Department of Accounting & Information

Systems
University of Dhaka
ASSIGNMENT

ON

FEASIBILITY STUDY ON
ESTABLISHING A THREE STAR
HOTEL IN COXS BAZAR
Project Appraisal and Management
Course code: 5403
SUBMITTED TO:

PROFESSOR DR. MAHFUZUL HOQUE

FACULTY OF BUSINESS STUDIES
UNIVERSITY OF DHAKA
SUBMITTED BY:
NAME
PARTHA SHARATHI DEBNATH
MOHAMMAD MUNIR HOSSEN
MD. EMRAN HOSSAIN
MBA (EVENING)

ROLL NO.
10916007
10814062
10916056

Particulars

Page No.

CHAPTER 1: INTRODUCTION

CHAPTER 2: PROJECT DESIGN

CHAPTER 3: INFORMATION ABOUT THE PLACE

CHAPTER 4: DEMAND QUANTIFICATTION

10

CHAPTER 5: TECHNICAL DETAILS PF THE PROPOSED

13

HOTEL

CHAPTER 6: RECOMMENDED MARKETING MIX

15

CHAPTER 7: MARKET FEASIBILITY

19

CHAPTER 8: FINANCIAL VIABILITY

23

BIBLIOGRAPHY

35

22

List of Annexures
Annexure
Annexure
Annexure
Annexure
Annexure
Annexure

1
2
3
4
5
6

Annexure 7
Annexure 8
Annexure 9
Annexure 10

Cost of land
Cost of Building
Plant and Machinery
Expenses
Miscelleneous Fixed Asset
Preliminary and Pre-operative
Expenses
Salary and Wages
Interest on L/T Loans
Room Sales
Food and Beverage Sale

CHAPTER -1
INTRODUCTION

33

TOURISM
Tourism is the totality of the relationship and phenomenon arising from travel and
staying of strangers; the stay does not imply the establishment of a residence and
connected with remunerated activity.

IMPORTANCE OF TOURISM
In creating better appreciation of other peoples ways of the life and institution,
tourism may create goodwill for a country. Each year many tourist travel to participate
in particular events; their visits also afford opportunities to improve co-operation as
well as project the correct image of a country to the outside world.
Politics, society, education, and culture thus often provide motivations for tourist to
travel away from home, they influence tourism and tourism in turn has an influence
on them. These factors also help explain participation in tourism generally as we have
seen. An evaluation of the significance of tourism may be extending to such aspects as
organized sport and religion.
The main economic significance of tourism-that money earned in places of normal
residence is spent in places visited-is common to all tourism, whether domestic or
international. Each year vast sums are transferred from the economy from whom it is
earned, to economies in receiving areas where they provide a source of income, a
means of livelihood, and amenities for the resident population.
The flow of money generated by tourist expenditure finds its way into the overall
economy of the tourist destination, as the money is turned over and re-spent. But
international tourist expenditure introduces an additional aspect of economic
significance, as countries, which have separate political and economic entities, have to
balance their transactions with the rest of the world.
International tourism, therefore, enters into the balance of payments accounts of
individual countries and ease of major significance in international trade. For
countries, which generate tourist traffic, it represents an import in the same way as the
import of merchandise. Globally tourism countries are a major item in world trade,
which has shown a much faster rate of growth in recent years than trade in goods.
Tourism is evaluated mainly in terms of its economic significance, but reference is

44

made also to its role as source of other, less quantifiable benefits and to some of the
problems which tourism presents to individual destinations.
When traveling away from home, tourists come in contact with places they visit and
with their inhabitance, and so social exchanges take place. Their presence and their
social background affect the social structure and mode of life at the destination.
Tourists are in turn affected by the experiences and often carry back home with them
new habits and new outlook on life.
Tourism has an educational significance. In the wider sense it has the beneficial effect
which contact between people of different races and nationalities can bring about. In a
narrow sense much tourist activity takes the form of study trips and attendance at
courses and conferences with specified educational aims in view. Tourism is often
accompanied by cultural exchange and by cultural enrichment of those who travel as
well as those at the receiving end. The cultural factors that may attract tourists to a
particular destination are architecture, historical monuments and birthplaces of
famous people. These are some of the places most visited by the tourists. Festivals
and exhibition rely heavily to visitor traffic as their audience.
Tourism can be classified into:
a) Recreational Purposes:
Tourists visit places for recreational purposes. Such tourists spots are usually
hill stations, beaches etc, such tourists like to get away from the daily grind of life and
freshen themselves.
b

Cultural

) Tourism:
Such type of tourist satisfies the cultural curiosity of the tourist. Such tourist spots
include ancient monuments, places of historical and religious importance etc.

c Adventure/Sp
) orts:
This type of tourism is very particular with the youth. This type provides people to
have adventure like diving, skiing, rafting etc.

55

d Healt
) h:
Such type of tourism takes people to places of recovery like places with curative
possibilities. E.g.: Hill-Stations, hot springs, spas etc.
e Convention/Educat
) ional:
Tourism such as this is meant for organizing conventions for political, cultural or
academic reasons.
Tourism can also be classified on basis of region:
Domestic:
Domestic tourism is for tourists belonging to their own country and do not require any
papers or documentation for travel.
International:
Such type of tourism refers top traveling to other countries other than their own and
with different political and economic systems. This requires documents such as visa,
passports, etc, to cross the borders.

CHAPTER -2
PROJECT DESIGN
66

AIM:
To reveal the market feasibility and financial viability of the proposed hotel.

OBJECTIVES:
Some of the main objectives of the study of the project are:

To determine the marketing feasibility & Financial Viability of a proposed hotel

in COXS BAZAR.

To estimate the cost of project.

To estimate the total expected revenue from the various departments of the
proposed hotel.

