Project description, ownership and management team

Ownership structure (who)

Vincent Alele Foundation is a registered company Limited by guarantee with no share capital.
It’s a privately owned company by 3 individual vision bearers, and 2 other appointed directors
with technical support on Agro tourism and culture. The former directors run Overall
management, including the day to today administration of the Company, while the later provide
technical guidance on the different components of the company operations.

Purpose (Why)

Tourism sector in Uganda provides about 7.3% DGP, Uganda is one country gifted by nature
with amazing and abundant wildlife including endangered species like mountain gorillas, lakes
and rivers, mountains, culture, historical cites among others. Besides all these, Tourists in an
attempt to locate hotels, many hotels has been found out to have very poor accommodation
facilities and services, improper waste disposal, air pollution, insecurity, poor meals and limited
varieties of meals and poor means of transport. Services provided do not reflect cultural and
environmental diversity in terms of meals, entertainment, livestock, agricultural and knowledge
on customary practices of environmental protection alongside chronic physical perils such as
drought, water stress and extreme temperatures, these longer-term shifts in weather patterns often
result in increased operational costs for hotel owners or could even remove the ability to operate.

Vincent Alele Foundation is proposing to provide the most convenient, secured, accommodative,
affordable and strategic 3-Star Tourist Hotel that will build a long lasting destination point for
most tourist coming up-country. The hotel will provide 150 self-contained accommodation
facilities (15 of which being double rooms for small families). The hotel will further provide
continental, intercontinental and local dishes for appreciation of diversity in cultural foods. There
will be a gallery with different art pieces from across the African continent and Uganda in
particular. Different cultural dances will be part of the tourist package of entertainment. An
annexed farm for agro tourism with a variety of livestock, crops and vegetables, traditional &
modern Agricultural practices in Uganda for tourist will be established for tourists to see, but
also for supply of fresh foods for the hotel.

It will also establish a unit for collection of Lango (Tribe in Northern Uganda) traditional
Agricultural production tools, story books, cooking and marriage items like pots, spears, hoes
etc, that are being forgotten. Furthermore, the proposed 3Star Tourist Hotel project falls under
Hospitality Industry and we are proposing it as a module to help Combat Climate Change by
promoting energy efficiency and achieving substantial energy gains, enabling the circular
economy, achieving sustainable development through eco-innovation, and allowing significant
technology transfer to our hotel dwellers and surrounding. In this we propose four conditions
under which the 3star tourist hotel could help to combat climate change: first, increased use of
Industry technologies to induce increased energy efficiency and reduction of GHG from the hotel
industry; second, increased use of the hotel technologies to induce a reduction in water
consumption and an increase in water use efficiency; third, increased use of the hotel industry
technologies to induce a reduction in food waste; fourth, increased use of the hotel Industry
technologies to promote circular Hospitality. The motivation of the choice of these propositions

pg. 1
comes from the literature review. The previous work treats these issues as separate topics; we
suggest that they are crucial for reducing the carbon footprint of the hotel industry.

Location (Where)
The Company is located in Lira City in Northern Uganda, and the project is proposed to be
located at Lira City in Omito Ward, Adyel Cell along Akitenino Valley and is specially
designed to provide comfortable facilities to the tourist and donor community. Lira City is
considered a gate way for all the tourist activities in the Northern region of Uganda, the region
has access to all public amenities including water electricity and telecommunication facilities.
Lira City is the gateway to some of the most scenic and traditional beauty spots in Northern
Uganda, namely: Kidepo Valley National park, Amuru Hot Springs,Guru Guru Hills, Tochi
Resort Beach, Murchison Falls National Park, Sir Samuel Baker’s Fort at Patiko, The Recreation
Project, Karuma Falls, Atiak Colobus Monkeys and Hill Climbing . The Northern Uganda City
of Lira has been chosen as the prime location for the proposed Lira City 3 Star Tourist Hotel.
There are five primary motivations that have inspired the project promoters of Lira City 3 Star
Tourist Hotel to make this decision:

 Lira City is the gateway to the Western Uganda tourism circuit that captures by
far the largest share of Uganda’s tourist traffic.
 The project promoters have a sizeable piece of land in Lira City that is naturally
endowed, attractive and suitable for development of the proposed 3-star hotel and cultural
tourism facility.
 The project promoters are born and raised in Lira City that they understand the social,
economic and cultural aspects of the area quite well to make this project a resounding
success.
 Lira City is the fastest growing town in Uganda with quite a number of commercial,
industrial, community development, educational and government institutional facilities
coming up that make it a highly convenient location for positioning a 3-star rating hotel
facility to cater for the growing traffic that are using such facilities.
 Tourist facilities that combine a scenic natural beauty, 3-star hotel rating status, and a
mini-zoo are hard to get anywhere within Uganda.
 That Lira City 3 Star Tourist Hotel will be the first of its kind in Uganda offering such
facilities and amenities will put it in a strong and favourable position to grow its tourism
market potential quite fast.

