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BUSINESS PLAN

ON THE

DEVELOPMENT & OPERATION

OF AN

TOURIST ECO-LODGE

AT

KICHWAMBA

IN

RUBIRIZI DISTRICT

BY

MT RWENZORI FARM LODGE LIMITED

MT RWENZORI FARM LODGE LIMITED


P.O. BOX 687,
ENTEBBE,
UGANDA.
Contact Phones: +256-702-873 106/772-873 106
E‐Mail: operations@stleosjuniorschool.com

SEPTEMBER 2017
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A. TABLE OF CONTENTS

S/NO. DESCRIPTION PAGE

1.0 EXECUTIVE SUMMARY 1


1.1 Promoter and Partners 1
1.2 Project 1
1.3 Establishment 1
1.4 Characteristics of the Company 1
1.5 Production and Market 2
1.6 Means of Production 2
1.7 Cost and Funding 2

2.0 DESCRIPTION OF THE PROJECT 3


2.1 Presentation of the Project 3
2.2 Objectives 3
2.3 Contribution in Innovations 3
2.4 Key Factors of Success 3
2.5 Schedule of Executing the Project 4
2.6 Regulation of the Sector 4
2.7 Project Financials 5

3.0 THE PROMOTER AND THE MANAGEMENT TEAM 7


3.1 Personal Experience 7
3.2 Personal Balance Sheet/Current Activities 8
3.3 Project Team 8
3.4 Choice of Legal Form 11

4.0 STRATEGIC ANALYSIS OF THE MARKET 12


4.1 Presentation of the Sector 12
4.2 Description of the Products of Mt Rwenzori Farm Lodge 13
4.3 Market for Products and Services for Mt Rwenzori Farm Lodge 13
4.4 Potential Demand 13
4.5 Analysis of Supply and Competition 16
4.6 Situation Analysis and Management of Risk 16

5.0 HOSPITALITY INDUSTRY DESCRIPTION AND OUTLOOK 18


5.1 Uganda’s Visitor Survey – Market Trends and Growths 18
5.2 Visitor Expenditure Pattern 19
5.3 Mt Rwenzori Farm Lodge and Its Target Market 20
5.4 Figures & Empirical Findings of a Similar Lodge in the QENP 20
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5.5 Visitor Market Segment and Product Analyses 21
5.6 Competitive Analysis 23
5.7 Keys to Success 36

6.0 MARKETING STRATEGY 38


6.1 Market Share Objectives 38
6.2 Marketing Strategies 38

7.0 PRODUCTION AND ORGANIZATION PLAN 42


Project Scheduling Process and Preparation of Dishes and
42
7.1 Delicacies
7.2 Production Capacity 43
7.3 Supply 44
7.4 Human Resources 44
7.5 Location – Establishment 47
7.6 Facilities 47

8.0 FINANCIAL PLAN 50


8.1 Key Project Assumptions 51
8.2 Break-even Analysis 51
8.3 Cost and Funding of the Project 53
8.4 Basic Assumptions Used in making Estimates 54
8.5 Total Operating Cost 54
8.6 Cost of Sales 55
8.7 Financial Performance 55
8.8 Basis of Preparation 56
8.9 The Vehicle 56
8.10 The Accounting System and Financial Control 56
8.11 Summary and Results 57

9.0 COMMUNITY CORPORATE TASKS 60


9.1 Social Responsibilities 60
9.2 Economic Responsibilities 64
9.3 Environmental Responsibilities 66
9.4 “Responsible Tourism” and the Triple Bottom Line 67
9.5 Marketing of the Corporate Responsibilities 68

10.0 EPILOGUES & CONCLUSION 70


10.1 Epilogues 70
10.2 Conclusion 71
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B. LIST OF TABLES

T/NO. DESCRIPTION PAGE

1 Company Shareholding Structure 1

2 Project Cost and Funding 2

3 Key Project Performance Parameters 6

4 Project Team for Mt Rwenzori African Safaris Limited 9

5 Project Team for St Leos Junior School Limited 10

6 Visitors to National Parks (Citizens and Foreigners), 2011 – 2015 14

7 2015 Visitors to National Parks by Category 14

8 Percentage capital Ownership of Hotels in East Africa 15

9 Situation Analysis 16

10 Risk Management 17

11 Visitors to Uganda in 2015 by Purpose of Visit 18

12 Visitor Expenditure Patterns 19

13 Visitor Market Segment and Product Analyses 22

14 Jacana Safari Lodge and Nile Safari Lodge 2017 Room Rates 24

15 The Bush Lodge Room Rates 25

16 January - December 31 2017 Mweya Safari Lodge Room Rates 26

17 Katara Lodge 2017 Nightly Room Rates 27

18 Simba Safari Camp 2017 Room Rates 35

19 Hippo Hill Lodge – Queen Elizabeth NP 2017 Room Rates 36


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20 Lodge Products 38

21 Lodge Accommodation Facilities 39

22 Pricing for Products and Services 39

23 Communication and Promotion Plan 40

24 Production Capacity of Products 43

25 Lodge Accommodation Facilities 44

26 Human Resource & Salary Structure 45

27 Eco-Lodge Construction Costs 47

28 Administrative Block Construction Costs 47

29 Lingerie Construction Costs 48

30 Restaurant Construction Costs 48

31 Construction Costs for Other Spaces 48

32 Other Expenditure 49

33 Break-Even Analysis in Project Year 6 52

34 Project Investment Cost and Funding Structure 53

35 Loan Repayment Table and Financial Charges in UGX 54

36 Annual Production Cost at Full Capacity 55

37 Project Sensitivity Analysis Results 59

38 Potential Socio - Cultural Effects of Tourism on Host Communities 62

39 Taking Action towards Social Responsibility 64


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40 Strategies for Communication of Economic Responsibilities 65

41 Key Financial Modeling Assumptions 72


41-1: Capacity Utilization Assumptions (Eco Lodge) 72
41-2: Revenue Assumptions (Eco Lodge) 72
41-3: Production & Revenue Assumptions (Fish Farm & Poultry Farm) 72
41-4: Production & Revenue Assumptions (St. Leo’s Junior School) 72
41-5: Operating Expense Assumptions (Eco Lodge) 72
41-6: Economic Related Assumptions 73
41-7: Financing Assumptions 73
41-8: Depreciation Rate Assumptions 73
41-9: Cash Flow Assumptions 73
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C. LIST OF FIGURES

F/NO. DESCRIPTION PAGE

1 Project Implementation Schedule 4

2 Financial Performance Highlights (2018 – 2022) 6

3 Visitors to Uganda in 2015 by Purpose of Visit 18

4 Guest Sources 21

5 Project Scheduling Process 42

6 Process of Food Preparation 43

7 Schedule of Supplies in 2018 44

8 Proposed Organization Structure 46


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D. LIST OF FINANCIAL ANALYTICAL SCHEDULES

S/NO. DESCRIPTION PAGE

01: Key Financial ModelingAssumptions 72

02: Source and Structure of Project Financing 74

Calculation of Working Capital: I Minimum Requirements of Current


03/1: Assets and Liabilities 75

03/2: Calculation of Working Capital: II Consolidated Annual Income Estimates 76

Calculation of Working Capital: III Annual Production Cost –


03/3: Estimates 77

03/4: Calculation of Working Capital: IV Working Capital Requirements 81

04: Fixed Assets and Depreciation Allowances 82

05: Change in Total Investment Costs 83

06: Change in Total Assets 83

07: Projected Cash Flow Table 84

08: Projected Cash flow Table and Calculation of Present Value 85

09: Projected Income Statement 86

10: Projected Balance Sheet 87

11: Business Ratios/Ratio Analysis 88

12: Projected Payback Period 90


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E. LIST OF APPENDICES

A/NO. DESCRIPTION PAGE

I: Map of Uganda Showing Major Tourist Circuit 91


1.0 EXECUTIVE SUMMARY

1.1 Promoter and Partners

Name or Business Name: MT RWENZORI FARM LODGE LTD


Promoter: Robert Byakutaga
Qualifications: B. Tourism (MUK) + Dip. Tourism
Operations (Crested Crane Hotel Jinja)
National ID No.:
Address: P. O. Box 687, Entebbe, UGANDA
Telephone: +256-702-873106
Email Address: operations@stleosjuniorschool.com
Partners: St. Leo‟s Junior School; Batte Siraje;
Masiga Colline; Mbabazi Lydia

1.2 Project

Type: Set-up
Nature of Project: Ecotourism (tourism, accommodation,
catering)
Line of Business: Service
Branch: Accommodation and Catering
Sector: Eco-Tourism
Distribution and Nature of Capital:

Table 1: Company Shareholding Structure


Shareholder/Director Amount (UGX) Percentage (%)
Byakutaga Robert 5,000,000 50
Mbabazi Lydia 5,000,000 50
Batte Siraje* 0 0
Total 10,000,000 100
* Non-shareholding Director

1.3 Establishment

Place of Establishment: Queen Elizabeth National Park/Uganda


District: Rubirizi
Surface Area of Building/Land: 3 Ha
Impact on the Environment: Negligible

1.4 Characteristics of the Company

Business Name: Mt Rwenzori Farm Lodge Limited

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Legal Form: Limited Liability Company
Head Office: Entebbe
Registered Capital: UGX 5 million

1.5 Production and Market

Products/Service: Tourism, Accommodation, Catering


Market Prospects: 20 customers daily, that is 10% of the
market share
Expected Sales Revenue: US$150,000 – 200,000 per annum

1.6 Means of Production

List of Equipment:
Permanent Jobs to be Created: Kitchen, security, care-taker service,
house-keeping, barman/woman,
gardening, technicians, laundry,
receptionist
Supervision Rate:

1.7 Cost and Funding

Table 2: Project Cost and Funding


Component Amount (UGX) Rate in %
Land (3 Ha = 7.5 Acres @ UGX 4.8 million) 36,000,000 4.79%
Existing Structures (40% complete) 188,000,000 25.00%
Establishment Costs 2,500,000 0.33%
Construction 100,000,000 13.30%
Civil Engineering/Development Costs 182,000,000 24.20%
Equipment 74,500,000 9.91%
Furniture and Office Supplies 12,300,000 1.64%
Rolling Stock 6,000,000 0.80%
Intangible Assets 2,400,000 0.32%
Sundry and Unforeseen 7,200,000 0.96%
Vehicles (2 units) 48,000,000 6.38%
Working Capital Operating Funds 87,000,000 11.57%
Non-Operating Cost 6,100,000 0.81%
Total 752,000,000 100.00%

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2.0 DESCRIPTION OF THE PROJECT

2.1 Presentation of the Project

MT RWENZORI FARM LODGE LIMITED is an eco tourism Lodge, a place where


you are in touch with the ecological spirit, where you are face to face with nature and
feel the warmth of relaxation, catering and accommodation. The Promoter Mr. Robert
Byakutaga was fascinated by the way in which eco-lodges in other places within
Uganda and other countries in East African succeed, while maintaining almost intact
the outward appearance of the environment, to promote bungalows making the area
fresh, comfortable, calm, and/or luxurious in their interior. The idea of the project was
inspired by strong uptake of hospitality and tourism-related servicesin thisQueen
Elizabeth National Park area of Uganda.

2.2 Objectives

Generate profits; become the first eco-tourism destination in this corner of the Queen
Elizabeth National Park; provide about a thirty jobs to many young persons, especially
women; instill in the entire community of Rubirizi District the need to migrate to
sustainable development activities; become an eco-tourism destination of choice in the
Western Region; become a natural cultural centre just like 5* hotels; help to instill in the
local population environmentally friendly attitudes and environmental protection.

2.3 Contribution in Innovations

MT RWENZORI FARM LODGE will be built under the theme of African traditional
huts thus encapsulating the image of Africa in miniature. It also seeks to promote the
culture of the Ankole sub-region, contribute to the education of tourists on the
importance of living in harmony with nature.

2.4 Key Factors of Success

As far as this project is concerned, the key success factor is mainly funding through the
commercial loan facility (68.18% of Total Project Cost) at an interest rate of 23% per
annum. The other critical success factors fundamental to this business are defined in
two (2) bands: primary activities and support activities.

Primary Activities:
 Local tourism resources
 Marketing activities
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 Service system and cultivation of tourists‟ understanding and behavoiur.

Support Activities:
 Company infrastructure and management
 Product or technical development
 Human resources

2.5 Schedule of Executing the Project

The schedule of execution of the project will be as follows:

Figure 1: Project Implementation Schedule


Activity/Period 2017 2018
A S O N D J F M
Preparation of the Business Plan
Project Funding
Construction of the Eco-Lodge
Recruitment of Staff
Launching and Opening

2.6 Regulation of the Sector

At the national level, the main laws are:


- Act 2 Uganda Tourism Act, 2008 – on tourism activity;
- The Copyright and Neighbouring Rights Act, 2006 on copyrights and related
rights ;
- The Uganda Investment Code Act 1991 on investments incentives;
- The national Environment Act, Chapter 153 to lay down the framework law on
management of the environment.

One could also mention the getting of a permit to build, open an accommodation
establishment, a restaurant, a leisure establishment. Documents to furnish: a technical
studies file prepared by an architect, who is a member of the Uganda Society of
Architects (USA), showing the characteristics of the building and the developments
made. This file will comprise of: the site plan, ground plan, the plan of existing
premises before their development, showing the parking space, development plans
showing especially the organization of space (distribution), emergency exits, fire and
smoke proof doors and other flame arrestors, plumbing installations with sewage
system, electricity facilities, fire-fighting equipment, kitchen plan showing vapour
extraction systems, dustbin location, work estimates clearly showing the types and
nature of materials to be used in particular for the construction of the night club hall

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and the kitchen and the work estimates; plan of a classical bedroom, plan of a septic
tank indicating the number of users; land ownership certificate; a copy of the
descriptive report written by the Regional Delegate for Tourism for the Littoral Region.

At the international level, we have the World Tourism Code.

2.7 Project Financials

MT RWENZORI FARM LODGE LTD has rigorously examined its financial


projections and concluded that they are both conservative in profits and generous in
expenditures.

This has been done deliberately to provide for unforeseeable events. The company‟s
principals believe that cash flow projections [Figure 2] are realistic.

Total operating costs are estimated at UShs. 949,742,106 in the first year (2018) rising to
UShs. 1,154,417,466 in year 6 (2022). This increasing trend in production costs therefore
reflects sustainable eco lodge operational output when the loan is repaid and interest
payments cease. The main item is cost of sales (comprising of safari expenditures,
acquisition of gorilla permits/chimps tracking and sundry purchases) which constitutes
42.79% of total costs.

MT RWENZORI FARM LODGE LTD is projected to start turning a profit right from
its first year of full operations (2018) of UShs. 191,533,086 which gradually improves to
UShs. 451,227,492 by the sixth year (2022). Cumulative cash balance is positive from
Year Two (2018) onwards, building up from UShs. 164,975,766 to UShs. 3,690,208,000
by Year Six (2022). Pay-back period of loan finance is 2.96 years. At sustainable capacity
in Project Year 5 (2021); break-even capacity is 30.73%.

Total project assets grow from UShs. 224,953,086 at the start of the project (2018) to
UShs. 1,536,582,968 by Project Year 6 (2022), mainly from build-up of cumulative cash
and other company current assets.

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Table 3: Key Project Performance Parameters (UGX)
KPI/Year 2018 2019 2020 2021
Sales 1,434,080,800 1,642,586,200 1,695,774,800 1,816,401,788
Operating Profit 484,338,694 645,356,989 648,684,128 716,956,583
Tax 82,085,608 137,015,097 144,637,238 171,742,975
Net Profit / [Loss] 191,533,086 319,701,892 337,486,890 400,733,608
Gross Margin 71.66% 74.02% 73.58% 74.10%
Operating Margin 33.77% 39.29% 38.25% 39.47%
Net Margin 13.36% 19.46% 19.90% 22.06%
Return on Investment 24.36% 40.66% 42.92% 50.96%
Fixed Assets Turnover 1.47 1.66 1.89 2.17
Debt Coverage Ratio 3.47 4.55 4.59 5.08
Times Interest Earned Ratio 4.39 7.31 9.79 16.24

Break-even Point (BEP): UGX 558,246,709 at a capacity utilization of 30.73%


Payback Period (Loan): 2.96 Years
NPV at 17%: USD 398,245,231
IRR: 37.56%

Figure 2: Financial Performance Highlights (2018 – 2022)


Sales Gross Margin Net Profit

2,000,000,000
1,800,000,000
1,600,000,000
1,400,000,000
1,200,000,000
UShs

1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
2018 2019 2020 2021 2022

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3.0 THE PROMOTER AND THE MANAGEMENT TEAM

3.1 Personal Experience

The Promoter of MT RWENZORI FRAM LODGE LIMITED – Mr Robert Byakutaga is


a Ugandan hailing from the western Uganda district of Rubirizi who is a tourism
operator by profession and occupation with B. Tourism (MUK) and a post-graduate
Diploma in Tourism Operations (Crested Crane Hotel Jinja).

I have a solid 10 years plus of experience in the tourism industry as a co-Director in East
African Explorers Safaris that was registered in 2004 with a 30% shareholding stake in
the Company. East African Explorers Safaris has also developed and operated the
Kyambura Game Lodge (renamed Mazike Game Lodge after having been gutted by
fire in 2014) and safaris in Uganda and Rwanda for tracking of the world-famous
Mountain Gorillas. I have thus actively contributed to the development and growth of
the Kyambura Game Lodge at a senior management level as Director of Operations
that has enabled me to gain intimate knowledge and know-how of wildlife tourism
operations first-hand.

