Investment in hotel business pdf

Branded supply is very low; due to this demand and supply analysis Aster Dereje hotel wants to participate and minimizes the gab of demand and supply standard hotel in Addis Ababa. Profitability: The financial analysis of the envisaged project is carried out for the following ten years.

Based on the 10 years financial projections using the income statement, cash flow statement and financial internal rate of return FIRR , the following results are obtained. Before tax financial internal rate of return is calculated to be This indicates the project is financially viable with an internal rate of return IRR of Investment in Ethiopia Ethiopia is now becoming more and more investment friendly country. The Government is creating favorable condition that would highly encourage the private Sector to be engaged in almost all areas of the economy.

The country with population of come 80 million offers significant domestic market for locally for Locally produced goods and service the country is also a member of the common Market for eastern and southern Africa Comesa offering huge benefit of Exporting commodities in preferential tariff rates to a wider regional market. Privet investment should be encouraged to increase form year to year and Investment constraints have to be alleviated in order to pave development ways so That investment sector happens to be determinant about factor of economic development of the country like Ethiopia.

There are Investments that could not be undertaken by privet sector due to its difficult nature I. However, the passed command economy system and the lack of experience Between both sides have made it so hard for a private sector to flourish. Hotel and Tourism sector in Ethiopia Ethiopia has vast potential for development of various economic sectors. Although Ethiopia is endowed with many natural and manmade tourist attractions, these resources have not been sufficiently exploited.

Despite considerable demand, tourism sector remains at relatively low stage of development. The Hotel and recreation service facilities in Ethiopia have been found at a lower level of development.

Only few Hotels have the capacity or quality to provide good accommodation and catering facilities to fulfill tourists need. This includes plan for expansion of tourist facilities and the necessary infrastructure. Indeed in the wider sense the country has a good potential for the development of high standard hotels, recreation and market center and there is a growing realization that this sector holds a significant development perspective, which should be fully exploited in the planned and controlled manner.

This will contribute substantially towards improving the standard of living and the quality of life of the population. The past trend shows that most of the high standard hotels and recreation centers are concentrated in the capital, Addis Ababa. The number of hotels and recreation service facilities in other regions of the country has remained insignificant to respond to the customers demand.

Only few hotels and recreation centers out of Addis Ababa have the capacity to provide accommodation for mid or high-class guests. Promoter Background The promoter, Aster Dereje has a work experience in hotel and management business activities. During this time, the promoter gained a vast knowledge and skill. With this reliable experience, Aster Dereje knows how to manage and lead any organization to profit and also know how to handle different challenges in the working environment. Moreover Aster Dereje has a very good reputation with banks and different financial organizations.

Ambition of creating the hotel project According to the preliminary market research, the demand for hotel service is very high and yet the supply is limited leaving a huge service gap to the customer.

Unfortunately there is no saturated standard hotel 5 stars in the area. The service 5 star hotels is widely accepted in Addis Ababa, Government employees, Private employees, Tourists, local customers, and to some extent even in rich house-holds.

Due to this, it has become imperative to build and maintain 5 star standard hotels service for the mankind in prevailing conditions. Purpose and Amount of Loan Purpose and amount of loan requested: The purpose of the loan is to import machineries and purchasing steel for building construction. Beside this the promoter believes that, the loan will strengthen the relationship between the investor and the bank. Furthermore, the investor gets strength to advance to various viable economy sectors in the country.

The Project 3. Project description and Justification International standard tourist hotel is high class hotel from three to five- star level where services like bedroom, catering, meeting rooms, multipurpose assembly hall, swimming pool, Spa Hot Spring , gymnasium, sauna and massage, other sports facilities like tennis or squash court, min- golf or badminton, bowling, table tennis and children playground, night club with dancing to live music or discotheque or cabaret etc. A hotel is an establishment that provides paid lodging on a short-term basis.

Facilities provided may range from a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a refrigerator and other kitchen facilities, upholstered chairs, a flat screen television and en-suite bathrooms.

Small, lower-priced hotels may offer only the most basic guest services and facilities. Larger, higher-priced hotels may provide additional guest facilities such as a swimming pool, business center with computers, printers and other office equipment , childcare, conference and event facilities, tennis or basketball courts, gymnasium, restaurants, day spa and social function services.

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. Project Objective The main objective of the project is aimed at to maximize the return on invested capital in the form of profit for the promoter. However, its implementation will benefit the employee, the consumer society and the government at different levels. In general, the project is believed to have significant social and economic benefits that accrue to the society, the region and the country beyond the financial returns to its owner.