Timeframe (When)
This is a new company proposing a new project and the breakdown of project phases will be as
follows:

o Design Phase 3–4 months

o Bid Phase 1–2 months
o Construction Phase 12 months
o Project launch and operationalization 1–2 months

Resources needed (How)

pg. 2
The Company has a team of 5 dedicated Directors (3 Vision bearers and 2 technical directors). The
foundation directors run Overall management, including the day to today administration of the
Company, while the later provide technical guidance on the different components of the
company operations. This will be complemented by additional a hired Finance Officer. The
required financing for the project is approximately USD 2,448,500. Technology needed will
innovative tools, machinery, modifications and software which will be defined by the Architectural
and Engineering team in the BOQ. The Company has an operation registration certificate, while the
construction contraction contracts will be obtained upon confirmation of funding opportunity. The
company has invested in the purchase acres of land for this project in Lira City. The company will
work with the City Planning Authority, accredited engineering and architectural firms to support the
design and construction of the hotel. The Tourism Ministry and actors in the tourism sectors for
tourist services and complementary services. The office of the City Mayor and Division Mayor will
also be involved in seeking the government support for the initiative, in terms of accreditation among
others.

Management Team
The Project will be under the guidance of 5 different directors who form part of ownership of the
company, the Company has 3 women, 2 men and these includes: Mr. Lemo Raphael; will be
behind this project development and implementation, he has a Diploma in Education and has too
the advance certificate in humanity and hospitality, he has Experience in Primary Education,
events management, community field extension management and community outreaches. Ms
Ejang Margaret Lucy; she holds a master’s degree in business administration, she is a certified
public accountant, she is currently working as Finance and administrative officer and as the
active secretary to the commission in Uganda Human Rights Commission, she has 38 working
experience. Ms Winnie Alum; she holds a master degree in social science, post graduate
diploma in research, she is a scientist and a researcher, she is working with World Food Program
as a senior consultant field officer, she has served for the last 15 years. Mr. Opio Martin
Kibony; he holds a diploma in civil justice, he is a police office in the rank of the the Assistant
Superintendent of Police and currently deployed as the District traffic Officer In charge, he has
served for the last 35 years. Ms Catherine Anume; she is a senior education officer, a diploma
holder in secondary education, she has been a school teacher for the last 22 years, she is
currently in the USA for further studies. The company will be able to employ 119 employees,
among them some will be working on fulltime, part-time, volunteers and support stuffs alongside
other professionals to implement various responsibilities in the 3-star tourist hotel. The Head
Office will directly be placed in the hotel to allow the clients and the management to collaborate
effectively.

Goals (What)
In addition to providing a convenient, secured, accommodative, affordable and strategic 3-Star
Tourist Hotel, the project will embrace the promotion of clean energy in running the hotel, like
clean cooking stoves, sun powered cooking equipment and biogas generated from a piggery. The
project will further create a recreational space that will provide the environmental conservation
through green beautiful scenery made of indigenous species of trees and grass vegetative cover
alongside promoting the aquatic life by opening up a man-made dam which will be used to breed
various fish species.

pg. 3
Target market
Our target market strategy is based on becoming a destination for people who are looking to get
away for a few days, on the beautiful Banff. Our marketing strategy is based on superior
performance in the following areas:
 Quality facilities.
 Beautiful location.
 Customer service.
The target markets are separated into six segments; "Business Class/Donor Community,"
"Seasonal Tourists/Vacationers," "Honey mooners,""Drop-ins," "Travelers" and, "Students". The
primary marketing opportunity is selling to these accessible target market segments that focus on
business travel, vacation and recreational needs.
Business Class/Donor Community
This segment of the market includes mainly business people who demand good quality without any
complications. Other prospective customers in this particular segment include people within the
donor community and trade organizations who may have intentions of organizing a conference
or a meeting at our hotel (the MICE market segment) – which represents a steadily growing
revenue stream at each level of the tourism chain. It will be important for Lira City 3 Star
Tourist Hotel to have in place well-facilitated and organized conference rooms and state-of-the-
art equipment to attract and retain this growing and increasingly influential segment of the Uganda
tourism value chain.
Seasonal Tourists/Vacationers
This segment of the market consists of international adventure tourists who will be traveling to
or transiting through Lira for eco-tourism or cultural heritage trips and need a comfortable place
top rest, dine and refresh themselves. Lira City 3 Star Tourist Hotel estimates this segment to
be the second most important revenue generator after the Business Class/Donor Community
segment and is expected to attract a steady stream of both international and domestic tourists
moving to or through Lira City.
Honeymooners
Because of the beauty and location of Lira City 3 Star Tourist Hotel, we will be a very
attractive choice for people looking for a honeymoon location.
Drop-ins
When rooms are available we will welcome the drop-in customer who is looking for a place to
stay for the night. We shall place a sign that can easily be seen from the highways into and out of
Lira City and we expect quite a few drop-ins.
Travelers
These are people who will be transiting through Lira City and prefer to stay in a hotel/motel.
Market Segmentation

pg. 4
 Market Segmentation

Business
Class/Donor

Community

Traveller

Honeymooner

Drop-

Student

Strategy and Implementation Summary

The primary sales and marketing strategy for Lira City 3 Star Tourist Hotel includes these
factors:
 To offer a bed and breakfast facility that will appeal to the busy professional.
 To provide unmatched customer service to our guests.
 To concentrate our marketing in the greater Lira City area.

