INOVATIVE AND TECHNOLOGICAL CENTER

(iTEC)

BUSINESS PLAN FOR ABEGO AFRICAN HOTEL LIMITED

P.O. BOX 79692
ARUSHA
Tel: +255-754-244794
Email: goahl@gmail.com
Website: www.genevafricahotel.co.tz

PARTICIPANTS

1) JOSEPH, BENEDICTO
2) PHILIPO, GODIANA
3) YOTHAM, ANDREA

OCTOBER, 2018

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LIST OF ACRONYMS

CPA- Certified Public Accountant

CSO- Civil Society Organizations
GoAHL- Geneva of Africa Hotel Limited
HD-High Definition
HRM- Human |Resource Manager
ICT- Information and Communication Technology
IRR- Internal Rate of Return
LAN- Local Area Network
LPO- Local Purchase Orders
NCF-Net Cash Flow
NPV-Net Present Value
PA - Per Annum
PI- profitability index
Tshs- Tanzania Shillings
TV- Television
USD- United States Dollar
BIPV-Building-integrated photovoltaic
PV - Photovoltaic

i
TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ........................................................................................ 1

1. THE COMPANY PROFILE/ COMPANY DESCRIPTION ..................................... 3
2.1 Enterprise Information .............................................................................................. 3
2.1.1 Name of Enterprise ............................................................................................ 3
2.1.2Physical Address ................................................................................................. 3
2.1.3 Contact Person ................................................................................................... 3
2.2 Ownership of the Enterprise ..................................................................................... 3
2.3 Status of Planning Instruments ................................................................................. 4
2. PRODUCT DESCRIPTION ....................................................................................... 4
3.1 Types of Products and Services ................................................................................ 4
3.2 Subsector ................................................................................................................... 5
4.1 Introduction ............................................................................................................... 5
4.2 Target Market............................................................................................................ 5
4.3 Market size and growth ............................................................................................. 5
3. MARKETING PLAN ................................................................................................. 6
5.1 Product and/services and pricing .............................................................................. 6
5.2 Promotions ................................................................................................................ 6
5.2.1 Advertisements .................................................................................................. 7
5.2.2 Distribution ........................................................................................................ 7
5.2.3 Physical presentation ......................................................................................... 7
5.2.4 Website .............................................................................................................. 7
5.2.5 Listing ................................................................................................................ 7
5.2.6 Customer retention ............................................................................................. 7
5.2.7 Partnerships ........................................................................................................ 7
4. BUSINESS COMPETITION...................................................................................... 8
6.1CompetitorLandscape ................................................................................................ 8
6.1.1 Direct Competitors ............................................................................................. 8
6.1.2 Indirect Competitors .......................................................................................... 8
5. MANAGEMENT AND ORGANISATION ............................................................. 10
7.1 Management ............................................................................................................ 10
7.2 Employees ............................................................................................................... 10
7.3 ABEGOHoL hotel organization structure .......................................................... 11
6. OPERATIONS AND RESOURCES ........................................................................ 12
6.1 Site and Building ................................................................................................ 12
8.2 Requirements for Completion ofGoAHL ............................................................... 12
8.3 Operations plan ....................................................................................................... 13
8.4 Key Challenges ....................................................................................................... 13
8.5 Business Milestones ................................................................................................ 13
8.6 Operating Policies ................................................................................................... 14
8.7 Details of capital requirements ............................................................................... 14
8.7.1 Completion of Civil Infrastructure/Equipment ................................................ 14
8.7.2 Room Furnishing ............................................................................................. 14

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 8.7.3 Seminar Facility ............................................................................................... 15
8.7.4 Reception Area/ Managers Offices .................................................................. 15
8.7.5 Restaurant/Kitchen ........................................................................................... 16
8.7.6 Bar .................................................................................................................... 16
8.7.7 Working Capital ............................................................................................... 17
7. FINANCIAL PLAN.................................................................................................. 17
7.1 Sources and uses of Funds ................................................................................. 17
9.1.1 Source of funds ................................................................................................ 17
9.1.1 Source of funds ................................................................................................ 17
9.1.2 Uses of Funds ................................................................................................... 17
9.2 Loan Terms and Repayment Schedule ................................................................... 18
9.2.1 Assumptions..................................................................................................... 18
9.2.2 Loan Repayment Schedule (‘000 Tshs) ........................................................... 18
7.2 Projected Sales Per Annum (60% Occupancy) .................................................. 18
7.3 Projected Sales (100% Occupancy) ................................................................... 19
7.4 Projected Costs (60% Occupancy) ..................................................................... 19
7.5 Projected Income Statement (Tshs).................................................................... 20
7.6 Projected Cash flow Statement (Tshs) ............................................................... 21
7.7 Net present value and IRR ................................................................................. 21
8. CONCLUSION ......................................................................................................... 22

