JIMMA UNIVERSITY
COLLEGE OF AGRICULTURE AND VETERNARY MEDICINE
DEPARTMENT OF AGRICULTURAL ECONOMICS
COURSE: ENTREPRENEURSHIP
TITTLE: BUSINESS PLAN
ASSIGNMENT FORM: GROUP ASSIGNMENT
BY GROUP ONE
S/N MEMBERS NAME ID NO
1 JOHN ASHENAFI RU 0738/14
2 MILKI ASSEFA RU 0680/14
3 MEBRAT MOKENNEN RU 0166/14
4 SHALOM ZAKERIYAS RU 1735/14
5 GEMECHU EJETA RU 1515/14
6 DAWIT WODAJO RU 2171/14
7 ADANE GALGALO RU 1830/14
8 TSION ABRAHAM RU 1592/14
9 LIDIA MADE RU 1703/14
10 MARKOS BANATA RU 2162/12
11 ATNAFU BORU RU 1856/14
SUBMITTED TO: ZANABA ADAMU (MSc)
SUBMISSION DATE: DECEMBER, 2024
JIMMA, ETHIOPIA
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Hotel Business Plan
Name of Company: Grand Royal Hotel
Address of Company: Adama City, Oromia Region
Telephone Number: +251912259268/0929617025
Presented to: Zanaba Adamu (MSc)
Name of Owners: Agro Economics students
City: Adama City, Oromia Region
Phone No: +251912259268
E-Mail: jashe7070@gmail.com
Adama, Ethiopia
December, 2024
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TABLE OF CONTENTS
TABLE OF CONTENTS........................................................................................................ iii
LIST OF TABLES.................................................................................................................. iii
1. EXECUTIVE SUMMARY..................................................................................................1
2. MARKET DESCRIPTION..................................................................................................1
3. OUR PRODUCTS AND SERVICES..................................................................................2
4. OBJECTIVES OF OUR HOTEL.........................................................................................2
5. OUR MISSION AND VISION STATEMENT....................................................................3
6. MARKET RESEARCH AND ANALYSIS.........................................................................3
6.1. Competitor Assessment................................................................................................. 3
7. OPERATION PLAN............................................................................................................4
7.1. Ownership and management..........................................................................................4
7.2. Legal issues................................................................................................................... 4
7.3. Market Segmentation.....................................................................................................4
8. FINANCIAL PLAN.............................................................................................................5
8.1. Total initial investment cost...........................................................................................5
8.2. Forecasted income statement.........................................................................................6
8.3. Forecasted balance sheet................................................................................................7
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LISTS OF TABLE
Table 1: Weaknesses and opportunities of the competitors.......................................................4
Table 2: Hotel business based data............................................................................................5
Table 3: Initial investment cost..................................................................................................5
Table 4: Forecasted income statement.......................................................................................6
Table 5: Forecasted balance sheet..............................................................................................7
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HOTEL BUSINESS PLAN
1. EXECUTIVE SUMMARY
GRAND ROYAL is a new Adama Hotel on the Adama to Finifine road. GRAND ROYAL
will target both fun-seeking as well as sophisticated diners looking for good food in a
fascinating atmosphere. We are at the final stages of leasing a facility along a major road that
is big enough to fit into the design of the kind of standard. We have delivery service options
for our customers, and our outlet is well secured with the various payment options. We know
that our customers are the reason why we are in business which is why we will go the extra
mile to get them satisfied when they visit our restaurant. GRAND ROYAL creates and serves
a wild atmosphere for dining and eloquent Adama feasts for people who love the hotel and
bar scene, as well as a good time spent out on the town. Its customers are creative, fun-
seeking, and sophisticated diners who wish to be best served by the hotel they choose. We
will ensure that we get our customers involved when making some business decisions that
directly affect them. we are not only going to operate a system where our customers would
have to come to our hotel to make purchase or whatever they want, but we will also operate
an online hotel and our customers can place orders for our meals online and they will get it
delivered to their houses or any location they want. GRAND ROYAL will seek to earn 85%
gross margins through an innovative setting, a wonderful menu, and an experienced hotel.