To calculate the profitability ratios and pay back loan period of the proposed
hotel.

Determine the profitability analysis.

To find the break-even point and expected return on investment.

METHODOLOGY:
The information for this project has been collected through the following
procedures:

Primary Data:
Some of the primary data, which are collected for the study of this project, were collected
from government officials of respected departments websites.

Secondary Data:
Various data were used from journals, books and various supplementary copies of news
and other magazines and from the Internet has helped us in gathering information.

LIMITATIONS:

Calculation made in the project is based on assumption, approximation and

subject to change.

Getting exact financial figures was not possible.

77

CHAPTER -3
INFORMATION ABOUT THE PLACE

COXS BAZAR
Cox's Bazar is a town, a fishing port and district headquarters in Bangladesh. It is
known for its wide sandy beach which is the world's longest natural sandy sea beach.
It is an unbroken 125 km sandy sea beach with a gentle slope. It is located 150 km
south of Chittagong.

ORIGIN OF THE NAME

Coxs Bazar is also known by the name "Panowa", the literal translation of which
means "yellow flower". Its other old name was "Palongkee". The modern Cox's Bazar
derives its name from Captain Cox (died 1799), an officer serving in British India. In
the 18th century, an officer of British East India Company, Captain Hiram Cox was
appointed as the Superintendent of Palongkee outpost after Warren Hastings became
the Governor of Bengal. Captain Cox was specially mobilised to deal with a century
long conflict between Arakan refugees and local Rakhains. A premature death took
Captain Cox in 1799 before he could finish his work. But the work he had done
earned him a place in the hearts of the locals and to commemorate his role in
rehabilitation work a market was established and named after him as Cox's Bazaar
("Cox's Market").

GEOGRAPHY AND CLIMATE

Cox's Bazar town with an area of 6.85 km, is located at 21350N 92010E /
21.583333N 92.016667E and bounded by Bakkhali River on the north and East,
Bay of Bengal in the West, and Jhilwanj Union in the south. The climate of Cox's
bazar is mostly similar to the rest of the country. It is further characterised by the
location in the coastal area. The annual average temperature in Cox's Bazar remains at
about a maximum of 34.8 C and a minimum of 16.1 C. The average amount of
rainfall remains at 4,285 mm.

88

AREAS OF INTEREST.
Tourist attractions near the town

Aggmeda Khyang: a large Buddhist monastery, and a place revered by around

400,000 Buddhist people of Coxs Bazar; and the Chittagong Hill Tracts. The
main sanctuary is posted on a series of round timber columns. It has a prayer
chamber and an assembly hall along with a repository of large and small bronze
Buddha images and a number of old manuscripts.

Ramu: about 10 km from Coxs Bazar, is a village with a sizeable Buddhist

population. The village is famous for its handicrafts and homemade cigars. There
are monasteries, khyangs and pagodas containing images of Buddha in gold,
bronze and other metals inlaid with precious stones. One of the most interesting of
these temples is on the bank of the Baghkhali river. It houses not only interesting
relics and Burmes handicrafts but also a large bronze statue of Buddha measuring
thirteen feet high and rests on a six feet high pedestal. The wood carving of this
khyang is very delicate and refined. The village has a charm of its own. Weavers
ply their trade in open workshops and craftsmen make handmade cigars in their
pagoda like houses.

Dulhazra Safari Park: This safari park is an extension of an animal sanctuary

located along the Chittagong-Cox's Bazar road about 50 km from Cox's Bazar
town. The sanctuary itself protects a large number of wild elephants which are
native to the area. In the safari park there are domesticated elephants which are
available for a ride. Other animal attractions include lions, Bengal tigers,
Crocodiles, Bears, Chitals and lots of different types of birds and monkeys.

Places of interest along the beach

Coxs Bazar, mostly famous for its beautiful sea beach and the sunset, has several
other attractions, including:

99

Himchari

Laboni Beach: This is the main beach of Cox's Bazar and is considered the
main beach due to the fact that it is closest to the town. Close to the beach,
there are hundreds of small shops selling souvenirs and beach accessories to
the tourists.

Himchari: Located about 18 km south of Coxs Bazar along the sea beach, is
a nice place for the picnic and film shooting. This picnic spot is famous for its
waterfalls. The road to Himchari runs by the open sea on one side and hills on
the other which makes the journey to Himchari very attractive. Its attraction is
the Christmas tree.

Enani Beach: Located 35 km south of Coxs Bazar, this white sandy beach is
located within Ukhia Thana. This beach is famous for its golden sand and
clean shark free water which is ideal for sea bathing. Most tourists prefer to
come down here for relaxing because it is free from the crowd of tourists that
is usually seen at the Laboni beach.

1010

CHAPTER -4
DEMAND QUANTIFICATION
Demand quantification is a part of Market research and broadly includes:
a)Determining the size of both current and potent
demand.
b)Accessing Market trends
c)Demand & sales forecasting

HOTELS AND THEIR FACILITIES

SL.No Name of the Hotel
1

Seagull Hotels Limited

2
3
4
5

Hotel Sea Palace

Hotel kollol
Hotel Sea Crown
Hotel Koral Reef

Total

No. of

Occupanc Produc

rooms
83

y
65%

t
5395

194
64
58
20

65%
60%
70%
70%

12610
3840
4060
1400

419

27305

1. Seagull Hotels Limited

Rooms: 83 Rooms
Facilities: Doctor on Call, Safe Deposit Locker Facility, In-house Laundry, 24
Hours Currency Exchange Facility, Free Multi Channel CCTV including Movies,
Free Parking, Left Luggage Room
2. Hotel Sea Palace
Rooms: 194
Facilities: Business Center, Swimming Pool, Health Club, Recreation Club, Book
Shop, Beauty Parlor, Travel Counter, Conference Hall, Discotheque, Shopping Center,
Restaurants
3. Hotel kollol