Since 2011, I have also been very active in crop and fish-farming at my 3 Hectare plot of
land (Plot 108 Block 10) at Kichwamba in Rubirizi District. I acquired this plot of land
way back in 2007 out of my own personal savings. This plot of land lies on a raised
escarpment with quite a panoramic and scenic view of Uganda‟s world-famous Queen
Elizabeth National Park spread out below it.

Queen Elizabeth National Park also acts as a get way to Mgahinga and Bwindi
Impenetrable National Park – home to the world-famous mountain Gorillas; Mountain
Rwenzori for mountain climbers; and Kibale National Park for the chimpanzees.

With that sort of background and experience, I decided to start up my own tourism
enterprise – Mountain Rwenzori African Safaris which I co-own with Mbabazi Lydia
(my wife).

Also have also done hotel/farm lodge development at the above-mentioned location at
Kichwamba to increase the earnings from both tourism of safaris and tourism lodge as
an up-market tourism facility.

Also own a kindergarten school in the names of St. Leo's Junior School located at Plot 2
Lane 1 Kakiika Andrews within Mbarara Municipality.

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I want the MT RWENZORI FARM LODGE accommodation facilities to open for
operations by January 2018 which is right at the beginning of the tourist high season.

3.2 Personal Balance Sheet/Current Activities

My assets: land of 3 Hectares size at Kicwamba in Rubirizi District, Land Certificate No.
------- established in the Rubirizi District Land Board. On this land I currently also
operate a sizeable Tilapia/Catfish fish ponds and poultry (egg-layers) farm that
generates a constant and continuous cash flow that has so far sustained the on-going
construction works at the proposed MT RWENZORI FARM LODGE site (40% of the
civil construction work already done). I also own a nursery school – St. Leo‟s Junior
School Limited based in Mbarara municipality (Kamukuzi Division) whose regular and
steady income stream will also greatly complement to the development and operational
budget of MT RWENZORI FARM LODGE.

3.3 Project Team

The Project team is made up of the following people:

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Table 4: Project Team for Mt Rwenzori African Safaris Limited
Name Position Qualification Experience Telephone Email
Byakutaga Robert Shareholding B. Tourism (MUK);  Operations Director – +256-702- operations@stleosjuniorschool.com
Director Dip. Tourism Operations East African Explorers 873106
(Crested Crane Hotel Jinja) Safaris
 Operations Director –
Kyambura Game Lodge
(10 years‟ experience)
 Director – Mt Rwenzori
African Safaris Company
Ltd (2 years‟ experience)
 Director – St. Leo‟s
Junior School
Batte Siraje Non-Shareholding B Tourism (MUK); Masters  Buganda Royal Institute
Director Degree – Environment & of Technical Education –
Natural Resources (MUK); Mutesa I Royal
Dip Tourism Operations University (14 years‟
(Crested Crane Hotel Jinja) experience)
Masiga Colline Company Secretary LLB (MUK);  Advocate at Barenzi &
Dip Legal Practice (LDC) Company Advocates
Mbabazi Lydia Shareholding B. Com (MUK)  Sales Executive – East
Director African Explorers Safaris
 Sales Executive –
Adventure Natural
Safaris
 Sales Executive – Mt
Rwenzori African Safaris
Company Ltd

9
Table 5: Project Team for St Leos Junior School Limited
Name Position Qualification Experience Telephone Email
Mr. Chairman B. Comm (MUK)  Accountant –
RutaroHonorato Banyankore Kweterana
Co-operative Union
(BKCU)
 Chairman – Bushenyi
District Service
Commission
 Cumulative experience
of 40+ years service in
various public and
private sector
capacities
Byakutaga Robert Member/Shareholding B. Tourism (MUK);  Operations Director – +256-702- operations@stleosjuniorschool.com
Director Dip Tourism Operations East African Explorers 873106
(Crested Crane Hotel Jinja) Safaris
 Operations Director –
Kyambura Game
Lodge (10 years‟
experience)
 Director – Mt Rwenzori
African Safaris
Company Ltd (2 years‟
experience)
 Director – St. Leo‟s
Junior School
Kanzira Cissy Principal Director Dip (YMCA);  Nursery Teacher at
Certificate – Early Mbarara Kindergarten
Childhood nursery teaching  Teacher at SOS Entebbe
(Taibah College Entebbe)  Head Teacher at
Mbarara Kindergarten
 Cumulative experience
of 14 years
Turaygyenda Secretary/HM at St. B. ED (KYU);  Rwanda Education
Laban Leo‟s Junior School Cert. in Early Childhood Board – Kigali
Management (KYU)  Kyebambe Primary
School – Kabarole
 St. Apollo Kaggwa PS –

10
Mengo
 Cumulative Experience
of 16 years
Oliver Naturinda Treasurer Accountant by profession  Business woman –
Mbarara
 9 years‟ experience
ByakutagaJoseline Member/Director Dip (YMCA) – Kampala  Hotel Management (20
years‟ experience)

3.4 Choice of Legal Form

MT RWENZORI FARM LODGE LIMITED operates as a Limited Liability Company incorporated in the Republic of Uganda.

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4.0 STRATEGIC ANALYSIS OF THE MARKET

4.1 Presentation of the Sector

1) Business Line of the Project:

MT RWENZORI FARM LODGE is a project that is part of the economic activities of


Eco Lodge. An Eco Lodge is a tourism accommodation complex, which lays emphasis
on the respect of the natural environment and where resources for the wellbeing of the
local population are preserved. Eco Lodges fall under Eco Tourism.

2) Summary of the Project:

The Project is an initiative of Mr. Robert Byakutaga who is leading and spearheading
the Eco Lodge development effort through MT RWENZORI FARM LODGE LTD
aiming at building a place of accommodation and a natural tourist resort at the fringes
of Queen Elizabeth National Park (QENP) in western Uganda, specifically in the town
of Kichwamba in Rubirizi District. This place, which belongs to the Eco Lodge category,
will be characterized by its traditional architecture, the quality of the dishes, art and
crafts, the image of the large cultural areas of Uganda. This cultural diversity will
enable travellers and tourists who will stay in this place, to visit the cultural diversity of
Uganda. This will help them to save some good sums of money than if they were to go
into these cultural areas alone. The aim is also to preserve the local ecosystem, the
protection, and restoration of biodiversity, the creation of parks, using technologies and
renewable energies such as solar energy and many others. While generating income,
MT RWENZORI FARM LODGE is a vector sustainable development project, a
centerpiece in the creation of jobs by promoting agricultural, fishery, handicraft, artistic
activities...

MT RWENZORI FARM LODGE therefore falls under the activities that involve the
following principles:
- Generating income and profits through accommodation, catering; visits of
certain natural environments;
- conserving, projecting, restoring the biodiversity of the locality of the Queen
Elizabeth National Park area;
- developing gardens;
- educating travellers and tourists on the importance of living in harmony with
nature;

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- promoting the local diversities of Queen Elizabeth National Park (QENP) area
and also national ecological and environmental diversities;

4.2 Description of the Products of Mt Rwenzori Farm Lodge

Based on data from literature review, from the field, research and interviews with
specialists on tourism, culture and a questionnaire specially designed for the market
survey, the MT RWENZORI FARM LODGE Complex will place its products and
services around:
 TRADITIONAL ACCOMMODATION
 NATIONAL CUISINES OF UGANDA AND INTERNATIONALCUISINE

4.3 Market for Products and Services for Mt Rwenzori Farm Lodge

The market for the products and services of MT RWENZORI FARM LODGE is limited
to the Western Region, in the area of Queen Elizabeth National Park (QENP), and
specifically within Rubirizi District.

The target in particular is foreign tourists and senior officials of the public and private
sectors who live there.

4.4 Potential Demand

4.4.1 Visitors to National Parks

The number of visitors to Uganda‟s protected areas has greatly increased by 17.5%, and
this is the highest increase ever since the Uganda Wildlife Authority was created about
two decades ago.

Uganda Safaris have experienced this rapid rise due to the hard-to find nature wonders
which have continuously attracted very many tourists from different parts of the
World. There is a magical feeling a visitor experiences while in this Pearl of Africa that
keeps him/her feel more at home compared to when he/she is in other countries.

Basing on research, the number of game park visitors increased from 182,149 in 2013 to
213,949 in 2015 which amounts to 17.5%.The marketing and research officer, Barbra
Ameso said that43% of the visitors were foreigners and the rest included both East
Africans and Ugandans.

Of all the National Parks in Uganda, Murchison Falls National Park attracted the
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highest number of visitors and this was followed by Queen Elizabeth National Park.
Though Kidepo Valley National Park has registered a rapid increase in the number of
visitors, it came third after Murchison Falls National and Queen Elizabeth National
Park.

The least visited National Park according to research is Lake Mburo National Park. This
park is still being developed into a suitable product for domestic tourism. The number
of visitors to Lake Mburo National Park is to be increased with the support of Africa
Wildlife Foundation and USAID.

Table 6: Visitors to National Parks (Citizens and Foreigners), 2011 – 2015


National Parks 2011 2012 2013 2014 2015
Queen Elizabeth 60,273 60,803 70,798 66,844 72,964
Murchison Falls 87,924 58,172 69,193 58,769 65,366
Lake Mburo 21,480 22,927 14,068 26,980 24,979
Bwindi Impenetrable 17,335 18,259 21,695 20,611 16,476
Kibaale 10,433 10,372 10,834 12,097 10,463
Semliki 3,152 3,591 5,752 4,824 10,389
Mgahinga Gorilla 1,899 2,497 8,952 3,033 2,648
Kidepo Valley 2,452 2,300 2,890 4,091 5,663
Rwenzori Mountains 1,738 1,663 2,724 2,758 3,343
Mount Elgon 2,350 1,565 2,096 2,314 2,669
Toro Semliki 770 0 4,948 564 598
Katonga _ _ _ _ _
Total 209,806 182,149 213,950 202,885 215,558
Source: Uganda Wildlife Authority

Table 7: 2015 Visitors to National Parks by Category


National Parks Foreigners Foreigners EAC Students Others Total
Non-Residents Residents Residents Uganda
Queen Elizabeth 15,947 3,199 16,862 36,956 _ 72,964
Murchison Falls 24,279 6,839 22,607 8,251 3,390 65,366
Lake Mburo 8,096 2,122 6,866 7,895 _ 24,979
Bwindi Impenetrable 14,891 730 705 126 24 16,476
Kibaale 8,874 306 623 655 5 10,463
Semliki 379 271 1,467 8,156 116 10,389
Kidepo Valley 1,625 599 3,186 243 10 5,663
Rwenzori Mountains 908 271 291 1,866 7 3,343
Mount Elgon 382 269 1,582 434 2 2,669
Mgahinga Gorilla 1,640 53 429 456 70 2,648
Toro Semliki SWR 185 116 152 36 109 598
Total 77,206 14,775 54,770 65,074 3,733 215,558
Source: Uganda Wildlife Authority
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4.4.2 Tourism Accommodation in Uganda

It is estimated that Uganda has a total of approximately 1,300 registered establishments


offering accommodation. These establishments have approximately 20,000 rooms with
close to 30,000 beds. It suffices to note that Uganda’s average room occupancy rates for
2009 were 29.9%; In other words, on average 29.9% of the rooms are occupied every
month. While the average room rate was US$11 per bed per night (for all
establishments), thus the total earned revenue was estimated to be US$15m that year.
The 2009 bed space utilization on the other hand is estimated at 25%, implying that
since 2005 room and bed space utilization has been below 50%.

Of these 1,300 establishments, approximately 600 are in the tourism-centric districts


with about 80 being used by international tourists or foreign residents and most of them
are located in Kampala, Entebbe and Jinja. These establishments have a high average
room rate and occupancy rate of US$44 and 26% respectively which is four-fold high
than national average room rate and double the national average occupancy rate. The
occupancy rate for the tourist standard hotels and lodges is highest in Kampala,
averaging 45% compared to 22% for all other focal areas.

Uganda has limited “high end” accommodation along the basic tourists’ circuit of
Murchison, Kibale, Queen Elizabeth, and Bwindi, which has 400 rooms of 2-star plus
range for a daily tourist population of about 700 and 1-star range camping site for 1,600
tourists. Thus making Uganda a “low-end” tourist destination and being dominated by
“backpackers” and “overlanders”. The low share of foreign non-African hotel
ownership in Uganda compared to Kenya and Tanzania (Table 8) can be attributed to
this. However, of late there have been significant foreign investments in the hotel
industry namely Serena Hotel, the Green Wilderness Group (Semliki Safari Lodge) and
Emin Pasha Hotel.

Table 8: Percentage capital Ownership of Hotels in East Africa


Ownership Uganda Kenya Tanzania
State 10.53 6.45 5.45
Private Sector (Domestic) 68.42 69.42 61.82
Private Sector (foreign African) 15.79 3.23 9.09
Private Sector (foreign Non-African) 5.26 20.90 23.64
Source: Uganda Diagnostic Trade Integration Study, Voulme 2, June 2006, page 109

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4.5 Analysis of Supply and Competition

Within the Queen Elizabeth National Park area, there are quite a number of lodges that
have come up in recent years that present quite some of level of competition for the
proposed MT RWENZORI FARM LODGE in this hospitality industry sector.
However, the key competition differentiator for MT RWENZORI FARM LODGE will
be in the beauty of surroundings, the style of its design as an up-market eco-tourism
complex, the quality of its hospitality services, and the strong commitment of its
promoter Mr. Robert Byakutaga to make it succeed in meeting its targeted cash flows
and business growth objectives while generating surplus to service the loan facility and
meet its shareholder expectations in the short- to medium-term.

4.6 Situation Analysis and Management of Risk

4.6.1 SWOT Analysis

Table 9: Situation Analysis


STRENGTHS WEAKNESSES
 Rich natural and cultural diversity of the  Limited financial resources to develop a
QENP tourist circuit; decent eco-tourism complex;
 Strategic location within the extremely busy  Lack of awareness by the local community;
western Uganda tourist circuit;  Low tourism sector input by the government
 Site has favourable traffic connections (good and other tourism suppliers;
connectivity);  Hotel Industry is linked with the wider
 The project already has its own land with a Economy leaving the sector vulnerable in
Title Deed; times of recession.
 Use of solar energy in the long-term;
 Development of leisure activities, guided
activities in the long-term;
 Leisure activities (traditional dances, etc.);
 Display of artistic objects.
OPPORTUNITIES THREATS
 Good economic potential;  Competition from other tourist
 IT as a means to promote tourism (to lodges/facilities within the QENP tourist
supplement site branding efforts); axis;
 Accession to the EAC – travelling without  Inadequate development finance (including
borders, high ecological standards, financial equity)
perspective – cohesion funds.  Lack of interest by the local community and
tourism suppliers;
 Climate changes and ecological disasters.

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4.6.2 Risk Management

Table 10: Risk Management


No Risk Involving the Execution of the Risk Management
Project
01 Lack of tourism subsidies  Get a commercial loan from a commercial
bank.
02 Insufficient liquidity to fund project  Continue growing and strengthening the
development farm and St. Leo‟s Junior School to bolster
the lodge‟s financial income.
03 Number of customers  Transform the site into a living
environment and build houses for that,
develop agro-pastoral and fishery
activities on a portion of the land.
04 Delay in getting funding

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5.0 HOSPITALITY INDUSTRY DESCRIPTION AND OUTLOOK

5.1 Uganda‟s Visitor Survey – Market Trends and Growths

According to the Uganda Wildlife Authority (UWA), Queen Elizabeth National Park
(QENP) received the highest number of visitors in Uganda for 2015 being 72,964 as the
total annual number of visitors to the national park including its tourist circuit lodges
and hospitality facilities.

Table 11 and Figure 3 below show a breakdown of visitors that entered in Uganda by
purpose of visit for 2015 (Source: Uganda Bureau of Statistics).

Table 11: Visitors to Uganda in 2015 by Purpose of Visit


Holiday - Business Transit Others Total
recreation (Visiting
friends and
relatives)
234,000 362,000 510,000 197,000 1,303,000

Figure 3: Visitors to Uganda in 2015 by Purpose of Visit

Visitors to Uganda in 2015 by Purpose of Visit

15% 18%

Holiday - recreation
Business
Transit (VFR)
Others
28%
39%

Currently, there are no disaggregated published data on the demographic profile of


visitors to Uganda – where they come from, purpose of visit, length of stay,
accommodation used etc.

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Uganda Wildlife Authority (UWA) national park visitor statistics shows that Europeans
account for some two - thirds of total visits and Americans a further 30 percent
although visitor arrivals from the main source markets have increased during the past
five years:
 Visitors from Europe and North America predominate.
 US originating traffic has grown slowly throughout the period from about 41,000
to 55,240, while traffic from Northern and Western Europe has grown from about
68,900 to 95,650 tourist arrivals.

Within Europe, the main source markets are Britain, Scandinavia, Italy, Germany and
France, which together accounted for just over 70 percent of total European arrivals in
2015. The secondary markets are Switzerland, the Benelux and Spain, together
accounting for a further 19 percent of arrivals.

Bearing in mind that the results of the pilot visitor exit survey are unweighted to take
account of the different visitor flows through the main entry – exitpoints, indications
are that just under half of all visitors came for holiday purposes; about 25% for business,
about 12% to visit friends and relatives, and about 10% for conference - meetings.

5.2 Visitor Expenditure Pattern

Expenditure patterns vary by purpose of visit, length of stay and whether package or
non-package arrangement as shown on the following table (source: international visitor
exit pilot survey, May 2017)

Table 12: Visitor Expenditure Patterns


Purpose of Non package Package
visit Length of Average in Average Length of Average in Average
stay in US$ per day in stay in US$ per day in
days US$ days US$
Business 1–3 837 418 1–3 986 493
4–7 878 160 4–7 981 178
8 – 28 1,481 82 8 – 28 1,481 82
Conference 1–3 1,359 680 1–3 851 426
4–7 362 66 4–7 539 98
8 – 28 679 38 8 – 28 863 48
Holiday 1–3 382 191 1–3 779 390
4–7 540 98 4–7 919 167
8 – 28 4,405 245 8 – 28 1,723 96

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Again, taking into account the fact that the results are unweighted by visitor flows, and
adjusting for extreme values, the findings indicate that:

 business visitors spend an average of about US$ 900 – per trip


 conference visitors spend an average of about US$ 600 – per trip
 holiday visitors spend an average of about US$1,000 – per trip

5.3 Mt Rwenzori Farm Lodge and Its Target Market

 In general, we are targeting those customers who are looking for a beach
complement to a combined safari, nature holiday, and soft adventure.