Analysis of existing competition and project competitiveness

The threat of entry of new competitors is low since the entry barriers as well as the exit barriers
are relatively high. Capital requirements are high, it is very costly to build a new hotel. Meaning
the facility itself as well as the establishment of a brand and creating a customer loyalty. In case
of a business failure it is difficult to sell the building or make new use of it because it is built
only for the purpose of a hotel with closeness to a highway, this increases exit or possible
switching costs. It is hard to create brand equity due to the opportunistic nature of the business
where customers do not attach big importance to loyalty to a certain brand. The profitability of
the industry is not very attractive since the whole gastronomy business is known for its
toughness to survive. The intensity of competition is high in this region and numerous hotels of a
similar type can be found in the Lira City area. It is hard to create a competitive advantage since
the concept of a hotel does not leave too much room for innovation. The requirements of the
customer are clear and simple and that is exactly what this projects intends to offer.

Estimated demand for your product or services

Our concept will attract mainly business people who demand good quality without any
complications. We want to attract “over-night-stayers” as well as business people who intend to
organize a conference or a meeting at our hotel. Lira City 3 Star Tourist Hotel will also offer
accommodation to tourists who are on their way through the Lira City area and want to stay
overnight. Lira City 3 Star Tourist Hotel will also provide special family-friendly hotel rooms

pg. 5
or facilities. We expect part of our guest list to include those people looking primarily for passive
regeneration or a possibility to disconnect after a hard business or congress day in order to start
well into the next day. Lira City 3 Star Tourist Hotel will offer this in an exclusive ambience.
Also the need for conferences or meeting can be satisfied by our conference rooms and the top of
the art equipment promises every event to be a success. Lira City 3 Star Tourist Hotel will
offer120 standardized rooms and 15 double-room tourist-themed cottages. Customers will have
the possibility to enjoy a breakfast if needed. We will offer a simple bed and breakfast service.
Breakfast offer will be a tasty, healthy, enjoyable menu for all tastes. The hotel will offer 150
parking lots in front of the facility. Additionally, congress and seminar rooms are a must with the
purpose of attracting companies and their external clients. If companies plan a congress event,
they have the opportunity to have lunch and dinner which will be organized by a selected
catering company. Other services on offer will include laundry and bar and restaurant service for
guests.

Business model:

Financial Highlights
 Sales in Project Year 5 (2028): USD 3,330,745
 Gross Profit Margin in Project Year 5 (2028): 87.32%
 Net Profit Margin in Project Year 5 (2028): 42.28%
 Payback period for Equity: 1.31 Years
 Payback period for Total Investment: 3.13 Years
 Capital: Output Ratio in Project Year 5 (2028): 1: 1.36
 Break-Even Analysis in Project Year 5 (2028): 15.68%
 Value Added/Contribution to GDP in Project Year 5 (2028): USD 2,769,595(83.15%)

The total project cost for setting up the proposed Lira City 3 Star Tourist Hotel and hospitality
development facility is USD 2,448,500. The capital cost incurred is USD 2,155,500 and the
working capital is USD 293,000. The limited availability of three star hotels in the Lira city area
creates a profitability margin window for the first time investor. If clean and comfortable stay is
provided to the customers, then with a very conservative estimate, the first year of the
project’s expected occupancy would be 50% room occupancy with annual growth increments
of at least 10% anticipated. This section evaluates various financial aspects of the project (cost of
project, earnings forecast, rates of return, payback period, cash flow, balance sheet, etc.).

Cost of Project (In USD): Funds are being solicited for use in putting up the requisite 3-star
hotel infrastructure and buildings at the designated site. Since the site land for the proposed
tourism and hospitality development facility is readily available, the rest of the financing facility
will be applied to other core project investment components including the purchase of hotel
facility use items (i.e. furniture, fixtures, computers and one vehicle unit), covering project
management fees and design fees, and defraying the initial working capital expenses.
Land: The plot of land having an area of 10 acres in Lira city has been proposed with 3
acres of land has so far been secured, justification for location of plant has been established in
the Technical Aspects of this Business Plan. The present value of this plot of land in Lira City is
estimated at US$ 78,570 per acre.

pg. 6
Infrastructure: Infrastructures costs include expenses incurred under this item include roads,
installation of utilities and electricity transformer plus perimeter fencing around the facility. The
total cost of infrastructure has been estimated at US$ 55,000.
Building & Construction: The building and civil works for the proposed Lira City 3 Star
Tourist Hotel and hospitality development facility will include construction of the 3-star hotel,
putting up the mini zoo, construction of the pool, cafeteria, bar & restaurant, the tennis court and
additional sports/recreation amenities, and landscaping and the car park. The total cost of the
building and civil works has been estimated at US$ 920,000.
Hotel Use Items: These will include crockery, linen, cooking appliances and utensils, etc. These
items are collectively estimated to cost US$ 32,200 for the start.
Vehicles: The proposed Lira City 3 Star Tourist Hotel and hospitality development facility
will require the services of a van to start off business. The van will be used for transportation of
hotel-use groceries, supplies and other routine-use items from town to the hotel in an effort to save
on transportation expenses that would be incurred in outsourcing transport hire services to
external transport service providers. The vehicle cost for 1 unit is estimated at US$ 20,000.
Zoo stocking: Stocking of the zoo will include the sourcing, capture, transportation, and acquisition
of the necessary Licenses from the Uganda Wildlife Authority (UWA) for the local area animals
that will be kept at the mini-zoo. The cost is estimated at US$ 50,000.
Furniture & Fixtures: This will include office furniture and fixtures as well as office
equipment like computers, operational software etc. The total cost is estimated at US$ 150,000.
Working Capital: Tourism and hospitality management is a business in which cash flow is very
high and companies in the industry tend to generate cash surpluses on a regular basis, most of the
hotel supplies are purchased on a 1-week cash basis and the finished product is sold on cash. Working
capital is mostly required for paying for the regular purchase of hotel use items, for payment of staff
wages and salaries, for paying of utility bills, petrol for vehicles and for spares. The Working
Capital requirements have been estimated at US$ 293,000 for the first months of operation.
Physical Contingences: Physical contingences for the first year have been estimated at US$
46,000.
Operational Data: The capacity of the hotel is 150 rooms and allied services. It is expected
that the room occupancy would be 50% in the first year and will increase gradually; the allied
services are expected to increase likewise.

