USD $ 171,538.40
  Exchange rate $ 55.00
  Total in ETB $ 9,434,611.78

Table 4-5 Hotel Rooms and Kitchen Items

  Supplier: DUET Trading   Currency: USD

  July, 2021
N Item description Unit Qty unit total cost
o price
Supplements for hotel rooms and kitchen      
1 Philips Hotel LED Television 32 inch 32 pcs 350 420.99 $147,347.20
HFL 2829T
2 Philips Hotel LED Television 55 inch 55 pcs 5 1621.48 $8,107.39
HFL 5oioT
3 Wall support Plasma W-065 for 55inch pcs 5 1621.48 $8,107.39
LED TV set,
4 aluminium ,inclusive safety lock and pcs 5 96.95 $484.75
mounting supplies
5 nkg Washing machine ,with timer pcs 10 4728.15 $47,281.47
DRWn-TM
6 Electric rotery dryer ,capacity 14kg DSE pcs 5 3837.62 $19,188.10
7 Iron with steam boiler DFRV-EL pcs 10 661.09 $6,610.89
8 Ironing table with aspiration DTR-CM pcs 10 661.09 $6,610.89

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9 Dryer -ironer DFINhoo/25,iron pcs 5 3303.25 $16,516.24

moomm,25omm0
1 Refirgerator for rooms 4.4 cu.ft (125 lit) pcs 200 373.75 $74,750.00
0
1 SMEC oven CX68CMS with 4ceramic pcs 2 1213.81 $2,427.61
1 hobs
1 Mini bar glass door 4olitres C400s/VT pcs 200 302.32 $60,463.78
2
Kitchen item      
1 Transport trolley CTP/R pcs 5 402.45 $2,012.27
2 Insect killer .E13°5-Mx pcs 5 318.44 $1,592.18
3 Cooling unit ASM /too in combination pcs 2 889.67 $1,779.35
with storage
4 Storage Cupboard for ASM/2co cooling pcs 2 65.55 $131.11
unit
5 Corner rack in aluminium 4levels, pcs 1 238.62 $238.62
385mm width RAA/o74-
6 RAA/i24-4N3385m m width pcs 1 313.73 $313.73
7 Linear rack in aluminium 4levels 385m pcs 1 271.90 $271.90
m,width RLA/o74-
Ground floor/Kitchen      
1 Chef table TV14-1 D A stainless steel pcs 1 559.59 $559.59
,left or right
2 orktable TL127-12oo x7ooxh83o pcs 1 343.85 $343.85
stainless steel wall shelf P123,
12oox3commwidth,staineles steel in
combination
3 all trim s A93,9oo length (also available pcs 1 19.02 $19.02
in 300 and
4 Table on cupboard TA107A/M sliding PCS 1 811.20 $811.20
doors stainless steel looox7ooxh880
5 Electric table top fryer F10TR/X PCS 1 312.00 $312.00
6 Wall cupboard PSC8o/E, stainless steel PCS 1 572.00 $572.00
7 Sorting table TS1070,stainless steel PCS 1 360.10 $360.10
8 Gas stove 4 burners and elect ric oven PCS 1 91.00 $91.00
G60/4BF EV6
9 Wall cooker hood kubo PCS 1 143.00 $143.00
1oooxnoox4i;o,stainless steel
1 TL-light 36W for hood HET36,13oomm PCS 1 61.10 $61.10
0 also in 700 or 16oomm
1 Dish washer DCi;o2-NP,stainless steel PCS 1 166.40 $166.40
1
1 Nozzle with mixing group CW8002 pcs 1 197.60 $197.60
2

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Ground Floor /Bar      

1 Table on cupboard TA187B sliding pcs 1 938.35 $938.35
doors stainless steel I.8oox700
2 Esoresso coffee machine and coffee PCS 1 910.00 $910.00
Grinder (La Pavoni
3 Warm water dispenser HVA/M,18litres pcs 1 535.46 $535.46
stainless steel
4 Work table TL127l,12oox7ooxh880 pcs 1 343.20 $343.20
stainless steel
5 Blender also in variable speed TLNB pcs 1 273.42 $273.42
6 Cooling table BMIV1;/TP, stainless steel pcs 1 13.00 $13.00
7 Chef table TV1471 DA. stainless steel PCS 1 520.00 $520.00
left or right bowl
8 Glass washer DC402-NP L pcs 1 104.00 $104.00
9 bar TAB /S2/ bottle cooler pcs 1 114.40 $114.40
-qoox;2oxhqoomm
Floor kitchen      
1 Electric table Bain marie PCS 1 184.60 $184.60
BMZR/H240Sstainless steel
2 Cupboard with sliding door TAio6/M pcs 1 698.10 $698.10
stainless steel
3 4 electric hobs on table Modular 700-2 pcs 1 1254.50 $1,254.50
7oox7oox85omm
4 Automatic pasta machine 8-1oke: PCS 1 4651.40 $4,651.40
mps10/l
5 cupboard with sliding doors stainless PCS 1 635.70 $635.70
steel
6 Utilitv wall 1000X200XJ.1oomm pcs 1 594.10 $594.10
7 Refiigerator ITh40/PM 14oolitres PCS 1 1025.70 $1,025.70
2doors stainless steel
8 Chef table TV1471 DA. stainless steel pcs 1 626.60 $626.60
left or right bowl
9 Dish washer DC502-NP,stainless steel pcs 1 1123.20 $1,123.20
1 Serving cupboard pcs 1 793.82 $793.82
0 MD/145,940x480xh1450mm
walnutmelamine
1 Wall shelf P123,1200x30ommwidth pcs 1 87.46 $87.46
1 stainless steel incombination with wall
trims Ag3and wall console M300
1 wall trims A93,300mm width pcs 1 19.02 $19.02
2 900mmlength (alsoavailable in3ooand
6oomm) stainless steel
1 Wall console M300, 300mm width pcs 1 8.57 $8.57
3 stainless steel

