Ya Project 1

PROJECT
PROPOSAL ON
BLUE NILE THREE
STAR
HOTEL
CONTENT
I. Executive Summary
Page
3
II. Back Ground Information 4
III. Market Study
IV. Technical Study
15
V. Organization and Management 24
VI. Implementation plan
25
VII. Financial Analysis
26
VIII. Economic Benefits and Environment Impact
37
Annexes
2
I. Executive Summary
Ato Kidane Tedla, owner of the envisaged project, runs Blue Nile Trading. Blue Nile Trading imports
various types of pumps, generators, safety boxes, baking machines, concrete machines and related tools
and machines. It has a lion market share in the Country.
The entrepreneur is young, energetic and farsighted. He actively participates in community

development activities. He is one of the active participants who have been designated by the Addis
Ababa City Administration in beautifying the city. He has constructed a well equipped Elementary and
Secondary School that worth Birr 3million in Tigray and handed over to the Regional Government.
Further more, he is a committee member for the Development of the Debre Damo Monastery. He has
been in business since 1975, and has adequate educational background. He speaks fluent English and
attempts to communicate in Italian and Arabic.
By observing and understanding the current business environment in Ethiopia, he has planned to exploit
the untapped hotel business in Addis Ababa. The fast growing industry and the flow of foreign direct
investment in Ethiopia have attracted him to enter to the business.
Currently, the growing tourism sector in Ethiopia attracts to invest in Hotel business. In 1987, 73,144
international tourists arrived to Ethiopia and in 2001 the figure reached to 146,600. In 2006, number of
tourists grew to 312,654. Moreover, the flow of direct foreign investment; Addis Ababa being the
gateway to many diplomats, a headquarter of African union and ECA, and a home for many other
international organizations are also additional factors to enter to the envisaged project.
The envisaged project is assumed to be in Addis Ababa, Kirkos Sub-City Kebele 02/03, which is sited
adjacent to Ibex Hotel, along the Ethio-China Friendship Road. The location is not more than two kms
radias from Bole Airport, National Palace, AU, ECA, Sheraton Hotel, and Meskel Square and, therefore,
the site is convenient to move to all directions of Addis Ababa and to the ring road.
The project requires 1000Sq.mt., of land, in which the built up area will be 700 Sq.mt. The hotel will be
G+5 a three star hotel grade. The architectural design will in combination of traditional and modern
housing design.
The main services of the envisaged project will include, but not limited to: bed rooms with satellite TV;
Restaurant and Bar; Jacuzzi and Steam bath; Beauty Salon, and Gym; Business Center/Internet/ and pool
game; Tour and Ticket office; Gift articles shop and Foreign Exchange Service.
All bedrooms, recreational facilities, restaurant, conference hall, and other customers' services will meet
the standards setup to three star hotel by the Ministry of Tourism. The
3
furniture, fittings, equipment and internal decorations will be high quality, comfort, convenient, and
color matching decor. All safety will be done to keep the security of the visitors and guests. The rooms
will have proper ventilation system to fit the environment. Other facilities such as adequate conference
hall, parking area, entertainment and recreation facilities will be in place.
The staffs will be well trained in hotel management having courtesy to guests and visitors. At full
capacity operation number of staffs will reach 75 and the key personnel will be bilingual managers.
The Initial Investment is estimated to be Birr 25,050,825 composed of Birr 23,074,575 fixed Investment,
Birr 53,500 pre-operation expenses, and Birr 980,370working capital. The source of finance will be 40%
(10,020,330) from own equity, and Birr 15,030,405 (60%) from Bank loan. The bank loan is expected to
be paid with in 10 years period of time at 10% interest rate and two years grace period.
1000Sq.mt. of land will be secured on lease base through negotiation at Birr 1,460 per Sq.mt. with 20%
advance payment and 8% interest rate, payable with in twenty years.
The envisaged project is expected to be profitable through out the project years. The Net Present Value
is Birr 7.23 million and IRR is 14.7 %, indicating the viability of the project. Moreover, the project will
open employment opportunity for 75 permanent and 150 temporary employees. It will have forward
and backward linkages to the economy too. Generally, the project will have multiple effects to the
economy in the form of employment, tax, foreign currency earning and mitigating the critical shortage
of hotel supply in Addis Ababa. The building also contributes to the beauty of the city of Addis Ababa.
II. BACK GROUND INFORMATION
2.1. Project Idea Scope and Promoters Profile
Blue Nile Trading is a company registered in Addis Ababa region, Arada Sub-City, Wereda 2 Kebele 01/02
House No. 560. The company engages in import and export business. At present it imports pumps,
generators, hose, safety box, baking machines, Concrete Mixers, various industrial tools, etc.
The company is licensed by the Ministry of Industry and Trade to run different kind of business.
Currently, the company has planned to participate in hotel business in kirkos sub-region, kebele 02/03
Administration Office.
The project idea is a three star hotel. Scope and objectives of the project are presented below.

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PROJECT

BLUE NILE THREE

II. Back Ground Information 4

III. Market Study

IV. Technical Study

V. Organization and Management 24

VI. Implementation plan

VII. Financial Analysis

VIII. Economic Benefits and Environment Impact

The entrepreneur is young, energetic and farsighted. He actively participates in community

II. BACK GROUND INFORMATION

2.1. Project Idea Scope and Promoters Profile

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