 Our foremost target group of customers is the European visitors whose main
motivation is of “wildlife” experience, combination holidays, hiking, soft
adventure and culture. In particular these European visitors and especially
British, Germans, Swiss and Austrians as well as the Scandinavian country
customers. Most of those countries are ranking highest worldwide in
consumption of organic food and organic farming, so there is an overall
understanding and acceptance of green, sustainable eco-tourism.

 Secondly, another target group of customers are the foreign staff of UN


organizations, diplomatic missions, multinational companies etc. including of
their visiting friends and relatives.

 A further source of market targeting in future will be the USA, Canada, Asia –
Pacific (especially Australians) customer.

 Another group of special interest that we are also targeting is the emergent
Ugandan tourist group composed mostly of school and university students.

5.4 Figures & Empirical Findings of a Similar Lodge in the QENP

Owing to the historical relationship of Uganda to the colonial time with United
Kingdom, the UK guest‟s are still one of the most observed tourists in the Queen
Elizabeth National Park (QENP).

Our exact findings and trends during an observation period, with a similar lodge
during two years (2013 until 2015) are as follows:

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 Visitors from USA 19.48%
 Visitors from UK 16.10%
 Followed by Scandinavian countries, Germans, Canadians, Netherlands and others
 37% were of Ugandan residence (embassies, NGOs, transnational companies, etc.)
 Spending average per head and per day US$100- (room rate by then was US$50 – p.p. &
night)
 Occupancy rate was 65% after two years operating.
 Most bookings 50% through E-mail and each 25% were bookings by telephone calls and
drop-ins.
 21% came back after they have seen our homepage. 18% came back because of trip
advisor and holiday check recommendations (traveller platform). 14% came back
because of recommendations (mouth to worth). Another 12% came back because of
other advertising sources. The rest of 35% were drop-in customers, or because of our
striking sign boards, or of comments in travel guide books and through bookings of tour
operators and agents, etc. etc.

Figure 4: Guest Sources

Guest Sources

14%
18%

Recommendation
12%
Advertising Various
Homepage
Drop-in & Others
Trip Advisor

35%
21%

5.5 Visitor Market Segment and Product Analyses

“Geotourism” includes ecological, nature, cultural and heritage tourism. What they all
have in common is that they offer visitors a wider range of authentic experiences of the
beaten track, in addition to and beyond the traditional wildlife viewing and beach
holidays.

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Table 13: Visitor Market Segment and Product Analyses
Market segment Characteristics Mt Rwenzori Farm Lodge
Products Required
Business  short stay (5 nights)  QENP visit add-on (1 to 2
 high spending; even seasonal nights)
 throughout year  Sightseeing of soft hiking tour
 high repeat business
Visiting friends – relations  long stay (up to one month)  One weekend trip to the
 stay with friends – relatives QENP
 low use of tourist plants  Combined visit to Kibale
 high repeat business National Park (for chimps
tracking) and
Mgahinga&Bwindi
Impenetrable Forest National
Park (for gorilla tracking)
Vacation – other leisure  medium stay (7 to 14 nights)  QENP excursion and safari
 stay in hotels – lodges
 high spending
 low repeat
 highly seasonal
Soft adventure  medium stay (6 to 13 nights)  Climatically adapting for
 stay in camps - tents MtRwenzori climbing
 younger age groups  Nature walks & hiking trips
 Cultural activities
Activity  medium to long stay  Climatically adapting for Mt
 stay in camps - tents Rwenzori climbing
 high spending  Nature walks & hiking trips
 Day game drives
 Nocturnal game drives
 Chimp tracking
 Mongoose tracking
 Bird watching
 Cultural activities
Special interest  medium stay Interest in visiting QENP for
 high usage of hotels & lodges historical,
 high spending archaeological, ornithological,
anthropological, and cultural
awareness
Conference – incentive  short stay  Good quality hotels and
 high spending lodges
 high hotel usage  Range of things to see and do
 low repeat  Support & services (pick-up &
transport)

The Queen Elizabeth National Park (QENP) has a variety of Flora and Fauna and it‟s
acknowledged to be a habitat for over 95 mammal species with about 612 species of
birds. The various species in this park, has made it a unique park most liked by tourists.
Geographers will say that the park has around 57 vegetation types but in actual sense, it

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has five levels of vegetation namely bushy grassland, acacia woodland, lakeshore or
swamp vegetation along with forest grassland.

The grasslands of the park settles wildlife such as Cape buffalo, Uganda kob,
waterbuck, warthog, lion, leopard, hyena, giant forest hog as well as elephants. Topis
can only be discovered in Ishasha and forest primate found in Kyambura Gorge in
addition to Maramagambo forest.

Africa has some protected areas. Therefore the park‟s remarkable birdlist does exceed
that of the neighboring Virunga National Park. Among these include African skimmer,
Chapins flycatcher, Pink-backed pelicans, Papyrus canary, Shoebill stork, martial eagle,
black-rumped buttonquail as well as the great flamingos.

A niche market is bird watching or birding. Although some specialized tours are run,
generally birders are mixed in with photographic safaris to the southern section of the
Queen Elizabeth National Park (QENP) – south of Kazinga Channel or northern section
of the Queen Elizabeth National Park (QENP) – north of Kazinga Channel, where
wildlife viewing is the main objective.

While it is unlikely that all but a dedicated few tourists would visit the Queen Elizabeth
National Park exclusively for its cultural assets, their existence adds to the richness of
the diversity of the tourism product. Such cultural assets can bring revenues to
communities that would not otherwise benefit from tourism and can help to extend the
length of the tourist‟s stay. Those cultural assets in the Queen Elizabeth National Park
have potential for development of other facets of tourism i.e. resort tourism, could
become destinations that can be successfully combined with wildlife viewing on the
northern or southern circuits.

5.6 Competitive Analysis

The following competitors in within the Queen Elizabeth National Park (QENP) and
surrounding area have to be taken into reflective consideration.

Jacana Safari Lodge (Up-Market Luxury):


Jacana is an up-market 24 bed lodge with swimming pool and sauna located 12 kms off
the main road from Katunguru to Mbarara set in the Maramagambo Forest. The lodge
is well sign posted on the main road at the bottom of the escarpment when coming from
Mbarara. The lodge is within the boundaries of QENP.

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Table 14: Jacana Safari Lodge and Nile Safari Lodge 2017 Room Rates
Meal Plan Single Room/night, Full Board Double Room/night, Full Board
Full Board US$210 US$330
*Children's Rates: under 5 years are free.
Children ages 5 years to 12 years pay 50% of the adult rate

Kyambura Gorge Fig Tree Camp:


The national parks maintain a chimpanzee trekking station at Fig Tree camp
overlooking the Kyambura Gorge. Camping here is possible at UShs10,000- p/p.

The Bush Lodge (Moderate Price Value):

The Bush Lodge forms an excellent base for your safari activities in Queen Elizabeth
National Park. The lodge is built along ecological principals, the bandas designed and
spaced in such a way to maximize privacy and enhance the safari aspect of the lodge.
Surrounded by the National Park and bordering the Kazinga channel, the lodge has a
truly unique setting. Animals literary room in and out the camp and sounds of hippo's
and hyena's complement our star lit dinners... At a great price quality ratio, The Bush
Lodge finally offers a safari camp which is affordable and authentic. Expect a great
outdoor safari atmosphere, a close to nature experience with excellent food and friendly
service.

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Table 15: The Bush Lodge Room Rates
Rates 2016 B&B HB FB
Banda single 110 125 135
Banda double 140 170 190
Extra bed 25 40 50
Tent Sgl Self Cont 55 70 80
Tent Dbl Self Cont 80 110 130
Tent sgl Non Self Cont 35 50 60
Tent dbl Non Self Cont 60 90 110

Mweya Safari Lodge (Up-Market):

Mweya Safari Lodge is 49 rooms of luxury. There are standard and up-market rooms
for you which are furnished in a most tasteful fashion. The rooms overlook Kazinga
Channel which connects Lake Edward and Lake George. The lodge itself and the
restaurant are a delight and each year thousands of visitors pass through here.

In a standard single, double and twin rooms you will find a simple safari atmosphere
with a level of comfort that is not disappointing. Other features include Electronic Safes,
telephone, balcony door, fan and an en-suite bathroom.

The service is gracious and kind - the lodge is a part of Marasa Africa that also owns
Paraa Lodge and the most awesome lodge in Uganda - Chobe Lodge, both Paraa and
Chobe are at Murchison Falls Park.

It has fantastic and well prepared food and can meet any need from vegetarian to the
carnivore lover. The swimming pool is fabulous, a perfect place to cool off after a long
safari drive.

Mweya Safari Lodge is in a most beautiful location, Bradt's Guide says it is a Sheraton
in the Bush. The rooms have private verandas with view to live for. A perfect place to

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stay at Queen Elizabeth National Park in Uganda. It is the Lodge of choice in the
Mweya region of Queen Elizabeth Park for up-market travelers and at reasonable up-
market price - full board.

Accommodation

Mweya Safari Lodge has the following types of accommodation:


– 32 Standard Rooms, 12 Deluxe Rooms with Air-conditioning, 2 Suites.

Table 16: January - December 31 2017 Mweya Safari Lodge Room Rates
Room
Bed & Breakfast (USD) Full Board (USD)
Single 203 227
Double/Twin 354 402
Standard Double per Tent 403 451
Deluxe Room 403 451
Deluxe Double Per Tent 446 494
Suite Per Room 446 494
Royal Cottage 751 847
Presidential Cottage 944 1094
Queen‟s Cottage 1094 1190

Children's Rates:
o $68 USD full board per child (1-2 children sharing with adults)
o $103 USD full board per child (2-3 children sharing a room of their own)

Katara Lodge (Up-Market Luxury):

Katara Lodge is situated on the Great Rift Valley escarpment with uninterrupted views
of the savannah, Lake Edward and the Virunga and Rwenzori mountain ranges

26
beyond. Katara Lodge is located 16km from the Katunguru gate of the Queen Elizabeth
National Park, which is Uganda‟s premier safari destination and one of the most
biodiverse reserves in the world.

Accommodation

The lodge offers accommodation in eight luxurious thatched cottages on a beautiful


stretch of hills overlooking the open savannah in a serene and relaxing atmosphere.
Each spacious cottage was hand crafted using locally available materials and carved
into the hillside by the Katara village community. The cottages combine wooden floors,
grass thatched roofs and canvas that can be folded away for uninterrupted views of the
park stretching out below. The water is heated using solar thermal energy.

Katara Lodge has 7 regular cottages and one family lodge.

The regular cottages have one large open sleeping and sitting area, with a double bed
and a four poster star bed that can be wheeled out onto the veranda to sleep directly
under the starlit African sky (only recommended during the dry season!). The
bathrooms are luxuriously fitted – the romantic roll top bath, or the invigorating rain
shower, provide a perfect way to unwind after a thrilling day on safari.

The family cottage has two separate bedrooms with a shared sitting area and
bathroom. It has a double bed in one bedroom, and two beds (one is 3x6ft and the
second 4x6ft) in the other bedroom which can accommodate up to three small children.
In addition, the family cottage comes with a small private outside sitting area with a
swing couch and two hammocks.

Table 17: Katara Lodge 2017 Nightly Room Rates (taxes inclusive)
Full board Half Board
Double occupancy 200 190
Single occupancy 250 240
Extra bed for 3rd person 75 70
Children 2 – 12yrs 60 55
(sharing cottage with parents)
Children less than 2 years old Free Free
(sharing cottage
with parents)
These rates are inclusive of VAT and all taxes, and on a full board basis (i.e. including
meals but not drinks).

27
Katara Lodge offers special discounts to Residents of East Africa.

Enganzi Lodge (Moderate Price Value):

Enganzi Lodge is situated in farmland on the escarpment overlooking the northeastern


part of the reserve, this reasonably pleasant lodge has large public areas supporting
several decent guests cottages ranged across the hillside below. This lodge has a
stunning location on an escarpment overlooking Queen Elizabeth National Park You
will pleasantly be surprised by amazing view overlooking the rift valley.

The luxurious huts are built hillside and you have a beautiful view from the terrace
down to the lowlands. The food is incredibly delicious and the staff is warm and very
friendly.

The gigantic rooms are well equipped - with big beds, shower, bathtubs and flush
toilets. They run on hydro power so the showers are nice and with copious hot water. –
Electrical outlets to charge your batteries in the room which is nice. The individual
cottages are huge with lots of windows for the views. The roofs are made from banana
leaves and this keeps it cooler all time. They have French doors opening up to your own
deck looking over the rift valley. It is a perfect spot to watch elephants, birds and the
sunset.....all AMAZING! You really have everything to relax after a hard safari day.

Because the lodge is situated on the edge of a hill, there are a lot of stairs going up to the
rooms, but the staff will help customers with their bags. This is just fine for some guests
as it may give them little workout and certainly keep them in shape.

They do provide their customers with bottled water in their room and even have
Umbrellas for customers if needed. This is one of the best places that one may want to
stay at on a Uganda safari. You relax and enjoy the accommodations and scenery!
Queen Elizabeth Park is spread out below you - This is truly a hidden gem!

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Enganzi Lodge is basically a rip-off of the high-rated Katara Lodge which is a stone's
throw away.

Whether the place is ultimately able to reproduce and keep the same levels of delivery
as its esteemed neighbour, we will have to wait and see but it‟s pretty much
recommended for now.

Bunyaruguru Crater Lake is 2.7 km from the property. Free private parking is available
on site.

Enganzi Game lodge features free Wi-Fi.

Guests can enjoy a meal at the on-site restaurant or a drink at the bar.

Kasyoha Kitomi Forest Reserve office is only 5 kms away from Enganzi Game Lodge.

Kingfisher Lodge Kichwamba (Moderate):


Located in western Uganda, just outside the Queen Elizabeth National Park at
Kichwamba escarpment with a strategic view of the park and yet it is the only
moderately priced facility that is quality all around. There is a swimming pool to cool
you off after the long drive from Kampala. You can eat order an Italian Style Pizza
from their wood fired oven. That is just the beginning. The beautiful gardens, the view
ahead of you, the African-style Bandas with western comfort and yet at a price that is
affordable all of these things make this lodge a good option to stay while visiting Queen
Elizabeth National Park.

The rooms are clean and spacious, well furnished, with


mosquito nets. It is obvious that a lot of thought and
care has gone into this lodge that keeps alive the African
theme throughout the establishment.
The Lodge is under German management who have done
a good job in putting together this oasis on the equator
providing a valuable and appreciated service to the tourist
community.

They have a very good track record at the Kingfisher Lodge in Jinja and hope to
continue that at Queen Elizabeth National Park. It has turned out be a lovely facility at
a moderate price.

29
All food is prepared to order and everything is made from scratch, so it usually takes
about 40 minutes or so to get your food. Place your order, give them your room
number, and they would inform you when it was ready. You can eat in the restaurant,
or in your room and they will bring it to you. If you eat in the restaurant, you have a
beautiful view of the park while you eat.

The pools are awesome. There are two. One is a children's pool, which is an upper pool
about 3 feet deep connected by a water slide to a lower pool about a foot-and-a-half
deep. The kids loved this and played in it a lot. The other pool is an adult pool,
approximately 5 feet deep. This overlooks the park and has a gorgeous view. They are
currently constructing a lower, deeper pool that also connects to this pool with a slide,
just like the kid's pool. They appear to be constructing what will likely be a hot tub.
Very cool. There is an observation deck overlooking the park where you can lay out and
get some sun, relax, or sit and watch wildlife (you will want to bring binoculars). The
equatorial sun is very strong, so remember to use sunscreen if you burn easy. The
grounds are gorgeous, well landscaped with lots of tropical trees and flowers. Be sure to
spend some time watching the local birds, including one large tree near the entrance
that is absolutely loaded with weaver birds.

Kyambura Game Lodge (renamed Mazike Valley Lodge) – Affordable Up-Market:


Kyambura Game Lodge is a stunning 7 cottage facility with a truly ecological spirit and
atmosphere located up on a hill overlooking the Queen Elizabeth National Park for as
far as you can see. Every room overlooks the valley which has sunsets in the distance.
Lovely hammocks surround the beautiful pool and the handcrafted artwork situated
around this lodge. The scenery is unbelievable and every detail of this lodge is
spectacular.

From the moment you arrive you are given a warm welcome and surrounded by
friends. The staff is incredible; gracious, very friendly and helpful. They love working
here and are so kind. The decorations in every part of the lodge- rooms, dining area,
porches, and reception- are amazing. All the cottages are thatched, very specious with
bathtubs and shower. Furnished African style with locally made furniture. A wide open
view from the deck or out of the large screened windows allows you to see wildlife
such as elephants right from the tented cottage in the authentic African feeling.

There is a lovely and pristine swimming pool in which you can take refreshing dip after
a day on game drives and certainly is a plus for this lodge. From the pool –you can see
the savannah below you. Wherever you are in this lodge, your cottage, having dinner,
swimming, a cold drink, the wild of the African savannah is before you and the name of

30
the lodge, Kyambura Game Lodge is appropriate since you can see much game and
wildlife right from the lodge, right from your tented cottage.