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1 wall shelf P124, ,2200x400mm width pcs 1 155.29 $155.29

4 stainless steel incombination with wall
trims Agand wall console M300
1 wall trims A93, .900mm width (also pcs 1 19.02 $19.02
5 available in3ooand600mm) stainless
steel
1 wall console M400, 400mm width pcs 1 17.42 $17.42
6 stainless steel
1 Wall refrigerator table TS3N/LA pcs 1 2602.38 $2,602.38
7
Floor Bar      
1 Cooling table BMIV15/TP, stainless pcs 1 1376.45 $1,376.45
steel 1500X600xh880
2 Chef table TV1471 DA, stainless steel pcs 1 559.59 $559.59
left or right bowl,1400length
3 Sorting table TS1070, stainless steel pcs 1 361.27 $361.27
4 Espresso coffee machine and coffee pcs 1 9269.00 $9,269.00
Grinder(La Pavoni
5 bar TAB /s2/ bottle cooler pcs 1 765.38 $765.38
-900X520Xh900mm
6 Glass washer DC402-NF pcs 1 1105.10 $1,105.10
435x530xh660mm stainless steel
7 Ice cube machine ICE42DISP a pcs 1 2262.64 $2,262.64
8 Container 2* 40ft       $4,500.00
  Sub total $446,319.81
  Transaction costs(freight, insurance, bank charge, etc) 15% $66,947.97
  Total $513,267.79
  Exchange rate $55.00
  Total in ETB 28,229,728.24

 Laundry Equipment’s
Table 4-6 Laundry equipment items

Supplier Excel Commerce PLCProforma No. date July, 2021 laundry equipment
pc 8334.6
1 Washer Extractor model FX 18oPrimus Belgium s 1 3 $ 8,334.63
pc 3861.5
2 Tumble Dryer model T16 Primus Belgium s 1 9 $ 3,861.59
pc 3954.2
3 DAM6 s 1 8 $ 3,954.28
4 Roller Ironer modell 25-140 Primus Belgium pc 1 4921.5 $ 4,921.54

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s 4
pc 5890.3
5 Ironing Table model NOVA primus Belgium s 1 0 $ 5,890.30
pc
6 Stainless Steel Washing Table OZTI 7758.166A525 s 1 523.25 $ 523.25
pc
7 Folding Table model 7911.16070.94 s 1 391.69 $ 391.69
pc
8 Trolley model PV40 primus Belgium s 2 723.58 $ 1,447.16
  Sub total       $ 29,324.43
  Transaction cost 15%       $ 4,398.66
  Total       $ 33,723.09

55.00
  Exchange rate      

1,854,769.88
  Total cost in ETB      

 Electrical Fixtures
Table 4-7 Electrical fixture items

electrical equipment
  Item Description Uni Qt Unit total cost
t y cost
1 Dish 110CM PC 2 14.23 $
S 28.46
2 LNB HD -ready PC 8 5.70 $
S 45.57
3 TMS 9X24/916/9x12 PC 60 10.67 $
S 640.46
4 TMS 9X16 PC 20 5.70 $
S 113.92
5 TMS 9 AMPLIFIER PC 6 4.98 $
S 29.87
6 TSS 400 SAT CONVENTER PC 10 10.67 $
S 106.74
7 RG-6 COAXIAL CABLE 305/ROLL roll 10 14.23 $

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0 1,423.24
8 CAT -6 UTP CABLE 305M/ROLL roll 10 56.96 $
0 5,695.95
9 RG-59 COAXIAL CABLE 305M/ROLL roll 50 14.23 $
711.62
1 RG-6 KOKA 6 TRIAX TWIST ON PC 20 0.01 $
0 CONNECTOR S 0 2.99
1 RF-1.5M PC 10 1.00 $
1 S 0 100.00
  Sub-Total       $
8,898.82
  Transaction cost 15%       $
1,334.82
  Total USD       $
10,233.65
  Exchange Rate       55.00
  Total ETB      
562,850.52

 Soft Furnishing Imported

Table 4-8 Soft furnishing items foreign supplier

Supplier: Mobilspazio Proforma July , 2021    

Soft Furnishing
N l tern Description Unit Qty unit cost Total Cost
o
1 Pillow pcs 1000.00 4.78 $ 4,784.00
2 Pillow Cover pcs 1000.00 1.79 $ 1,794.00
3 Duvet/Blanket pcs 500.00 55.02 $ 27,508.00
4 Bed cover pcs 500.00 31.54 $ 15,772.25
5 Bed sheet set 160*200 pcs 500.00 17.94 $ 8,970.00
  Sub-Total       $ 58,828.25
- 15% Transaction Cost       $ 8,824.24
. .
- Value in USO       $ 67,652.49
- Exchange Rate       55.00
  Total       3,720,886.81
 Soft Furnishing for Local
Table 4-9 Soft furnishing item local supplier

Supplier :MNS Manufacturing PLC

Proforma soft furnishing

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Uni
No Item Description t quantity unit cost Total Cost

1.00 Paris Towel90* lSO Pcs 250.00 351.00 87,749.03

2.00 Paris Towel70* 140 Pcs 500.00 265.20 132,599.03

3.00 Paris Towel50*90 Pcs 500.00 137.80 68,900.00

4.00 Paris Towel50*70 Pcs 500.00 137.80 68,900.00

5.00 Bath Robe Pcs 500.00 418.60 209,300.00

6.00 Carpet Pcs 300.00 215.80 64,740.98

7.00 Cushions Pcs 250.00 168.99 42,248.70

  Sub total       674,437.73
  15% VAT       101,165.66
  Total Birr       775,603.38

 Furniture
Table 4-10 Hotel Furniture items

Furniture
Royal Prestige Mattress 160*200 pcs
1.0 21.00
0 23,702.38 497,750.05
Functional base 160*200 pcs
2.0 21.00
0 12,740.00 267,540.00
Pana Head board 160cm pcs
3.0 21.00
0 3,074.50 64,564.45
Hawassa Single Seater pcs
4.0 21.00
0 11,687.01 245,427.27
Condy Sofa with arm pcs
6.0 10.00
0 10,269.99 102,699.92
Table pcs
6.0 6.00
0 6,110.01 36,660.03
  Sub total      
1,214,641.72

