The document proposes establishing a 10-room lodge and restaurant in Dengego, Ethiopia. The lodge would provide accommodations for local residents and tourists visiting the region. It would be constructed using local materials like bamboo to support the local economy and environment. A financial analysis shows the project would be economically viable, with a positive net present value, 20% internal rate of return, and payback period of under 5 years. The lodge aims to boost sustainable tourism and regional development.

1. TRADITIONA
L DENGEGO
LODGE
Prepared byAwotK/tsion

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LODGE DENG
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Introduction
 The existence of lodge is important in all aspect of
development of a given countries.
 There are a few numbers of lodges throughout
Ethiopia and can rarely be found in the some regions.
 Building lodge industry is a commercial establishment
that provides lodging and other services to the local
residence and tourist

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Description of the Project
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 The project imagines that establishment of lodge
plant with 10 self contends bed rooms and
restaurant at Dengego area in Eastern Region of
Ethiopia.
 It provides sleeping accommodations, including
recreational facilities, food, drinks, and other
services. Since there is no lodge that require
services of foreign and local tourists, researchers
on historical areas.
LODGE DENG

4. My subtitle
Location of the project
The location of the proposed project is
at Dengego which is located in center
of Dire Dawa and Harar as well as
Jigjiga. Dengego’s Y-junction two-
way road to Dire-Dawa and Harar
which is important to tourist travel and
other local residence

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LODGE DENG
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Location selection criteria
 Maplandia.com in partnership with Booking.com
offers highly competitive rates for all types of
hotels in Dengego, from affordable family hotels
to the most luxurious ones.
 The reason behind to select the project site at
Dengogo considered as center for cities and as
well weather condition is better, nearest to
historical area of Harla, as compare the cities.
 Besides, it is so an important to researchers
during research conditions on historical areas like
Harar building, and lake Haramaya

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Mission Statement
» We aim to attain the highest level of client satisfaction through our Client
is King Policy
Vision Statement
» To take lodge accommodation to the extreme, through offering exclusive
service to our local, regional and international clients and to be the
ultimate experience provider to our clientele
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Mission and vision statement
» LODGE DENG

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PROJECT OBJECTIVES
»The primary objective of the proposed project,
beyond delivering market-based financial returns
from the projects, is to use sustainable tourism
development and countries image building.
» LODGE DENG

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»Dengego lodge target market strategy is based on becoming a
destination choice for families and tourists of local and
foreigners.
»The target markets that we are going to pursue are people
looking for a vacation or hiking through mountains and drop-
in customers.
»Tourists, arrival of people for different religious ceremony
like “annual celebration of kulibi Geberial.
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MARKET DEMANDANALYSIS
» LODGE DENG

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MARKET DEMANDANALYSIS
» LODGE DENG
» Besides serving tourists, the lodge and
restaurant at Dengego Mountains could be
a good recreational center for wedding and
also for occasional ceremonies like
graduation day and short conferences.

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LODGE DENG
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IMPLEMENTATION SCHEDULE
 The project implementation will take 1 year
 the lodge and restaurant will be made from traditional materials like Bamboo
tree sticks and palm tree (zembaba) Dengego have such a tree production.

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» All raw materials are available in the domestic
market. the lodge and restaurant will be made from
traditional materials like Bamboo tree sticks
Dengego have such a tree production.
» Building in Bamboo tree have a great positive
impact to the nature by giving example of time- &
cost-efficient Eco-building
» LODGE DENG
MATERIALSAND INPUTS

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» The main processes of establishing traditional lodge at Dengego include
studying the market, securing land, constructing traditional buildings,
equipping and furnishing the buildings and starting the operations of the
businesses.
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» LODGE DENG
PRODUCTION PROCESS

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» The total investment cost of the project including working capital
is estimated Birr 1 million.
» The Owner shall contribute 40% of the finance in the form of
equity while the remaining 60% is to be financed by bank loan.
» The construction of Dengego lodge requires a total of 700 m2 area
of land
» LODGE DENG
CAPITALREQUIREMENT

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» Out of which, 400 m2 is construction of 10 self contend bed rooms and
restaurant which includes 300m2 for parking of car and green areas.
» The total cost of construction is estimated to be Birr 566,000, Land lease will
be Birr 25 /m sq .
» For land preparation and park decoration require Birr 50,000.00 , the total
will be Birr 616,000.00
» LODGE DENG
Cont…

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S.NO DESCRIPTION VALUES Rs
1 FIXEDINVESTMENT COST 820,000.00
2 WORKING CAPITAL 180,000.00
TOTAL INITIAL INVESTMENT 1,000,000.00
TOTALINITIAL INVESTMENTS
» LODGE DENG