You can watch the sunset with a refreshing drink from the well stocked bar on
sundowner deck and watch the endless African sky with it‟s countless of stars and
moon illuminating the African night over the savannah before you. Depending on how
much time you have, I would recommend staying an extra day here and just relaxing by
the pool and taking in the views.

Please note that the site does NOT overlook the Kyambura Gorge but it‟s situated on
the escapement that overlooks Queen Elizabeth Park.

Park View Lodge (Mid-range/Moderate):

Parkview Safari Lodge is a Uganda safari lodge located in Queen Elizabeth National
Park in the Kyambura area. The lodge is a mid-range or standard rate lodge facility that
is best placed to serve the middle income travellers on their voyage to the park and
surrounding local communities.

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The lush en-suite cottages are nicely placed in a natural ecosystem setting crafted using
natural materials and fitted with canvas that blends with their surroundings. The
cottages are thatched with local grass presenting a cool atmosphere suitable for
relaxation while on safari. Equipped with both hot and cold running water, the bath
tubs and showers overlook the wilderness while the private wooden decks offer
uninterrupted views of the park Savannah when lit by electricity.

Parkview Safari Lodge is considerably rich in facilities including a fully equipped


conference hall, restaurant with an extensive menu providing both local and
international cuisines, library and reading area where you can learn more about
conservation and Queen Elizabeth National Park in general, sauna and steam bath,
massage parlour, gift shop where one can secure a souvenir to commemorate the
Uganda tour, extensive swimming pool offering a deep bath after an extensive game
drive, laundry services, internet connectivity that keeps one connected in the outside
world and a well-stocked bar.

Besides the lush en-suite cottages, the lodge also features well-built standard rooms set
with concrete materials providing a rather affordable accommodation to the price
sensitive travellers. The rooms have hot and cold shower among other exciting services
that surpass your expectations. The guests in these rooms fortunately have access to the
swimming pool, the restaurant among other facilities.

The lodge presents a good base for tourists visiting the park and undertaking a myriad
of activities including game drives in Kasenyi, community encounters, Crater Lake
viewing and excursions to the magnificent tree-climbing lion truck-Ishasha sector, river
safari along Kazinga channel, chimpanzee trekking in either Kyambura Gorge or
Kalinzu Forest Reserve and forest walk in Maramagambo forest.

Kasenyi Safari Lodge (Mid-Market):

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Nestled on the rim of Bunyampaka Lake, the Kasenyi Safari Camp is one of the
popular lodges in Queen Elizabeth National Park known for providing
accommodation for mid-market travelers on safari tours to Uganda.
The Kasenyi Safari Camp is marked by a raised thatched dining structure presenting
a good view of the lake and park while taking a delicious meal or a soothing drink in
the African wilderness while on a Uganda Safari tour.

Accommodation is presented in tents that are positioned on raised platforms


featuring canopy roof. The four (4) tents are all en suite marked with an ample living
room area along with private decks presenting an opportunity to view Uganda
tour wild game at the comfort of your tent.

Amazingly, a range of animals frequent Kasenyi Safari Camp both during the day
and night. Depending on the sheer luck that you carried with you to the Ugandan
wilderness, the wildlife sights can include; prides of lions, Buffalo, Hippo,
waterbuck, elephant, warthog and Hyena. The jungle sounds including those of
Hyenas and lions may not be missed at night.

Kasenyi Safari Camp enjoys excellent location and its proximity to Kasenyi sector
gives it an advantage in terms of being used as a base for the exciting game drive
activity in this part of Queen Elizabeth National Park.

Wilderness Safari Camp (Affordable Up-Market):

Ishasha Wilderness Camp is situated within the Southern Ishasha sector of Queen
Elizabeth National Park on the Ntungwe river, an idyllic retreat for people who truly
enjoy the wilderness. This exclusive camp offers superb quality accommodation and
services in this unspoilt remote sector of Queen Elizabeth National Park famous for its
tree climbing lions that can sometimes be spotted resting in the branches of the large fig
33
trees in the area. Being within the park the wildlife is free to also pass through the camp
and elephants can be seen bathing in the river, buffalo enjoy grazing and resident
troops of Black-and-White Colobus and vervet monkeys are frequently viewed.
2016 and 2017 Rates
International rates begin from $US 310 per adult during Low Season (sharing in double
/ twin accommodation).

Rates include: Full Board accommodation, 3 multiple course meals per day, all hot
beverages and bar snacks, drinking water with meals and in rooms, and other lodge
services provided atIshasha Wilderness Camp.

Simba Safari Camp (Budget-reasonable):

Quality and affordability. There is no swimming pool, there are no fancy rooms, but
there are comfortable and clean rooms, self-contained awaiting the traveler to Queen
Elizabeth.

This is the best budget option at Queen Elizabeth National Park.


The Camp is fairly new but the management has been tried and proven over some years
at the other facilities that they own. They have created the best budget facility in the
area and yet there are self-contained.

Breathtaking views of the nearby crater lakes. It is the closest accommodation to the
Kasenyi Game drives in Queen Elizabeth National Park, located just outside of the park.
rooms, and if you want to really save money there are the dorm room at a most
reasonable rate.

The restaurant serves good food at reasonable prices. Simba Safari Camp is a most
welcome addition to the moderate market. It certainly represents one of the best values
for Queen Elizabeth National Park. Beds in dormitory such as for backpackers are about
10 usd per night.

34
The food is good and well prepared and full board can be had here. The bar is well
stocked with local and international drinks.

Each room is self-contained and has a veranda, and most beautiful views located on the
equator. This has been a favorite amongst budget travelers and those looking for a
moderate price full board at Queen Elizabeth Park. Simba Safari Camp fills a void that
has been at Queen Elizabeth Park and you can only benefit.

Table 18: Simba Safari Camp 2017 Room Rates


ALL PRICES ARE PER PERSON, PER NIGHT
GUEST HIGH SEASON LOW SEASON
ROOMS BED & HALF FULL BED & HALF FULL
PRIVATE & BREAKFAST BOARD BOARD BREAKFAST BOARD BOARD
EN-SUITE
Double USD 47 USD 60 USD 71 USD 28 USD 41 USD 52
occupancy
Single USD 71 USD 84 USD 95 USD 43 USD 56 USD 67
occupancy
Triple USD 46 USD 59 USD 70 USD 28 USD 41 USD 52
occupancy
Family USD 50 USD 63 USD 74 USD 30 USD 43 USD 54
Cottage(4
pax)
DORMITORY BED & HALF BOARD FULL BOARD
BREAKFAST
SHARED ROOM & FACILITIES
Per person, Per bed USD 26 USD 39 USD 50
CAMPING SELF-CATERING, OWN CAMPING
EQUIPMENT
Per Person, Per Night USD 9
EXTRA SERVICES
MEAL PRICES BREAKFAST USD LUNCH USD 13 DINNER USD
10 15
WI – FI CONNECTIVITY FREE

Children below 3 years stay free of charge Children aged 3-12 years pay 50% of the
adult rate when sharing room with either 1 or 2 adults

HOLIDAY SUPPLEMENT

A Christmas supplement of USD 25 (per person, per night)


1st January 2017 and 24th- 25th -26th -31stDecember 2017

35
Hippo Hill Camp (Up-Market):

Buffer zone in close vicinity to Mweya area and it is a lovely setting, new facility and
moderately priced. It overlooks a beautiful lake and has ten tents where you can spend
your time of rest and relaxation after a long day tracking wildlife or birding at Queen
Elizabeth National Park.

The tents are nicely furnished and all have en-suite bath in the back of the tent. You can
sit on your porch and enjoy the sunset and the wildlife around you.
The food is nicely presented and overall the camp provides a most comfortable setting
for the visitor to Queen Elizabeth National Park.

The camp overlooks Lake Edward and some islands and is near the Katwe salt lake and
Munyanyange crater lakes. You might see some of the fabulous Flamingos at the nearby
salt lake.

Table 19: Hippo Hill Lodge – Queen Elizabeth NP 2017 Room Rates
Room Regular Off season
Double US$ 200 US$ 130
Single US$ 150 US$ 100
Off season rates apply to March, April, and May, October & November

There are a lot of other small lodges, hotels and guest houses in Rubirizi District and
around the Queen Elizabeth National Park area, but those are out of question to be
actually serious competitors for the MT RWENZORI FARM LODGE target market.

5.7 Keys to Success

In order to achieve all the goals related to building up a cutting-edge hospitality


business, MT RWENZORI FARM LODGE needs to focus on the following key areas:

36
 Appropriate communication through personal interaction, media, and regional
marketing
 Focus on loyal customers who give repeat - business and work closely with
travel agents and tour operators in order to generate adequate sales
 Maintain a high level of service quality and offer cutting - edge facilities
 Allow visitors to see the beauty of the Queen Elizabeth National Park and the
surrounding countryside and make them want to comeback
 Competitive price and price policy
 Strong management handling costs, cash flow and other operations
 Encourage local authorities to support the project
 Developing a range of special interest products to a high standard
 Developing activity and soft adventure products
 Developing a cultural - historical product
 Image creation as MT RWENZORI FARM LODGE is a soft eco - tourism lodge,
emphasizing the abundance of flora and fauna of the Queen Elizabeth National
Park and its immediate environs. MT RWENZORI FARM LODGE should
advertise the fact that MT RWENZORI FARM LODGE is not a mass tourism
lodge and that MT RWENZORI FARM LODGE is an ideal base for recreation
holiday‟s with activities e.g. guided national park touring, bird-watching, biking
on -site activities etc. the Queen Elizabeth National Park and the MT
RWENZORI FARM LODGE unspoilt natural environment and beautiful
scenery should also be highlighted. To develop an image of MT RWENZORI
FARM LODGE as the leading accommodation provider in conjunction with high
quality services, activities and diverse cultural interests.
 To undertake an inventory of tourism resources. this would involve not just an
enumeration of the various resources, amenities and facilities - but also include a
qualitative description

37
6.0 MARKETING STRATEGY

6.1 Market Share Objective

In the light of the studies that have been conducted, the potential market, which is also
the available market of the Queen Elizabeth National Park tourist circuit, is estimated at
about 73,000 customers. MT RWENZORI FARM LODGE intends to enter this market
and take 10% of the market share, that is, 7,300 customers per year.

6.2 Marketing Strategies

6.2.1 Product/Service Policy

MT RWENZORI FARM LODGE when it starts operating will offer products from the
catering sector and accommodation services.

a-) Products of Mt Rwenzori Farm Lodge:

Talking about products, the products which will be proposed to customers are the
following:

Table 20: Lodge Products


No. Categories Number of Varieties
1 National Cuisine 15
2 International Cuisine 24
3 Creams 04
4 Desserts 04
5 Natural Juice 10
6 Alcoholic Drinks 20
7 Liquor 08
8 Wine 10
9 Sweet Beverages 09
10 Cocktails 12
11 Beers 10
TOTAL 11 125

b-) Services of Mt Rwenzori Farm Lodge:

The accommodation services will comprise of:

38
Table 21: Lodge Accommodation Facilities
No. Categories Dimensions Number of
Rooms
1 Eco Lodge Rooms 20 m2 08
TOTAL 160 m2 08

6.2.2 Pricing Policy

The provisional prices that will be adopted are as follows:

Table 22: Pricing for Products and Services


No. Categories Prices (USD)
Catering
1 National Cuisine 3
2 International Cuisine 8.4
3 Creams 5
4 Desserts 4
5 Natural Juice 4
6 Alcoholic Drinks 10
7 Liquor 30
8 Wine 30
9 Sweet Beverages (Soda) 0.5
10 Cocktails 10
11 Beers 1.0
Total A 11 105.9
Accommodation
1 Eco Lodge Rooms
Total B 8 20 x 8 = 160
Total A + B 19 265.9

6.2.3 Communication and Promotion

It is necessary to state that the MT RWENZORI FARM LODGE Complex will lay
emphasis on:
- service quality;
- customer service;
- quality-prix ratio
- national customers because the data on the market survey conducted earlier
show that they are many and can even meet the profitability objectives.
The table below is a summary of the communication and promotion plan:

39
Table 23: Communication and Promotion Plan
No. Activities Number of Budget per Period Number of prospects Cost of
yearly transaction and visits Getting One
transactions (USD) Customer
(USD)
Min. Max. Prospects Number Min. Max.
of
Clients
1 Articles in Jan; Dec 500 10 12 16
New Vision 2 600 800
2 Press Release 1 400 500 Dec. 100 10 40 50
3 Internet 12 4800 9000 Once a 10,000 40 5 10
month
4 Lobbying 3 1200 1800 Dec; 200 10 60 90
May;
July
5 Mailing Twice a 200 10 10 15
address 24 200 300 month
6 TV adverts 1 600 200 Dec. 1,000 10 6 8
7 FM Radio 500 10 8 10
adverts 1 400 500 Dec.
8 Mouth to ear 100 10 20 30
network 1 200 300 Jan.
9 Stand for
events During
(WORLD dates of 150 05 80 135
TOURISM 3 1200 2000 such
DAY, PEARL events
OF AFRICA
TOURISM
EXPO,
UGITF)
10 Posters 3 600 600 Dec; 100 05 60 60
May;
July
11 Banners 3 1500 1500 Dec; 100 05 150 150
May;
July
12 Newsletters 12 200 300 Once a 200 02 10 15
month
13 Phoning 12 1200 2400 Once a 200 20 60 120
month
14 Conference 3 1000 1400 Dec; 200 10 50 70
May;
July
15 Gifts to Dec. 50 20 100 200
Customers 1 500 1000
TOTAL 15 81 14,600 22,500 13,600 177
NB: Currency Conversion Rate of USD 1 = UGX 3,600

6.2.4 Distribution

40
The sales point of the products of MT RWENZORI FARM LODGE is at Kichwamba in
Rubirizi District. Accommodation services will take place on the site and on the website
via the marketing and communication service.

41
7.0 PRODUCTION AND ORGANIZATION PLAN

7.1 Project Scheduling Process and Preparation of Dishes and Delicacies

7.1.1 Project Scheduling Process

The MT RWENZORI FARM LODGE implementation scheduling process will be as


follows:

Figure 5: Project Scheduling Process


Step 1: Purchase of Building Materials

Step 2: Site Preparation and Development for Construction

Step 3: Construction of Foundations

Step 4: Erection of Walls

Step 5: Roofing

Step 6: Shaping of Stones

Step 7: Putting on Pavements and Tiles

Step 8: Connection of Lighting and Water Systems

Step 9: Painting of Buildings

Step 10: Arranging and Setting Up the Premises

Step 11: Recruitment of Staff

Step 12: Launching of Eco-Lodge

42
7.1.2 Process of Preparation of Dishes

Figure 6: Process of Food Preparation


Step 1: Buy the Ingredients

Step 2: Wash the Ingredients

Step 3: Prepare the Ingredients

Step 4: Cook

Step 5: Set the Table

Step 6: Deliver the Order

7.2 Production Capacity

The production capacity of MT RWENZORI FARM LODGE is summarized in the


following tables:

7.2.1 Production Capacity of Products

Table 24: Production Capacity of Products


No. Categories Number of Annual
Varieties Production
1 National Cuisine 12 3,600
2 International Cuisine 22 3,600
3 Creams 04 1,000
4 Desserts 04 3,600
5 Natural Juice 10 7,200
6 Alcoholic Drinks 20 520
7 Liquor 08 520
8 Wine 10 520
9 Sweet Beverages 09 7,200
10 Cocktails 12 7,200
11 Beers 10 14,400
TOTAL 11 121 49,660

43
7.2.2 Production and Accommodation Capacity

Table 25: Lodge Accommodation Facilities


No. Categories Dimensions No. of Rooms Annual Usage
1 Eco Lodge Rooms 20 m2 08 2,920
TOTAL 160 m2 08 2,920

7.3 Supply

The MT RWENZORI FARM LODGE Project intends to deploy its supply system
around the following positions:

Figure 7: Schedule of Supplies in 2018


Activity 2018 Suppliers
J F M A M J J A S O N D
Ingredients for Various
Dishes suppliers in
western
Uganda
Energy Bill Umeme
Internet Connection UTL
Supply from the
administration
Marketing and Computer
communication graphics and
tools (gifts, banners silkscreen
and other printing
gadgets…)

7.4 Human Resources

7.4.1 Payroll and Duties

The proposed human resource staffing, functions and salary structure are presented in
Table 26 below.