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LIST OF TABLES
Table 1: Financing .............................................................................................................. 1
Table 2: Ownership of the enterprise .................................................................................. 3
Table 3: Status of planning instruments.............................................................................. 4
Table 4: subsector ............................................................................................................... 5
Table 5: Product and /services and pricing ......................................................................... 6
Table 6: Competitor hotels and pricing .............................................................................. 8
Table 7: Board of directors ............................................................................................... 10
Table 8: Human Resource ................................................................................................. 11
Table 9: Requirements for completion of GOAHL .......................................................... 13
Table 10: Business Milestones.......................................................................................... 13
Table 11: Civil Infrastructure/ Equipment ........................................................................ 14
Table 12: Room Furnishing .............................................................................................. 14
Table 13: Seminar Facility ................................................................................................ 15
Table 14: Reception Area/ Managers office ..................................................................... 15
Table 15: Restaurant/ Kitchen .......................................................................................... 16
Table 16: Bar Requirements ............................................................................................. 16
Table 17: Working capital ................................................................................................ 17
Table 18: Shows the source and uses of funds for the project. ......................................... 17
Table 19: Loan repayment schedule ................................................................................. 18
Table 20: Projected sales per annum (60% occupancy) ................................................... 18
Table 21: Projected sales per annum (100% occupancy) ................................................. 19
Table 22: Projected costs (60% occupancy) ..................................................................... 19
Table 23: Projected Income statement .............................................................................. 20
Table 24: Shows the projected cash flow statement ......................................................... 21
Table 25: shows the calculation of the net present value (NPV) and internal rate of return
(IRR) ................................................................................................................................. 21
Table 26: Net present value and IRR ................................................................................ 22

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 LIST OF FIGURES
Figure 1: Architectural impression of ABEGOHoL ........................................................... 3
Figure 2: Organisation structure of ABEGOHoL ............................................................. 12

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 1. EXECUTIVE SUMMARY

AGEBO African Hotel Limited (ABEGOHoL) will be the highly classified five-star hotel
intended for international and local tourist visiting Arusha national parks. This business
plan will explain in detail about the establishment and operation of ABEGOHoL project
planned to be constructed at Karatu in the Ngorongoro national park. The hotel will be
designed for provision of cutting-edge services that will market it as the ultimate transit
point for both tourists visiting the numerous attractions along Arusha and Kilimanjaro
with high quality of room which are very much comfort. Due to the uniqueness of the
hotel in constructions, it will be the best hotel over all hotels in Arusha and Kilimanjaro
to enjoy with full of natural ventilation, natural daylight and architectural attraction due
to the use of building integrated semi-transparent photovoltaic as well as use of the
thermal mass walls to replace the convectional equipment
Also, the service provided will have the capacity to influence standards for the
hotel/tourism industry in Arusha city as a whole. The market potential is enormous and
in exhaustible in the probable future. The eight-storey civil infrastructure will be
constructed with the following specifications:
 Twenty-five (25) self-contained guest rooms with natural ventilations
 Spacious seminar hall
 Two (2) shop facilities for rent
 Bar and restaurant
 In-house internet café with 4G connectivity facilities in guest rooms
 Telephone interconnection
 Five (5) HD channel satellite TV in each guest room
 Laundry facilities
 Room services
 Secure parking

The company needs about Shs 506,815,000/= from initial construction to furnishing so as
to be able to launch operations. Of that, the promoters will contribute Shs 306,815
million and the remaining Shs 200 million will be secured from a bank loan. The loan
will attract an interest of 18% p.a. and be payable over six (6) years with one year of
grace on principal payments. The financing required is broken down as shown in Table 1.

Table 1: Financing
ITEM COST(Tshs)
Purchasing Land and erecting the story building 200,000,000
Civil Infrastructure Completion 167,977,000

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 Seminar Facility 12,760,000
Reception Area/ Managers offices 39,000,000
Furnishing 57,568,000
Restaurant/Kitchen 12,680,000
Working Capital 34,830,000
TOTAL 524,815,000

Financial Performance

In utilizing the financing facility, working towards achieving a positive cash flow
position will require the following:

 Enhancing sales revenue through aggressive marketing and continuous improvement

of the quality of service.
 Minimizing and control of operation costs by developing value for money tools.
 Strict budget control for general and administrative expenses to prevent overruns.
The budgetary measures will be flexible to respond to demand and inflationary
pressures.
 Accounting measures would be undertaken.

The above four factors combined will ensure profitability for the company and easy
payback of the facility.

Financial Projections
a) Projected Revenue at 60% occupancy = Shs1,671,120,000p.a.
b) Project Revenue at 100% occupancy = Shs2,764,800,000p.a.
c) Profitability: Year 1: (50% occupancy) = Shs 328,533,333
: Year 6: (70% occupancy) = Shs 783,251,605
d) Payback Period: 1.82 years
e) NPV = Shs1,204,386,628.95/=
f) IRR = 27.27% (greater than the borrowing rate of 18% p.a.)

Economic Benefits

 Will contribute to tourism and economic development

 Create jobs
 The market for local produce
 Contribute to poverty alleviation.