Goal Objectives are the goals toward which activities of the business are directed and one of the most important functions the business owner must perform is setting objectives. This important aims of this sole proprietorship business among others include the following highly interrelated general goals with each other. Project location and justification 3. Location The proposed project of 5 star International hotel will planned to be located in Addis Ababa Bole sub city woreda 11 Town.

Addis Ababa is the capital and largest city of Ethiopia. It is the seat of the Ethiopian federal government. According to the population census, the city has a total population of 2,, inhabitants. The total land size the promoter requesting for the implementation of the project is estimated at square meters, which will been obtained from investment commission of Addis Ababa city administration Hence the owners select Addis Ababa for proposed project by looking every aspects of business integrity tourist area.

As a chartered city ras gez astedader , Addis Ababa has the status of both a city and a state. It also hosts the headquarters of the United Nations Economic Commission for Africa ECA and numerous other continental and international organizations. Addis Ababa is therefore often referred to as "the political capital of Africa" for its historical, diplomatic and political significance for the continent 3.

Climate: Addis Ababa has a subtropical highland climate. The high elevation moderates temperatures year-round, and the city's position near the equator means that temperatures are very constant from month to month.

Demographics: As of the latest population census conducted by the Ethiopian national statistics authorities, Addis Ababa has a total population of 2,, urban and rural inhabitants.

For the capital city , households were counted living in , housing units, which results in an average of 5. Although all Ethiopian ethnic groups are represented in Addis Ababa because it is the capital of the country, the largest groups include all nation nationality 3. Infrastructure and economic status Economy: The economic activities in Addis Ababa are diverse. According to official statistics from the federal government, some , people in the city are engaged in trade and commerce; , in manufacturing and industry; 80, Homemakers of different variety; 71, in civil administration; 50, in transport and communication; 42, in education, health and social services; 32, in hotel and catering services; and 16, in agriculture.

In addition to the residents of rural parts of Addis Ababa, the city dwellers also participate in animal husbandry and cultivation of gardens. Various luxury services have also become available and the construction of shopping malls has recently increased. According to Tia Goldenberg of IOL, area spa professionals said that some people have labeled the city, "the spa capital of Africa. In , the European Council on Tourism and Trade named Ethiopia the 1 tourist spot in the world Development: The city hosts the We Are the Future center, a child care center that provides children with a higher standard of living.

The center is managed under the direction of the mayor's office, and the international NGO Glocal Forum serves as the fundraiser and program planner and coordinator for the WAF child center in each city. Each WAF city is linked to several peer cities and public and private partners to create a unique international coalition.

Hani Masri, with the support of the World Bank, UN agencies and major companie Education: Addis Ababa University was founded in and was originally named "University College of Addis Ababa", then renamed in for the former Ethiopian emperor Haile Selassie I who had donated his Genete Leul Palace to be the university's main campus in the previous year.

The taxis are usually minibuses that can seat at most twelve people. Two people are responsible for each taxi, the driver and a weyala who collects fares and calls out the taxi's destination. The Ring Road has greatly helped to decongest and alleviate city traffic. General Overview The hotel industry consists of many different services, including accommodation, restaurants, cafes and catering. The market for the hotel industry, especially classified hotels in a developing country like Ethiopia, is closely linked to the tourism industry, because a majority of consumers for the sector services come from international tourists.

According to the United Nations Statistical Commission, Tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year and staying at least 24 hours in the country visited. The total number of international tourists arriving in Ethiopia is steadily increasing.

The highest number of tourist arrival is in i. As can be seen from Table 3. Table 4. Present supply in Addis Ababa According to Current Information Addis Ababa has a quality supply of 32 hotels and a total of keys bed rooms currently in the market, giving an average number of rooms per hotel. Branded supply is very low, with only Starwood, Rezidor, Marriott and Louvre present.

Future supply is predominantly branded Table 4. Accordingly, assuming working days, currently international standard hotels in Addis Ababa have a total of , per annum tourist night room capacity. Based on discussion with various private hotel managers and other knowledgeable persons the average stay of tourists in a hotel is assumed to be 4 days.

In order to project tourist arrival in to Ethiopia, the past trend in tourist arrival is considered. During the period , the total tourist arrival in the country has registered an 8. Accordingly, assuming that this growth rate will continue in the future and taking year figure , as a base, tourist arrival is forecasted. Moreover, in order to compute the unsatisfied demand the total annual capacity of international standard hotels in Addis Ababa, which computed to be , rooms per annum is taken as the existing capacity.

