PROJECT PROPOSAL:
Location:
Proposed By:
Date:
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TABLE OF CONTENTS
1. Executive Summary
2. Introduction
3. Background
o 3.1 The Industry of the Project
o 3.2 The Project Sites
o 3.3 Project Benefits/Project Justification
o 3.4 The Promoter
4. General Description of the Area
o 4.1 Location
o 4.2 Topography
o 4.3 Soil Type
o 4.4 Economic Activity
5. The Project Description
o 5.1 Object of the Project
o 5.2 Technology and Techniques to be Used
o 5.3 Service Provision Capacity and Capacity Utilization
6. Market Study and Plant Capacity
o 6.1 International and Domestic Demand for Hotel Services
7. Land Use Plan and Action Plan
o 7.1 Land Use Plan
8. Organization and Management
o 8.1 Organizational Structure
9. Financial Study
o 9.1 Project Capital and Sources of Finances
o 9.2 Initial Working Capital Estimation
o 9.3 Estimated Costs of Salary Expense
o 9.4 Revenue and Revenue Projection
o 9.5 Depreciation of Fixed Assets
o 9.6 Basic Assumptions
10. Financial Analysis
11. Brief Environmental Impact Assessment (EIA)
EXECUTIVE SUMMARY
1. Project Title: Lodge
2. Promoter:
3. Project Location:
o Oromia Regional State
o Debrezeyit Town, Bishoftu Lake
o 45 km from Addis Ababa
4. Total Proposed Land Area: 2,000 m²
5. Employment Opportunity: 10 permanent and 15 temporary workers
6. Total Capital: Br. 10,000,000
o Fixed Capital: Br. 6,500,000
o Working Capital: Br. 3,500,000
7. Source of Funds:
o Own Equity (30%): Br. 3,000,000
o Bank Loan (70%): Br. 7,000,000
8. Foreign Exchange Requirement: Br. 1,500,000
9. Net Revenue at Full Capacity: Br. 2.5 million/year
10. Tax Payment at Full Capacity: Br. 0.75 million/year
1. Introduction
The Hill Top Lodge project aims to address the growing demand for quality lodging in
Debrezeyit, a town near Bishoftu Lake, by establishing a modest, modern lodge. With Ethiopia’s
tourism sector expanding due to favorable government policies and increasing domestic and
international tourist interest, this scaled-down project leverages the region’s potential to provide
affordable, high-quality hospitality services. The reduced budget necessitates a smaller facility
with fewer rooms and simplified operations, yet it retains the vision of contributing to the local
economy and tourism sector.
2. Background
2.1 The Industry (Hotel and Tourism Sector)
Ethiopia’s tourism sector is a key focus of the government’s Growth and Transformation Plan
(GTP), driven by the country’s nine UNESCO World Heritage Sites and improving
infrastructure. The demand for quality lodging is rising, particularly in secondary towns like
Debrezeyit, where modern facilities are scarce. This project aligns with the government’s
incentives, such as duty-free imports for hotel equipment, to foster private investment in tourism.
2.2 The Project Sites
The lodge will be located in Debrezeyit, a rapidly growing town 45 km from Addis Ababa,
known for its scenic lakes and proximity to the capital. The site’s accessibility and tourist appeal
make it ideal for a small-scale lodge catering to domestic and regional visitors.
2.3 Project Benefits/Project Justification
Economic Impact: Creates jobs for 10 permanent and 15 temporary workers, boosting
local employment.
Tourism Development: Enhances Debrezeyit’s appeal as a tourist destination.
Revenue Generation: Contributes taxes and foreign exchange earnings.
Community Benefits: Provides markets for local agricultural products and services.
2.4 The Promoter
Mr. ______________, an Ethiopian residing abroad, aims to invest in his home country’s
tourism sector. His vision is to establish a sustainable lodge that supports local communities and
promotes Ethiopia as a tourist destination.