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1. THE COMPANY PROFILE/ COMPANY DESCRIPTION

2.1 Enterprise Information

2.1.1 Name of Enterprise 2.1.3 Contact Person

ABEGO AFRICAN HOTEL LIMITED Benedicto Joseph
Mobile Phone
2.1.2 Physical Address +255-754244794
MAMIRE, N.P. E-mail benjos98@yahoo.com
Address:
P.O. Box 69792,
Arusha, Tanzania

Figure 1: Architectural impression of ABEGOHoL

2.2 Ownership of the Enterprise

Table 2: Ownership of the enterprise
Names of Shareholders Shares % Private
1. Mr. B.M Joseph 40 √
2. Mr. A. Yotham 30 √
3. Ms.G. Philipo 30 √

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2.3 Status of Planning Instruments

Table 3: Status of planning instruments

Particular Business Budget Bank Account Quality Policy & Procedure
Plan System Manual
Instruments √ √ √ √ √

2. PRODUCT DESCRIPTION
ABEGOHoL will be the perfect home away from home, providing
lodging/accommodation year-round for practically every occasion, including vacations,
weekends, trips, touristic activities, or simply rest and relaxation due to uniqueness of its
structure and facilities available. We will boast well-furnished luxury rooms with natural
ventilation and natural lights, with all essential elements that provide the comfort of a
home, including; a TV, natural air, bathroom/restroom, closets, shoe rack, table, two
sofas, refrigerator, and a bedside lamp. Families will also be catered to, with access to
family apartments, consisting of a sitting area and three rooms. The natural air instead of
air-conditioner sitting area provided with; TV, 4 sofas, table, and refrigerator in an
extension of the said sitting area. Each bedroom in the family apartment will be natural
air instead of air-conditioned, having; bedside lamp, table and two chairs, the master
bedroom will be provided with a sofa and TV as well as use of daylight due to high
technology used for harvesting daylight for giving more comfort to the family

Bearing in mind that not everyone can afford the luxury rooms/apartments, we will also
provide lodging with economy-class rooms, each with; table, chair and
bathroom/restroom. We will also possess a general sitting area with access to a wide TV
screen. Guests/Residents at the hotel will have access to 24/7 high-speed Wi-Fi, a
restaurant with a dining area, and a swimming pool which will use passive solar
collector with Low Temperature (> 30C) for heating water to be more comfort. There
will be also a storey on the premises offering some personal items as well as souvenirs
and small gifts. With an understanding of difficulties that can be faced with transit, we
will provide transportation to and from the major bus stations and airport in the city at
set fees.

3.1 Types of Products and Services

1. Accommodation 4. Seminar Facilities/Workshops
2. African Traditional Food and Beverages 5. Guided Tour Packages
3. Internet 6. African culture entertainments
7. Swimming pools with natural solar
heating at low temperature using solar
collector

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3.2 Subsector
Table 4: subsector
Particulars Trading Services Tourism
Accommodation  × 
African Traditional Food and Beverages   
Internet ×  
Seminar Facilities/Workshops ×  ×
Guided Tour Packages   
African culture entertainments ×  ×
Swimming pools with solar heating at low   
temperature using solar collector

4. MARKET ANALYSIS

4.1 Introduction

Tanzania is one of the unique destinations on the African continent that has yet to be
discovered by many. It is a land of many wonders harboring an unparalleled diversity of
fauna and flora. Kilimanjaro, the highest permanently snow-capped free-standing
mountain in Africa, the exotic Islands of Zanzibar, the finest game sanctuaries of
Serengeti, Tarangire, Lake Manyara, Ngorongoro Crater, Ruaha, Selous and the Marine
Park of Mafia Island are only but a few of the living examples.

The landscape, topography and very friendly people make Tanzania one of the best
places to visit and promise the best wildlife photographic safaris on the continent.
Tanzania indeed has it all. Tanzania has 16 National Parks, 1 conservation area, 17 game
reserves, and several marine parks, a breath-taking coast and Lake Zone and gently
undulating highlands that are a hiker’s paradise.

4.2 Target Market

The markets targeted are all local and international tourists who need to enjoy the vast
nature and great gifts of recreation sites present in Tanzania.

4.3 Market size and growth

The World Tourism Organization (WTO) forecasts that international tourism will
continue growing at the average annual rate of 4%. With the advent of e-commerce,
tourism products have become one of the most traded items on the internet. Tourism
products and services have been made available through intermediaries, although tourism

5
providers (hotels, airlines, etc.), including small-scale operators, can sell their services
directly. This has put pressure on intermediaries from both online and traditional shops.

The tourism sector is Tanzania’s number one foreign currency earner. Visitor exports
generated USD 2 billion in 2014 (i.e. 21% of total exports). The total contribution of
tourism to Tanzania’s GDP in 2014 equaled 9.3% with USD 4.5billion. The 2015
Economic Impact Report for Tanzania of the World Travel and Tourism Council
(WTTC) indicates that international tourist arrivals increased by 90%, from 622,000 to
1.1m during the period 2006–2014, making Tanzania the 7th destination in the Sub-
Saharan region after South Africa, Zimbabwe, Mozambique, Uganda, Kenya, and
Namibia. The WTTC projects that the Tanzanian tourism sector will rise by 4.9% (to
7.7% of GDP) in 2015–2025.

3. MARKETING PLAN
The following objectives will guarantee the success of our hotel over other available
hotels in Tanzania.