1111

Rooms: 58 rooms
Facilities: Business Center, Swimming Pool, Health Club, Recreation Club, Book
Shop, Beauty Parlor, Travel Counter, Conference Hall, Discotheque, Shopping
Center,Restaurants
4. Hotel Sea Crown
Rooms: 64 rooms
Facilities: 24 hour room service/ Coffee shop, Satellite television ,Restaurant ,
Bar, Health club, Laundry , Conference hall , Doctor call, Currency exchange, Travel
assistance , Car hire.
5. Hotel Koral Reef
Facilities: Business Center, Swimming Pool, Health Club, Recreation Club, Book
Shop, Beauty Parlor, Travel Counter, Conference Hall, Discotheque, Shopping

DEMAND CALCULATION:
Total Pr oduct
1. Average Occupancy = Toatal no. of Rooms
27305
= 419
=65.16
Assuming that break-even occupancy is 60% for a three star hotel Therefore demand
for the room for the proposed hotel -Total Rooms Average Occupancy
Break Even Occupancy
2. Total potential of rooms =
419 65.16
60
=

1212

= 453.91
( AverageOccupancy B.E.O) Total Rooms
B.E.O.

3. Demand =

(65 60) 419

60
= 34.91

Demand
34.91
100
100
60
4. Maximum Number of Rooms = B.E.O.
= 58.18
Since the assumptions made are not fully validated it is suggested a hotel project of 45
can be promoted in Coxs Bazar.

Figure: Proposed Place at Coxs Bazar

1313

CHAPTER -5
TECHNICAL DETAILS OF THE PROPOSED
HOTEL
ABOUT THE FORT MANOR HOTEL
Accommodation consists of elegantly appointed rooms that range from the suite to the
pent house suites. Each features a seating area and balcony. Luxurious marble
bathrooms with Victorian style freestanding bathtubs overlook a private walled
courtyard.
The FORT MANOR Hotel has 45 ROOMS. The Main features of the hotel
are:

ROOMS

TARIFF

20 SINGLE rooms,
20 DOUBLE rooms,
5 Deluxe suites
1 multi cuisine restaurant ( THE REGENCY- 50 Pax)
1 Bar ( LAGOONA- 30 Pax)
1 Banquet Hall, Conference Hall & Board Room(420 Pax)

Name

of

2500
3500
4000

theHOTEL FORT MANOR

hotel
Star category
Location
Type
Propose site
No. Of rooms
Facilities offered

3 star
Coxs Bazar
Private ownership
Marin Drive, Kola Toli New Beach
45
Restaurant, Accommodation
Bar, Car parking etc
Means of Finance Loans from Bank and personal financing
Manpower
135

AMENITIES
Air conditioned room

1414

Airport transfers
Audio visual equipped
Baby care
Banquet facilities
Bar
Business center
Cable TV
Car parking
Doctor on call
Fax service
Fire safeguards
Laundry facilities
Money changer
Parking
Photocopy services
Power back-up
Restaurant
Safe deposit
Travel desk

BANQUET FACILITIES (420 PAX)

OHP presentations

Public address systems - lectern, table, and lapel microphones

Exhibitions - design and execution

Business center

Full communication facilities - National and international

Printing, stationary, delegate kits

Video coverage and photography

CHAPTER -6
RECOMMENDED MARKETING MIX
Marketing is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges that
satisfy individual and organizational objectives. The marketing mix refers to the
appointment of the effort, the combination, the design and integration of elements of
marketing in to a program, which is on the basis of an appraisals of the marketing

1515

forces, will vest achieve the objective of an enterprise of a given time.

MARKETING MIX:
In common parlance, marketing is the process of selling something at a shop or
market place. A market is regarded as a single or an aggregated or relationship
between consumers and producers who are separated by place and time and have a
potential to strike an exchange of goods and services. Marketing is concerned with
business and the functions, product planning, pricing, selling and advertising.
When the functions mentioned above are interlocked in a planned and systematic
manner to attain a given objective. They merge their identity in what is called the
marketing mix in short; it just means the mixing of marketing ingredients, which are
also popularly known as the four Ps viz.
Adequate advertising, sales, promotion and personnel selling to create interest and
design for the product among customers for the proposed hotel can be based upon the
concept of the customer segment aimed at promote the market strategy.
The four basic aspect of marketing are:

Place
Product
Price
Promotion
An optional marketing mix, hence involves from a creative blinding of ingredients or
elements, so that the product or services is offered to the market under the conditions
most favorable to the attainment of marketing objectives.
Place:
The place can define as The aggregate of forces or conditions within which buyers
and sellers make decision that result in the transfer of goods can be segmented
geographically into:
Region or place

1616

 Climate
In the geographic base, regional differences in terms of topography, climate,
population and its density, from the base for market segmentation and differentiated
marketing effort.
Choosing the right location is an important and vital decision for any hospitality
business. Certain factors have to be taken into account to decide the right place. Some
of the factors that decided the selection of proposed hotel place are:

Railway station and bus stand are 1 kms and airport is 3 kms respectively.

Main City is just 2 km from the proposed site.

Easy accessibility to town area.

Product:
A product is a bundle of utilities and accompanying services. The proposed three star
hotel would be a three-floor building with the following facilities.