The projected tourist room requirement, which is calculated by taking the projected tourist arrival and multiplying it by the average hotel stay of tourists 4 days , the unsatisfied demand is shown in Table 4. Demand for hotel services The feasibility study conducted for this project deals with the demand and supply analysis for the hotel project to be established in the area by taking the number of international and national tourist, investors, employers and government directly related with the level of development of the economy in general and the tourism sector in particular.

It is a function of the number of both domestic and foreign tourist travelers in the area, travelers for the commercial or business purposes, travelers for conference and other assembly purposes, residents in the area in fact it depends up on the standard of the hotel and the living status of the residents etc.

Promotors with stronger balance sheets, technical support and access to foreign currency have a higher likelihood of completing their developments. The result of this is a more measured and appropriate supply pipeline of new hotels.

Demands Evaluation Mechanism The following are some of the methods which can be used to evaluate the demand of the services. By use of Customers feedback follow up form High GDP growth and increasing corporate entry is driving hotel demand in the business and conference segment. The aid and diplomatic segments continue to provide the majority of the market demand in Addis Ababa. Ethiopia has a strong domestic economy which is driving demand growth in the mid-market. Once the locally branded quality supply is included.

Investment Addis Ababa has received significant investment into the hotel sector in recent years, with a number of successful local entrepreneurs investing in hotels. This has largely shaped the type of supply in the market, with few of these investors having turned to global brands to manage their properties.

The extensive list of branded hotels that has been announced, is evidence that this trend has changed. The easier access to finance and technical service expertise associated with having a brand are driving this change. You may also see real estate business proposal templates. Size It rarely makes a difference whether a hotel has five or twenty rooms when it comes to management.

You may also see restaurant business proposals. Marketing An important part of having a good occupancy is good marketing. Good occupancy means good profits, which also means extending your marketing efforts online where it really matters. The business should have a website with content that offers detailed information for clients.

Remember that for guests and travelers, information and real time response are key to winning them over, since they would be in a hurry to book a room in advance or before their travel time. You may also see sample business proposals in a word. Put links to search engines, include advertising in the right tourist agencies and have reliable contacts with travel agents and operators. Make wise marketing decisions, because these days, companies are easily tempted in breaking the bank only to end up in multiple marketing blunders.

There are still a lot of areas that needs to be covered and analyzed which is of course integral to any basic business plan. Working with a broker or a firm can be very helpful in this process and they would also be qualified to give you insights into the industry, especially when it comes to local information.

Partnering with a local firm when you have no knowledge about the country let alone the area, would help you make the right hotel investment decision, from lodges, backpacker rooms, motels to large hotels. You may also see perfect investment proposals. The Challenge Ambitious investors who can afford overseas buying, getting into the local sector would be harder. According to experts, non-locals are the ones who are interested and are more likely to succeed in their venturing into the hospitality scene.

Not only are their general idea of what the industry demands impressive, but are also often knowledgeable with building international contacts. You may also see funding proposal templates. The hotel industry is big on labor and the need to hire a certain number of local staff or natives of the country can easily be met.

He must be specialize in planning, organizing, creative, controlling and advance in technical, human relations, conceptual, decision-making and time management skills. Training Employees Our employees will have variety of skills that they will bring to the workplace.

Some of them have a lot of experiences that our resort needed and also the employees that do not have experiences, so we will organize the on-the-job training for them. Because our resort need to provide high quality service to customers, that is why training is an important course for our workplace. Our resort has training manager who will responsible for training new employees, so we will let the new employees work 3 months for training with suitable salary as their working.

Compensation Our resort will be own by CEO and General Manager, so we do not expect any salaries except the profit that we will get from the business. If they work harder, we will include life insurance for them.

They are in the range of years old as young married or couples with or without children, old married with children under or above 18 years old; additionally their family size are normally over 4 people.

They are in the range of years old as senior or old married with or without children above 18 years old; additionally their family sizes are normally between 2- 3 people.

According to these features, they are senior who want to enjoy themselves during their retirement period and this happens very often to many elite groups who like to spend their money and time to enjoy travelling especially to luxurious places like our resort and their target place is usually the golf course. Product Features and Benefits The Paradise Island Resort will provides full ranges of services that consumers are able to experience with numerous categories.