5.1 Product and/services and pricing

Table 5: Product and /services and pricing

Items Attributes Price of the product (Tshs)
24-hour Room Service Convenience 200,000/=
Local and International foods Choice variety 20,000/=
Dinner with Traditional Dancers Show Choice variety 20,000/=
Service
Internet – Hot Spot (Wi-Fi) New service 4,000/=
Guided Tours packages New service 20,000/=
Conference/Workshop Facility Convenience 50,000 – 150,000/=
Laundry Services Convenience 5,000 – 10,000/=
Shopping Facility Convenience 15,000
Bar Easy access 10,000 – 15,000/=
Parking Security Free
24-hour Doctor On Standby Convenience Varies
Airport Pick-up/Transfer Service Varies
Natural hot water Swimming Pool Tsh. 10,000
24-hour Business Centre Convenience Varies

5.2 Promotions
The following activities will be undertaken to induce customer’s uptake ABEGOHoL
services.

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5.2.1 Advertisements
An aggressive advertising strategy will be made through brochures at airports, travel
bureaus linking ABEGOHoL to places of tourist attractions in Arusha region. Building
the public relations of GoAHL will be proactive by active promotion on search engines
across the globe. Also,a partnership with different airline companies will be done to
enhance easy access of customers. ABEGOHoL will position itself as the provider of the
best hospitality and Hotel services in Arusha.

5.2.2 Distribution

ABEGOHoL will adopt multiple distribution methods to deliver products and services as
detailed.

5.2.3 Physical presentation

This is widely used in all organizations to reach your target customers.

5.2.4 Website
ABEGOHoL will develop its own website and also utilize host as a long-term strategy to
market its products/services.

5.2.5 Listing
Membership subscriptions to professional Tourism, Hotel and Investment organizations
will be a crucial element of the distribution methods to ensure products/services are
delivered to customers through recommendation and complementarities.

5.2.6 Customer retention

ABEGOHoL management will develop longterm relationships with customers as a
customer retention initiative through the following customer relationship management
tools:

 High level of service to ensure customer satisfaction

 Customer questionnaires to identify areas of improvement
 Good hospitality to guarantee customer return
 Good public relations to easily receive recommendations
 Close collaboration with competitors.

5.2.7 Partnerships
ABEGOHoL will partner with financial institutions for raising capital if the need arises.

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4. BUSINESS COMPETITION

6.1CompetitorLandscape

6.1.1 Direct Competitors

Mount Meru Hotel with 178 rooms and Ngurdoto Mountain Lodge with 74 rooms
currently offer the level of service that ABEGOHoL will offer with the prices both
ranging from $100 – $200. Other direct competitors include Kiboko Lodge, Mvuli Hotel
Arusha, Arusha Serena Hotel and Arumeru River Lodge. Arumeru River Lodge and
Mvuli Hotel Arusha combine good marketing, wide exposures in directories, industry
magazines and have well-developed websites. Together with good pricing structures,
they are normally overbooked and therefore enjoy the biggest share of the market. The
peak period is between September and May.
The typical charges for the direct competitors are shown in Table 6.

Table 6: Competitor hotels and pricing

Hotel Night (Dollars) No. of Rooms
Ngurdoto Mountain Lodge $ 137-$150 74 Rooms
Mount Meru Hotel $ 100-$153 178 Rooms
Kiboko Lodge $101-$180 12 Rooms
Mvuli hotel Arusha $100-$150 17 Rooms
Arusha Serena Hotel $ 180 42Rooms
Arumeru River Lodge $100-$150 25 Rooms
Momella Tourism Hotel $100-$200 30 Rooms

6.1.2 Indirect Competitors

There are many lodges around Arusha which are serving different target markets with
similar products and services. The typical charge for a room is in the range of $100-$200
per night. But there is no hotel in Tanzania that use semi-transparent photovoltaic to
provide daylight and natural ventilation. The introduction of semi-transparent
photovoltaic module such as thin-film and dye-sensitised solar cells will help to provide
homogeneous daylighting of interior spaces as well as low cost. These semi-transparent
cells are highly suited for shading elements, facades and roof windows. They are also
available to replace windows and glazing elements in warm facades and room elements.

A building will be integrated with semi-transparent photovoltaics (BIPV) system which

will consist of integrated photovoltaics modules into the building envelope to the
window, wall and thermal materials such as tiles and roofs to the facade. By
simultaneously serving as building envelope material, also will be serve as an alternative
to power supplied by TANESCO, the power harvested through the semi-transparent
photovoltaic system intergrated into the building will be used to supply power the most

8
power consuming parts such as water heating as well as room warming as natural heat
and cooling at different seasonal times and swimming pools.

This kind of technology of semi-transparent photovoltaic will cut down cost that would
be incured by paying TANESCO utilities again reducing the use of fossil and generator
that could be used as standby that results into emission of ozone-depleting gases. Will
also add architectural interest to the building as this is a new technology in Tanzania.

In addition, building-integrated photovoltaic (BIPV) systems designed will be blended

with traditional building materials to create a high-technology, future-oriented
appearance and special space for enjoyment. Semi-transparent arrays of spaced
crystalline cells will provide diffuse, interior and attractive natural lighting for tourist.
High profile systems will also signal a desire on the part of the building to provide an
environmentally conscious work environment.