Car Parking

Banquet Facilities

Telephone in all Rooms

TV with Channels in all Rooms

Central Air Conditioning system

Multi- Cuisine Restaurant

Bar

24 Hours Room Service

PROMOTION:
To make the product and price known and acceptable to the target customers, it is
essential to communicate, persuade and motivate them. Promotion can be effected
through,

Personal Selling

1717

Advertisement

Sales Promotion

Public Relation

Personal Selling: The hotels sales persons, who are on its customers so as to
make an offer of sale, motivate them to positively respond to it and finally clinch the
ideal.
Advertising: The proposed hotel prompted through advertisements, by giving
complementary to the guest and also by suggesting other 3* and 4* hotels by
suggesting the name of the hotel if the guest has his company here, so that it is easily
accessible in the same way the proposed hotel also in return will help. Advertisement
could be referred to as the use of mass communication media to influence existing or
potential through newspaper, T V ads. Etc.
Advertisements will have positive effects such as:

It will help to raise awareness about the company

To increase safer for the company

To create favorable image and confidence of company.

The various elements of advertising are joint media, RADIO ADVERTISING AND
OUT DOOR ADVERTISERS PRINT MEDIA:
Newspaper and magazine have a great effect on influencing the people. An
alternative advertisement given in the newspaper or magazine will influence the
people. Such advertisements are already targeted at particular market segment; there is a
large reading audience.

Out Door Advertisement: This type of advertisements covers large number of

people with low experiences. The sales can also be promoted by giving discounts to
the regular customer. As the proposed hotel is mostly targeting on air travelers, it is
suggested to have a airport facilitator to guide to gust and even canvas people for the
hotel. The hotel will provide pick up and drop to guest from the airport, and also will
have tips with air lines for the staff and customers in cause of stop over and delay of
flight etc.
The hotel will be offering its facilities at nominal rates. The off-heard saying 5 star
facilities at 3 star rates would be a reality as far as The Destiny would be concerned.

1818

The pricing strategy will naturally depend on what the proposed hotel offering, the
facilities available in the hotel etc. Another factor to be considered when pricing of
rooms and out lets are low is to compare it with the competitions. It should be less
that of the competitions.

CHAPTER -7
MARKET FEASIBILITY
1919

PORTERS FIVE FORCES MODEL:

Threat of New Entrants: Within the hotel industry in Coxs Bazar there is significant
more threat of new entrants because it is rapidly growing industry with a very strong
potential growth. The factors which limit the new entrance or which become the
barriers to entry of new entrant are:

Legal Requirement

Capital-intensive industry

Proper research and development

Bargaining Power of Suppliers: The power of suppliers is strong when sellers are
concentrated, or the customers have few alternatives in term of substitutes or the
switching cost is high. Suppliers can really affect an industry by raising their prices.
In case of Hotel Fort Manor we can say that they have strong bargaining power
mainly because of the following reasons:

Their product and services are really unique and different

There is no close substitute of hotels they have forward integration and have
direct contact with the customers

Bargaining Power of Buyers: Buyers may affect the industry through their ability to
force down the prices. In case of Hotel Fort Manor bargaining power of buyers is high
because:

Alternative hotels in Coxs Bazar

Switching cost towards competitors is low

They get discounts if they make reservation online

2020

Intensity of Rivalries: In Coxs Bazar there is a strong competition within the

hotel industry and they all compete aggressively, and there is no alliance
between these hotels because the opportunities to differentiate the target market
are few. So the intensity of rivalry is severe and the companies defend their
targeted customers aggressively. The competition is intense mainly because of
the following reasons:

Hotel industry is a rapidly growing industry and all the competitors have an
opportunity to grow

All the competitors are roughly equal in size and power

High exit barriers

Threat of Substitute: When we talk about the threat of the substitute Islamabad
Serena hotel, we come to know that there is no as such threat because there is no close
substitute of hotel industry.

SWOT ANALYSIS
Opportunities:
Opportunity means an area in environments that, if exploited, may generate high
performance.

Within the context of Serena Hotel they have the following

opportunities:
1. Trend to Tourism: The hotel has an opportunity to introduce more attractive
packages because the tourism trend is continuously increasing and as the hotel is
on its growing stage, they have to lower their prices to gain more and more share
in the market. By doing this they can keep hold on to their old customers and can
attract new tourists.
2. Alliance with Airlines & Shipping Corporation: Serena hotel has a
great opportunity to create an alliance with airlines because it helps them to
increase their revenues as well as boost the tourism so they have a great
opportunity to get maximum revenue out of it.

2121

Threats:
Organizational threats means an area in environments that increases the difficulty of
an organizations achieving high performance. So when we talk about treats to Serena
hotel we can say that they are facing the following threats:
1. Existing Competitors: The hotel has competitors like Hotel Seagull and
Hotel Sea Palace. They are threats for the Hotel Fort Manor because if they start
lowering their prices or offer more attractive packages then it may be possible that
customers will move to them.
2. Strong Competition: Strong completion among the existing competitors is
also a big threat because the switching cost of the customer from one hotel to
another is very low so it may be possible that if the customer is not satisfied with
any particular service then can move to the competitors.

Strengths:
Strength is a skill or capability that enables an organization to conceive of and
implement its strategies. Following are the strengths:
1. Location & Best Property: The hotel is situated near both the airport and
the bus stand. Communication with the town is also very good.
2. High Quality Services: Serena hotel provide different services like

Airport pick-up and drop by Hotel Vehicle

Providing services like Free local calls / faxes / Internet, fruit basket, daily
newspaper, laundry/pressing/dry-cleaning

Small boardrooms and meeting facilities are available as well.

The hotel features 24-hour Room Service, travel desk, and in-house doctor.

3. Competent Staff: The primary goal of the Hotel is to meet and satisfy the
needs of all people associated with the Hotel that includes both guests and
employees. So one of the biggest strength of the hotel is that they have competent
and skilled employees who are available at the proper time and performing the
tasks that meet the needs of the Hotel.