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  15% VAT      
182,196.26
  Total      
1,396,837.98

 Set furniture’s
Table 4-11 Set furniture items

Supplier:Ethio Dutch Furniture PLC (EDF) set furniture

No Item Description Un quantit Unit Cost total cost

it y
I One bed room Furniture's Set 5,817.5 203,612.5
35.00 0 0
2 Reception Counter Set 5,947.5 5,947.5
.00 1.00 0 0
1 Bar counter 2 meter Set 7,092.8 7,092.8
.00 1.00 0 0
4 Bar counter 1meter Set 5,939.7 5,939.7
.00 1.00 0 0
  Sub total       222,592.5
0
  VAT       33,388.8
8
  Total       255,981.3
8

 Vehicles cost
To facilitate the hotel business in full capacity and for the staff service, vehicles will be
procured at an estimated cost of Birr 22,817,700.00
Table 4-12 vehicle cost data

Supplier: TOYOTA      
Performa Ref No.: Dated: June, 2021 Currency:
USD
S/ Description Qty Unit price Total Total
N (USD) Price(USD) Price(ETB)

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1 TOYOTA HIACE (MINIBUS) 4 70,200 280,800 15444000

2 TOYOTA HI-LUX P/UP 2 70,200 140,400 7722000

DOUBLE CABIN
3 LIGHT TRUCK (40 Qty) 1 67,080 67,080 3689400

  Sub Total   488,280 26,855,400

  695,760 38,266,800
Transaction cost (15%)  
  Vehicle registration fee (2%)   1,251,120 68,811,600

Total 2,435,160 22,817,700.00

 Generators cost
Table 4-13 Generator cost

  Supplier:
  Proforma No.: Dated: July, 2021
S/N Description Numbe Unit price Total Price(USD) Total
r (USD) Price(ETB)
1 Generator 150KVA with 1 57,850.00 57,850.00  
automatic and Cummins motor
  Sub Total   57,850.00  
 
      8,678  
Transaction cost (15%)
  Total     66,528 2,993,737.50

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5 ORGANIZATIONS AND MANAGEMENT

5.1 Organizational Structure

A hotel organizational structure is a comprehensive plan by a hotel owner to define
departmental activities and responsibilities. This structure brings order to every aspect of hotel
operation from the front desk and room service to the human resources department. Hotel
organizational structures are necessary to ensure maximum profitability from each room,
restaurant and bar on a daily basis. Your hotel can run efficiently if it creates an organizational
structure that is easy to understand.
The hotel structure should accommodate the following points:

 Startup operation should follow the phase from single to complex based on market
growth.
 Organizational growth must be anticipated in the future & this should also be reflected in
the structure
 The structure must consider the company’s ability to pay for employees.
There are different types of approaches in structuring an organization.
The following are some of the commonly and widely used approaches:-
 Functional Organization
 Product or market oriented organization structure and,
 Matrix organization structure
Whatever organizational structure is chosen the essential points in structuring should consider the
organization’s strategy. To achieve the pre-determined objectives set for an organization, what is
needed for the company is a structure that enables the company to be agile and responsive to
environmental changes. Thus simple functional structure with low complexity and normalization
is necessary for the company to be successful in achieving or meeting its objectives and in solving
its problem

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Figure 6-17 Organizational structure of Hotel

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5.2 Management
The hotel will be run by a qualified person who has ample experiences in maintaining
and managing similar or internationally recognized hotels. The department managers also have
to be competent and experienced individuals in maintaining the day to day activities of the hotel.
Some of the duties and responsibilities of the hotel General Manager will be the followings.
Exercise the power of the company for the successful operation of the established
objectives.
Plans, organizes, directs, coordinates and controls over all activities of the company.
Implementation of decision of the owners, formulated strategies, policies and system and
systems and procedures and an approval ensures their implementation.
Establishes, or reviews and determines details of the organization structure, staff plan and
pay system which the hotel will be fully operated and controlled.
Subject to the approval of the owners, employees, assigns, and dismisses the officers of
the company accountable to him and define their function.
In consultation with the concerned department hires, promotes and dismisses personnel
that are accountable to the section heads as per established system and procedures.
Formulate and develop financial policies and procedures and ensures its implementations.
Ensure the establishment of effective information system that meets the information
requirements of the owners, the executive management group and the operation of the
Hotel.
Directs the preparation of long term and short term plan and programs and budgets, upon
approval, implements and submit periodic report on performances and cost to the owners.
Ensure tourists, conference client and local community are property served.
Formulates and develops policies and procedures governing procurement, income, market
research, promotion and storage of consumables.
Represent the hotel in all aspect of its operation and legal proceedings brought by or
against it, negotiate and enter in to agreements and ensure their proper implementation.
Similarly each human resource has its own duty in hotel.

5.3 Manpower Requirement

For smooth and efficient operation of the organization, it has been anticipated that each units will
have adequate number of qualified and experienced manpower. The labor component of the
International 5 star hotel Service General Manager will hire qualified and experienced in
management whose main responsibility is to coordinate the overall activity of the project.

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Table 5-14 Manpower requirement

Monthly Annual salary

No Position Number of employees
Salary expense
1 Hotel General Manager 1
17,550.00 210,600
2 Section Heads 2
14,950.00 358,800
3 Secretary 1
5,200.00 62,400
4 Accountant Clerks 1
5,850.00 70,200
5 Cashier 2
3,900.00 93,600
6 Receptionist 3
3,900.00 140,400
7 Laundry Man 1
2,600.00 31,200
8 Bar Man 2
3,250.00 78,000
9 Head Waiters 1
5,200.00 62,400
10 Waiters 4
2,600.00 124,800
11 Chief Cook 3
6,500.00 234,000
12 Cookers 4
3,250.00 156,000
13 Telephone Operator 2
1,950.00 46,800
14 Property Administrator 1
2,600.00 31,200
15 Cleaners 10
1,300.00 156,000
16 Guards 3
1,300.00 46,800
17 Drivers 2
2,600.00 62,400
1,965,600
  Totally 43 84500

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5.4 Training Requirement

Training will be given for all newly recruited staff members by professionals on customer
handling salesmanship, cleaning, communication, cooking and catering. The hotel should also
encourage and recognize the employee’s self-development effort through carrier development
scheme. Attendance of international and national level conference, sponsoring of researches and
symposiums should be made by staffs in respective of their related fields. The hotel will initiate
and participate in community development programs.