Technology and operations overview

The 3-Star Tourist Hotel shall be constructed in a way that it will lower the carbon-intensity of it
operations by reducing the amount of energy that is used for different processes and activities.
By decreasing our energy usage, we’ll also cut down on needless energy expenditures. We shall
incorporate efficiencies directly into our buildings by adopting bioclimatic design principles.
Bioclimatic design works in harmony with the local climate to create comfortable spaces while
optimizing energy use. Though bioclimatic techniques vary by climate type, examples include
orientating windows to absorb the sun’s heat, using trees and overhangs for shading, and
choosing light-colored roofing materials to reflect solar rays. Traditional architecture styles often
tend to be bioclimatic since they’ve been adapted to the local environment for centuries. They
are also a good way to showcase traditional construction techniques and locally-sourced building
materials. Beyond the design of the building itself, hotels can utilize energy saving technologies

pg. 7
to further drive down carbon footprint. Considering upgrading our washing machines,
refrigerators, air conditioning units, and other appliances to more efficient models. Alternatively,
our hotel will be switching to ozone laundry systems which eliminate hot water use and shorten
drying times. Another technology will be to replace existing light fixtures with LED bulbs which
uses 75% less energy, and last much longer, than incandescent lighting. Heat pumps offer an
efficient alternative to traditional furnaces and boilers since they capture heat from the outside
air, water, or ground. Similarly, large water air conditioning systems (LWAC) to cool buildings.
Combined heating and power (CHP) systems also require less energy due to their ability to
generate electricity and heat simultaneously. Other carbon reduction tactics include reducing
waste, conserving hot water resources, or providing sustainable transportation options such as
electric golf carts, bicycles, or kayaks.

Marketing, distribution and sales to customers

Marketing and related promotional activities will require a well thought out strategy and full
advantage of international chain of hotels may be taken. Although, the promotional activities
should start from the first year of the project, the main sales pitch will be taken from the second year
of establishment. This may include awareness- raising among the potential internal tourists, linkage
with international chain of hotels, discount campaigns, and provision of various added attractions
to increase the (hotel’s) customer value.

Sales Forecast
The sales forecast table is broken down into four main revenue streams: Accommodation; Foods
and Beverage service; Shop license fees; and revenue from other operational departments of the
hotel facility (e.g. mini-zoo receipts, laundry services, etc.). The sales forecast for the upcoming
year is based on a 10% growth rate for direct sales. Lira City 3 Star Tourist Hotel will have
150+ rooms to offer its guests at a rate of US$ 50.00 per night. We expect the rate of rooms
occupied to increase as the year progresses. In spite of the economic unpredictability we are
experiencing, these projections appear attainable and take the increasing base into consideration.
Annual growth rates are based on 10% per year.
12 Months Sales Forecast (at Full Capacity)
Accommodation Price Reservati Amount Rooms Days in
ons Yr.
Per Double bed room 50 54,750 2,737,5 150 365
00
Food and Beverages
Room Service 10 10,950 109,500
Room Refreshments 5 7,665 38,325 Parties
Restaurants 20 21,900 438,000 60 365
Parties 500 365 182,500 1 365
Outside Service 300 365 109,500 1 365
877,825
Other Operation Departments
Mini-zoo receipts 3 9,125 27,375

pg. 8
 Laundry 2 9,125 18,250
Pool, club and others 3 9,125 27,375
73,000
Shop License Fees
Number of Shops 1,250 10 12,500
12,500

Total Sales 3,700,8

25

Marketing Segmentation
The profile of our customer consists of the following geographic and demographic
information.

Geographic
Our immediate geographic market is the Lira City area with a population of over 200,000
people. A 200-mile geographic area/radius would want to use the kind of services we offer. The total
target area population is estimated at two million people.

Demographics
 Male and female.
 Married and single.
 Age range of 25 to 65 years with a median age of 40.
 Work in a professional business setting.

Marketing Mix
The Lira City 3 Star Tourist Hotel’s marketing mix is comprised of the following approach to
pricing, distribution, advertising and promotion, and customer service.
Pricing
The pricing scheme is based on a room rate. The rate is arrived at in terms of by its market
value
Distribution
Figure 4: The Four P Components of the Marketing Mix

pg. 9
MARKETING CHANNEL SELECTION
 Consumer Characteristics
 Product Attributes
 Type of organization
 Competition
 Marketing environmental forces
 Characteristics of intermediaries

Generally there are many marketing channels but we decided to select some of them to make our
plan work and practical. Personalize method of marketing and promotion of our facilities we
select direct and email marketing method. The most successful traditional advertising will be
with the Lira City 3 Star Tourist Hotel association. Developing strategic alliances with
universities and other prominent secondary schools in Lira City will be a non-traditional method
of marketing, but it will be quite efficient. The website will also be used in marketing activities.