Weaknesses:

2222

Organization weakness means skills and capabilities that do not enable an

organization to choose and implements strategies that support its mission .A good and
well-reputed organization should over come its weaknesses, in this way company can
achieve its goals. So within the context of Serena hotel we come to know the
following weaknesses:
1. Limited Target Market: One of the biggest weaknesses of the hotel is that
they have a limited target market. Their basic approach is the only tourists or the
business class.
2. Internet facility: The hotel does not have the internet facility to book rooms
online, for which the hotel is losing some foreign customers.

2323

CHAPTER -8
FINANCIAL VIABILITY
INTRODUCTION TO FINANCIAL ASPECTS OF THE
PROPOSED PROJECT
The financial planning includes the selection of objectives and selection of policies,
programmers and procedures to achieve the objectives.

The various consideration

relating to the present capital need, requirement of investors and possibilities of

expansion resolve themselves into a present determination of:

The amount of capital to be raised.

The forms of propitiated amount of securities to be issued.

Policies as to administration of capital.

PROJECT AT GLANCE
Total land Area
Total Built up Area
Type of hotel
Location
Name of the hotel
No - of guest room
Room tariff

= 3500 sq.ft
= 13870 sq.ft
= Business Hotel
= Marin Drive, Kola Toli New Beach
= HOTEL FORT MANOR
= 45 Rooms
=Single Room: 2500/Double Room: 3500/Suite Room: 4000/(Rates are fixed till 3rd then to increase 10% every year)

FACILITIES PROVIDED BY THE PROPOSED HOTEL

Multi - cuisine Restaurant

= 50 covers

2424

= 30 covers
= 420 covers

Bar
Banquet/ Conference Hall
Centralized A/C
Room Service
Travel Desk
Locker Facility
Car Rental
Free Pick Up Facility
Secretarial / Valet Services
Doctor On Call
Channel Music
Cable Network
Foreign Currency Exchange

COST OF PROJECT

Amount in lakhs
49.93

Cost of land
Cost of building
Plant and machinery

158.65
212.30

Furniture and fixture

Miscellaneous fixed assets

39.55
12.12
553.12
55.31
77.50
685.93
34.29
639.10

Margin for contingency (10% on 1-5)

Preliminary expenses
Interest on implementation period
Total cost of the project

MEANS OF FINANCE
1) Term loan (65% of project):

415.41

2) Owners capital (35% of project):

252.07

DER (DEBT EQUITY RATIO)

2525

Term Loan
Share Capital
Debt equity ratio =
DER

415.41
= 252.07
= 1.85

SALES REVENUE
Estimation of Income of 5 Yrs

Item

Year I

Year II

Year III Year IV

Year V

60%

65%

70%

75%

80%

Room sales

306.60

332.15

357.70

421.57

494.64

F and B sales

519.68

613.69

718.09

827.91

951.73

Total Sales

686.28

810.84

945.79

1124.48

1326.37

% of occupancy
(operational
level)

OPERATIONAL EXPENSES

2626

Estimation of Expense for 5 Yrs

Item

Year I

Year II

Year III

Year IV

Year V

Cost of F and B

207.87

245.47

287.23

331.16

380.67

(40% of F and B sales)

Electricity (5% of

44.31

50.54

57.28

66.22

76.31

total sales)
Salaries and

88.27

97.09

106.80

117.48

129.23

Wages (annexures)
Administration and

44.31

50.54

57.28

66.22

76.31

132.94

151.62

171.86

198.67

228.95

44.31

50.54

57.28

66.22

76.31

sales)
Miscellaneous expenses (4%

35.45

40.43

45.83

52.97

61.05

of total sales)
Total expenses

597.46

686.23

783.56

898.94

1028.85

Dep

Total

management expenses (5%

of total sales)
Advertisement
and publicity (15% of total
sales)
Insurance and
legal charges (5% of total

DEPRECIATION STATEMENT
Year Building

Dep

P&M

(10%)
I

206.65

23.66

Dep.

F&F

(25%)
212.30

53.07

Dep

Misc

(25%)
39.55

9.88

(25%) Depreciation
12.12

3.03

89.64

2727

II

212.99

21.29

159.23

39.80

29.67

7.41

9.09

2.27

70.77

III

191.70

19.17

119.43

29.85

22.26

5.56

6.82

1.70

56.28

IV

172.53

17.25

89.58

22.39

16.70

4.17

5.12

1.28

45.09

155.28

15.52

67.19

16.79

12.53

3.13

3.84

0.96

36.40

PROFITABILITY STATEMENT
Particulars
1. Op. Profit
2. a) Interest on L/T loan
b) Interest on BOD

Year I
288.82
74.90
3.63

Year II Year III Year IV

324.61 362.23
425.54
65.54 56.17
46.81
4.18
4.78
5.52

Year V
497.52
37.45
6.36

3. Depreciation
4. POP expenses
5. Profit before tax A[1-(2+3+4)]

89.64
77.50
43.15

70.77 56.28
77.50 77.50
106.62 167.50

45.09
77.50
250.56

36.40
77.50
339.81

6. Profit for tax B = A

7. Income tax @ 50% + 10%

43.15
25.89

106.62 167.50
63.97 100.50

250.56
150.37

339.81
203.88

surcharge(C+D)
8. Profit after tax E = [B-(C+D)]

17.26

42.65

67.00

100.25

135.93

9. Available surplus(8+3+4)

184.40

190.92 200.78

222.84

249.83

10. L.T repayment

58.51

58.51

58.51

58.51

58.51

11. Net cash flow (9 -10)

94.65

95.41

100.12

103.11

127.38

FUND FLOW STATEMENT

Source of
funds
Share

Implementation Year I Year II Year III Year IV Year V

period
252.07

capital
Secured

loan
Gross profit
Depreciation

228.45
56.28

302.95
45.09

383.62
36.40

121.68 176.34
89.64 70.77

2828

POP

expenses
Application

77.50

77.50

77.50

77.50

77.50

Implementation Year I Year II Year III Year IV Year V

of funds
Fixed assets
Margin for

period
685.93
55.31

contingency
POP

77.50

74.90
2.96
58.51
-

65.54
3.37
58.51
-

56.17
3.82
58.51
-

46.81
4.42
58.51

37.45
5.08
58.51
-

expenses
Interest LTL
Interest W/C
Repayment of L/T
Dividend of shares
(35% of cash flow)