3. General Description of the Area
3.1 Location
The lodge will be situated in Debrezeyit, Oromia Regional State, near Bishoftu Lake, a popular
tourist spot 45 km from Addis Ababa.
3.2 Topography
The area features high-altitude terrain (2,200–2,400 m) with scenic views of Bishoftu Lake and
surrounding mountains, ideal for tourism.
3.3 Soil Type
The soil consists of black-vert, brownish, and red types, with red soils suitable for construction
due to their stability.
3.4 Economic Activity
The local economy is primarily agricultural, with growing investment in real estate and small
businesses, driven by proximity to Addis Ababa.
4. The Project Description
4.1 Object of the Project
The project aims to establish a modest lodge with 20 rooms, offering accommodation, dining,
and basic event services. It seeks to:
Provide affordable, quality lodging in Debrezeyit.
Support regional tourism development.
Generate profit and create jobs.
4.2 Technology and Techniques to be Used
The lodge will use standard hospitality technologies, including:
Modern kitchen and dining equipment.
Energy-efficient utilities (e.g., solar water heaters).
Basic digital booking and management systems.
4.3 Service Provision Capacity and Capacity Utilization
Table 1: Service Provision Capacity
No Main Services Unit Full Capacity Operation
1 Bedrooms Pcs 20
2 Bar (Alcoholic Beverages) Lit 500
3 Non-Alcoholic Beverages Lit 1,000
4 Hot Beverages Cups 10,000
5 Foods Dish 20,000
6 Meeting Services Occasion 6 (biannually)
Note: The project will operate at 50% capacity in Year 1, 75% in Year 2, and 100% in Year 3.
5. Market Study and Plant Capacity
5.1 International and Domestic Demand for Hotel Services
Ethiopia’s tourism sector is growing, with inbound tourist arrivals increasing from 76,844 in
1989 to 523,438 in 2011 (9.7% compound annual growth). Debrezeyit’s proximity to Addis
Ababa and its lakeside attractions draw domestic and regional tourists. The lack of modern
lodging in the area creates a market gap that this project addresses.
6. Land Use Plan and Action Plan
6.1 Land Use Plan
The project will use 2,000 m², to align with the budget.
Table 2: Land Use Plan
No Types of Land Use Proposed Land Size (m²)
1 Main Lodge Building 1000
2 Parking Area 200
3 Storage 200
4 Green Area 600
Total 1,000
7. Organization and Management
7.1 Organizational Structure
Fig 1: Organizational Structure
General Manager
│
├─ Receptionist
├─ Hotel Manager
│ ├─ Catering
│ └─ Accommodation
├─ Admin & Finance
└─ Security
Table 3: Manpower Requirements
Level of Monthly Salary Annual Salary
No Description Qualification Units
Education (Br.) (Br.)
General
1 Management BA 1 3,000 36,000
Manager
Hotel
2 Hotel Manager BA 1 2,500 30,000
Management
3 Receptionist Reception Diploma 1 1,500 18,000
Admin &
4 Accounting Diploma 1 2,000 24,000
Finance
5 Catering Staff Catering Level III 3 1,000 36,000
Level of Monthly Salary Annual Salary
No Description Qualification Units
Education (Br.) (Br.)
Security
6 Literate 8th Grade 2 800 19,200
Workers
7 Cleaners Literate 4th Grade 2 600 14,400
Total 10 177,600
8. Financial Study
8.1 Project Capital and Sources of Finances
Table 4: Total Investment Cost
No Description Cost (Br.)
1 Fixed Investment
1.1 Land, Building, and Construction 5,000,000
1.2 Machines and Equipment 1,200,000
1.3 Vehicles 250,000
1.4 Office Furniture and Equipment 50,000
Total Fixed Investment 6,500,000
2 Operating Expense
2.1 Raw Materials and Products 2,800,000
2.2 Salary Expense 177,600
2.3 Other Operating Expenses 472,400
2.4 Pre-operating Expense 50,000
Total Operating Expense 3,500,000
Total Investment Cost 10,000,000
8.2 Initial Working Capital Estimation
Table 5: Working Capital
Cost Component Coverage (Months) Amount (Br.)