When arrive at Bamboo Island as well as our resort, customers will experience the 5-star hotel and amazing view of the sea. Our hotel also provides large dining halls, conference rooms and hall, swimming pool, spa, gym, steam, sauna, Jacuzzi, souvenir shops, cultural theater, and sky bar.

Our zoo will be home to major local endanger species such as birds, mammals, lizards and many other types of species. We will also bring some popular species from abroad so that local people can experience it such as giraffe, ostrich, wolf, eagle, zebra, penguin, and seal as well. Also most of these species have special talents to perform numerous activities to audiences.

Our resort provides a large golf course with 18 holes, which is very convenient to customers plus it, meets the international standards as well. In addition, we also provide a small portion of the whole golf course as training course for those customers who are beginners and expect to improve their golfing skill, moreover, for those who are interested to learn how to play golf also.

Enlarge on that, membership card is also available for yearly payment customers and they would have unlimited access to our golf course as they wish, actually this would benefit for those who are golf lover.

On the other hand, for customers who are rarely access to our golf course, they can choose to pay as walk-in payments separately. Uniquely, our resort also has airport and dock parking available to customers. Therefore, customers from the city or even abroad can visit our resort more easily. For customers who stop-by at Sihanouk Ville and want to extend their trips to our resorts, they are warmly welcome by our large dock parking through rented cruiser and sailboats according to their desires and also depend on the booking time arrivals and payments.

Furthermore, we provide these cruiser and sailboats for rent to our customers to travel around the island and experience the nature especially from the middle of the sea, as well as to look at the whole view of our resort.

Additionally, there are plenty of restaurants available throughout our resort; each different category has one special restaurant of their own. Therefore, customers can experience different food specialty with respect to different environments they are in. We will provide both tangible and intangible benefits to our customers. For tangible benefits, they are able to experience the first international standards resort in Cambodia plus full ranges of services that has not been found here yet.

For intangible benefits, customers will experience a relaxation and entertainment environment at our resort after full periods of works and stress. Product Differentiations There are varieties of choices for customers to entertain themselves nowadays and most importantly resort is their priority.

There are numerous resorts available currently in Cambodia, located in different places and have their own specialty. Despite the fact, we are the first business to provide this huge resort project in which none of the business here has ever experienced before.

As mentioned, we provide full ranges of services to our customers and ensure that all of which are of best quality. Compare to other local resorts, the majority of them only provide accommodation and restaurant sectors, garden and park for hanging around while some of them also provide zoo and little entertaining instruments.

For regional competitors, our location would be an advantage. Bamboo Island surrounds by the sea, Gulf of Thailand, and totally natural that customers are demanding for. Our beach also has been rank as the best beach in the world, which is one part of the strength to our business as well. Pricing Our pricing strategy is penetration pricing in the sense that we will keep the price as low as possible but it also has to cover up the daily operation costs as well in order to generate little profits on hand.

We will not practice price skimming that the initial prices would be very high to cover new products cost in an attempt to straightly generate a profit. If it is so, the price of each and every service of our resort would be extremely high because we have invest enormous amount of capital to start-up this business. It would not be convenient and suitable for our local people compare to their incomes therefore it would not be popular among them as well and thus we have lose our customers since the first stage of our business.

Our attempt is to attract more and more customers to get to know our business first then the next step will be to generate profit by increasing the prices little by little. Place Distribution Issues Our business will provide services to customers so there will not be any distributions to retailers or wholesalers.

Moreover, we will distribute our services to customers through two main distribution channels. The first one is the Channel 1: Direct Distribution that delivers our services directly to customers without intermediaries. The second one is the Channel 4: Distribution by Agents or Brokers that depends on travel agents to help advertise and promote our resort to customers. In contrast, the location of our resort would be a great distribution issue to deal with. In fact, we will serve the best services to our customers ahead of our competitors locally and later on we will strive to compete internationally.

Advertising Our first advertising strategy is to advertise our business on billboard. Because billboard plays an important role in advertisement as the majority of people can see it, our target location for this type of advertisement will be held in Phnom Penh City. Obviously, our resort will locate at Bamboo Island, Sihanouk Ville province but the majority of people especially our target customers are in the city also our purpose is to spread the word-of- mouth among customers since we are the new business.

The second advertising strategy is on local newspapers the Cambodia Daily and Phnom Penh Post and television spot especially on most popular television network and television shows in which once again the majority of people especially our target customers can see it. Promotion Our resort will organize our own website and we will post update information and especially various types of promotion on our website so that our ideal customers can realize it.

Moreover, we will build connections with numerous travel agents in order to promote our business.