BREAK EVEN ANALYSIS

To arrive at Break Even Point for specific year occupancy:
Revenue: - III year 945.79

occupancy: - 70%

Fixed cost:
1.
2.
3.
4.
5.
Total

Power (40%)
Salary (80%)
Insurance and license
Interest on LTL
Administration and management expenses

Amounts in lakhs
22.91
85.44
2.00
56.17
57.28
223.80

2929

Variable cost:
1.
2.
3.
4.
Total

Power (60%)
Salary (20%)
Interest on W/C (interest on B.O.D)
Expense towards telephone (10%)

Amountss in lakhs
34.36
21.36
3.82
10.00
69.54

1. Contribution = Income - Variable Cost

= 1145.79 - 69.54
= 1076.25
Fixed Cost
2. Break Even Point = Contribution
223.80
= 1076.25
= 0.20 (i.e., 20%)
3. BE Turnover = Total Revenue x B.E.P
Assumed occupancy
= 1145.79 x 20%
70%
= 327.36

DEBT SERVICE COVERAGE RATIO (DSCR)

Coverage (A)

Year I

Year II

Year III

Year IV

Year V

Profit after tax

Depreciation
Interest on L/T loan

43.15
89.64
74.90

106.62
70.77
65.54

167.50
56.28
56.17

250.62
45.09
46.81

339.81
36.40
37.45

POP expense
Total

77.50
285.19

77.50
320.43

77.50
357.45

77.50
420.02

77.50
491.16

3030

Debt (B)

Year I

Year II

Year III

Year IV

Year V

Repayment of L/T

58.51

58.51

58.51

58.51

58.51

loan
Interest on L/T loan
Total

74.90
133.41

65.54
124.05

56.17
114.68

46.81
105.32

37.45
95.96

DSCR = A/B
285.19 320.43 357.45 420.02 491.16

133.41 124.05 114 .68 105.32 95.96

= 2.13 + 2.58 + 3.10 + 3.90 + 5.11
= 16.83

Average DSCR = I year + II year + III year + IV year + V year

2.13 2.58 3.10 3.90 5.11
5
=
= 3.36

R.O.I (RETURN ON INVESTMENT)

Return on investment, =

Net cash flow x 100

Equity share capital

I year =

94.65 x 100
252.07

= 37.54
II year =

95.41 x 100
252.07
3131

= 37.85
III year =

100.12 x 100
252.07

= 39.71
IV year = 103.11x 100
252.07
= 40.90
V year =

127.38 x 100
252.07

= 50.53

Average R.O.I = I year + II year + III year + IV year + V year

5
= 37.54+37.85+39.71+40.90+50.53
5
=

206.53
5

= 41.30
Pay Back Period =

100
ROI
= 100
41.30
=2.42

SENSITIVITY RATIO
Sensitivity change=

Change in income

3232

Change in expenses
= 16.36
11.19
= 1.46
Sensitivity to income change = Total income
Occupancy
= 1145.79
70
= 16.36
Sensitivity to expense change = Total expense
Occupancy
= 783.56
70
= 11.19

COST BENEFIT ANALYSIS

A = Total cost of project

= 639.10 (amount in lakhs)
B = total revenue - total expenses
= 4893.37 - 3995.04
= 898.33 (amount in lakhs)
Capital intensity = B/A
= 898.33
720.22
= 1.24

NETWORK ANALYSIS
Sl. no

Description

Duration (Months)
3333

1.
2.
3.
4.
5.

Project search
Preparation of feasibility report
Formation of feasibility report
Purchase of land
Preparation of building plan and

2
4
2
6
1.5

6.
7.
8.
9.
10.
11.
12.
13.

tender
Application for loan
Staff appointment
Application for power, water.
Project approval
Building construction
Order for P and M
Plumbing and electrification
Delivery and installation of

2
2
5
1
15
3
6
4

14.
15.
16.
17.
18.
19.
20.

machinery
Recruitment of staff
Furnishing and interior decoration
Application for working capital
Procurement of material
Trail runs and commissioning
Land seaping
Inauguration and commercial

2
5
1
1
3
3
3

operating
Total implementation period

5 (years) 9(months)

3434

BIBLIOGRAPHY
S.No.
1.
2.
3.
4.
5.
6.

Titles
Perspectives on Indian hotel industry
Hotel Economics
Hospitality Management
All India Travel Companion
Project Analysis
Hotel Accountancy

Authors
Pushpinder S.Gill
P.M. Mathew
T. Philip
Asia Publishing Companion
G. Phyler
T. Ryder

WEBSITES
www.answers.com
www.wikitravel.com
www.wikipedia.com
www.hoteliercaterer.com

3535

ANNEXURES

3636

ANNEXURE 1
Cost of land

= Land required in sq. ft x Rate per sq. ft

= 3500sq. ft x 300
= 41.61 lakhs

15% for conveyance

= 6.24 lakhs

5% for site development

= 2.08 lakhs

Total

= 49.93 lakhs

ANNEXURE 2
COST OF BUILDING
Total Built up area
Rate per sq. ft
Cost
15% of Electrical work
12% of Plumbing and Drainage
25% on Consultant
Total