Customer Service

Obsessive customer attention is the mantra. Lira City 3 Star Tourist Hotel’s philosophy is
whatever needs to be done to make the customer happy must occur, even at the expense of short-
term profits. In the long run, this investment will pay off with fierce customer loyalty.

Required supply chain

Since Uganda has a well-functioning and elaborated legal framework, the legal environment
bears the highest risks concerning high costs in health and safety issues. The strong laws which
favour consumers and job-holders cause high costs for the employer. With a carefully analyzed
environment and legal advice all other risks concerning legal issues can be
eliminated. Governmental influence at the central government level for the 3-star hotel is for
now irrelevant. Yet the importance on a community level has to be considered. Since the major of
the community is informed about this project and is supporting the project, the likelihood of
objections from a public side is low. Objections from a private person are also very unlikely to
occur. The 3-star hotel will be placed in a rather industrial characterized zone of Lira City and
does neither affect the overall appearance of the locality nor impacts the housing area.

Human resources
General Manager

Is responsible for the hotel, guiding and supervising the operation of its different
departments. As responsible for the different sections, he/she will inform the
Administration about the investments and the financial, economic and commercial
policies, having the capacity to represent the Administration of the hotel within certain
powers that are conferred to him/her. Besides this, the General Manager is also
responsible for staff management as recruitment & selection, remuneration,
compensation perks or promotions as set in their contract of employment.
Moreover, He/she is responsible for the operational departments (Room and Food &

pg. 10
Beverage), supervising, coordinating, guiding and organizing them. Thus he/she
establishes and guarantees the conditions for an adequate accommodation.

Front Office

The front office functions include making reservations, reception and registration of
guests; ensure their accommodation; control the delivery of keys of rooms; register all
the consumptions of the customers in the informatics system; prepare and provide the
respective invoices to the guests; do check-out; notify the remaining sections about the
arrivals and departures of guests and control the reception of luggage and
correspondence. Its workers are also responsible for meeting the wishes and complaints
of guests, acting accordingly to the hotel procedures.
The Night Auditor, in addition to the previous functions, is responsible for the revision
and rectification of the effectuated registers in the system during the day (reservations,
consumptions and cash flows) as well as for the closing of the day in the system.
Besides this, he/she is also the responsible for the accurate operation of the hotel during
the night.

Housekeeping

The main functions of this department are to clean and prepare the rooms for the
accommodation of guests as well as ensuring the cleaning of the common areas
(reception, living area and sanitary facilities), the multipurpose room, the service areas
and the access facilities (lifts, runners, stairs). The inventory control is also his/her
responsibility.

Maintenance

The maintenance department must ensure the conservation and accurate operation of the
building and the equipment of the hotel. It is responsible for the installation,
maintenance and reparation of all equipment and machinery of the hotel and should be
apt to respond quickly to the daily intervention requests, mainly those that are directly
related to the satisfaction of customers. The department is also responsible for the
acclimatization and fire prevention systems. Also, it needs to perform periodic
inspections in the hotel and ensure that the department has the tools and materials that
are needed to repair and quickly solve problems and faults that affect the operation of
the hotel. Furthermore, it needs to register the preventive and repairing interventions
made in the hotel as well as the problems that it was asked to solve, reporting to the
Operational Manager.

Food and Beverage Department

The main function of this department is to prepare and serve the meals for breakfast,
since the hotel will not have any bar or restaurant services. The inventory control is also
its responsibility, in coordination with the General Manager. The cleaning and

pg. 11
preparation of the kitchen and the floor service should also be made by the department,
along with the preparation of the meals for the employees of the hotel.

Sales and Marketing Department

The Department establishes and guarantees the conditions for an accurate distribution
and promotion of the hotel, defining policies according to the values, vision, goals and
target of the Hotel and approved by the General Manager. The prices and discounts are
also defined by this department, as well as the management of complaints and
suggestions of the customers. The department provides all the information and reports
regarding the sales, occupation and price by distribution channels and customers, as
well as planning and forecasting maps.

Sales Assistant

Administrative Department

The administrative department is responsible for ensuring and processing the payments
of all the hotel’s suppliers; for computing all travel agent commissions payable; for
controlling and balancing all advance deposits; for keeping all records relating to
payroll and salaries; for issuing guest checks daily to all front office cashiers and for
ensuring the follow-up on missing checks and preparing cashier’s daily report. This
department is also responsible for the control of purchase and stock of the raw-materials
and internal consumption according to the demand of the various departments in the
hotel, as well as helping the General Manager in the Human Resources procedures,
organizing the recruitment and selection process and the formation of the new staff.
Besides that, he/she also collects and organizes the different information in order to
send to the outsourced Accounting Company that is responsible for all the accounting
activities, including salaries processing.

Growth strategy:

Where is the project now and how will it grow?