2. MARKET DESCRIPTION
GRAND ROYAL will be targeting locals and tourists who are active hotel seekers. There
will be a special focus on young adults with 6000 -8000ETB of income looking for good food
and a great time. In addition to the young adults with money to spend, GRAND ROYAL will
also be targeting adults and tourists known to frequent Adama city. Historically, if there is a
dip in the general economy, the Hotel industry is usually affected far less that the overall
economy. To some degree this is because of people’s perception that food, regardless
whether it is from the grocery or a hotel is a fundamental necessity of life and spends
accordingly. GRAND ROYAL focuses on local and tourist active hotel seekers, with special
focus on young adults with a 20-30,000/year income and a desire for good food and a
fascinating atmosphere as our target market.
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3. OUR PRODUCTS AND SERVICES
One thing that is always consistent with GRAND ROYAL is their impeccable service. All
server staff hired has extensive experience and all go through three weeks of training,
ensuring benchmarked customer service. GRAND ROYAL provides delicious Adama
cuisine, with friendly, efficient service and atmosphere. We are especially focused on
providing a unique environment for people to dine and meet. We have a full Arsi Honey bar
for young adults and adults to enjoy drinks and music. We also provide the value of flawless
and creative staff at a “hip” location located on Sunset Strip with valet included. We want to
be known as the GRAND ROYAL hotel that truly cares for its customers. Our intention of
starting our GRAND ROYAL hotel is to favorably compete in the industry and of course to
make profits, and we will do all that is permitted by the law in the Ethiopia to achieve our
aim and business goal. Our product and service offerings are listed below;
• Operating quick-service restaurants
• Operating fast food services
• Operating drive-thru and take-out facilities
• Sale of Arsi cultural food like; cacabsa, micirra,and merqa.
• Sale of Sandwiches
• Sale of beverages such as juice and coffee.
4. OBJECTIVES OF OUR HOTEL
▪ Increasing sales more than 345,000 ETB by the third year
▪ keeping gross margin at approximately 80%
▪ Improve inventory turnover to two-hundred turns next year in year two, and to 240 in year
three
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5. OUR MISSION AND VISION STATEMENT
Our mission is to establish chains of GRAND ROYAL hotel that will make available a wide
variety of Arsi inspired delicacies and soft drinks at affordable prices. GRAND ROYAL is a
business that envelopes fine dining of unique Arsi taste and an excellent bar and grill
atmosphere. The mission is not only to have great tasting food, but to have efficient and
friendly service. We will not judge a customer on class or dress. We want the GAND
ROYAL grill to be place people can enjoy a good meal and meet new friends at our tropical
Arsi Honey bar located inside the hotel.
6. MARKET RESEARCH AND ANALYSIS
We are aware that there are several hotel and other standard hotels that serve Arsi delicacies
scattered all around Adama city, which is why we spent time and resources to conduct our
feasibility studies and market survey so as to offer much more than our competitors will be
offering. We have delivery service options for our customers, and our outlet is well secured
with the various payment options. Know that our customers are the reason why we are in
business which is why we will go the extra mile to get them satisfied when they visit our
hotel. We will ensure that we have wide varieties of Indian inspired delicacies in our
restaurant at all times. It will be difficult for customers to visit our hotel and not make a
purchase. One of our business goals is to make our hotel competent. Our excellent customer
service culture, online options, various payment options and highly secured facility will serve
as a competitive advantage for us. Lastly, our employees will be well taken care of, and their
welfare package will be among the best within our category in the hotel industry, meaning
that they will be more than willing to build the business with us and help deliver our set goals
and achieve all our aims and objectives.
6.1. Competitor Assessment
Locally and nationally the operation’s competitors are those who produce commodities. Our
ability to compete with them will depend on our capability to produce at lower costs and also
our ability to operate larger scale production enterprises in comparison to the norm.
Economies of scale play a huge role in the success of agricultural enterprises.
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Table 1: Weaknesses and opportunities of the competitors
Strengths Weaknesses
Marketing experience Inefficient (time consuming)
Huge land Weak in financial asset
Family labor (less cost) Un improved management
Modernized system Weak management of price
7. OPERATION PLAN
7.1. Ownership and management
Legal form of the business is partnership. The partners are one fourth of agricultural
economics students. To make any decision the manager should discuss with all partners.
Depend on the discussion, the manager can determine when, how, how many to produce and
sell. Any dispute will be resolved without the involvement of mediator as much as possible
but if it’s beyond the partners capacity it will be resolved legally depend on initial agreement
that will be made.
7.2. Legal issues
Our product is not our innovative product so it’s difficult to protect from imitators. Any
interested person can continue to produce the same product. Any activity of people in the
country should be in line with rule and regulation of the government of the country. So our
product should not cause negative externality on people around the business. And we will pay
a tax for the government based on Ethiopian taxation system.