However, due to the use of new technologyof BIPV, the following also describes the
competitive advantages that will be created by ABEGOHoL business model:
 Refined rooms with floor-to-ceiling semi-transparent windows and natural lighting
which offer a comfort living.
 Highspeed WiFi internet and full HD satellite TV without any power interruption
powered through semi-transparent BIPV.
 Using semi-transparent thin-film modules, with custom-spaced cells between two
layers of glass, BIPV will create unique day lighting features in facade and skylight
PV systems. This will help to reduce unwanted cooling load and glare associated with
large expanses of architectural glazing, where there is no such building in Arusha.
 Using passive solar and thermal mass (tiles and walls) which will store energy and
circulate at night makes the room to be a very comfort rather than using air-
conditioners and fans
 Hybrid PV-Solar Thermal Systems as an option to optimize system efficiency is
chosen to capture and utilize the solar thermal resource developed through the heating
of the modules. This will be attractive in our environments as is cold climates for the

9
 pre-heating of incoming ventilation make-up air rather than TANESCO power in
ventilation
 Minibars as well as strong safes and tea and coffee making facilities
 Airport and bus stations pickup
 Suites and sitting areas
 Coffee shop, a chic bar and a lounge, and restaurants offering international cuisine.
 Other amenities include a terrace, a stylish conference room and an outdoor pool with
a waterfall.
 Restaurant, laundry, hot-tub, fitness and bar will also be provides with high quality as
well as low cost compared to other hotels available in Arusha.

5. MANAGEMENT AND ORGANISATION

7.1 Management
At this stage of business planning, all positions are well defined and roles that will be
played and identifying key qualifications of employees to be hired for ultra-critical roles.
The composition of the Board of Directors provides continuity. The General Manager
shall be the team leader who shall be the final accountable focal point for ABEGOHoL
performance. In the long run, this responsibility will be shared with the other members
of the Board in:
 Sourcing of market opportunities
 Ensuring compliance with regulatory authorities
 Strategic positioning of the GoAHL in the Hotel/Tourism Industry.

Table 7: Board of directors

No. Names Age Profile/Biography
1. Mr. Benedicto M Joseph 35 MSc. SESE, Ass. Lecturer (SJUIT)
(Managing Director)
2. Ms.GodianaPhilipo 26 MSc. SESE, Ass. Lecturer (SAUT)
(Director)
3. Mr. Andrea Yotham (Director) 34 MSc. SESE, Energy Engineer

7.2 Employees
Table 8 shows the core competencies that will be required of the core team. In carrying
out its duties, the Board of Directors will be assisted by the core team who shall be
responsible for; overall business performance, resource allocation and coordination of
activities on daily basis.

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Table 8: Human Resource
Position No. Characteristics Role Salary p.m

10 years’ experience
General Day-to-day
1 1,500,000
Manager Degree/Masters in Hotel Management
Management
5 years’ experience Day-to-day
Managers 5 Management, @ 5,000,000
Degree in Hotel Management 1,000,000/=
2-4 years’ experience
Accountant 1 Degree in Accounts and must Assisted by Cashier 800,000
have CPA(T)
Make/receive
1 years’ experience
Cashier 1 payments 600,000
diploma in Accounts Keep records
Sales and 1 years’ experience Deals with sales and
1 500,000
marketing diploma in Sales/marketing marketing
Executive 5 years’ experience with a
1 Food preparation 700,000
Chef diploma in food and nutrition
Make sure rooms are
House Certificate in Hotel/Tourism
2 kept occupiable @ 600,000
Keepers Professional
300,000/=
Restaurant Oversee service in bar
1 Certificate 500,000
supervisor and restaurant
Assist Chef in food
Cook 1 2 years’ experience 500,000
preparation
Receive customers
Receptionist 1 Diploma/Computer 300,000
Conduct guided tours
Serve customers @
Waitresses 2 O’ Level/certificate in catering 500,000
250,000/=
Clean all areas @
Cleaners 2 O’ Level 400,000
200,000/=
Guard the premises.
Security
2 O’ Level Check for theft. @ 400,000
Guard
200,000/=
On call for
Technician Certificate/Diploma 250,000
maintenance
Total 13,000,000

7.3 ABEGOHoL hotel organization structure

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 BOARD OF DIRECTORS

GENERAL MANAGER

ACCOMMODATION FOOD AND FINANCE AND HUMAN MARKETING

MANAGER BEVERAGE ACCOUNTING RESOURCES MANAGER
MANAGER MANAGER MANAGER

HOUSE RESTAURANT EXECUTIVE ACCOUNTS CASHIER ASSISTANT SALES &

KEEPERS SUPERVISOR CHEF HRM MARKETING
MANAGER

LAUNDRY COOKS, BARMAN,

& WAITERS & WAITERS &
CLEANER WAITRESSES WAITRESSES
S S

Figure 2: Organisation structure of ABEGOHoL

6. OPERATIONS AND RESOURCES

6.1 Site and Building

The two-storeyed structure will comprise 25 guest rooms (self-contained) situated in
upstairs and other facilities on the ground floor. The financing for the development so far
is from savings of the Directors to the tune of Tshs 200,000,000 required to purchase
Land and erect the storeyed building

8.2 Requirements for Completion of ABEGOHoL

The costs of completion to the level of launching operations are given in Table 9.

12
Table 9: Requirements for completion of ABEGOHoL
Item Cost

Purchasing Land and erecting the storey building 200,000,000

Civil Infrastructure Completion 167,977,000

Seminar Facility 12,760,000
Reception Area/ Managers offices 39,000,000
Furnishing 57,568,000
Restaurant/Kitchen 12,680,000
Working Capital 34,830,000
524,815,000

8.3 Operations plan

The key strategy is to transform the business plan from concept to reality through:

 Meeting the product/service targets as set out in this business plan as a short-term
objective.
 Recruiting a knowledgeable and synchronized management team capable of
achieving low service costs, high turnover, and high customer satisfaction as a long-
term objective.
 Continuous improvement of the service offer, staff, productivity and profitability as a
long-term objective.