44
Table 26: Human Resource & Salary Structure
Number Category Skills/Training Duties/Functions Monthly Total Annual
Salary Salary (UGX)
(UGX)
3 Board of Directors Promoter and his partners Define the general policy, objectives, vote 2,000,000 72,000,000
(BOD) the budgets
1 GM Master’s Degree in Management or Execute the policies defined by the Board 1,500,000 18,000,000
Business Administration (5 years of Directors and management of the entire
experience) complex
1 Secretary Bachelor’s Degree in Law (3 years Assist Management and manage the 850,000 10,200,000
experience) database (sex female)
1 Accounting & Financial Bachelor’s Degree in Accounting and General, cost, financial accounting, 1,000,000 12,000,000
Director Management (5 years experience) cashier for accommodation services and
auditing of accounts (sex female)
1 Marketing & Bachelor’s Degree in marketing (5 years Marketing Strategies ; commercial and 1,000,000 12,000,000
Communications experience) communication
Director
2 General Bachelor’s Degree in Corporate Implementation of the general strategies 1,200,000 28,800,000
Communication Communication (3 years experience) and Internet
1 Computer Bachelor’s Degree in computer Computer Maintenance 1,000,000 12,000,000
Maintenance maintenance (3 years experience)
1 Lighting System Higher National Diploma (HND) in Maintenance of the lighting system 720,000 8,640,000
Maintenance electricity (3 years experience)
1 Water System Higher National Diploma in Management Maintenance of the water system 720,000 8,640,000
Maintenance of Water Systems (3 years experience)
1 Manager of Bachelor’s Degree in tourism and leisure Implementation of the policies defined by 1,000,000 12,000,000
Accommodation or hotel business and catering (5 years the GM, the marketing and communication
experience) service under the services accommodation
(sex female)
2 Chambermaids Diploma in hotel business and catering Upkeep of the bedrooms and dressing 850,000 20,400,000
(3 years experience) room
1 Restaurant Manager Bachelor’s Degree in hotel business and Implementation of the policies defined by 1,000,000 12,000,000
catering (5 years experience) the GM, the marketing and communication
service under the restaurant
1 Barman Diploma in hotel business and catering Managing the bar and cashier of the 500,000 6,000,000
(3 years experience) restaurant
1 Chief Cook Diploma in hotel business and catering Cook for customers 500,000 6,000,000
(3 years experience)
3 Cooks Advanced Level (3 years experience) Cook for customers 350,000 12,600,000
4 Waiters Advanced Level (3 years experience) Wait on customers (sex female) 400,000 19,200,000
3 Maintenance Workers (3 years experience) Maintenance and cleaning of the complex 300,000 10,800,000
2 Security Guards (3 years experience) Security of the complex, customers and of 300,000 7,200,000
the staff
TOTAL 30 15,190,000 288,480,000

From the data presented in Table 26 above, we notice that the average wage is UGX
506,000. It is largely above the minimum wage in Uganda which is UGX 300,000. In
anticipation of changes in the operating account, the average salary will increase by 5%
per annum.

45
7.4.2 Organizational Chart

Figure 8: Proposed Organization Structure

BOARD OF
DIRECTORS

GM

SECRETARIAT

MARKETING AND ACCOUNTING AND


COMMUNICATIONS FINANCIAL
DIRECTOR DIRECTOR

COMPUTER LIGHTING SYSTEM WATER MANAGER OF RESTAURANT MAINTENANCE


COMMUNICATORS
MIANTENANCE MIANTENANCE MAINTENANCE ACCOMMODATION MANANGER WORKERS

CHAMBERMAIDS BARMAN SECURITY GUARDS

CHIEF COOK

COOKS

WAITERS

46
7.5 Location – Establishment

The market for the products and services of MT RWENZORI FARM LODGE is located
in the Western Region of Uganda, in Rubirizi District, specifically in the town of
Kichwamba lies approximately 350 kilometres (220 miles), by road, southwest of
Kampala, the capital of Uganda. It extends over an area of 3 Hectares. However, the
eco-lodge structure itself occupies an area of approximately 1,707 m2.

7.6 Facilities

The MT RWENZORI FARM LODGE building will be built with bamboo, earth, wood
and other local materials. The following construction costs are drawn up as in the
following tables:

Table 27: Eco-Lodge Construction Costs


ECO-LODGE
No Rooms Nos. Dimensions/Room (m2) Total Area (m2)
1 Bedroom 8 20 160
2 Water room 8 3 24
3 Sas 8 3 24
4 WC 8 2 16
TOTAL 4 28 224
COST 224 m2 x UGX 175,000 = 39,200,000

Table 28: Administrative Block Construction Costs


No Rooms Nos. Dimensions/Room Total Area
(m2) (m2)
1 Office 1 15 15
2 Airlock 1 3 3
3 Meeting Room 1 30 30
4 WC Office 1 6 6
5 Reserve 1 15 15
TOTAL 5 69 69
COST 69 m2 x UGX 250,000 = 17,250,000

47
Table 29: Lingerie Construction Costs
LINGERIE
No Rooms Nos. Dimensions/Room Total Area (m2)
(m2)
1 Storage Space 1 15 15
2 Bedrooms 1 30 30
3 Machine Room 1 15 15
4 Dressing Room 1 30 30
5 WC 1 2 2
TOTAL 5 92 92

Table 30: Restaurant Construction Costs


RESTAURANT
No Rooms Nos. Dimensions/Room (m2) Total Area
(m2)
1 Kitchen 1 35 35
2 Cold Room 1 4 4
3 Store 1 12 12
4 Bar 1 5 5
5 Dining Room 1 80 80
6 Dressing Room 2 3 6
7 Manager's Office 1 15 15
8 WC 2 2 4
9 Terrace 1 10 10
10 Airlock 1 5 5
TOTAL 10 171 176
COST 176 m2 x UGX 250,000 = 44,000,000

Table 31: Construction Costs for Other Spaces


OTHER SPACES
No Rooms Nos. Dimensions/Room (m2) Total Area (m2)
1 Sentry Box 1 10 10
2 Reception 1 30 30
3 Gardens and Green 100 100
Spaces
4 Pavement 1,000 1,000
5 External WC 3 2 6
TOTAL 5 1,142 1,146
COST 1,146 m2 x UGX 50,000 = 57,300,000

48
Table 32: Other Expenditure
OTHER EXPENDITURE
No Rooms Nos. Dimensions/Room Total Area
(m2) (m2)
1 Lighting System 1,707 m2 12,375.51 21,125,000
2 Hydraulic System 1,707 m2 7,272.99 12,415,000
3 Internet Network 1,707 m2 292.91 500,000
4 Communication System 1,707 m2 585.82 1,000,000
5 Equipment for Administration 41 60,975.61 2,500,000
6 Catering & Kitchen Equipment 5,000,000
7 Equipment for Bedrooms 10 200,000 2,000,000
8 Generator 1 6,000,000 6,000,000
9 Small Equipment 1,500,000
10 Rolling Stock 3,000,000
TOTAL 10 _ _ 55,040,000
COST 176 m2 x UGX 500,000 = 88,000,000

49
8.0 FINANCIAL PLAN

In order to develop a comprehensive investment case for MT RWENZORI FARM


LODGE‟s establishment of the tourist eco-lodge and its subsequent development, a
detailed financial model was created. The model builds revenue and cost forecasts, as
well as associated capital expenditures, relying on historical performance and
considering expected changes in the business. The model was designed with the
following key objectives:

 Provide flexibility to test and alter assumptions and inputs in the future.
 Identify and capture the key input levers that drive financial requirements and
return.
 Identify and assess the expected financial and economic results.

The key variables used in the model are:

 Inputs: High-level capital inputs such as equipment cost, building infrastructure


cost and office space, additional working capital requirements, and capital
structure. Cost of capital: Calculations of the discount rate for the proposed
operations, taking into consideration key determinants such as risk-free rate,
marginal risk premium, and debt-equity structure.
 Historical financial performance: Considering behavior of historical cost and
revenue drivers, including production volumes and growth in cost elements.
 Market size: Sizing the tourism market in Uganda and projecting market share
for MT RWENZORI FARM LODGE.

The main outputs of the model include:

 Debt: Breakout of the schedule for debt repayments, including principal and
interest portions. The debt can be used to finance acquisition of fixed assets.
 Pro forma financials: Income statement, balance sheet, and cash flow statements,
including key performance measures.
 Outputs: Summary of the key return metrics and capital requirement.
 Development benefits: Estimates of the number of tourists involved in the
service consumptive application and anticipated increase in incomes.
 Sensitivity Analyses: Estimates levels of change in projected financial
performance of the business following potential changes in key cost and revenue
drivers.

50
8.1 Key Project Assumptions

The financial analysis of the iodized salt project is based on the data presented in the
previous sections and the following assumptions:-

Construction period 1 year


Source of finance 36.17% project promoter‟s equity
63.83% loan financing
Tax holidays 3 years
Loan interest 23% per annum
Discount cash flow 17.0%
Accounts receivable 30 days
Cost of sales 30 days
Work in progress 9 days
Finished products 45 days
Cash in hand 15 days
Accounts payable 30 days

8.2 Break-even Analysis

The MT RWENZORI FARM LODGE Break-even Analysis figures are linked to the
main financial analysis spreadsheets (i.e. Schedules 01-12) that are appended to this
Business Plan.

The project‟s commercial break-even level (profitability break-even) in Project Year 5


(2022) is calculated below:

51
Table 33: Break-Even Analysis in Project Year 6 – 2022 (In UGX)
Items Variable Cost Fixed Cost Total Cost
Cost of Sales 470,424,946 0 470,424,946
Salaries and Wages 250,463,745 83,487,915 333,951,660
Marketing Costs 27,826,411 9,275,470 37,101,881
Transport and Fuel 33,779,136 11,259,712 45,038,848
Stationery 5,723,298 2,861,649 8,584,947
Telephone and Internet 9,090,250 3,030,083 12,120,334
Audit Fees 3,107,066 1,553,533 4,660,598
Bank Charges 8,204,551 4,102,276 12,306,827
Rental + Lake Subscription Costs 24,754,653 8,251,551 33,006,204
Repairs and Maintenance 13,480,929 6,740,465 20,221,394
Electricity and Water 14,856,959 4,952,320 19,809,279
Miscellaneous Expenses 76,663,716 25,554,572 102,218,288
Depreciation 0 64,620,000 64,620,000
Financial Expenses 0 44,160,000 44,160,000
TOTAL 938,375,660 269,849,545 1,208,225,205

Sales Value of Production = UGX 1,816,401,788

Break-even Sales = 269,849,545 = 269,849,545 = 269,849,545


1 – 938,375,660 1 – 0.5166 0.4834
1,816,401,788

Break-even Sales = UGX 558,246,709

Capacity utilization required to Break-even = UGX 558,246,709 x 100 = 30.73%


UGX 1,816,401,788

Margin of Safety = 100% – 30.73% = 69.27%.

52
8.3 Cost and Funding of the Project

8.3.1 Investment Details and Costs

Table 34: Project Investment Cost and Funding Structure


Component Amount (UGX) Rate in %
A. EXISTING ASSETS (EQUITY)
Land (3 Ha = 7.5 Acres @ UGX 4.8 million) 36,000,000 4.79%
Existing Structures (40% complete) 188,000,000 25.00%
Vehicles (2 units) 48,000,000 6.38%
Sub-Total 272,000,000 36.17%
B. PLANNED INVESTMENTS (LOAN)
Establishment Costs 2,500,000 0.33%
Construction 100,000,000 13.30%
Civil Engineering/Development Costs 182,000,000 24.20%
Equipment 74,500,000 9.91%
Furniture and Office Supplies 12,300,000 1.64%
Rolling Stock 6,000,000 0.80%
Intangible Assets 2,400,000 0.32%
Sundry and Unforeseen 7,200,000 0.96%
Working Capital Operating Funds 87,000,000 11.57%
Non-Operating Cost 6,100,000 0.81%
Sub-Total 480,000,000 63.83%
Total 752,000,000 100.00%

According to Table 34 above, we notice that civil engineering and development costs
take the largest share on the loan-financed part of the investment (24.20%) followed by
construction costs at 13.30% and working capital at 12.38%.

8.3.2 Funding

This project will be financed through a mixture of Equity (existing assets) and debt
(medium-term loan of UGX 480 million) refundable with a 23% interest rate per
annum.

8.3.3 Loan Disbursement

The Project Promoter of MT RWENZORI FARM LODGE – Mr Robert Byakutaga


proposes loan disbursements for the requested for medium-term loan of UGX 480

53
million to be made in 4 separate installments over a 4-month period (i.e. October 2017 –
January 2018).

8.3.4 Repayment and Financial Charges

For the medium-term loan, the repayment table is presented here below with a straight-
line depreciation and variable annuities.

Table 35: Loan Repayment Table and Financial Charges in UGX


Year 2017* 2018 2019 2020 2021 2022 Total
Principal 0 96,000,000 96,000,000 96,000,000 96,000,000 96,000,000 331,200,000
Interest 0 110,400,000 88,320,000 66,240,000 44,160,000 22,080,000 480,000,000
TOTAL 0 206,400,000 184,320,000 162,240,000 140,160,000 118,080,000 811,200,000
* The first year (2017) is a Grace Period of 1 year.

8.4 Basic Assumptions Used in Making Estimates

The assumptions that have been used as basis for calculating the turnover are:
- the requirement of the customer with respect to quality-price and service-
customer ratio;
- investment and operational and administrative costs.

8.5 Total Operating Cost

The annual total operating cost at full operation capacity (2022) is estimated at UGX
1,154.42 million (see Table 36). The cost of sales accounts for 42.79 per cent, while
salaries and wages will take 30.37 per cent of the annual operating cost.

54
Table 36: Annual Production Cost at Full Capacity (UGX)
Items Cost %
Cost of Sales
Cost of Sales I 122,236,171 10.59%
Cost of Sales II 171,023,864 14.81%
Cost of Sales III 200,686,159 17.38%
Total Cost of Sales 493,946,194 42.79%
Overhead Costs
Salaries and Wages 350,649,243 30.37%
Marketing Costs 38,956,975 3.37%
Transport and Fuel 47,290,790 4.10%
Stationery 9,014,194 0.78%
Telephone and Internet 12,726,350 1.10%
Audit Fees 4,893,628 0.42%
Bank Charges 12,922,168 1.12%
Rental + Lake Subscription Costs 34,656,514 3.00%
Repairs and Maintenance 21,232,463 1.84%
Electricity and Water 20,799,743 1.80%
Miscellaneous Expenses 107,329,202 9.30%
Total Overheads 660,471,272 57.21%
Total Operating Expenses 1,154,417,466 100.00%

8.6 Cost of Sales

The Cost of Sales (CoS) for the MT RWENZORI FARM LODGE tourism enterprise
includes the direct variable expenses like game safari expenses, purchase of Day Old
Chicks and fish fingerlings for the farm, acquisition of gorilla permits and chimps
tracking, and purchase of fish and poultry feeds for the farm. These are calculated as
part of working capital estimation and are reflected in Schedule 03/3.

8.7 Financial Performance

Income for the MT RWENZORI FARM LODGE tourism enterprise is realized from
the pricing margins realized on the sale of eco-lodge accommodation, game drives, bar
drinks, souvenirs and nature walks as explained in Schedule 01: Key Financial
Modeling Assumptions on page 72. Net Income has been calculated by taking into
account all the operational cost and gross income for the variety of salts and industrial
gases being sold on the domestic and external export markets.

55
The stabilized average income realized by the MT RWENZORI FARM LODGE
tourism enterprise is presented in Schedule 09: Projected Income Statement.

Summarized income and expenditure forecasts have been compiled and are set out in
Schedules 03/3, 07, and 09 respectively. These projected financial figures are based on
the assumption that the salt-processing and marketing enterprise is established and
operating effectively.

Taxation has been provided at the company income tax rate of 30%.

8.8 Basis of Preparation

The generation of cash is crucial in sustaining any business, but for the purposes of this
Business Plan the forecast profit and loss account has been prepared on the cash basis of
accounting.
For the purposes of illustration all receipts and payments have been reflected on a
“cash” basis.

8.9 The Vehicle

As a medium-sized but highly promising tourism enterprise, it is imperative that MT


RWENZORI FARM LODGE tourism enterprise employs the most transparent, ethical
and responsible CEO and subordinate Departmental Managers to run the business.

To this end, we would suggest the following governance mechanisms: -


A small but efficient Board of Directors be instituted to guide and control the company.
Only people who have the necessary time to devote to the business should be
considered.

Sound accounting and internal controls to be followed.

By running a business through a company the most efficient tax mechanism can be
planned and staff can be remunerated and employed on an incentives-driven basis.

8.10 The Accounting System and Financial Control

An up-market software accounting package will be acquired in order that the financial
condition of the business can be regularly monitored.

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We see control over expenditure as a most important issue. The following methods of achieving
sound financial control will be implemented.

Annual operating budget will be approved.

Monthly management accounts to be prepared on a timely basis and any capital


expenditure and all major running expenditures will have to be approved by the Board.
Audit shall by a reputable firm of auditors with expertise in the industry that can offer
high quality business solutions.

8.11 Summary and Results

8.11.1 Profitability

According to the projected income statement, the project will start generating profit in
the first year of operation (2018). Important ratios such as profit to total sales, net profit
to equity (Return on equity) and net profit plus interest on total investment (return on
total investment) show an increasing trend during the life-time of the project.

The income statement and the other indicators of profitability show that the project is
viable.

Profitability is shown by:


An Internal Rate of Return (IRR) after tax of 37.56%.
A Net Present Value (NPV) of UGX 398,245,231 at a discount factor of 17%.
The company is shown to have an average gross profit margin of 73.53% between the
first year of the project (2018) and the sixth year (2022). The operating effectiveness of
the enterprise is reflected in the four year operational period operating margin that
averages at 38.14% - Schedule 09 refers.

8.11.2 Payback Period

The investment cost and income statement projection are used to project the pay-back
period. The project‟s initial investment will be fully recovered within 3 years (2.96
years).

8.11.3 Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 37.56% and the net
present value at 17% discount rate is UGX 398.245 million.
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8.11.4 Liquidity

The MT RWENZORI FARM LODGE tourism enterprise will require a medium-term


credit financial infusion in the year of investment (i.e. First Year of Project) to complete
eco-lodge construction, procure capital equipment and finance essential working capital
that the company does not have to be able to finance out of its planned establishment
and operations.

Basing on the forecast attainable levels of the MT RWENZORI FARM LODGE tourism
enterprise‟s operational output, the project is shown to generate a strong cash flow
position that starts out from UGX 164,975,766 in the first year of operation (2018) to post
a very strong and healthy surplus cash flow return of UGX 1,066,880,808 by the sixth
year of operation (2022) – Schedule 07 refers.

The company is thus able to comfortably cover its medium term debt obligations right
from the first year of operations. The Debt Service Coverage Ratio is 5.36 in Project
2022 (project end-point) and the Times Earned Ratio is 34.74 – Schedule 11 refers.