The project is at the stage of funding sourcing, when the funding is secured, the project will take a
minimum of 18 months for it completion, it will take 5 phases; Design Phase, Bid Phase, Project
launch, Construction Phase, handover and operationalization. In some circumstances, these phases
may overlap. The intention is to achieve as much work in parallel as possible. Local architectural
and engineering firms will be used to ensure speedy statutory approval by the local authorities,
which will occur during the Design and Bid phases. The limited availability of three star tourist
hotels in the Lira city area creates a profitability margin window for the first time investor. If
clean and comfortable stay is provided to the customers, then with a very conservative estimate,
the first year of the project’s expected occupancy would be 50% room occupancy with annual
growth increments of at least 10% anticipated. Funds are being solicited for use in putting up the
requisite 3-star tourist hotel infrastructure and buildings at the designated site in Lira city west
Division of Lira City. Since the site land for the proposed tourism and hospitality development
facility is readily available with a readily available utilities, the rest of the financing facility will

pg. 12
be applied to other core project investment components including the purchase of hotel facility
use items (i.e. furniture, fixtures, computers and one vehicle unit), covering project management
fees and design fees, and defraying the initial working capital expenses.
Proposed project investment plan

The capital cost is US$ 1,062,600; the hotel use items would require US$ 252,200; while the
initial working capital required would be US$ 293,000, thus the Total Cost would be US$
1,607,800. The sale at full occupancy i.e.150 double rooms and allied services is US$ 3,700,825.
The human resource requirement is 119 personnel in the managerial, skilled and semi-skilled
level. There will also be numerous jobs created indirectly. There is no problem of entry into the
market as the people here are known to be very friendly and there are no monopolies in this area
of the economy. The project is proposed to be financed through a combination of equity and
institutional development financing in the ratio of 68:32 respectively. We assume that the
institutional development loan will carry a profit markup rate of 10 percent per annum payable
over a period of ten years.

Financial Plan (In USD)

Development Facilities
Infrastructure 2.25% 55,000 55,000
Buildings 37.57% 920,000 920,000
Design Fee 2.76% 67,620 67,620
Project Management Fee 1.18% 28,980 28,980
Hospitality Facility Use Items 10.30% 252,200 252,200
Physical Contingencies 1.88% 46,000 46,000
Initial Working Capital 11.97% 293,000 293,000
Sub-Total (1) 67.91% 1,662,800 0 1,662,800
2) Equity
Project Sponsors
Land 32.09% 785,700 _ 785,700
Sub-Total (2) 32.09% 785,700 0 785,700
TOTAL (1) + (2) 100.00% 2,448,500 0 2,448,500

Profit and Loss Account.

The projected income statement for the proposed Lira City 3 Star Tourist Hotel tourism and
hospitality development facility is given in Table below.
Summary Profit & Loss Account for First Five Years of the Project (In USD)
ITEM/YEAR 2024 2025 2026 2027 2028
Sales 1,850,410 2,220,495 2,590,580 2,960,660 3,330,74

pg. 13
 5
Direct Cost of Sales 207,800 245,140 324,340 360,000 422,340
Other Production Expenses 0 0 0 0 0
Total Cost of Sales 207,800 245,140 324,340 360,000 422,340
Gross Margin 1,642,610 1,975,355 2,266,240 2,600,660 2,908,40
5
Gross Margin % 88.77% 88.96% 87.48% 87.84% 87.32%
Expenses
Payroll 220,800 231,840 243,432 255,604 268,384
Sales & Marketing & other 60,000 80,000 100,000 120,000 140,000
Expenses
Depreciation 68,970 68,970 68,970 68,970 68,970
Overhead Costs 35,500 42,600 49,700 56,800 63,900
Heat, Light and Power 3,300 3,960 4,620 5,280 5,940
Insurance 12,270 12,270 12,270 12,270 12,270
Lease 0 0 0 0 0
Payroll Taxes 33,120 34,776 36,515 38,341 40,258
Other 0 0 0 0 0
Total Operating Expenses 433,960 474,416 515,507 557,264 599,721
Profit Before Interest and Taxes 1,208,650 1,500,939 1,750,733 2,043,396 2,308,68
4
EBITDA 1,277,620 1,569,909 1,819,703 2,112,366 2,377,65
4
Loans Repayment 332,560 332,560 332,560 332,560 332,560
Interest Expense 166,280 133,024 99,768 66,512 33,256
Taxes Incurred 233,634 331,298 416,213 513,988 603,551
Net Profit 545,146 773,028 971,163 1,199,306 1,408,28
6
Net Profit/Sales 29.46% 34.81% 37.49% 40.51% 42.28%

On the basis of the projected income statements and related projections, rates of return for the
project are calculated and shown in Table below.

Gross Profit to Sales 88.77 88.9 87.4 87. 87.32

6 8 84
Operating Profit to Sales 65.32 67.5 67.5 69. 69.31
9 8 02
Net Profit to Sales 29.46 34.8 37.4 40. 42.28
1 9 51
Net Profit to Investment 22.26 31.5 39.6 48. 57.52
7 6 98

Payback Period

pg. 14
Payback period for the project, both in terms of owner’s equity and total investment,
is calculated below:
Total Investment = US$ 2,448,500
Promoter‟s Equity = US$ 785,700

“Profits” = Net Profit + Interest + Depreciation

Calculation of Payback Period for Equity and Total Investment
1 545,146 -1,903,354 -240,554
2 773,028 -1,130,326 532,474
3 971,163 -159,163 1,503,637
4 1,199,30 1,040,143
6
5 1,408,28 2,448,429
6