8.4 Key Challenges

The primary challenges are:
 Fuel Costs and stable electricity – Increase in prices and unstable electricity from
TANESCO will continue to have an impact on the cost of doing business, but the
problems is solved by use of the semi-transparent photovoltaic technology that has
replaced the use of standby generator
 Recruiting the right kind of employees focused on achieving ABEGOHoL goals will
require assistance in identifying a winning team with key qualifications and personal
attributes.

8.5 Business Milestones

Table 10: Business Milestones
NO. Milestone Achievement
Date/Month
1 Bank Loans Secured June/July 2019
2 Key employees hired November 2019
3 Civil infrastructure construction August 2019-August 2020
3 Website Development December 2019
4 Seminar facilities operational December 2020

13
 5 Introduction of products/services to the market December 2020
6 Advertising/Marketing October 2020 – ongoing
7 Key partnership executed March 2021
8 Packaged tours secured June 2021
9 Full Occupancy Achievement December 2021

8.6 Operating Policies

As in all hotel business, ABEGOHoL will develop operating guidelines and policies that
not only bind every employee to work within but also to achieve stated objectives
through teamwork. Such policies would include human resources, purchasing, inventory
control, sales management, best hotel practices, accounting, and audits.

8.7 Details of capital requirements

8.7.1 Completion of Civil Infrastructure/Equipment

Table 11 shows the requirements for the completion of the civil infrastructure/
equipment.

Table 11: Civil Infrastructure/ Equipment

ITEM AMOUNT( Tshs)
Roofing + Rain Water 20,050,000
Walling 25,000,000
Semi-transparent windows 23,206,000
Architectural doors 24,156,000
External Finishes 10,872,000
Internal Finishes 38,523,000
Fittings & Fixtures 5,000,000
Mechanical Installations 10,113,000
Electrical Installations 11,057,000
TOTAL 167,977,000

8.7.2 Room Furnishing

Table 12 shows the room furnishing requirements needed.

Table 12: Room Furnishing

UNIT COST AMOUNT
ITEM QUANTITY
(Tshs) (Tshs)
Beds 25 250,000 6,250,000
Bedding 75 200,000 15,000,000
Table 25 60,000 1,500,000
Chairs 50 25,000 1,250,000
TV 25 600,000 15,000,000

14
 Lamp Sheds 25 10,000 250,000
Telephone 25 15,000 375,000
Curtains 25 44,000 1,100,000
Mosquito Nets 25 16,000 400,000
Carpets 25 120,000 3,000,000
Sandals 50 1,860 93,000
Mirrors 25 14,000 350,000
Wardrobe (Mirror) 25 20,000 500,000
Mini-Bar 25 500,000 12,500,000
TOTAL 57,568,000

8.7.3 Seminar Facility

Table 13 shows the seminar facility requirements

Table 13: Seminar Facility

ITEM QUANTITY UNIT COST AMOUNT
(Tshs) (Tshs)
Tables 15 100,000 1,500,000
Chairs 50 50,000 2,500,000
Table Cloths 15 20,000 300,000
Curtaining Lump sum 5,000,000 5,000,000
Flip Chart Stand 2 150,000 300,000
Fans 4 40,000 160,000
LCD Projector/Screen 1 2,000,000 2,000,000
DVAD/TV 1 set 1,000,000 1,000,000
TOTAL 12,760,000

8.7.4 Reception Area/ Managers Offices

Table 14: Reception Area/ Managers office
ITEM QUANTITY UNIT COST(Tshs) AMOUNT(Tshs)
LAN/Internet 6 Stations 2,000,000 12,000,000
Counter 1 1,000,000 1,000,000
Computer 6 666,666.7 4,000,000
PABX/Telephone 6 500,000 3,000,000
DSTV Control 1 2,000,000 2,000,000
Server 1 5,000,000 5,000,000
Sofa Sets 6 500,000 3,000,000
TV 6 sets 500,000 3,000,000
Music System 6 333,333.3 2,000,000
Photocopier 1 3,000,000 3,000,000
Safe 1 1,000,000 1,000,000
TOTAL 39,000,000

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8.7.5 Restaurant/Kitchen
Table 15: Restaurant/ Kitchen
ITEM QUANTITY UNIT COST(Tshs) AMOUNT (Tshs)
Tables 10 100,000 1,000,000
Chairs 60 50,000 3,000,000
Table Clothes 10 20,000 200,000
Napkins 100 5,000 500,000
Cutlery Sets 10 Dozen 30,000 300,000
Glasses 10 Dozen 25,000 250,000
Curtaining Lump sum 500,000 500,000
Salt/Pepper Dispenser 10 sets 20,000 200,000
TV 1 500,000 500,000
Menus 20 20,000 400,000
Freezers 2 500,000 1,000,000
Gas Cookers 2 500,000 1,000,000
Microwave 2 300,000 600,000
Gas Cylinder 2 200,000 400,000
Crockery Various Lump sum 500,000
Pro Chef Knives 5 Set 30,000
Beef Knife & Forks 4 (set) 10,000 40,000
Kitchen Helper 2 15,000 30,000
Super Slicer 1 60,000 60,000
Fruit Juice Blender 1 75,000 75,000
Salad Bowls 10 4,000 40,000
Soup Bowls 10 5,500 55,000
Laundry/Drying 2 1,000,000 2,000,000
Machines
TOTAL 12,680,000