8.11.5 Leverage

The project has a sound capital structure with a debt to net worth ratio in the first year
(i.e. 2018) of the project of 0.55 that steadily reduces to 0.05 by the sixth year (i.e. 2022)
of the project when practically all the principal debt and interests shall have been fully
discharged. The loan is therefore adequately secured and there shall be no recourse to
additional collateral or security provisions – Schedule 11 refers.

8.11.6 Sensitivity Analysis

The assumptions on which the financial projections are based reflect current conditions.
A Sensitivity Analysis of the project has, however, been carried out to examine the
impact of possible changes in critical variables on the MT RWENZORI FARM
LODGE‟s performance. The results of the sensitivity analysis are presented in Table 37
below.

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Table 37: Project Sensitivity Analysis Results
DSCR
Change IRR ROI PY 2 PY 3 PY 3 PY 3 PY 6
Sensitivity Case

Base Case 37.56% 47.98% 3.47 4.55 4.59 5.08 5.36


Selling Prices -10% 22.69% 31.42% 2.47 3.41 3.41 3.81 4.02
Operating Costs +10% 32.14% 42.15% 3.10 4.15 4.17 4.64 4.90
Cost of Sales +10% 33.50% 43.62% 3.19 4.25 4.28 4.75 5.02

The sensitivity analysis above shows that the MT RWENZORI FARM LODGE tourism
enterprise is most sensitive to changes in unit selling prices (decline by 10%).
Fortunately, the project will benefit from the strong and sustained growth of the
Uganda tourism sector as well having good complementary support from its related
enterprises of farming (agriculture) and nursery education (education) that have one of
the highest sector compound average growth rates (CAGR) in Uganda at the present.
The potency of the exiting market for these services in the tourism, agriculture and
education sectors of the Ugandan economy will thus have the effect of cushioning the
MT RWENZORI FARM LODGE tourism enterprise from unexpected price distortions
and any other unexpected negative market phenomena that tends to play havoc on
most other consumer goods enterprises active within the domestic economy.

Legend:
IRR: Internal Rate of Return
ROI: Return on Investment (Project Year 5)

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9.0 COMMUNITY CORPORATE TASKS

9.1 Social Responsibilities

MT RWENZORI FARM LODGE is aware of the negative impact that tourism can
create and we are committed to spread the benefits of tourism to previously
disadvantaged communities by sharing our skills and knowledge, connecting
communities with opportunities, funding and facilitation.

It is MT RWENZORI FARM LODGE‟s policy to:

 Develop tourism with dignity, respect and nurture local cultures (including
religion), so that they enrich the tourism experience and build pride and
confidence among local communities.
 Ensure communities are involved in and benefit from tourism and that
exploitation and over-commercialization of local cultures is avoided.
 Use tourism as a catalyst for human development, focusing on gender equality
and career development.
 Coordinating training programmes to develop skills within the framework of the
skills.
 Develop relationships with local communities based on trust, empowerment, co
– operation and partnerships and respect indigenous intellectual property.
 Recruit and employ staff in an equitable and transparent manner and maximize
the proportion of staff employed from the local community
 As the project develops and becomes viable it will provide structures for the
local community to improve their skills in order to participate in the
management and rewards of MT RWENZORI FARM LODGE:
o Provide appropriate on-going skills training programmes for staff;
o Involve the community in the planning, decision - making and the
development of tourism;
o Support the development of sustainable local crafts by assisting with
improvement of design, marketing, production and packaging skills whilst
ensuring that they maintain the authenticity and cultural values of their
products;
o Provide information to guests about the host culture and traditions, local
services and attractions, and encourage them to use them;
o Educate guests to respect local customs and traditions and make them aware
of how they should behave in this regard;
o Create opportunities for visitors to interact with locals in an unstructured,
spontaneous manner;
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o Protect the community against negative social and cultural impacts associated
with tourism, such as increased crime, drug and alcohol abuse, prostitution,
and crime.

Tourism is one of many processes or factors that contributes to social and culture
change in host communities. Some of the direct and indirect impacts that may be
associated with tourism are summarized in Table 38 below.

Respect for local culture and tradition is integral to “responsible tourism” practice of
MT RWENZORI FARM LODGE. “Responsible tourism” requires the establishment of
trust and effective communication between everyone involved in the tourism
encounter. Trust and communication provide the basis for information exchange,
cultural understanding and tolerance of difference.

“Responsible tourism” is about embracing and respecting cultural variation, not only to
avoid conflict and other negative aspects of culture contact but also to explore the
potential for “responsible” commercial tourism products that are based on culture and
heritage.

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Potential Socio - cultural Effects of Tourism on Host Communities

Table 38: Potential Socio - Cultural Effects of Tourism on Host Communities


Positive Effects Negative Effects
 tourism can lead to new domestic  tourism can lead to new domestic arrangements and
arrangements and gender roles gender roles that create social tension (e.g. reduced
that create new opportunities for esteem for elders and/or men)
women and young people  local people may try to imitate tourists which can
 tourism can keep cultural lead to disillusionment, and cultural drift
traditions alive, engender  tourism can lead to the co modification of culture
community pride and encourage  tourism can increase pollution and deplete natural
creative art resources
 tourism provides opportunities for  tourism can increase crime, prostitution, begging,
cultural exchange and broadening alcohol and drug abuse, and can also lead to the
of horizons spread of disease
 tourism can create new  tourism can lead people to change their cultural
/expanded public services and  practices (e.g. arts, craft, dress, festivals) to meet the
amenities real or perceived needs of tourists
 tourism can create economic  tourism can exacerbate existing social inequalities
stability and improved living and create new ones
standards  tourism can engender new forms of moral conduct,
 tourism can promote use and  family relations, recreation and community
conservation of natural and organization, which may lead to conflict amongst
cultural resources individuals and/or social groups
 tourism can improve quality of  Tourists can offend local people (e.g. by wearing
fire protection tourism can lead to revealing clothing or visiting private / sacred sites).
improved education  an influx of tourists can lead to loss of language,
 tourism can support indigenous artifacts
languages

The Benefits of Social Responsibility

Any enterprise that employs people, works with people, purchases services and
products from people, and/or provides activities for visitors will engender a range of
social impacts. There are various reasons why MT RWENZORI FARM LODGE should
attempt to manage these impacts, in their own interests as well as in the interests of
others. Some of these reasons are summarized below:

 Sustainable use of shared resources. Many tourism enterprises rely upon


communal or public resources that are used by many parties. Acting in a socially

62
responsible manner leads to improved co - operation between resource users and
mutually acceptable, sustainable use.
 Destination success. The success of an individual tourism enterprise is linked to
the broader success of the tourism destination in which it is situated. co -
operation between government, communities and the private sector on the
broader planning, management and marketing of the destination will be
beneficial to all.
 Improved problem solving. Tourism enterprises are sometimes faced with
problems that they cannot solve on their own. a good example is crime, which is
best addressed through a collective approach to safety and security that involves
community members, government and other role players. For instance, rock tail
bay (www.rocktailbay.com), which is operated by wilderness safaris,
(www.wildnerness-safaris.com) employs a community - based security service
that became part of a wider community - policing forum. This strategy has been
extremely effective in curbing local crime to the benefit not only of tourists but
also of the host community more generally.
 Appropriate community benefits. “Responsible tourism” is about ensuring that
host communities have a say in how they would like to benefit from tourism, and
how they would like these benefits to be distributed.
 Improved supply and other business linkages. MT RWENZORI FARM
LODGE will benefit from the establishment of linkages with local suppliers as
well as with complementary tourism products in the area.
 Mutual respect. “Responsible tourism” MT RWENZORI FARM LODGE
respect their neighbors, and vice versa. This shared respect leads to improved
communication and co - operation between MT RWENZORI FARM LODGE
and host communities, which in turn enrich the overall tourism experience.

Action Plan for Social Responsibility

As noted above, social responsibility is desirable for a number of reasons - not least of
all because it makes good business sense. But how does MT RWENZORI FARM
LODGE go about becoming more socially responsible? What does social responsibility
mean in practice?

As summarized below, a tourism enterprise that wants to operate in a socially


responsible manner needs to undertake a series of concrete actions designed to create,
execute, support, monitor and promote enterprise – specific strategies for socially
“responsible tourism”. The targets set by MT RWENZORI FARM LODGE should be
realistic yet challenging, and benchmarks employed should be easily measured and
relevant to the social responsibility objectives of the enterprise.
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MT RWENZORI FARM LODGE strategies should incorporate one or more of the
following areas of social responsibility like:

 creating partnerships
 establishing a social contract
 supporting community development
 tourist activities and information
 recruitment and employment
 capacity building, training and skills development

Table 39: Taking Action towards Social Responsibility


Action No. Actions
Action 1 Commit the enterprise to working according to an ethic of social
responsibility.
Action 2 Identify and support a member of staff who will be tasked with
monitoring and reporting on social responsibility within the enterprise.
Action 3 Set targets and benchmarks to monitor social responsibility progress and
Performance.
Action 4 Create a strategy with an implementation plan.
Action 5 Educate and motivate staff to be socially responsible.
Action 6 Invite suggestions from staff, tourists and others as to how the enterprise
can improve its social responsibility efforts.
Action 7 Showcase social responsibility initiatives and projects to guests, and
ideally employ a local guide or community representative to facilitate site
visits.

9.2 Economic Responsibilities

MT RWENZORI FARM LODGE appreciates that promoting tourism, increasing


linkages, planning initiatives and investments will contribute to the broader economic
development for the area and the community within the project proposal.

It is MT RWENZORI FARM LODGE‟s policy to:

 Empower communities to market their cultural traditions and products as assets


and enhance their economic opportunities.
 Work closely with local communities and entrepreneurs to develop new
products that provide complementary products for the tourism industry.

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 Develop partnerships and joint ventures in which communities have a significant
stake, and a substantial role in management.
 Ensure that the risk is equitably shared when entering into agreements with local
communities or emerging entrepreneurs
 Maintain and encourage economic diversity, whilst avoiding over - dependency
on tourism
 Buy locally - made goods and use locally provided services from locally owned
businesses wherever quality, quantity, and consistency permits in order to
minimize the revenue that “leaks” out of the local area
 Pay fair prices for local services and products
 Encourage visitors to spend more money in the local economy
 Make clients aware of the responsible purchasing policy

MT RWENZORI FARM LODGE will communicate economic responsibilities by:

Table 40: Strategies for Communication of Economic Responsibilities


Provide information Providing guests with information about the local economy (e.g.
household income, school fees, unemployment, etc).

Showcase any corporate social investment activities by providing


details of money spent, infrastructure created

Providing guests with information about current or planned social


infrastructure projects
Demonstrate the impact Demonstrate the impact that a relatively small amount of money (e.g.
UGX 120,000 – per month, about 33 – US Dollars) can make to a poor
rural household
Create opportunities Ensure that guests are able to spend money locally and encourage them
to do so

Make it possible for clients who want to support local projects to do so


Solicit feedback Guest feedback forms should include a list of „responsibility‟ questions
that can solicit general impressions as well as specific information about
visitor expenditure in the local economy

Feedback can be used to profile clients and increase return business


Showcase staff benefits MT RWENZORI FARM LODGE will make sure that guests are aware
of training and other benefits to staff
Consider a local tour Enable interested guests to visit neighbouring communities and make
sure they are informed about how MT RWENZORI FARM LODGE has
benefited the local economy (e.g. improved living standards, more
schools, more shops, etc).

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9.3 Environmental Responsibilities

MT RWENZORI FARM LODGE abides the environmental and conservation policies.

Further it is MT RWENZORI FARM LODGE‟s policy to:

 Advise and ensure that guests behaviour respects the natural heritage and has a
low impact upon it, by using designated trails, not collecting seeds and removing
plants, and by not feeding animals
 Working closely with suppliers to minimize the amount of packaging purchased
with supplies, and therefore reducing the amount of waste that needs to be
disposed of.
 Avoid or minimize pollution by using environmentally friendly chemicals, and
by using biodegradable soaps and detergents.
 Ensure that staff are familiar with the issues and ways of avoiding environmental
impacts and to communicate it to guests.
 Buy crafts that are sustainable produced.
 Educate guests by building sensitively placed trails and hides, with
interpretation material for guests.
 Educate local communities about the importance of sustainable natural resource
management.
 Have clearly labeled separate bins for wet waste, plastics, glass and tin to help
recycling compost food waste on site and to use it to fertilize the lodge grounds.
 Store, collect and dispose of hazardous waste safely and according to
government regulations.
 Inform guests and train staff how they can help with water and energy
conservation.
 Invert in and develop renewable energy technology for minimizing the
greenhouse gas impact of MT RWENZORI FARM LODGE and practice
sustainable energy consumption

The benefits of environmental management and biodiversity conservation

Uganda is one of the most ecologically diverse countries in the world, with habitats
including forests, mountains, swamps, savannah, rivers, thickets and a long and
beautiful stretch of coastline. This natural heritage, combined with the rich cultural
heritage, is the foundation for Uganda‟s tourism sector. Needless to say, it is vital that
all Ugandans take responsibility for maintaining the integrity of the national natural
resources and the rich biodiversity that they support tourism enterprises, especially

66
those engaged in nature - based activities, have an especially vital role to play in
maintaining and expanding this biodiversity. Even small, local initiatives can have
impacts of international importance!

How does a tourism operation affect conservation and biodiversity?

MT RWENZORI FARM LODGE can affect the local environment and its biodiversity
values in a number of ways – both positive and negative. “Responsible” operators will
recognize this inter – relationship and attempt to manage the impacts in such a way that
MT RWENZORI FARM LODGE leaves a net positive impact on the environment. To
determine how MT RWENZORI FARM LODGE impacts on the natural world, it is
necessary to examine all aspects of the operation over the life cycle of MT RWENZORI
FARM LODGE.

9.4 “Responsible Tourism” and the Triple Bottom Line

Aside from decreasing operating costs, managing MT RWENZORI FARM LODGE


responsibly makes good business sense for at least three reasons:

 “Responsible tourism” is aligned to the international trend towards


responsible business practice.
 “Responsible tourism” meets the growing market demand for responsible
tourism products.
 “Responsible tourism” makes customers, staff and investors feel good.

Recent market research in the UK and elsewhere has pointed towards a positive trend
in consumer and sector demand for “responsible tourism” products. This research
suggests that ethical business practices can provide commercial advantage, and that
“responsible tourism” can be a positive marketing tool – provided that claims of
responsibility are credible and based on demonstrable delivery of responsible activities
and objectives.

Although most tourists make purchasing decisions based on such factors as price,
weather, type and range of facilities and quality, more and more tourists are also
concerned about the ethics of travel. a recent survey by the UK - based NGO
“TearFund”, for instance, found that British consumers are more likely to book a
holiday based on availability of information about the country, reduced environmental
impact and meeting local people on holiday than on whether or not they had used the
company before.

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Significantly, the data suggests that consumers (and thus trade) demand for
“responsible tourism” products are increasing – and that more and more people want to
purchase responsible holidays. In 2007 and again in 2009, “TearFund” asked
holidaymakers whether they would be more likely to book a holiday with a company
that had a written code guaranteeing good working conditions, protection of the
environment and support of local charities in the tourist destination. The proportion of
respondents saying, “yes” rose from 45% to 52% between the two years - that‟s a 7%
shift in demand towards responsible tourism products!

The „Feel Good‟ Factor

Positive publicity and customer feedback associated with responsible business activities
engender good relationships with staff and shareholders, while simultaneously paving
the way for meaningful partnerships with local businesses and communities. the
importance of the „feel good‟ factor cannot be underestimated, for example in
accounting for the value of positive word- of - mouth advertising and the role played by
staff in shaping the (positive or negative) quality of the MT RWENZORI FARM
LODGE tourism experience.

Responsible action by one business, like MT RWENZORI FARM LODGE will be, also
helps to encourage similar and even improved initiatives within other companies and
enterprises. this „domino effect‟ will ultimately lead to positive action within industry as
a whole, which in turn can help to position of the Queen Elizabeth National Park, the
western Uganda tourism circuit and Uganda as whole as a leading responsible tourism
destination.

9.5 Marketing of the Corporate Responsibilities

Marketing is essential to the operation and survival of each and every tourism business.

MT RWENZORI FARM LODGE responsible marketing is about:

 Truth in advertising: MT RWENZORI FARM LODGE will be honest about the


quality, range and price of experience/s offered, and ensure that guests get more
or less what they bargained for including a range of information about local
attractions in promotional materials (e.g. brochures, website)
 MT RWENZORI FARM LODGE will promote informal / emerging tourism
enterprises and encouraging guests as well as tour operators to include these in
their itineraries. Wherever possible, MT RWENZORI FARM LODGE will put

68
tour operators and SMEs in direct contact with each other, which empowers
disadvantaged people to participate in the tourism „mainstream‟.
 MT RWENZORI FARM LODGE will promote diverse complementary local
products, services and attractions to the clients, before they arrive, and when
they are with MT RWENZORI FARM LODGE. Word - of - mouth advertising is
very strong MT RWENZORI FARM LODGE will report on how promote local
activities, and report on visitation by guests.
 MT RWENZORI FARM LODGE will ensure that additional products „fit‟ the
enterprises marketing image, its product and the type of source market in which
MT RWENZORI FARM LODGE is operating. To avoid confusion over the type
of product marketed as well to avoid misunderstanding by tourists and/or tour
operators concerning the type of experience they can expect from MT
RWENZORI FARM LODGE.
 MT RWENZORI FARM LODGE will closely monitor local products. MT
RWENZORI FARM LODGE should monitor the number of local products
advertised in its literature; the proportion of space provided to them as well as
the impressions of customers (e.g. did the inclusion of such information influence
purchasing behaviour?). Provision of new and complementary products may
encourage tourists to stay longer at a particular location (e.g. more bed – nights)
and in turn spend more money in the area. MT RWENZORI FARM LODGE
will report on its attempts to market responsibly and on any improvement in
tourist spend and length of stay.