Payback period for Equity = 1.31 Years

Payback period for Total Investment = 3.13 Years

Capital: Output Ratio
Capital output ratios, representing the production potential of the project in relation to the
investment involved in its establishment, are calculated in Table below.
Capital: Output Ratios (In USD)
Total Investment 2,448,500 _ _ _ _
Sales (Output) 1,850,410 2,220,49 2,590,58 2,960,66 3,330,7
5 0 0 45
Capital: Output Ratio 1: 0.76 1: 1: 1.06 1: 1: 1.36
0.91 1.21

The projected cash flow for the first five years of the project is shown hereunder:
Projected Cash Flows (In USD)

ITEM/YEAR 2024 2025 2026 2027 2028

CASH RECEIVED
Cash from Operations
Cash Sales 1,850,410 2,220,49 2,590,58 2,960,66 3,330,74
5 0 0 5
Cash from Receivables 0 0 0 0 0
Sub-Total Cash from Operations 1,850,410 2,220,49 2,590,58 2,960,66 3,330,74
5 0 0 5

pg. 15
 Additional Cash Received
VAT Received 0 0 0 0 0
New Current Borrowing 0 0 0 0 0
New Other Liabilities (Interest-free) 0 0 0 0 0
New Long-term Liabilities 0 0 0 0 0
Sales of Other Current Assets 0 0 0 0 0
Sales of Long-term Assets 0 0 0 0 0
New Investment Received 0 0 0 0 0
Sub-Total Cash Received 1,850,410 2,220,49 2,590,58 2,960,66 3,330,74
5 0 0 5
EXPENDITURES
Expenditures from Operations
Cash Spending 768,845 782,724 851,265 903,297 937,938
Bill Payments 559,564 617,298 820,696 865,697 892,640
Sub-Total Spent on Operations 1,328,409 1,400,02 1,671,96 1,768,99 1,830,57
2 0 4 7
Additional Cash Spent
VAT Paid Out 0 0 0 0 0
Principal Repayment of Current Borrowing 0 0 0 0 0
Other Liabilities Principal Repayment 0 0 0 0 0
Long-term Liabilities Principal Repayment 332,560 332,560 332,560 332,560 332,560
Purchase Other Current Assets 35,000 51,000 53,000 60,000 72,000
Purchase Long-term Assets 0 60,000 120,000 180,000 240,000
Dividends 0 0 0 0 0
Sub-Total Cash Spent 1,695,969 1,843,58 2,177,52 2,341,55 2,475,13
2 0 4 7
Net Cash Flow 154,441 376,913 413,060 619,106 855,608
Cash Balance 182,717 559,630 972,690 1,591,79 2,447,40
5 3

Projected Balance Sheet (In USD)

ITEM/YEAR 2024 2025 2026 2027 2028
ASSETS
Current Assets
Cash 182,717 559,630 972,690 1,591,795 2,447,403
Other Current Assets 35,000 86,000 139,000 199,000 271,000
Total Current Assets 217,717 645,630 1,111,690 1,790,795 2,718,403
Long-term Assets
Long-term Assets 1,962,900 2,022,900 2,142,900 2,322,900 2,562,900
Accumulated Depreciation 68,970 137,940 206,910 275,880 344,850
Total Long-term Assets 2,031,870 2,160,840 2,349,810 2,598,780 2,907,750
Total Assets 2,249,587 2,806,47 3,461,50 4,389,575 5,626,153
0 0

pg. 16
 LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable 9,900 126,315 142,742 204,071 364,923
Current Borrowing 0 0 0 0 0
Other Current Liabilities 0 0 0 0 0
Sub-Total Current Liabilities 9,900 126,315 142,742 204,071 364,923
Long-term Liabilities 1,662,800 1,330,240 997,680 665,120 332,560
Total Liabilities 1,672,700 1,456,55 1,140,422 869,191 697,483
5
Paid-in Capital 200,000 200,000 200,000 200,000 200,000
Retained Earnings -168,259 376,887 1,149,915 2,121,078 3,320,384
Earnings 545,146 773,028 971,163 1,199,306 1,408,286
Total Capital 576,887 1,349,91 2,321,078 3,520,384 4,928,670
5
Total Liabilities and Capital 2,249,587 2,806,47 3,461,500 4,389,575 5,626,153
0
Net Worth 576,887 1,349,91 2,321,078 3,520,384 4,928,670
5

Break-Even Analysis

The project’s commercial break-even level (profitability break-even) in Project Year

5 (2028) is calculated below:
Break-Even Analysis in Project Year 5 (2028) (In USD)

Direct Cost of Sales 422,340 _ 422,340

Payroll 268,384 268,384
Sales & Marketing & other Expenses 140,000 _ 140,000
Depreciation _ 68,970 68,970
Overhead Costs 63,900 _ 63,900
Heat, Light and Power 5,940 _ 5,940
Insurance expenses _ 12,270 73,426
Payroll Taxes _ 40,258 851,827
Interest Expense _ 33,256 54,348
TOTAL 5,819,987 1,356,441 7,176,428