7.3. Market Segmentation
Our target market segmentation is divided between young restaurant seekers with money to
spend, as well as other adults and tourists who are known to frequent Sunset For recreational
enjoyment. Defining the high-end crowd is difficult because most of Sunset Strip goers are
such. We will concentrate on the high-end spenders who enjoy new restaurants, eating out, a
fun atmosphere, and high-end food and service.
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8. FINANCIAL PLAN
Pricing is one of the key factors that gives leverage to hotel, it is normal for consumers to go
to places where they can purchase food at cheaper prices which is why big players in the
hotel industry will continue to attract loads of consumers. We know we don’t have the
capacity to compete with bigger and well – established Adama hotel, but we will ensure that
the prices of all the delicacies that are available in our hotel are competitive with what is
obtainable amongst Adama hotel within our level.
The financial analysis of the Grand Royal Hotel business is based on the following presented
data.
Table 2: Hotel business based data
Construction period 3 months
Source of finance 60% owners’ equity
Tax holidays 1 year
Bank interest 8%
Discounted cash flow 8%
Land value Based on estimated lease rate of oromia region
Accounts receivable 10 days
8.1. Total initial investment cost
The total initial investment cost of the project including working capital is estimated at about
Birr 600,000. From the total cost 360,000(60%) will be covered by the partners, and the left
part of the cost will be obtained from money lending institution (bank).
Table 3: Initial investment cost
Items Total Cost
Land 100,000
Building and Civil work 120,000
Plant equipment 50,000
Office furniture and equipment 20,000
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8.2. Forecasted income statement
One thing is certain when it comes to hotel business, if your hotel is centrally positioned, you
will always attract customers and that will sure translate to increase in revenue generation for
the business. We are well positioned to take on the available market in Adama and we are
quite optimistic that we will meet our set target of generating enough profits from our first six
months of operation and grow the business and our clientele base. Below is the sales
projection for GRAND ROYAL hotel, it is based on the location of our business and other
factors as it relates to Grand royal hotel start – ups in Adama city.
Table 4: Forecasted income statement
Variables Dec 31, 2025 Dec 31, 2026 Dec 31, 2027
Sales 1,200,000 1,000,000 1,300,000
Less Cost of Goods Sold 900000 800,000 850,000
Gross Profit 300,000 200,000 450,000
Less operating expense
Selling Expenses 15,000 12000 14,000
General and Adm. 20,000 18,000 22,000
Expenses
Total Operating Expenses 35,000 30,000 36,000
Operating Profit 265000 170,000 414000
Less Interest Expenses 21,200 13600 23,000
Net Profit Before Tax 243800 156,400 391000
Less Profit Tax (at 15%) 36570 23460 58650
Net Income After Tax 207230 132940 332350
Less Preferred Stock 20,000 20,000 20,000
Dividends
Earnings Available to 187230 112940 312350
Common Shareholders
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8.3. Forecasted balance sheet
Table 5: Forecasted balance sheet
Dec 31, 2025 Dec 31, 2026 Dec 31, 2027
Assets
Current Assets
Cash 100,000 120,000 130,000
Accounts Receivables 40,000 50,000 60,000
Marketable Securities 200,000 30,000 50,000
Inventories 300,000 290,000 310,000
Total Current Assets 640,000 490,000 550000
Gross Fixed Assets (at cost)
Land and Buildings 220,000 230,000 240,000
Machinery and Equipment 50,000 70,000 80,000
Furniture and Fixture 20,000 30,000 50,000
Vehicles 10,000 13,000 15,000
Others 30,000 40,000 60,000
Total Fixed Assets 330000 383000 445000
Depreciation 60,000 120,000 80,000
Less Acc. Net Fixed Assets 270000 263000 365,000
Total Assets 910,000 753000 915000
In setting up any business, the amount or cost will depend on the approach and scale you
want to undertake. If you intend to go big by renting a place, then you would need a good
amount of capital as you would need to ensure that your employees are well taken care of,
and that your facility is conducive enough for workers to be creative and productive.
Profitability index it is computed by dividing the PV of the cash inflows by the initial cash
outlay.
NPV
pI =
Initial investment cost
PI of the business = 209391.35/600000=34.9%
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The business will have about 35 % excess net present value or profitability index.
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