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10.0 EPILOGUES & CONCLUSION

10.1 Epilogues

MT RWENZORI FARM LODGE rate assumes the following:

 Market growth projections for the tourism industry and for travelling are
accurate.
 National economic conditions, which are favourable to tourism and travel
industry, will not experience significant decline in the next five years.
 International conditions will remain favourable for tourism service providers
and MT RWENZORI FARM LODGE will be able to maintain those
relationships.
 According our past experience, and as a positive outlook, is that those
assumptions and statements of the business plan are held in low esteem relating
income generating activities. The past experienced evidences have confirmed
that the growing part was faster than it was theoretically assumed. Another
aspect, but more likely the negative point is, that the cost ofimported
construction material are increasing due to constant shifts and changes in global
economic circumstances and are therefore an unpredictable component in the
subject of the project.

The investment opportunity will be a shining illustration of MT RWENZORI FARM


LODGE hospitality in an exceptional African setting mixed with local traditional
culture elements within a socio –ecological consensus and harmony

Uganda is ready for business and in fact, it has been for many, many centuries now. But
while the emerging markets outside of Africa are generating tons business investment
buzz, Africa has received little attention and has still boasted some of the highest
returns imaginable.

The data is clear: in almost every case small hotels out-perform larger ones.
Commonsense explains this occurrence: a successful 5-50 room lodge will inevitably
prompt the development of one or more new, small lodges of similar quality in the
immediate area. Ina competitive market environment, the smaller lodge has a distinct
advantage and wins almost every time. The fact remains that if one builds a smaller
than average property for a given brand, results should be improved over the average.

Internationally, there has been a growing interest in heritage and cultural tourism. This
growing interest has created positive views of indigenous knowledge and cultural

70
resources, and also engendered a wide range of expectations for the impacts of cultural
tourism, especially amongst disadvantaged communities. Cultural tourism can facilitate
the necessary financing to rehabilitate and interpret heritage resources, as well as be a
tool for stimulating economic development. Cultural tourism can be a source of product
differentiation that may establish new some opportunities.

The challenge for communities and heritage sites is to provide a unique, special, and
participatory tourist experience that will stimulate investment resulting in jobs and
economic development. This challenge is complicated by three critical imperatives:
 The need to preserve the integrity of the cultural resources being used for
tourism purposes;
 The need to offer an „authentic‟ experience; and
 The need to respect the social and cultural way of life of the host community.

A tourism establishment like MT RWENZORI FARM LODGE if well-planned, will


adopt good environmental practices and inevitably contribute to the quality of the
surroundings, improving the experience for guests and the living standards of the local
communities.

10.2 Conclusion

At the end of the presentation of this business plan, the MT RWENZORI FARM
LODGE meets the tourism and cultural perspective of Uganda as it strives to become
an emerging economy in this part of Africa.

The data under realistic conditions show that in the first year of operation (2018), a
turnover of UGX 1,434,080,800 can be achieved with a net income of UGX 191,533,086,
that is 13.36% of the gross annual sales turnover.

In addition, from the study of profitability, the net present value (NPV) of the project at
17% discount rate is estimated at UGX 398,245,231 and payback period of the
investment is estimated to be 2 years 11 months. This shows that the MT RWENZORI
FARM LODGE is on a good track and is quite bankable.

The MT RWENZORI FARM LODGE Project initiative which encourages


entrepreneurship is an appeal therefore to persons of good will, investors, banks, State
Institutions, national and international organizations, tourism development NGOs to
believe in Ugandan tourism entrepreneurs and give them a chance to prove their worth.

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Schedule 01: KEY FINANCIAL MODELLING ASSUMPTIONS

Table 41-1: Capacity Utilization Assumptions (Eco Lodge)


Service/Year 2018 2019 2020 2021 2022 2023
Double Room Bed nights 474 552 554 598 636 672
Single Room Bed nights 63 83 92 102 114 130
Extra Bed nights 44 39 44 50 56 62
Game Drives (Nos.) 62 57 70 82 94 100

Table 41-2: Revenue Assumptions (Eco Lodge)


Double Room rate (US$) 224
Single Room rate (US$) 132
Extra Beds rate (US$) 92
Day Game Drives (US$) 75
Annual Increase in Eco-Lodge Rates 0%

Table 41-3: Production & Revenue Assumptions (Fish Farm & Poultry Farm)
Annual Fish Catch from Fish Ponds (fish) 37,800
Fish Sales Price/fish in UGX 5,500
Annual increase in Fish Prices 5%

Table 41-4: Production & Revenue Assumptions (St. Leo‟s Nursery School)
Number of children enrolled in nursery school in Year 2017 220
Annual increase in school enrollment in numbers (2017-2022) 10
School Fees per Pupil/Term in Year 2018 in UGX 650,000
Annual increase in School Fees (%) 5%

Table 41-5: Operating Expense Assumptions (Eco Lodge)


Safari expenditures in First Year (2018) in US$ 25,035
Gorilla permits/chimpanzee tracking in First Year (2018) in US$ 31,200
Purchases in First Year (2018) in US$ 16,100
Marketing and website in First Year (2018) in US$ 10,000
Transport and fuel in First Year (2018) in US$ 3,600
Stationery in First Year (2018) in US$ 360
Telephone and Internet in First Year (2018) in US$ 1,800
Audit Fees in First Year (2018) in US$ 285
Annual Operating Expense Assumptions Growth Rate (%) 5%

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Table 41-6: Economy-Related Assumptions
Electricity price growth rate 5%
Diesel price growth rate 5%
Wage growth rate 5%

Table 41-7: Cash Flow Assumptions


Accounts Receivable cycle (in days) 30
Accounts Payable cycle (in days) 30
Raw material inventory (in days) 3
Equipment spare parts inventory (in days) 30

Table 41-8: Financial Assumptions


Project Life (Years) 6
Debt 68.19%
Equity 31.81%
Interest rate on long-term debt 23.0%
Debt tenure (Years) 6
Grace Period (Years) 1
Debt payments per year 1
Currency Exchange Rate (USD to UGX) 3,600

Table 41-9: Depreciation Rate Assumptions


Land 0%
Buildings 5%
Machinery and Equipment 10%
Office Equipment 10%
Furniture & Fixtures 10%
Vehicles 20%

73
Schedule 02: Source & Structure of Project Financing (In UGX)
Source Share Equity Debt Total
Land (3 Ha) 4.79% 36,000,000 0 36,000,000
Existing Structures (40% Complete) 25.00% 188,000,000 0 188,000,000
Establishment Costs 0.33% 0 2,500,000 2,500,000
Construction 13.30% 0 100,000,000 100,000,000
Civil Engineering/Development Costs 24.20% 0 182,000,000 182,000,000
Equipment 9.91% 0 74,500,000 74,500,000
Furniture and Office Supplies 1.64% 0 12,300,000 12,300,000
Rolling Stock 0.80% 0 6,000,000 6,000,000
Intangible Assets 0.32% 0 2,400,000 2,400,000
Sundry and Unforeseen 0.96% 0 7,200,000 7,200,000
Vehicles (2 units) 6.38% 48,000,000 0 48,000,000
W/Capital: Operating Funds 11.57% 0 87,000,000 87,000,000
W/Capital: Non-Operating Cost 0.81% 0 6,100,000 6,100,000
TOTAL 100.00% 272,000,000 480,000,000 752,000,000
% of Total 36.17% 63.83% 100.00%

74
Schedule 03/1: CALCULATION OF WORKING CAPITAL: I Minimum
Requirements of Current Assets and Liabilities

(a) Accounts receivable: 30 days at total production costs minus depreciation


and interest
(b) Inventory:

Cost of Sales: 30 days

Salaries & Wages: 90 days

Production Operations: 60 days at total operating expenses

Building & Eqpmt maintenance: 180 days

Work in progress: 9 days at total cost of sales

Finished products: 45 days at total cost of sales

© Cash-in-hand: 15 days, see separate calculations at the bottom of


Schedule 03/4.

(d) Accounts payable: 30 days of 10% total operating expenses

N.B.: All the local cost price factors for cost of sales, operational costs and working
capital are indicated in Uganda Shillings for the ease of computational and financial
analysis.

75
Schedule 03/2: Calculation of Working Capital: II Consolidated Annual Income
Estimates (In UGX)
Year 2018 2019 2020 2021 2022 2023
Eco-Lodge Services
Double Rooms 474 552 554 598 636 672
Single Rooms 63 83 92 102 114 130
Extra Beds 44 39 44 50 56 62
Game Drives 62 57 70 82 94 100

Eco-Lodge Rates (US$)


Double Rooms 224 224 224 224 224 224
Single Rooms 132 132 132 132 132 132
Extra Beds 92 92 92 92 92 92
Game Drives 75 75 75 75 75 75

Eco-Lodge Income (US$) 2018 2019 2020 2021 2022 2023


Double Rooms 106,176 123,648 124,096 133,952 142,464 150,528
Single Rooms 8,316 10,956 12,144 13,464 15,048 17,160
Extra Beds 4,048 3,588 4,048 4,600 5,152 5,704
Game Drives 4,650 4,275 5,250 6,150 7,050 7,500
Other Income (1) 87,138 85,800 80,130 82,470 80,316 84,418
Total 210,328 228,267 225,668 240,636 250,030 265,310

Consolidated Income (UGX)


Eco-Lodge Income 757,180,800 821,761,200 812,404,800 866,289,600 900,108,000 955,116,000
Nursery School Income (2) 429,000,000 470,925,000 515,970,000 564,342,188 616,261,669 671,962,243
Farm Income (3) 247,900,000 349,900,000 367,400,000 385,770,000 405,058,500 425,311,425
Total Income 1,434,080,800 1,642,586,200 1,695,774,800 1,816,401,788 1,921,428,169 2,052,389,668

Notes:
1. Other Income includes sales receipts from transfer fees from Kasese Airfield to Entebbe
Airport, souvenir sales, bar drink sales, swimming pool fees, massage parlour sales and
nature walk sales.
2. Nursery School Income represents the total annual nursery school fees receipts.
3. Farm Income are the annual consolidated revenues from the sale of farmed fish and eggs
produced at the farm.

76
Schedule 03/3a: Calculation of Working Capital: III Annual Production Cost
Estimates in UGX (Eco Lodge)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 2017 2018 2019 2020 2021 2022
Operating Costs (UGX)
Cost of Sales
Safari Expenditures 87,084,000 91,438,200 96,010,110 100,810,616 105,851,146
Gorilla Permits/Chimps Tracking 98,280,000 103,194,000 108,353,700 113,771,385 119,459,954
Sundry Purchases 47,880,000 50,274,000 52,787,700 55,427,085 58,198,439
Total Cost of Sales 233,244,000 244,906,200 257,151,510 270,009,086 283,509,540
Overhead Costs
Marketing and website 27,900,000 29,295,000 30,759,750 32,297,738 33,912,624
Transport and Fuel 12,600,000 13,230,000 13,891,500 14,586,075 15,315,379
Stationery 1,116,000 1,171,800 1,230,390 1,291,910 1,356,505
Telephone and Internet 9,540,000 10,017,000 10,517,850 11,043,743 11,595,930
Audit Fees 1,026,000 1,077,300 1,131,165 1,187,723 1,247,109
Bank Charges 5,400,000 5,670,000 5,953,500 6,251,175 6,563,734
Rent expenses 12,312,000 12,927,600 13,573,980 14,252,679 14,965,313
Repairs and Maintenance 11,808,000 12,398,400 13,018,320 13,669,236 14,352,698
Electricity and Water 6,912,000 7,257,600 7,620,480 8,001,504 8,401,579
To Related Party (St. Leo's JS) 7,200,000 7,560,000 7,938,000 8,334,900 8,751,645
Total Overheads 95,814,000 100,604,700 105,634,935 110,916,682 116,462,516
Total Operating Costs 329,058,000 345,510,900 362,786,445 380,925,767 399,972,056

77
Schedule 03/3b: Calculation of Working Capital: III Annual Production Cost
Estimates in UGX (St. Leo‟s Nursery School)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 2017 2018 2019 2020 2021 2022
Operating Costs (UGX)
Cost of Sales
Medication & First Aid 280,000 294,000 308,700 324,135 340,342
Food Purchases 31,045,756 32,598,044 34,227,946 35,939,343 37,736,310
Uniform & Sports Wear 9,025,000 9,476,250 9,950,063 10,447,566 10,969,944
Total Cost of Sales 40,350,756 42,368,294 44,486,708 46,711,044 49,046,596
Overhead Costs
Advertising & Promotion 4,150,000 4,357,500 4,575,375 4,804,144 5,044,351
Transport and Fuel 22,106,250 23,211,563 24,372,141 25,590,748 26,870,285
Stationery 6,300,000 6,615,000 6,945,750 7,293,038 7,657,689
Telephone and Internet 570,000 598,500 628,425 659,846 692,839
Audit Fees 2,000,000 2,100,000 2,205,000 2,315,250 2,431,013
Bank Charges 1,031,100 1,082,655 1,136,788 1,193,627 1,253,308
Rent expenses 15,600,000 16,380,000 17,199,000 18,058,950 18,961,898
Repairs and Maintenance 2,060,000 2,163,000 2,271,150 2,384,708 2,503,943
Electricity and Water 3,600,000 3,780,000 3,969,000 4,167,450 4,375,823
To Related Party (Tourism) & Misc. 60,700,000 63,735,000 66,921,750 70,267,838 73,781,229
Total Overheads 118,117,350 124,023,218 130,224,378 136,735,597 143,572,377
Total Operating Costs 158,468,106 166,391,511 174,711,087 183,446,641 192,618,973

78
Schedule 03/3c: Calculation of Working Capital: III Annual Production Cost
Estimates in UGX (Farm)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 2017 2018 2019 2020 2021 2022
Operating Costs (UGX)
Cost of Sales
Purchase of Day Old Chicks 13,200,000 13,860,000 14,553,000 15,280,650 16,044,683
Purchase of Fish Fingerlings 11,376,000 11,944,800 12,542,040 13,169,142 13,827,599
Purchase of Fish & Poultry Feeds 108,200,000 113,610,000 119,290,500 125,255,025 131,517,776
Total Cost of Sales 132,776,000 139,414,800 146,385,540 153,704,817 161,390,058
Overhead Costs
Salaries and Wages 0 0 0 0 0
Advertising & Promotion 0 0 0 0 0
Transport and Fuel 4,200,000 4,410,000 4,630,500 4,862,025 5,105,126
Stationery 0 0 0 0 0
Telephone and Internet 360,000 378,000 396,900 416,745 437,582
Audit Fees 1,000,000 1,050,000 1,102,500 1,157,625 1,215,506
Bank Charges 4,200,000 4,410,000 4,630,500 4,862,025 5,105,126
Lake Subscription Fees for Use of Cages 600,000 630,000 661,500 694,575
Repairs and Maintenance 3,600,000 3,780,000 3,969,000 4,167,450 4,375,823
Electricity and Water 6,600,000 6,930,000 7,276,500 7,640,325 8,022,341
Medication & Fumigation + Cage Replacement 20,400,000 21,420,000 22,491,000 23,615,550
Total Overheads 40,960,000 43,008,000 45,158,400 47,416,320 49,787,136
Total Operating Costs 173,736,000 182,422,800 191,543,940 201,121,137 211,177,194

79
Schedule 03/3d: Calculation of Working Capital: III Annual Production Cost
Estimates in UGX (Consolidated Project)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 2017 2018 2019 2020 2021 2022
Operating Costs (UGX)
Cost of Sales
Cost of Sales I (4) 100,564,000 105,592,200 110,871,810 116,415,401 122,236,171
Cost of Sales II (5) 140,701,756 147,736,844 155,123,686 162,879,870 171,023,864
Cost of Sales III (6) 165,105,000 173,360,250 182,028,263 191,129,676 200,686,159
Total Cost of Sales 406,370,756 426,689,294 448,023,758 470,424,946 493,946,194
Overhead Costs
Salaries and Wages 288,480,000 302,904,000 318,049,200 333,951,660 350,649,243
Marketing Costs 32,050,000 33,652,500 35,335,125 37,101,881 38,956,975
Transport and Fuel 38,906,250 40,851,563 42,894,141 45,038,848 47,290,790
Stationery 7,416,000 7,786,800 8,176,140 8,584,947 9,014,194
Telephone and Internet 10,470,000 10,993,500 11,543,175 12,120,334 12,726,350
Audit Fees 4,026,000 4,227,300 4,438,665 4,660,598 4,893,628
Bank Charges 10,631,100 11,162,655 11,720,788 12,306,827 12,922,168
Rental + Lake Subscription Costs 28,512,000 29,937,600 31,434,480 33,006,204 34,656,514
Repairs and Maintenance 17,468,000 18,341,400 19,258,470 20,221,394 21,232,463
Electricity and Water 17,112,000 17,967,600 18,865,980 19,809,279 20,799,743
Miscellaneous Expenses 88,300,000 92,715,000 97,350,750 102,218,288 107,329,202
Total Overheads 543,371,350 570,539,918 599,066,913 629,020,259 660,471,272
Total Operating Costs 949,742,106 997,229,211 1,047,090,672 1,099,445,205 1,154,417,466

Financial Costs (UGX)


Bank M & E Fees (US$ 100 p.m.) (7) 4,320,000 4,320,000 4,320,000 4,320,000 4,320,000
Interest on Medium Term Loans @ 23% p. a. 110,400,000 88,320,000 66,240,000 44,160,000 22,080,000
Depreciation 46,620,000 48,620,000 56,620,000 64,620,000 64,620,000
Total Financial Costs 161,340,000 141,260,000 127,180,000 113,100,000 91,020,000

Total Production Costs 1,111,082,106 1,138,489,211 1,174,270,672 1,212,545,205 1,245,437,466

Notes:
4. Cost of Sales I: Safari Expenditures (Eco-Lodge) + Medication & First Aid (St. Leo‟s
Nursery School) + Purchase of Day Old Chicks (Farm).
5. Cost of Sales II: Gorilla Permits/Chimps Tracking (Eco-Lodge) + Food Purchases (St.
Leo‟s Nursery School) + Purchase of Fish Fingerlings (Farm).
6. Cost of Sales III: Sundry Purchases (Eco-Lodge) + Uniform & Sports Wear (St. Leo‟s
Nursery School) + Purchase of Fish & Poultry Feeds (Farm).
7. A Monitoring and Evaluation allowance of US$100 (UGX 360,000) per month on the
project by the bank is included as a Financial Cost.