Sales Value of Production = US$ 3,330,745

Break-even Sales = 423,138 423,138 423,138
1-632,180 1 –0.19 0.81
3,330,745

pg. 17
 Break-even Sales =US$ 522,393

Capacity utilization required to Break-even = US$ 522,393 x 100 = 15.68%

US$ 3,330,745

Margin of Safety = 100% 15.68% = 84.32%

Value Added/Contribution to GDP

Implementation of the project is expected to have a beneficial economic impact on

regional/national economic development. The project’s contribution towards the
country’s Gross Domestic Product (GDP) is estimated below.
Value Added/Contribution to GDP (USD)
Description 2024 2025 2026 2027 2028
Value of Production (Sales) 1,850,410 2,220,495 2,590,580 2,960,660 3,330,74
5
Less Inter mediate Inputs:
Direct Cost of Sales 207,800 245,140 324,340 360,000 422,340
Heat, Light and Power 3,300 3,960 4,620 5,280 5,940
Overhead Costs 35,500 42,600 49,700 56,800 63,900
Depreciation 68,970 68,970 68,970 68,970 68,970
Total Intermediate Inputs 315,570 360,670 447,630 491,050 561,150
Value Added 1,534,840 1,859,825 2,142,950 2,469,610 2,769,59
5
Value Added as % of Output 82.95% 83.76% 82.72% 83.41% 83.15%
Value Added per Worker (US$) 12,898 15,629 18,008 20,753 23,274

Identification and mitigation of risks

Social factors do hardly influence this project or bare risks which have to be considered. Mentionable
is the aging population which increases cost in labor due to higher salaries for experienced
workers. On the other hand, it offers an opportunity because of higher income customers. Due to
Uganda’s stable economy, economical risks are generally estimated as low. Cost of capital is
rather high and economic growth is low which bears some risk estimated as low to medium. This
means existing hotels in this area have to compete for a consistent market share. In case the hotel
should not be able to quickly establish a large market share it might not be able to cover the
operational costs which can threaten the whole project. Additionally, the high price level in
Uganda as well as the short travelling season reduces the attractiveness for tourists. Yet the main
customer is the business traveler which reduces the risk of low occupation. Due to its location
next to the highway, risks in complications with the supply chain are low.

Scenario Analysis

pg. 18
Customer Power
The relative high supply of hotels in the Lira City area implies a high customer power. This
results in tense competition and price pressure. Nevertheless, this is most likely only true in low
demand periods such as Christmas holidays. Most interviewees stated that during expositions and
similar events most hotels are fully booked and therefore customer power is lowered. Conclusively,
the customer power in the hotel business depends to a certain extent on seasonal events. Though
the customer power for tourists is relatively high, since they are not bound to a certain location
and do not mind driving a few miles further. As mentioned the majority of customers are
expected to be business people and therefore the tourists do not have a big influence on the
customer power.

Suppliers
We assume that due to the high availability of suppliers for almost all respects, the power of
suppliers is believed to be relatively low or at maximum moderate. There are no suppliers
specialized only in the hotel industry.

Substitutes
After intensive thinking and research we conclude that there is no real substitute for a hotel or
motel. One might argue rest areas where truck driver’s sleep could be used as a substitute to
hotels but we highly doubt business people would choose this option. Neither camping place nor
hostels fully reflect the service and comfort of a hotel or motel.

Social
Social factors do hardly influence this project or bare risks which have to be considered.
Mentionable is the aging population which increases cost in labour due to higher salaries for
experienced workers. On the other hand, it offers an opportunity because of higher income
customers.

Environmental
By taking landscaping as a major eco-system preservation consideration, the project shall
gradually adopt a green practice for managing environmental issues and implementing
sustainable business practices in and around the tourist hotel through; a) Promoting clean energy
for running the hotel b) Using clean cooking stoves and sun powered cooking equipment; c)
Using biogas generated from a piggery unit d) Using solar energy for lighting. To protect the
eco-system, the proposed project shall manage environmental issues and implement sustainable
business practices in and around the tourist hotel- this will include; creating conservative water
run ways within the hotel complex, planting trees in and around the hotel environment to
regulate weather and clean airspace through absorption of carbon, and creation of a separate free
and safe eco-system space for training and learning. Also, a sub-weather station shall be created
within the hotel premise for weather/environmental training as a way of ensuring economic
benefits of adopting green practices in the hotel and tourism industry which shall be highlighted
as part of a win-win green and competitive position. Such a green commitment by the hotel
management will influence the growth of the green accommodation sector (e.g., green hotels,
eco-lodge, caravan, camping), which is committed to setting up an environmentally friendly
guideline for sustainable business practices, educating consumers to be more aware of the green
practices, and engaging in pro-environmental behavior such as energy saving, recycling, water

pg. 19
management, waste management for environmental conservation outcomes as well as proper
eco-system management.

Gender
Whereas the project has not yet done a Gender Impact Assessment study, from observations, the
hotel industry in Uganda is dominated by female employees. However, this is mainly at junior
levels such as cleaners, waitresses and front desk officers among others. The project will provide
additional employment opportunities for women and will intentionally prioritize qualified
women for management positions.

Conclusion
It can be concluded from the foregoing business analysis and financial modelling that the
proposed full-scale establishment and operation of the Lira City 3 Star Tourist Hotel and
hospitality development facility at Lira City in Northern Uganda is extremely viable from a
financial and commercial point of view; and it is further recommended that an early decision to
facilitate it with the requisite line of credit be expedited such that implementation of the project
follows the fastest track possible for the benefit of the project promoters, the Uganda tourism
and hospitality industry and market, and the Ugandan economy at large. The competitive forces
on the project are not very strong at the moment; the government policies are inclined towards
foreign investments and inflow of funds in the economy. There is a big gap in the tourist market
in our identified location. The large capital requirement of the project raises significant barriers
to entry which constrains new entrants into the market.

pg. 20