13870 sq.ft
Rs 750
104.02 lakhs
15.60 lakhs
12.48 lakhs
26.05 lakhs
158.15 lakhs

3737

ANNEXURE 3

PLANT AND MACHINERY

Items
Central a/c
Lift
Generator
Transformer
Bore well
Boiler
EPBAX
Instrument
Exhaust/ vent
CCTV
Kitchen equipment
Water cooler
Fire fitting
Typewriter
Computer
Telex
Fax Rs 50000/Total

Amount in
lakhs
70
25
25
20
2
10
15
5
2
10
15
2
2
5000/800000/75000/9.30
212.30

3838

ANNEXURE -4
Expenses
a. Guest Room
Item

Price in taka

Nos

Total

Twin bed
Double bed
Side table
Chair
Coffee table
Cupboard
Luggage rack
T.V stand
Carpets 6600sq.ft
Mirrors
Wash basin
Bath tub
W/C
Upholstery

3500
4500
600
500
400
500
400
2500
100/ sq. ft
500
1000
7000
1500
1000

20
20
80
40
40
40
40
40
6600sq.ft
40
40
40
40
40

70000
90000
48000
20000
16000
20000
16000
100000
660000
20000
40000
280000
60000
40000

Dressing table
Fixtures

1000
5000

40
40

40000
200000

Total

b. FOOD AND BEVERAGE OUTLETS

RESTAURANT: (50Pax)
Item
Price
No
Tables
2500
13
Chairs
500
55
Side station
4000
2
Dcor and upholstery
Carpets
100/sq.ft
400 sq.ft

Fixtures
Total

1720000

Total
32500
27500
8000
100000
40000

100000
308000

3939

c. BAR: (30Pax)
Item
Stools
Table
Chair
Bar counter
Music system
Carpets
Dcor
Total

Price
500
1500
500
50000
50000
100/sq.ft

No
10
10
30
1
1
200 sq.ft

Total
5000
15000
15000
50000
50000
20000
75000
230000

d. ROOM SERVICE :( 45Rooms)

Item
B/f Trays
Tea Trays
12 Salvers
9 Salvers
Trolleys
Racks
O.T cabin
Desk
Miscellaneous
Total

Price
150
200
250
200
1500
500
5000
6000

Number
15
15
10
10
5
5
1
1

Total
2250
3000
2500
2500
7500
2500
5000
6000
6000
36750

4040

e. BANQUET: (420 Pax)

Item
Chairs
Tables
Carpets
Podium
Music
system
12 salver
Fixtures
Total

Price
500
1000
100/sq.ft
1500

Number
425
30
1200sq.ft (1)
2

Total
212500
30000
120000
3000
50000

250

30

7500
100000
523000

f. STORES, PURCHASE, HOUSEKEEPING

Item
Cupboards
Shelves
Racks
Bins
Fixtures
Total

Total
50000
25000
30000
10000
50000
165000

g.ADMINISTRATION
Item
Tables
Chairs

Total
75000
50000
4141

Fixtures
Total

50000
175000

h. RECEPTION AND LOBBY

Item
Counter
Stationery
Pigeon hole
Cupboard
Safe deposit
Sofa set
Fixtures
Luggage carrier
Miscellaneous
Total

Total
40000
5000
10000
10000
20000
200000
300000
100000
50000
735000

i. STAFF CAFETARIA
Item
Tables
Chairs
Fixtures
Total

Total
12500
25000
25000
62500

ANNEXURE 5
MISCELLANEOUS FIXED ASSETS
a.FOOD AND BEVERAGE OUTLETS
Item
Table cloth
Napkins
Par

Price
200
30

Number
30
200

stock(*3)
Total cost

Total
6000
6000
12000
36000

b. BANQUET HALL AND CONFERENCE

4242

Item
Frills
Table cloth
Napkins
Par stock (*3)
Total

Price
500
150
30

Number
30
30
500

Total
15000
45000
15000
34500
103500

c.GUEST ROOM AND SUITE ROOM LINEN

Item
Single bed sheet
Double bed sheet
Blankets
Blanket cover
Mattress
Mattress protector
Bed cover
(single)
(double)
Pillow cover
Hand towel
Bath towel
Bath mat
Pillows
Par stock (*4)
Total

Price
250
250
400
200
1000
200

Number
25
30
50
50
50
50

Total
6250
9000
20000
10000
50000
10000

200
300
50
30
100
150
150

25
30
100
100
100
50
90

5000
9000
5000
3000
10000
7500
13500
158250
633000

4343

d. KITCHEN STEWARDING (RESTAURANT &ROOM SERVICE)

Item
Glasses
Chinaware
Flatware
Cutlery
Miscellaneous
Total

Price (Rs)
50
30
30
30

Number
800
800
800
800

Total
40000
24000
24000
24000
25000
137000

Price(Rs)
50
30
30
25

Number
1000
1000
1000
1000

Total
50000
30000
30000
25000
137000

e. BANQUETS
Item
Glassware
Chinaware
Flatware
Cutlery
Total

f .STAFF CAFETARIA
Item
Plates
Spoons
Forks
Total

Total
60000
20000
20000
100000

g. HOUSE KEEPING MISCELLANEOUS ASSETS

4444

Item
Vacuum cleaner
Cleaner mug
Mops
Brooms
Squeezer
Duster
Waiters cloth
Miscellaneous
Total

Number
4
20
30
30
30
100
500

Price
5000
20
30
25
25
5
40

Total
20000
400
900
750
750
500
20000
25000
68300

ANNEXURE 6
PRELIMINARY AND PRE-OPERATIVE EXPENSES
Item

Amounts In

1. Salary and wages

2. Loan procurement and application
3. Project fees
4. Registration and establishment fees
5. Insurance
6. Advertisement and publicity
7.Deposits
a) Electricity
b) Telephone
c) Water supply
d) NSC
8.) Miscellaneous expenses
POP Total

ANNEXURES 7

Lakhs
20.00
2.00
2.50
2.00
15.00
10.00
5.00
5.00
3.00
3.00
10.00
77.50

SALARY AND WAGES

S. No Designation
1.
2.
3.
4.
5.

General manager
Front office manager
Lobby manager
GRE
Front office assistant

Person

Salary

Total

required
1
1
1
1
4

20000
9000
8000
5000
5000

amount
20000
9000
8000
5000
20000
4545

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.