80
Schedule 03/4: Calculation of Working Capital: IV Working Capital Requirements in UGX
X Y Requirements (UGX)
Minimum Coefficient Full-Capacity
days of
Item of coverage turn-over 2018 2019 2020 2021 2022

I. Current assets
A. Accounts receivable 30 12 79,145,176 83,102,434 87,257,556 91,620,434 96,201,455

B. Inventory
a) Cost of Sales 30 12 33,864,230 35,557,441 37,335,313 39,202,079 41,162,183
b) Salaries & Wages 90 4 72,120,000 75,726,000 79,512,300 83,487,915 87,662,311
c) Business Operations 60 6 185,180,351 189,748,202 195,711,779 202,090,868 207,572,911
d) Maintenance & Repair 180 2 8,734,000 9,170,700 9,629,235 10,110,697 10,616,232
e) Work-in-Process 9 40 20,456,825 21,479,666 22,553,650 23,681,332 24,865,399
f) Finished Products 45 8 102,284,126 107,398,332 112,768,249 118,406,661 124,326,994

C. Cash-in-hand (from V below) 15 24 24,463,963 24,528,161 24,641,569 24,806,647 42,137,104

D. Current assets _ _ 526,248,670 546,710,936 569,409,650 593,406,632 634,544,589

II. Current Liabilities


A. Accounts payable 30 12 -9,259,018 -9,487,410 -9,785,589 -10,104,543 -10,378,646

III. Working Capital


A. Net Working Capital 516,989,652 537,223,526 559,624,061 583,302,089 624,165,943
B. Increase in Working Capital _ 20,233,874 22,400,535 23,678,028 40,863,854

IV. Total Production Costs _ _ 1,111,082,106 1,138,489,211 1,174,270,672 1,212,545,205 1,245,437,466

Less: Cost of Sales _ _ 438,420,756 460,341,794 483,358,883 507,526,828 122,236,171


Transport & Fuel _ _ 38,906,250 40,851,563 42,894,141 45,038,848 47,290,790
Depreciation _ _ 46,620,000 48,620,000 56,620,000 64,620,000 64,620,000
15 24 587,135,100 588,675,855 591,397,648 595,359,530 1,011,290,505
V. Required Cash Balance _ _ 24,463,963 24,528,161 24,641,569 24,806,647 42,137,104

81
Schedule 04: Fixed Assets and Depreciation Allowances in UGX
Year 2017 2018 2019 2020 2021 2022
Initial Dep Dep Dep Dep Dep

Asset Value Allowance Allowance Allowance Allowance Allowance

Eco-Lodge Buildings 470,000,000 23,500,000 23,500,000 23,500,000 23,500,000 23,500,000

St. Leo's Nursery School 80,000,000 4,000,000 6,000,000 14,000,000 22,000,000 22,000,000

Eco Lodge Equip & Machinery 74,500,000 7,450,000 7,450,000 7,450,000 7,450,000 7,450,000

Office Furniture & Equip 12,300,000 1,230,000 1,230,000 1,230,000 1,230,000 1,230,000

Miscellaneous Fixed Assets 8,400,000 840,000 840,000 840,000 840,000 840,000

Motor Vehicles 48,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000

TOTALS 693,200,000 46,620,000 48,620,000 56,620,000 64,620,000 64,620,000

82
Schedule 05: Change in Total Investment Costs in UGX
Period Construction Full Capacity
Year 2017 2018 2019 2020 2021 2022 Total

1. Fixed Investment Costs 693,200,000 40,000,000 160,000,000 160,000,000 0 0 1,053,200,000


a) Initial fixed investment costs 693,200,000 40,000,000 160,000,000 160,000,000 0 0 1,053,200,000
b) Replacement 0 0 0 0 0 0 0

2. Pre-operational expenses 93,100,000 0 0 0 0 0 93,100,000

3. Working Capital increase 0 516,989,652 20,233,874 22,400,535 23,678,028 40,863,854 624,165,943

Total Investment Costs 786,300,000 556,989,652 180,233,874 182,400,535 23,678,028 40,863,854 1,770,465,943

Schedule 06: Change in Total Assets in UGX


Period Construction Full Capacity
Year 2017 2018 2019 2020 2021 2022 Total

1. Fixed Investment Costs 693,200,000 40,000,000 160,000,000 160,000,000 0 0 1,053,200,000


a) Initial fixed investment costs 693,200,000 40,000,000 160,000,000 160,000,000 0 0 1,053,200,000
b) Replacement 0 0 0 0 0 0 0

2. Pre-operational expenses 93,100,000 0 0 0 0 0 93,100,000

3. Current Assets increase 0 526,248,670 20,462,267 22,698,713 23,996,982 41,137,957 634,544,589

Total Assets 786,300,000 566,248,670 180,462,267 182,698,713 23,996,982 41,137,957 1,780,844,589

83
Schedule 07: Projected Cash Flow Table in UGX
Period Construction Full Capacity *Sal val Total
Year 2017 2018 2019 2020 2021 2022
Costs (UGX)
A. Cash inflow 786,300,000 1,434,080,800 1,642,586,200 1,695,774,800 1,816,401,788 1,921,428,169 _ 9,296,571,757

1. Financial resources total 786,300,000 _ _ _ _ _ _ 786,300,000

2. Sales revenue total _ 1,434,080,800 1,642,586,200 1,695,774,800 1,816,401,788 1,921,428,169 _ 8,510,271,757

B. Cash outflow -786,300,000 --1,269,105,034 -936,486,657 -945,599,710 -814,324,904 -854,547,361 989,165,943 --4,617,197,723

1. Total assets schedule


including replacements -786,300,000 -566,248,670 -180,462,267 -182,698,713 -23,996,982 -41,137,957 989,165,943 -791,678,646

2. Operating Costs (Cost of Sales) _ -406,370,756 -426,689,294 -448,023,758 -470,424,946 -493,946,194 _ --2,245,454,948

3. Debt Service
a) Interest _ -110,400,000 -88,320,000 -66,240,000 -44,160,000 -22,080,000 _ -331,200,000

b) Repayments _ -96,000,000 -96,000,000 -96,000,000 -96,000,000 -96,000,000 _ -480,000,000

4. Corporate tax _ -82,085,608 -137,015,097 -144,637,238 -171,742,975 -193,383,211 _ -728,864,129

5. Dividends 4% on equity _ -8,000,000 -8,000,000 -8,000,000 -8,000,000 -8,000,000 _ -40,000,000

C. Surplus / deficit 0 164,975,766 706,099,543 750,175,090 1,002,076,884 1,066,880,808 989,165,943 4,679,374,034

D. Cumulative cash balance 0 164,975,766 871,075,309 1,621,250,399 2,623,327,283 3,690,208,091 4,679,374,034

*Salvage values – Land: 36,000,000; 70% of eco-lodge structures: 329,000,000; Working Capital: 624,165,943
989,165,943

84
Schedule 08: Projected Cashflow Table and Calculation of Present Value in UGX

Year 2017 2018 2019 2020 2021 2022 *Sal val Total
Constr. Full Capacity

Investment Costs -786,300,000 _ _ _ _ _ _ -786,300,000

Net Profit after Tax _ 191,533,086 319,701,892 337,486,890 400,733,608 451,227,492 _ 1,700,682,968

Depreciation _ 46,620,000 48,620,000 56,620,000 64,620,000 64,620,000 _ 281,100,000

Interest Add back


Mid-term Loan _ 110,400,000 88,320,000 66,240,000 44,160,000 _ _ 309,120,000

NET CASH FLOWS -786,300,000 348,553,086 456,641,892 460,346,890 509,513,608 -854,547,361 989,165,943 1,123,374,057

Discount Factors at 14% 0.8772 0.7695 0.675 0.5921 0.5194 0.4556 0.4556 _

PV at 14% 268,211,600 308,233,277 272,571,393 264,641,368 -389,331,778 450,664,004 485,247,504


-689,742,360
NPV at 14% 485,247,504

Discount Factors at 17% 0.8547 0.7305 0.6244 0.5337 0.4561 0.3898 0.3898 _

PV at 17% 254,618,029 285,127,197 245,687,135 232,389,157 -333,102,561 385,576,885 398,245,231


-672,050,610
NPV at 17% 398,245,231

Internal Rate of Return = 37.56%


37.56%
NPV at 14% = UGX 485,247,504

NPV at 17% = UGX 398,245,231

85
Schedule 09: Projected Income Statement in UGX
Year 2017 2018 2019 2020 2021 2022

Sales _ 1,434,080,800 1,642,586,200 1,695,774,800 1,816,401,788 1,921,428,169

Cost of Sales _ 406,370,756 426,689,294 448,023,758 470,424,946 493,946,194

GROSS PROFIT _ 1,027,710,044 1,215,896,906 1,247,751,042 1,345,976,842 1,427,481,975

Less: Operating Costs


(excl. Cost of Sales) _ 543,371,350 570,539,918 599,066,913 629,020,259 660,471,272

OPERATING PROFIT _ 484,338,694 645,356,989 648,684,128 716,956,583 767,010,703

Less: Interest on Medium-Term Loan (@ 23% p.a.) 110,400,000 88,320,000 66,240,000 44,160,000 22,080,000
Less: M&E Costs _ 4,320,000 4,320,000 4,320,000 4,320,000 4,320,000

Less: Annual Repayments _ 96,000,000 96,000,000 96,000,000 96,000,000 96,000,000

NET PROFIT BEFORE TAX _ 273,618,694 456,716,989 482,124,128 572,476,583 644,610,703

Corporation Tax 30% _ 82,085,608 137,015,097 144,637,238 171,742,975 193,383,211

NET PROFIT _ 191,533,086 319,701,892 337,486,890 400,733,608 451,227,492

Accumulated Net Profit (Loss) _ 191,533,086 511,234,978 848,721,868 1,249,455,475 1,700,682,968

Net Profit Margin _ 13.36% 19.46% 19.90% 22.06% 23.48%

Gross Profit Margin 71.66% 74.02% 73.58% 74.10% 74.29%

Rate of Return on Investment _ 24.36% 40.66% 42.92% 50.96% 81.01%

Operating Profit Margin _ 33.77% 39.29% 38.25% 39.47% 39.92%

86
Schedule 10: Projected Balance Sheet in UGX
CAPITAL EMPLOYED: 2017 2018 2019 2020 2021 2022
Share Capital 200,000,000 200,000,000 200,000,000 200,000,000 200,000,000
Retained Earnings 191,533,086 511,234,978 848,721,868 1,249,455,475 1,700,682,968
Shareholder's Equity/Deficit 391,533,086 711,234,978 1,048,721,868 1,449,455,475 1,900,682,968

Long-Term Liabilities 480,000,000 384,000,000 288,000,000 192,000,000 96,000,000


871,533,086 1,095,234,978 1,336,721,868 1,641,455,475 1,996,682,968

EMPLOYMENT OF CAPITAL: `

Eco-Lodge Buildings 470,000,000 446,500,000 423,000,000 399,500,000 376,000,000 352,500,000


St. Leos Junior School 80,000,000 116,000,000 270,200,000 416,690,000 395,855,500 356,269,950
Equipment & Machinery 74,500,000 67,050,000 59,600,000 52,150,000 44,700,000 37,250,000
Office Furniture & Equipment 12,300,000 11,070,000 9,840,000 8,610,000 7,380,000 6,150,000
Miscellaneous Fixed Assets 8,400,000 7,560,000 6,720,000 5,880,000 5,040,000 4,200,000
Vehicles 48,000,000 38,400,000 28,800,000 19,200,000 9,600,000 0
LONG-TERM ASSETS: 693,200,000 686,580,000 798,160,000 902,030,000 838,575,500 756,369,950
CURRENT ASSETS: 198,532,103 310,882,388 448,797,457 817,304,519 1,255,011,663

Accounts Receivable 79,145,176 83,102,434 87,257,556 91,620,434 96,201,455


Stock (Inventory) 422,639,532 439,080,341 457,510,525 476,979,551 496,206,029
Bank Balance and Cash 24,463,963 24,528,161 24,641,569 24,806,647 42,137,104
Other Current Assets -235,828,548 -120,612,193 223,897,886 620,467,074
-327,716,566

CURRENT LIABILITIES: 13,579,018 13,807,410 14,105,589 14,424,543 14,698,646


Accounts Payable 9,259,018 9,487,410 9,785,589 10,104,543 10,378,646
Current Portion of Long-term
Liabilities 4,320,000 4,320,000 4,320,000 4,320,000 4,320,000

NET CURRENT ASSETS: 184,953,086 297,074,978 434,691,868 802,879,975 1,240,313,018


TOTAL CAPITAL 871,533,086 1,095,234,978 1,336,721,868 1,641,455,475 1,996,682,968

87
Schedule 11: Ratio Analysis in UGX
Period Construction
Full Capacity

Year 2017 2018 2019 2020 2021 2022


Sales Growth 5% 5% 5% 5% 5%

Percent of Total Assets


Accounts Receivable 8.94% 7.49% 6.46% 5.53% 4.78%
Inventory 47.75% 39.59% 33.87% 28.81% 24.67%
Other Current Assets -37.03% -21.26% -8.93% 13.52% 30.85%
Total Current Assets 22.43% 28.03% 33.22% 49.36% 62.40%
Long-term Assets 77.57% 71.97% 66.78% 50.64% 37.60%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 1.53% 1.24% 1.04% 0.87% 0.73%


Long-term liabilities 54.23% 34.62% 21.32% 11.60% 4.77%
Total Liabilities 55.76% 35.87% 22.36% 12.47% 5.50%
Net Worth (Total Capital) 98.47% 98.76% 98.96% 99.13% 99.27%

Percent of Revenues
Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 71.66% 74.02% 73.58% 74.10% 74.29%
Management / Administration 0.73% 0.67% 0.68% 0.67% 0.66%
Net Profit (after Interest &
Tax) 13.36% 19.46% 19.90% 22.06% 23.48%

Main Ratios
Current 14.62 22.52 31.82 56.66 85.38
Quick -16.50 -9.28 -0.62 23.59 51.62
Total Debt to Total Assets 54.23% 34.62% 21.32% 11.60% 4.77%
Pre-tax Return on Net
Worth 31.40% 41.70% 36.07% 34.88% 32.28%
Pre-tax Return on Assets 30.91% 41.18% 35.69% 34.57% 32.05%

Business Vitality Profile


Revenue per Employee $47,802,693 $54,752,873 $56,525,827 $60,546,726 $64,047,606

88
Schedule 11: Ratio Analysis……..continued in UGX
Additional Ratios
Net Profit Margin 13.36% 19.46% 19.90% 22.06% 23.48%
Return on Equity 48.92% 44.95% 32.18% 27.65% 23.74%

Activity Ratios
Accounts Receivable
Turnover 1.81 1.98 1.94 1.98 2.00
Collection Days 30 30 30 30 30
Inventory Turnover 2.25 2.27 2.29 2.31 2.33
Accounts Payable Turnover 1.20 1.20 1.20 1.20 1.20
Payment Days 30 30 30 30 30
Total Assets Turnover 1.62 1.48 1.26 1.10 0.96
Fixed Assets Turnover 1.38 1.25 1.16 1.31 1.53

Debt Ratios
Debt to Net Worth 0.55 0.35 0.22 0.12 0.05
Current Liability to Liability 0.03 0.04 0.05 0.08 0.15
Debt-Service Coverage
Ratio 3.47 4.55 4.59 5.08 5.36

Liquidity Ratios
Net Working Capital $516,989,652 $537,223,526 $559,624,061 $583,302,089 $624,165,943
Interest Coverage [Times
Interest Earned Ratio - TIE]
4.39 7.31 9.79 16.24 34.74
Additional Ratios
Assets to Revenue
Current Debt / Total Assets 0.62 0.68 0.80 0.91 1.05
Acid Test 0.49% 0.39% 0.32% 0.26% 0.21%
Sales/Net Worth -16.50 -9.28 -0.62 23.59 51.62

89
Schedule 12: Projected Payback Period in UGX
YEAR/ITEM 2018 2019 2020 2021 2022

Net Profit 191,533,086 319,701,892 337,486,890 400,733,608 451,227,492


Interest 110,400,000 88,320,000 66,240,000 44,160,000 22,080,000
Depreciation 46,620,000 48,620,000 56,620,000 64,620,000 64,620,000
"Profit" 348,553,086 456,641,892 460,346,890 509,513,608 537,927,492

Year Amount paid Balance of Balance of

back from Total Equity

"profits" Investment Investment

1 0 -786,300,000 -306,300,000

2 348,553,086 -437,746,914 42,253,086

3 456,641,892 18,894,978 498,894,978

4 460,346,890 479,241,868 959,241,868

5 509,513,608 988,755,475 1,468,755,475

6 537,927,492 1,526,682,968 2,064,610,460

Payback Period (Total Investment) = 2.96 Years


Payback Period (Equity Investment) = 1.88 Years

90
APPENDIX I: MAP OF UGANDA SHOWING MAJOR TOURIST CIRCUIT

91