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6 Financial Study

6.1 Operating Costs Estimation

6.1.1 Manpower cost (wages and salary)
Table 6-15 Human resource and annual salary

Monthly
No Position Number of employees Annual salary expense
Salary
1 Hotel General Manager 1 17,550.00 210,600
2 Section Heads 2 14,950.00 358,800
3 Secretary 1 5,200.00 62,400
4 Accountant Clerks 1 5,850.00 70,200
5 Cashier 2 3,900.00 93,600
6 Receptionist 3 3,900.00 140,400
7 Laundry Man 1 2,600.00 31,200
3,250
8 Bar Man 2
.00 78,000
5,200
9 Head Waiters 1
.00 62,400
2,600
10 Waiters 4
.00 124,800
6,500
11 Chief Cook 3
.00 234,000
3,250
12 Cookers 4
.00 156,000
1,950
13 Telephone Operator 2
.00 46,800
2,600
14 Property Administrator 1
.00 31,200
1,300
15 Cleaners 10
.00 156,000
1,300
16 Guards 3
.00 46,800
2,600
17 Drivers 2
.00 62,400
1,965,600
  Totally 43 84500

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6.1.2 Direct and indirect costs

Table 6-16 Direct and indirect cost list

Operating Cost Schedule:

  100% 60% 65% 70% 75% 80% 85% 90% 90% 90% 90%
Description/Year   Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Direct Cost            
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Cost of Rooms
1,349,58 809,752. 877,231. 944,711. 1,012,19 1,079,67 1,147,14 1,214,62 1,214,62 1,214,62 1,214,62
service
7.50 50 88 25 0.63 0.00 9.38 8.75 8.75 8.75 8.75
Cost of food, ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Beverage and hot 891,840, 535,104, 579,696, 624,288, 668,880, 713,472, 758,064, 802,656, 802,656, 802,656, 802,656,
drinks Services 306.50 183.90 199.23 214.55 229.88 245.20 260.53 275.85 275.85 275.85 275.85
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Cost of
936,000. 561,600. 608,400. 655,200. 702,000. 748,800. 795,600. 842,400. 842,400. 842,400. 842,400.
Conference Halls
00 00 00 00 00 00 00 00 00 00 00
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Cost of Gym
8,212,50 4,927,50 5,338,12 5,748,75 6,159,37 6,570,00 6,980,62 7,391,25 7,391,25 7,391,25 7,391,25
service
0.00 0.00 5.00 0.00 5.00 0.00 5.00 0.00 0.00 0.00 0.00
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
cost of Laundry
33,739.6 20,243.8 21,930.8 23,617.7 25,304.7 26,991.7 28,678.7 30,365.7 30,365.7 30,365.7 30,365.7
service
9 1 0 8 7 5 3 2 2 2 2
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Salaries and
1,512,00 907,200. 982,800. 1,058,40 1,134,00 1,209,60 1,285,20 1,360,80 1,360,80 1,360,80 1,360,80
benefit
0.00 00 00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Repair & main. 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40 5,159,40
6.10 6.10 6.10 6.10 6.10 6.10 6.10 6.10 6.10 6.10 6.10
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Utility Expenses 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0
42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26
Insurance ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1 11,893,1

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31.92 31.92 31.92 31.92 31.92 31.92 31.92 31.92 31.92 31.92 31.92
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Staff Uniform 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0 45,360.0
0 0 0 0 0 0 0 0 0 0 0
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Other overhead
30,762,6 18,457,5 19,995,6 21,533,8 23,071,9 24,610,0 26,148,2 27,686,3 27,686,3 27,686,3 27,686,3
costs
05.64 63.38 93.66 23.95 54.23 84.51 14.79 45.07 45.07 45.07 45.07
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Total Direct costs 964,049, 590,190, 636,923, 683,655, 730,387, 777,120, 823,852, 870,585, 870,585, 870,585, 870,585,
679.60 983.87 320.84 657.81 994.77 331.74 668.70 005.67 005.67 005.67 005.67
Indirect Cost            
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Fuel & lubricants 411,036. 411,036. 411,036. 411,036. 411,036. 411,036. 411,036. 411,036. 411,036. 411,036. 411,036.
15 15 15 15 15 15 15 15 15 15 15
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Marketing and
12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0 12,305,0
promotion
42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Stationery &
45,360.0 27,216.0 29,484.0 31,752.0 34,020.0 36,288.0 38,556.0 40,824.0 40,824.0 40,824.0 40,824.0
supplies
0 0 0 0 0 0 0 0 0 0 0
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Total indirect
12,761,4 12,743,2 12,745,5 12,747,8 12,750,0 12,752,3 12,754,6 12,756,9 12,756,9 12,756,9 12,756,9
Expenses
38.41 94.41 62.41 30.41 98.41 66.41 34.41 02.41 02.41 02.41 02.41

Operating cost and ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Expense before 976,811, 602,934, 649,668, 696,403, 743,138, 789,872, 836,607, 883,341, 883,341, 883,341, 883,341,
Depreciation 118.01 278.28 883.24 488.21 093.18 698.14 303.11 908.08 908.08 908.08 908.08

ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Depreciation 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191,
855.83 855.83 855.83 855.83 855.83 855.83 855.83 855.83 855.83 855.83 855.83
ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Operating Cost
1,089,00 715,126, 761,860, 808,595, 855,329, 902,064, 948,799, 995,533, 995,533, 995,533, 995,533,
After Depreciation
2,973.83 134.10 739.07 344.04 949.00 553.97 158.93 763.90 763.90 763.90 763.90
Total Operating   ETB ETB ETB ETB ETB ETB ETB ETB ETB ETB
Expense 715,126, 761,860, 808,595, 855,329, 902,064, 948,799, 995,533, 995,533, 995,533, 995,533,

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134.10 739.07 344.04 949.00 553.97 158.93 763.90 763.90 763.90 763.90

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6.1.3 Fuel and Lubricant

Table 6-17 Fuel and lubricate cost

Fuel & Lubricant

Daily Diesel/ Total Diesel Diesel Total for a
Description
Travel/Km/ KM lt/day price/lt year
LIGHT TRUCK
100*1 0.4 0.4*100 = 40 24.75
(40 Qtl) 361,350.00
Minibus 4x100=400 0.1 4x10 = 40 24.75 361,350.00
Pickup 2*100 0.1 20 24.75 361,350.00
Generator (assuming power is off for 2 hrs per day @ 5 litter & 16.5ETB/lt) 30,113.00
Sub-total 391,463.00
  19,573.15
Total with 5% oil & lubricant 411,036.15

6.2 Financial Projection

6.2.1 Bank Loan
The total investment capital of the project is to be financed from the promoter’s equity
and bank loan. Out of the total capital birr 2,378,626,384.50, the owner contributed
1,189,313,192.25 (50%), while the remaining balance of birr 1,189,313,192.25 (50%) is to be
financed by local banks. The bank loan will be repaid based on the following terms and
conditions:

 Loan amount = 1,189,313,192.25 birr

 Installment period/ term = 20 years

 Interest on loan (including service charge) = 14.5%

Table 6-18 Bank Loan Replay Schedule

Principal Interest Year ending

Year
Repayment Payment Balance
0     1,189,313,192.25
59,465,659. 172,450,412. 1,129,847,532.6
1
61 88 4
59,465,659. 163,827,892. 1,070,381,873.0
2
61 23 3
59,465,659. 155,205,371. 1,010,916,213.4
3
61 59 1
59,465,659. 146,582,850. 951,450,553.
4
61 94 80
59,465,659. 137,960,330. 891,984,894.
5
61 30 19

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59,465,659. 129,337,809. 832,519,234.

6
61 66 58
59,465,659. 120,715,289. 773,053,574.
7
61 01 96
59,465,659. 112,092,768. 713,587,915.
8
61 37 35
59,465,659. 103,470,247. 654,122,255.
9
61 73 74
59,465,659. 94,847,727. 594,656,596.
10
61 08 13
59,465,659. 86,225,206. 535,190,936.
11
61 44 51
59,465,659. 77,602,685. 475,725,276.
12
61 79 90
59,465,659. 68,980,165. 416,259,617.
13
61 15 29
59,465,659. 60,357,644. 356,793,957.
14
61 51 68
59,465,659. 51,735,123. 297,328,298.
15
61 86 06
59,465,659. 43,112,603. 237,862,638.
16
61 22 45
59,465,659. 34,490,082. 178,396,978.
17
61 58 84
59,465,659. 25,867,561. 118,931,319.
18
61 93 23
59,465,659. 17,245,041. 59,465,659.
19
61 29 61
59,465,659. 8,622,520. 0.
20
61 64 00
1,189,313,192. 1,810,729,335. (1,189,313,192.2
Total
25 20 5)

6.2.2 Total Investment Cost

Table 6-19 investment cost

Total Investment Cost

Description Amount
Land Purchase by Lease 202,500,000.00
Building and Civil Works 1,890,000,000.00
Machinery, Furniture, Equipment, Kitchen Utensils etc 51,594,061.00
Soft Furnishing 3,720,886
Spa 2,500,000.00
Vehicles 22,817,700.00

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Generator 2,993,737.50
Sub Total 2,176,126,384.50
Pre-operating Expenses
Working capital 202,500,000
Sub Total 202500000
Total Investment Cost 2,378,626,384.50

6.2.3 Depreciation
Table 6-20 Deprecation value

Depreciation
Cost Item Original Cost Rate Applied Per Year
Land lease paid 202,500,000 0%
Building and Civil Works 1,890,000,000 5% 94,500,000
Machinery, Furniture, Equipment, Kitchen
51,594,061 20% 10,318,812
Utensils etc
Soft Furnishing 3,720,886 50% 1,860,443
Spa 2,500,000 20% 500,000
Vehicles 22,817,700 20% 4,563,540
Generator 2,993,738 15% 449,061
Total Depreciation     112,191,856

6.3 Revenue Determination

The project hotel revenue will generate from many services. These incomes include:-

 Room accommodation
 Bar & Drinks
 Food & Beverages
 Cafe and Bar services to external customers.
 Rental Conference rooms
 Shops, laundry and others

6.3.1 Income from room rental

The hotel has 450 bed rooms (30-suite, 120 double bed rooms and 300 single bed rooms).
International tourist standard hotels room price varies significantly. As shown in the following
table, the average room price of 11 hotels is 6820 Birr/Night.
Considering price penetration strategy, room charges considered for the project is Birr
10,650 for single bed rooms and 12,750 for double bed room and birr 16,000 for suite room with
15% VAT.