Travel desk operator

Bellboys
Telephone operator
Bell captain
Night auditor
F & B Manager
Banquet manager
Restaurant manager
Barman
Captains
Senior Captain
Stewards
Executive chef
Souse Chef
Commis
Chef de partie
Steward supervisor
Dish / pot washer
Executive house keeper
House keeping supervisor
Floor supervisor
Room attendant/house man
Personal manager
Sales & marketing manager
Sales & marketing executive
Accountant
Chief accountant
Cashier
B.Sales executive
Bakery chef
Desk control supervisor
Linen attendants
Laundry attender
Flower. Assistant
Carpenter
Plumber
Hostess
R.S.OT
Training manager
Training assistant
G.M secretary
Pest controller
Laundry manager
Personnel office asst.
Drivers
Doorman
Apprentices
Life guard
Security manager
Security Supervisor

1
4
2
2
1
1
1
1
1
2
2
20
1
2
6
3
1
4
1
2
3
10
1
1
1
1
1
2
2
1
2
2
2
1
1
2
2
2
1
1
1
2
1
2
2
2
4
2
1
2

4500
2500
3000
3000
4000
12000
9000
9000
5000
4000
5000
3000
25000
10000
4000
5500
4500
2000
12000
5500
5000
3000
8000
9000
5000
5000
10000
6000
4000
15000
4000
3000
3000
2500
2500
2500
3000
3000
8000
3000
6000
2000
8000
3000
4000
3000
1500
2500
8000
4500

4500
10000
6000
6000
4000
12000
9000
9000
5000
8000
10000
60000
25000
20000
24000
16500
4500
8000
12000
11000
15000
30000
8000
9000
5000
5000
10000
12000
8000
15000
8000
6000
6000
2500
2500
5000
6000
6000
8000
3000
6000
4000
8000
6000
4000
6000
6000
2500
8000
9000

4646

56.
57.
58.
59.
60.
61.
62.
TOTAL

Security guard
Chief engineering
Supervisor
Technicians
Purchase officer
Purchase manager
Stores keeper

4
1
2
2
1
1
2
135

Add benefits 20% of 613000

Total monthly salary
Total yearly salary

2500
9000
4000
3000
5000
8000
3000

10000
9000
8000
6000
5000
8000
6000
613000
122600
735600
8827200

(735600X 12)

ANNEXURE 8
INTEREST ON L/T LOANS
(Rate of interest 16%)
Year
I
II
III
IV
V
VI
VII
VIII

Installment
58.81
58.81
58.81
58.81
58.81
58.81
58.81
58.81

L/T loan
468.14
409.63
351.12
292.61
234.10
175.59
117.08
58.57

Interest
74.90
65.54
56.17
46.81
37.45
28.09
18.73
9.37

ANNEXURE 9
ROOM SALES

4747

Room sales =

Room Tariff x No. of Rooms x % Occupancy x 365

100

SINGLE ROOM (20 Rooms)

yea Room Tarif

No. of

No. of

Total Amounts in

r
I
II
III
IV
V

Rooms
20
20
20
20
20

Occupancy
60
65
70
75
80

days
365
365
365
365
365

Lakhs
109.50
153.30
127.75
150.56
176.66

2500
2500
2500
2750
3025

DOUBLE ROOMS (20 Rooms)

Yea Room Tarif

No. of

No. of

Total

Rooms

Occupancy

days

amounts in

365
365
365
365
365

Lakhs
153.30
166.07
178.85
210.78
247.32

I
II
III
IV
V

3500
3500
3500
3850
4235

20
20
20
20
20

60
65
70
75
80

SUITE ROOMS (5Rooms)

Year
I
II

Room Tarif

No. of

4000
4000

Rooms
5
5

% Occupancy No. of
60
65

days
365
365

Total amounts
in Lakhs
43.80
47.40
4848

III
IV
V

4000
4400
4840

5
5
5

70
75
80

365
365
365

51.10
60.22
70.66

ANNEXURE 10
FOOD & BEVERAGE SALES
F & B SALES=No. of Pax x Average Cover Charge x 365
BAR (30 Pax)
Yea
r

No. of covers

Average

sold/day

cover

Number of Total Amounts in

days

lakhs

365
365
365
365
365

8.32
14.01
23.32
31.31
46.53

charges
I
II
III
IV
V

8
12
18
22
30

285
320
355
390
425

RESTAURANT (50 Pax)

Yea
r
I
II
III
IV
V

No. of covers

Average cover

sold/day
30
35
40
45
50

charges
300
325
350
375
400

Number of Total Amounts in

days
365
365
365
365
365

lakhs
32.85
41.51
51.10
61.59
73.00

ROOM SERVICE (45 Rooms)

4949

Yea
r
I
II
III
IV
V

No. of covers

Average cover

sold/day
37
39
41
43
45

charges
300
325
350
375
400

Number of Total Amounts in

days
365
365
365
365
365

lakhs
40.51
46.26
52.37
58.85
65.70

BANQUET & CONFERENCE HALL (420 Pax)

Yea
r
I
II
III
IV
V

No. of covers

Average cover

sold/day
300
330
360
390
420

charges
400
425
450
475
500

Number of Total Amounts in

days
365
365
365
365
365

lakhs
483.00
511.91
591.30
676.16
766.50

5050