8.7.6 Bar
Table 16: Bar Requirements
ITEM QUANTITY UNIT COST(Tshs) AMOUNT (Tshs)
Counter 1 1,000,000 1,000,000
Fridges 4 800,000 3,200,000
Bar Stools 10 50,000 500,000
Tables 4 100,000 400,000
Chairs 20 50,000 1,000,000
Shelves Lump sum 500,000 500,000
(Wine/Spirits)
Glasses 50 2,000 100,000
Spirit Dispensers 5 10,000 50,000
TV 1 500,000 500,000
Umbrellas 5 100,000 500,000
Plastic Tables 5 50,000 250,000
Plastic Chairs 20 15,000 300,000

16
 TOTAL 8,300,000

8.7.7 Working Capital

Table 17: Working capital
ITEM QUANTITY UNIT AMOUNT
COST(Tshs) (Tshs)
Beers 10 35,000 350,000
Sodas 10 10,000 100,000
Spirits 10 30,000 1,500,000
Wines 10 20,000 600,000
Water 10 Boxes 8,000 80,000
Two Month Salary 26,000,000
Restaurant/Kitchen Stock 500,000
Stationery (Receipts, Invoices,
200,000
LPOs)
Maintenance/Operations 2,000,000
Advertising/Marketing 500,000
Uniforms 15@50,000 x 2 1,500,000

Licenses/Memberships 1,500,000
TOTAL 34,830,000

7. FINANCIAL PLAN

7.1 Sources and uses of Funds

9.1.1 Source of funds

Table 18: Shows the source and uses of funds for the project.

9.1.1 Source of funds 9.1.2 Uses of Funds

SOURCE AMOUNT (TSHS) Purchasing Land and 200,000,000
erecting the storey
building
Promoters 324,815,000 Completion of 167,977,000
Savings Infrastructure
Bank Loan 200,000,000 Furnishing/Equipment 122,008,000
Working Capital 34,830,000
TOTAL 524,815,000 TOTAL 524,815,000
CAPITAL

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9.2 Loan Terms and Repayment Schedule

9.2.1 Assumptions
Loan Amount 200,000,000
Interest 18% p.a. reducing balance
Grace Period 1 Year
Loan Period 6 Years
Repayment Quarterly.

9.2.2 Loan Repayment Schedule (‘000 Tshs)

Table 19: Loan repayment schedule

Year Principal Balance Principal Interest Paid Total Paid

Paid
1 Q1 200 - 9,000 9,000
Q2 200 - 9,000 9,000
Q3 200 - 9,000 9,000
Q4 200 - 9,000 9,000
2 Q1 190 10,000 9,000 19,000
Q2 180 10,000 8,550 18,550
Q3 170 10,000 8,100 18,100
Q4 160 10,000 7,650 17,650
3 Q1 150 10,000 7,200 17,200
Q2 140 10,000 6,750 16,750
Q3 130 10,000 6,300 16,300
Q4 120 10,000 5,850 15,850
4 Q1 110 10,000 5,400 15,400
Q2 100 10,000 4,950 14,950
Q3 90 10,000 4,500 14,500
Q4 80 10,000 4,050 14,050
5 Q1 70 10,000 3,600 13,600
Q2 60 10,000 3,150 13,150
Q3 50 10,000 2,700 12,700
Q4 40 10,000 2,250 12,250
6 Q1 30 10,000 1,800 11,800
Q2 20 10,000 1,350 11,350
Q3 10 10,000 900 10,900
Q4 - 10,000 450 10,450
Total 200,000 130,500 330,500

7.2 Projected Sales Per Annum (60% Occupancy)

Table 20: Projected sales per annum (60% occupancy)
Item No/Day No/Month No/Year Rate Total (Tshs)

18
Rooms (60%) 15 450 5,400 200,000 1,080,000,000
Food 24 720 8,640 20,000 172,800,000
Drinks (+ Mini Bar) 42 1,260 15,120 6,000 90,720,000
Seminars (rooms) - 8 96 50,000 4,800,000
Seminar Service - 8 x 40 3,840 10,000 38,400,000
(Meals)
Shop Facilities Rent - 2 24 150,000 3,600,000
Tel/Internet Business 15 450 5,400 4,000 21,600,000
Centre
Tours/Travel 36 1080 12,960 20,000 259,200,000
Total 1,671,120,000

7.3 Projected Sales (100% Occupancy)

Table 21: Projected sales per annum (100% occupancy)
Item No/Day No/Month No/Year Rate Total (Tshs)
Rooms 25 750 9,000 200,000 1,800,000,000
Food 40 1,200 14,400 20,000 288,000,000
Drinks 70 2,100 25,200 6,000 151,200,000
Seminars 10 120 50,000 6,000,000
Seminar Service 10 x 40 4,800 10,000 48,000,000
Office Rent 2 24 150,000 3,600,000
Tel/Business 25 750 9,000 4000 36,000,000
Centre/Internet
Tours/Travel 60 1800 21,600 20,000 432,000,000
Total 2,764,800,000