Input Expenses 1 233,333
Salary and Wages 1 14,800
Property Insurance 6 50,000
Repair and Maintenance 6 100,000
Utilities 1 5,000
Miscellaneous 1 2,000
Total 405,133
8.3 Estimated Costs of Salary Expense
Total annual salary: Br. 177,600 (as per Table 3).
8.4 Revenue and Revenue Projection
Table 6: Revenue Projection
Service Quantity Revenue (Yr1/Yr2/Yr3)
No Price (Br.)
Type (Yr1/Yr2/Yr3) (Br.)
Deluxe
2,250,000/3,600,000/4,500,0
1 Rooms 5/8/10 1,500
00
(10)
Standard
1,500,000/2,400,000/3,000,0
2 Rooms 5/8/10 1,000
00
(10)
Alcoholic
3 Beverage 250/375/500 1,500 375,000/562,500/750,000
s
Non-
Alcoholic
4 500/750/1,000 50 25,000/37,500/50,000
Beverage
s
Hot
5 Beverage 5,000/7,500/10,000 20 100,000/150,000/200,000
s
10,000/15,000/20,0 1,000,000/1,500,000/2,000,0
6 Foods 100
00 00
Meeting
7 3/4/6 1,500 4,500/6,000/9,000
Services
5,254,500/8,256,000/10,509,0
Total
00
8.5 Depreciation of Fixed Assets
Table 7: Depreciation
No Description Value (Br.) Rate (%) Depreciation/Year (Br.)
1 Construction 5,000,000 5% 250,000
2 Machines & Equipment 1,200,000 15% 180,000
3 Vehicles 250,000 20% 50,000
4 Office Equipment 50,000 15% 7,500
Total 6,500,000 487,500
8.6 Basic Assumptions
300 working days/year, 24 hours/day.
Bank loan interest: 10%.
Room types: 10 Deluxe (Br. 1,500/day), 10 Standard (Br. 1,000/day).
Capacity utilization: 50% (Year 1), 75% (Year 2), 100% (Year 3).
9. Financial Analysis
Table 8: Income Statement
Item Year 1 (Br.) Year 2 (Br.) Year 3–10 (Br.)
Revenue 5,254,500 8,256,000 10,509,000
Sales Expenses (5%) 262,725 412,800 525,450
Raw Material Costs 2,800,000 2,800,000 2,800,000
Gross Profit 2,191,775 5,043,200 7,183,550
Expenses
Salary Expense 177,600 177,600 177,600
Operating Expenses 472,400 472,400 472,400
Depreciation 487,500 487,500 487,500
Interest Expense (10%) 700,000 630,000 560,000
Total Expenses 1,837,500 1,767,500 1,697,500
Profit Before Tax 354,275 3,275,700 5,486,050
Tax (30%) 106,283 982,710 1,645,815
Net Profit 247,992 2,292,990 3,840,235
Table 9: Cash Flow Statement
Particulars Year 0 (Br.) Year 1 (Br.) Year 2 (Br.) Year 3–10 (Br.)
Cash Inflow
Own Equity 3,000,000 - - -
Bank Loan 7,000,000 - - -
Depreciation - 487,500 487,500 487,500
Net Profit - 247,992 2,292,990 3,840,235
Total Inflow 10,000,000 735,492 2,780,490 4,327,735
Cash Outflow
Fixed Capital 6,500,000 - - -
Working Capital 3,500,000 - - -
Loan Repayment - 700,000 700,000 700,000
Total Outflow 10,000,000 700,000 700,000 700,000
10. Brief Environmental Impact Assessment (EIA)
The scaled-down lodge minimizes environmental impact:
Preconstruction: Limited land disturbance due to smaller 1,000 m² site.
Construction: Dust and noise control through proper scheduling and barriers.
Operation: Waste management via recycling and proper disposal systems; water
conservation through efficient fixtures.
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