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Man power requirement
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Position No employee Monthly salary Annual salary
Manager 1 3,500 42,000
Guide man 1 2,500 30,000
Cashier 1 1,500 18,000
Recipient 1 1,200 14,400
Waiter 4 1,100 52,800
Kook 1 1,500 18,000
Assistance kook 1 1,150 13,800
Cleaners 1 700 8,400
Guard 2 1,100 26,400
Total 14 223,800
Beneficiaries (20%) 44,760
Total 268,560

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Type of service Quantity/day Capacity Annual revenue
Food 30 persons 10,950 328,500
Beverage 80 bottles 29,200 584,000
Bed 10 beds 3,300 825,000
Total 43,450 1,737,500
» Working days are assumed to be 365 day /year and 17 hours per days for food and beverage
and bed
» Annual revenue of the projection will be 1,737,500.
PLANT CAPACITY
» LODGE DENG

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production cost
Item No Items Annual cost
1 Raw materials 550,900
2 Utilities 5,548.50
3 Wages and Salaries 77,160
4 Direct labor 119,400
5 Administration cost 72,000
6 Spares and Maintenance 24120
Total operating cost 849,128.50
7 . Depreciation 87000
8 Financial costs 250,000
Total cost 1,186,128.50
» annual production cost for the first year

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» The estimated five year project profit
Projected Profit & Loss Statement
Item
No
Items Year 1 Year 2 Year 3 Year 4 Year 5
1 Gross Revenue
1,537,500 1,855,650.00 2,213,217.00 2,824,585.37 3,336,837.84
2 Less operating cost 1,186,128.50
1,480,453.35 1,583,906.69 2,037,835.85 2,580,029.29
3 Income before interest
351,371.5 375,196.65 629,310.31 786,749.52 756,808.55
4 Interest (on
loan)
90,000 90,000 90,000 90,000 90,000
Profit before tax
261,371.5 285,196.65 539,310.31 696,749.52 666,808.55
Tax 35%
188,758.61 243,862.33 233,382.99
Net income
261,371.5 285,196.65 350,551.70 452,887.19 433,425.56

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FINANCIALANLYSIS
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»Construction period 1 year
»Source of finance 40 % equity
» 60 % loan
»Bank interest 15%
»Tax holidays 2 years
»Value of land Based on lease
rate
»Discount cash flow 17%

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cash flow of the project
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Estimated five year cash flow of the project
Cash flow initial investment (1,000,000)
» Year cash inflow
1 261,371.5
2 285,196.65
3 350,551.70
4 452,887.19
5 433,425.56
» LODGE DENG

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Discounted cash flow
year Cash flow Discount
rate(17%)
Discounted cash flow
0
-1000000
1
261,371.5 0.855 223,472.6325
2
285,196.65 0.73 208,193.5545
3
350,551.7 0.624 218,744.2608
4
452,887.19 0.5336 241,660.6046
5
433,425.56 0.456 197,642.0554

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FINANCIALEVALUATION
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»Profitability
» The financial projections made reveal that the project is
economically viable and social desirable.
» According to the income statement of the plant, the
project will generate profit beginning from first year
operation. The first year profit will 261,371.5 birr and are
gradually increasing.

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Payback Period
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» The payback period, also called pay – off period is defined as the period
required recovering the original investment outlay through the
accumulated net cash flows earned by the project.
» based on the projected cash flow it is estimated that the project’s initial
investment will be fully recovered regular payback period is 3 years and 2
month in the discount payback period is 4 years and 6 months.
» LODGE DENG

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Internal Rate of Return
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»The internal rate of return (IRR) is the annualized
effective compounded return rate that can be earned on
the invested capital
»internal rate of return for an investment is the discount
rate that makes the net present value of the investment's
income stream total to zero
» LODGE DENG

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Cont…
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»A project is a good investment proposition if its IRR is
greater than the rate of return that could be earned by
alternate investments or putting the money in a bank
account.
»Accordingly, estimated cash flow of the project the IRR
of this project is computed to be 20% indicating the
variability of the project.
» LODGE DENG

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Net Present Value
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» Net present value (NPV) is defined as the total present value of a time
series of cash flows.
» NPV aggregates cash flows that occur during different periods of time
during the life of a project in to a common measuring unit i.e. present
value
» NPV is an indicator of how much value an investment or project adds to
the capital invested. In principal a project is accepted if the NPV is non-
negative.
» LODGE DENG

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Cont…
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»According to the cash flow of the project and at 17%
discount rate the NPV is found to be Birr 76,907.81
which is acceptable
» LODGE DENG

29. Thank You