GIS

Entrepreneurs

Deogratias Nyakiki

Deogratias Nyakiki

Founder & CEO

Deogratias Nyakiki is Founder & CEO at GIS.

$ 0 K

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Idea

GIS proposes a business plan for a 20-room tourist hotel in Bujumbura, with a total cost of $500,000. The hotel will cater to the mid-range market for tourists and is planned to be financed entirely by a CRDB Bank loan over a 10-year term. The loan will cover 100% of the cost, with 3% in bank fees rolled into the principal. The hotel’s financial and operational plans include detailed monthly amortization schedules, a 10-year pro forma, and performance metrics for various financial scenarios. The model also includes an exit strategy, where the hotel will be sold at the end of year 10 based on a capitalization rate and the hotel’s projected net operating income at that time.


Challenge

GIS faces several challenges, the primary one being the negative cash flow in the initial years, particularly as the hotel ramps up to full occupancy. Additional funds (cash calls) will likely be needed from the sponsor to cover deficits in the first three years unless CRDB Bank allows deferred amortization. Furthermore, market occupancy and ADR fluctuations pose a risk to the hotel’s revenue, especially in its early years. To address these challenges, GIS plans to implement active marketing campaigns, form partnerships with tour operators, and diversify revenue through food and beverage offerings and event packages. Risks related to renovation cost overruns will be mitigated by using fixed-price contracts and maintaining a contingency reserve.


Solution

GIS’s solution revolves around establishing a small hotel/guesthouse with 20 rooms in Bujumbura, targeting mid-range tourists. The investment plan includes acquiring property for $320,000, renovating and furnishing it with an additional $130,000, and setting aside $50,000 for pre-opening and working capital. The CRDB Bank loan, covering the full project cost, will have a 10-year fully amortizing structure with a fixed interest rate of 13.5%. The hotel is expected to reach 45% occupancy in its first year, growing to 75% by year four, with ADR (average daily rates) increasing by 3% annually. This plan is aimed at achieving profitability by year four as occupancy grows and operational efficiencies are realized.