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Table 6-21 Hotel price in Addis Ababa

No. Hotels with 5 star category Price per night(Birr)

1 Sheraton Addis 14,154
2 Radisson blue Hotel 5676
3 Golden tulip Hotel 3705
4 Intercontinental Hotel 6464
5 Capital hotel 3205
6 Hyatt Regency 14,010
7 Hilton Hotel 6426
8 Marriott exclusive Apartment 8785
9 Jupiter International Hotel 5876
10 Getfam Hotel 3014
11 Elilly international Hotel 3702
Average 6820

Table 6-22 Hotel rental service income

Income from room rental

Room type No. of Price/room/da Price Net No. Revenue Net of

rooms y of VAT of VAT
days /
year
Suite room 30 16,000.00 13,600 365 $
4,964,000.00
Double bed room 120 15,000.00 12,750 365 $
4,653,750.00
Single bed room 300 12,500.00 10,625 365 $
3,878,125.00
Total 450       $
13,495,875.00

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6.3.2 Assumptions to other costs

 Beverages and hot drinks and pastry cost: 65% of Price;
 Profit tax: 30%, VAT 15%,
 Replacement: Soft furnishings are subject for replacement every three years with 10%
increment in cost.
 Cost of room service 10% of room revenue
 Cost of GYM and laundry 10% & 15% of the respective revenue
 Stationery & Communication 3% of staff cost
 Insurance 0.8% of fixed investment
 Repair & maintenance 0.5% of fixed investment except first year
 Marketing & promotion expense 0.8% of total revenue
 Miscellaneous expense of 0.2% of all other expense
Income from foods and beverages

6.3.3 Income from Food and Beverages

Table 6-23 Income from foods and beverage

Revenue from Food, Beverage and Hot drinks service at full capacity
Price
Price/mea Net of
No. of Turnover/da Days in Revenue Net of
Service type l (with VAT
Seats y Year VAT
VAT)
in ETB
$
Food 500 1480 1258 3 365
688,755,000.00
Alcohol from bar $
850 940 799 2 365
and night club 495,779,500.00
Soft
$
Drink/water/coffe 230 40 34 3 365
8,562,900.00
e
$1,193,097,400.0
Total Food and Beverage
0
$
Hot drinks 15% of food & Beverage
178,964,610.00
$1,372,062,010.0
Total
0

6.3.4 Income from conference hall

Table 6-24 Income from conference hall

Revenue from Conference Hall at full capacity

Hall with 1500 people capacity
Number of Conferences per Month 12

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Number of Conferences per Year 144

Rental price per Conference Net of VAT 65,000
Total Annual Income from conference halls (ETB) 9,360,000

6.3.5 Income from gym Service

Table 6-25 Income from gym service

Revenue from Gym Service at full capacity

Number of users per day 50
Number of users per Year 18,250.00
Monthly fee per person less VAT 4500

Total Annual Income from Gym Service $ 82,125,000.00

6.3.6 Income from laundry service

Table 6-26 Income from laundry service

Revenue from Laundry Service at full capacity

Revenue from Room Service 13,495,875.00

Laundry service is assumed to be 2.5% of room service 337,397

6.3.7 Income from SPA service

Table 6-27 Income from SPA service

Revenue from spa Service at full capacity

Number of users per a day 50
Price per person 3000
Revenue from Spa Service $ 54,750,000.00

6.3.8 Income from Revenue from cultural and business service

Table 6-28 Income from Revenue from cultural and business service

Revenue from cultural and business Service

Area of shop in square meter 500.00

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Price per square meter per month 1,000.00

Revenue from Cultural and Business Service $ 6,000,000.00

6.4 Summary of Revenues

Table 6-29 5.4 Summary of Revenues

Summary of Revenue at full capacity

Service unit Revenue at full capacity
Room Service 13,495,875
Food, Beverage and Hot drink service 1,372,062,010
Conference Hall 9,360,000
Gym Service 82,125,000
Spa service 54,750,000
cultural and business service 6,000,000
Laundry service 337,397
Revenue Net of VAT 1,538,130,282

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6.5 Projected Profit/loss statement

Table 6-30 Project Profit/Loss Statement

Projected Income/Loss Statement

 
Description /Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
922,878,1 999,784,6 1,076,691,1 1,153,597,7 1,230,504,2 1,307,410,7 1,384,317,2 1,384,317,2 1,384,317,2 1,384,317,2
Revenue
69 83 97 11 26 40 54 54 54 54
Less: Total Cost & 715,126,1 761,860,7
808,595,344 855,329,949 902,064,554 948,799,159 995,533,764 995,533,764 995,533,764 995,533,764
expenses 34 39
207,752,0 237,923,9
Gross Profit 268,095,853 298,267,762 328,439,672 358,611,581 388,783,490 388,783,490 388,783,490 388,783,490
35 44
59,465,66 59,465,66
Less: Interest on Loan 59,465,660 59,465,660 59,465,660 59,465,660 59,465,660 59,465,660 59,465,660 59,465,660
0 0
112,191,8 112,191,8
Less: Depreciation 112,191,856 112,191,856 112,191,856 112,191,856 112,191,856 112,191,856 112,191,856 112,191,856
56 56
62,325,61 71,377,18
Profit Tax 80,428,756 89,480,329 98,531,901 107,583,474 116,635,047 116,635,047 116,635,047 116,635,047
1 3
233,983,1 243,034,6
Less: Total 252,086,271 261,137,844 270,189,417 279,240,990 288,292,562 288,292,562 288,292,562 288,292,562
26 99
-
Net Income After Tax 26,231,09 -5,110,755 16,009,582 37,129,918 58,250,255 79,370,591 100,490,927 100,490,927 100,490,927 100,490,927
1

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6.6 Projected cash flow statement

Table 6-31 Project Cash Flow Statement

Project Year
Description
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow                  
1,189,313,
Equity                    
192.25
1,189,313,
Bank loan                    
192.25
922,87 999,78 1,076,69 1,153,59 1,230,50 1,307,41 1,384,31 1,384,31 1,384,31 1,384,31
Revenue  
8,169 4,683 1,197 7,711 4,226 0,740 7,254 7,254 7,254 7,254
112,19 112,19 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191, 112,191,
Depreciation  
1,856 1,856 856 856 856 856 856 856 856 856
2,378,626,3 810,68 887,59 964,499, 1,041,40 1,118,31 1,195,21 1,272,12 1,272,12 1,272,12 1,272,12
Total Inflow
85 6,313 2,827 341 5,856 2,370 8,884 5,398 5,398 5,398 5,398
Cash Out Flow                  
2,176,126,3
Fixed Cost                    
85
Initial
715,126,13 715,12 761,86 808,595, 855,329, 902,064, 948,799, 995,533, 995,533, 995,533, 995,533,
working
4 6,134 0,739 344 949 554 159 764 764 764 764
Capital
Loan 59,465, 59,465, 59,465,6 59,465,6 59,465,6 59,465,6 59,465,6 59,465,6 59,465,6 59,465,6
 