7.4 Projected Costs (60% Occupancy)

Table 22: Projected costs (60% occupancy)
Rooms Per Day Per Month Per Year Total(Tshs)
Room Supplies 15 3,000 90,000 1,080,000 16,200,000
English Breakfast 15 5,000.00 1,800,000 27,000,000
150,000
Laundry 30,000 10,800,000 10,800,000
Materials 900,000
Cleaning 30,000 900,000 10,800,000 10,800,000
Materials
Water Bill 14,400,000 14,400,000
40,000 1,200,000
Electricity Bill 21,600,000 21,600,000
60,000 1,800,000

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 Fuel (Generator) 5,400,000 5,400,000
15,000 450,000
Wages/Salaries 13,000,000 156,000,000 156,000,000
NSSF (10%) 15,600,000 15,600,000
Food 800,000 24,000,000 288,000,000 288,000,000
Drinks 300,000 9,000,000 108,000,000 108,000,000
Service 100,000 3,000,000 36,000,000 36,000,000
ICT 50,000 1,500,000 18,000,000 18,000,000
DSTV (5 210,000 2,520,000 2,520,000
Channels)
Air time 40,000 1,200,000 14,400,000 14,400,000
Advertising 1,000,000 12,000,000 12,000,000
Transport 100,000 3,000,000 36,000,000 36,000,000
Licences 1,000,000 1,000,000
Memberships 1,000,000 1,000,000
Website 1,000,000 1,000,000
Directors 4 132,000,000 132,000,000
meetings/year + 11,000,000
Honorarium
Director’s Costs 11,000,000 132,000,000 132,000,000
Audit/Accounting 5,000,000 5,000,000
Costs
Total 1,064,720,000

7.5 Projected Income Statement (Tshs)

Table 23: Projected Income statement

Year 1 2 3 4 5 6
Occupancy 50% 60% 70% 70% 70% 70
(%)
Sales
1,392,600,000 1,671,120,000 1,949,640,000 2,274,580,000 2,653,676,667 3,095,956,111
Costs
887,266,667 1,064,720,000 1,242,173,333 1,449,202,222 1,690,735,926 1,972,525,247
Gross Profit
505,333,333 606,400,000 707,466,667 825,377,778 962,940,741 1,123,430,864
Interest Paid 36,000,000 33,300,000 26,100,000 18,900,000 11,700,000 4,500,000
Net Profit
469,333,333 573,100,000 681,366,667 806,477,778 951,240,741 1,118,930,864
Tax
140,800,000 171,930,000 204,410,000 241,943,333 285,372,222 335,679,259
Net Cash

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 328,533,333 401,170,000 476,956,667 564,534,444 665,868,519 783,251,605

7.6 Projected Cash flow Statement (Tshs)

Table 24: Shows the projected cash flow statement
Year 1 2 3 4 5 6
Occupancy 50 60 70 70 70 70
(%)
Balance 298,533,333 665,703,333 1,008,660,000 1,439,194,444 1,971,062,963
B/F
Loan 200,000,000
Equity 324,815,000
Sales 1,392,600,000 1,671,120,000 1,949,640,000 2,274,580,000 2,653,676,667 3,095,956,111
Total 1,917,415,000 1,969,653,333 2,615,343,333 3,283,240,000 4,092,871,111 5,067,019,074
Inflows
Operational 887,266,667 1,064,720,000 1,242,173,333 1,449,202,222 1,690,735,926 1,972,525,247
Costs
Capital 524,815,000 100,000,000 100,000,000 100,000,000 100,000,000
Costs
Loan Paid - 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Interest 36,000,000 33,300,000 26,100,000 18,900,000 11,700,000 4,500,000
Paid
Tax 140,800,000 171,930,000 204,410,000 241,943,333 285,372,222 335,679,259
Other 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000
Payments
Total Out 1,618,881,667 1,303,950,000 1,606,683,333 1,844,045,556 2,121,808,148 2,446,704,506
Flows
Cash 298,533,333 665,703,333 1,008,660,000 1,439,194,444 1,971,062,963 2,620,314,568
Balance

7.7 Net present value and IRR

Table 25: shows the calculation of the net present value (NPV) and internal rate of
return (IRR)
Year
1 2 3 4 5 6
Occupancy
(%) 50 60 70 70 70 70
NCF
328,533,333 401,170,000 476,956,667 564,534,444 665,868,519 783,251,605
Discount
Factor @ 0.847 0.718 0.609 0.516 0.437 0.370
18%

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Present
Value of 278,418,079.10 288,114,047.69 290,290,552.26 291,180,586.08 291,057,266.24 290,141,097.58
NCF

Table 26: Net present value and IRR

Total Present Value of NCF 1,729,201,628.95 NPV 25% 301,096,657.24

Investment 524,815,000 NPV 30% 361,315,988.69
Net Present Value 1,204,386,628.95 IRR (%) 27.27
Profitability Index 3.3

Since NPV >0, PI>1 and IRR>18%, the investment is viable.

8. CONCLUSION
The project at 50 – 70% occupancy will be able to make a profit and repay the loan.
The investors will be able to recover their investment through the retained profits. The
investment will be able to contribute about Tshs 1,000 million to the treasury over 6
years. From the projected cash flow statement, it is noted that from year 3, some
capital assets such as tour vehicle and pick-ups will be added as well as other
payments in form of dividends.

22