Repayment 660 660 60 60 60 60 60 60 60 60
Total Out 2,891,252,5 774,59 821,32 868,061, 914,795, 961,530, 1,008,26 1,054,99 1,054,99 1,054,99 1,054,99
flow 19 1,794 6,399 004 609 214 4,819 9,424 9,424 9,424 9,424
36,094, 66,266, 96,438,3 126,610, 156,782, 186,954, 217,125, 217,125, 217,125, 217,125,
Net Inflow -
520 429 38 247 156 065 974 974 974 974
Cumulative 36,094, 102,36 198,799, 325,409, 482,191, 669,145, 886,271, 1,103,39 1,320,52 1,537,64
-
balance 520 0,948 286 533 689 754 729 7,703 3,677 9,652

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6.7 Net Present Value with Different Interest Rate

Table 6-32 Net Present Value with Different Interest Rate

Year 0 1 2 3 4 5 6 7 8 9 10
Gross 922,8 999, 1,076, 1,153, 1,230, 1,307, 1,384, 1,384, 1,384, 1,384,
income 78,169.13 784,683. 691,197. 597,711. 504,225. 410,739. 317,253. 317,253. 317,253. 317,253.
22 31 41 50 59 69 69 69 69
Total costs 2,378,62 602,9 649, 696, 743, 789, 836, 883, 883, 883, 883,
6,384.50 34,278.28 668,883. 403,488. 138,093. 872,698. 607,303. 341,908. 341,908. 341,908. 341,908.
24 21 18 14 11 08 08 08 08
Gross profit (2,378, 319,9 350, 380, 410, 440, 470, 500, 500, 500, 500,
626,384. 43,890.85 115,799. 287,709. 459,618. 631,527. 803,436. 975,345. 975,345. 975,345. 975,345.
50) 98 10 23 36 49 61 61 61 61
Less: Profit 95,9 105, 114, 123, 132, 141, 150, 150, 150, 150,
tax 83,167.25 034,739. 086,312. 137,885. 189,458. 241,030. 292,603. 292,603. 292,603. 292,603.
99 73 47 21 95 68 68 68 68
After tax net (2,378, 223,9 245, 266, 287, 308, 329, 350, 350, 350, 350,
benefit 626,384. 60,723.59 081,059. 201,396. 321,732. 442,069. 562,405. 682,741. 682,741. 682,741. 682,741.
50) 98 37 76 15 54 93 93 93 93
Discount
Factor at 1% 1.00 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91 0.91
rate
Present (2,378,6 221,743,2 240,251, 258,372, 276,110, 293,472, 310,462, 327,088, 323,849, 320,643, 317,468,
Value 26,384.5 90.69 994.89 452.68 537.73 045.41 693.86 124.87 628.59 196.62 511.50
0)
Net present 510,836, - - - - - - - - - -
Value 092.33
Discount
Factor at 5% 1.00 0.95 0.91 0.86 0.82 0.78 0.75 0.71 0.68 0.64 0.61
rate
Present (2,378, 213,2 222, 229, 236, 241, 245, 249, 237, 226, 215,
Value 626,384. 95,927.23 295,746. 954,774. 380,300. 672,432. 924,541. 223,677. 355,883. 053,222. 288,783.
50) 02 97 60 02 17 49 32 21 06
Net present (61, - - - - - - - - - -
Value 181,096.

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42)

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6.8 Balance sheet

Current asset
Raw cost and utilities 153,750,440
Administrative costs
Salary and wage 907,200
Repair and maintenance 5,159,406
Insurance 11,893,132
Advertising expense 12,305,042
Office supplies 27,216
Miscellaneous expense 18,457,563
Sub total 48,749,560
Fixed cost
Land Lease and development 202,500,000
Building & Constructions 1,890,000,000
Machinery and equipment 51,594,061
Procurement of Vehicles &
furniture's 32,032,324
Total fixed cost 2,176,126,385
2,378,626,384.5
Total asset 0
Liabilities
1,189,313,192.2
Bank loan 5
1,189,313,192.2
owners Capital 5
2,378,626,384.5
Total liabilities and capital 0

6.9 Internal Rate of Return and Other Parameters

6.9.1 Internal Rate of Return
The internal rate of the project is the rate of discount that radios the present value of the
investigated project to zero. In calculating the IRR, the discount rate can be adjusted until the
NPV becomes Zero or at least as to zero. Hence, the IRR of this project is calculated using excel
IRR = 4.5

6.9.2 Net Present Value

It is a method of calculating the expected net gain or loss from project by discounting rate
of all expected future cash inflow and outflows to the present point in time. The above table
shows that NPV at 1% and 5 % discount rate is 510,836,092.33 and (61,181,096.42)

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respectively, this figure is positive value or NPV>0 it is indicate that accepted the project until
below 5% of discount rate

6.9.3 Break Even Analysis

The break-even analysis establishes a relationship between operation costs and revenues.
It indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point of the project including cost of finance when it starts to operate at full capacity is estimated
by using income statement projection.
¿ Cost 1,089,002,973.83
BE= = =2
sales−variable cost 1,538,130,281.88−976,811,118.01

6.9.4 Pay Back Period

The payback period is the amount of time required for a firm to recover its initial
investment in a project, as calculate from cash inflow. The investment cost and income statement
projection are used to project the pay-back period
initial investment co st 2,378,626,384.50
PBP= =
Gross Profit−Depretiation 1,538,130,281.88−112,191,855.83
¿ 1.44 Years

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7 Sensitivity Analysis
Sensitivity analysis is variation scenario analysis in which each scenario represents a
change in only one variable, rather than a number of variables. For the proposed project, the
sensitivity of the project has been computed at 10% for sales reduction, operating cost increase
and investment cost increased accordingly. The result shows that the hotel will have loss of profit
for consecutive 3 years.

7.1 Sensitivity 1: - Sales decrease by 10%

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Project Year
Description
0 1 2 3 4 5 6 7 8 9 10
Cash Inflow                  
1,189,3
Equity 13,192.                    
25
1,189,3
Bank loan 13,192.                    
25
1,076,6 1,153,5 1,230,5 1,307,4 1,384,3 1,384,3 1,384,3 1,384,3
Original
922,878 999,784 91,197. 97,711. 04,225. 10,739. 17,253. 17,253. 17,253. 17,253.
Revenue
  ,169.13 ,683.22 31 41 50 59 69 69 69 69
Revenue
830,590 899,806 969,022 1,038,2 1,107,4 1,176,6 1,245,8 1,245,8 1,245,8 1,245,8
decreased by  
,352 ,215 ,078 37,940 53,803 69,666 85,528 85,528 85,528 85,528
10%
112,191 112,191 112,191 112,191 112,191 112,191 112,191 112,191 112,191 112,191
Depreciation  
,856 ,856 ,856 ,856 ,856 ,856 ,856 ,856 ,856 ,856
2,378,6 718,398 787,614 856,830 926,046 995,261 1,064,4 1,133,6 1,133,6 1,133,6 1,133,6
Total Inflow
26,385 ,496 ,359 ,222 ,084 ,947 77,810 93,672 93,672 93,672 93,672
Cash Out Flow                  
Fixed Cost 2,176,126,385                  
Initial
715,126 715,126 761,860 808,595 855,329 902,064 948,799 995,533 995,533 995,533 995,533
working
,134 ,134 ,739 ,344 ,949 ,554 ,159 ,764 ,764 ,764 ,764
Capital
Loan 34,055, 34,055, 34,055, 34,055, 34,055, 34,055, 34,055, 34,055, 34,055, 34,055,
 
Repayment 923 923 923 923 923 923 923 923 923 923
Total Out 2,891,2 749,182 795,916 842,651 889,385 936,120 982,855 1,029,5 1,029,5 1,029,5 1,029,5
flow 52,519 ,058 ,663 ,267 ,872 ,477 ,082 89,687 89,687 89,687 89,687
- -
14,178, 36,660, 59,141, 81,622, 104,103 104,103 104,103 104,103
Net Inflow - 30,783, 8,302,3
954 212 470 727 ,985 ,985 ,985 ,985
561 03
Cumulative - - - - 11,753, 70,894, 152,517 256,621 360,725 464,829 568,933

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30,783, 39,085, 24,906,

balance 302 771 ,499 ,484 ,469 ,454 ,439
561 865 910

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8 Risk Analysis
The major risk of this project shall be high market price fluctuation and turnover the
skilled and trained man power. These risks can be mitigated. The high staff turnover may be
lessened by creating conductive working atmosphere and providing some benefits. For this
project, 25% benefit is proposed for the permanent employees
Characteristic (Personal) Risk: As to this company, the promoter have sufficient years
of work experience in both government and private organization (leading private business by
engaging themselves), so personal risk is minimum under this context
Business Risk: The fate of the business is generally found to be dependable. The
demand- supply analysis exhibits the need of the service of the business organization. According
to the overall demand the effect of competitors in the sector would not be an immediate alarming
threat at least for the coming few years. In additional to this Long year experience of the owner
in the field will help to react against any adverse situation in the business.
However, the reaction of competitors should be attended. In additional to an advanced
promotional work and sustainable goodwill development by creating new and best quality
products with good service deliveries
Collateral Risk: Since the owners of the project are engaged on different related
business, there is no any risk related to collateral. In this regard, the proposed building and other
proposed equipment and the business as a whole are dependable securities. The experience and
skill of the owner as well as the manager and the other expertise add confidence to the lenders.
Therefore, there is no risk regarding collateral in general.
Construction Risk: Construction risk is one of the most important areas of risk that need
great consideration during project implementation. In the case of 5 star international hotel
services, the construction work of the proposed building will be made by phase with self-
response supervision. Hence, there is no as such serious risk related to construction work.
All the identified risks, which are related to the universally accepted lending policy, are
to the acceptable level that keeps the lender’s interest in safe position. Furthermore, the quality
of the assets of the company is dependable and the projected finical reports show that the
company will have a capacity to pay the principal and interest without any problem within short
period of time.

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9 Conclusion and recommendation

9.1 Conclusion
The current supply of hotels in the primary market is projected to more than double
by 2025. This is shown clearly in the projection of future market occupancies. On
the contrary, the current demand is projected to triple by 2025.
Addis Ababa is center for many international and national organizations due to those
many foreigner and local people pass through Addis Ababa. So investing in hotel is
profitable in Addis Ababa due to Addis Ababa location.
Investing in 5 star hotels in kazanches area is economically feasible. According to the
projected income statement, the envisaged project starts earning profit from the
second year of production. The income statement and other profitability indicators
show that the project is viable. The project is believed to have significant social and
economic benefits that accrue to the society beyond those financial returns to its
owner.
The furthermost notable social benefits are job creation that leads to reduction in the
level of unemployment.

9.2 Recommendation
By considering social and economic benefit of the project concerned government
office and peoples should support sunshine investment group.
Banks should support sector by facilitating loan for proposed hotel project

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10 Reference
Financial report and Audited financial statements for the biennium ended
December 31, 2005. Report of board of auditors by united nations,
united nations publications
Overton, Rodney. (2007). Feasibility Studies Made Simple. Martin Books Pty
Ltd.
Private Sector Development, (2020), http://preciseethiopia.com/, July 17,
2021
Business strategy and planning (2020), https://www.bdc.ca/en/articles-
tools/entrepreneur-toolkit/pages/default.aspx July 17, 2021

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