HOTEL FEASIBILITY STUDY
Hotel feasibility studies determine the economic viability and sustainability of a particular hotel or resort project.
BHA’s feasibility study is a commercial investment grade globally recognized financial report that is regarded by banks, financial institutions, investors, developers, and hotel operators. Therefore, a hotel feasibility study by Boutique Hotel Advisors professional staff of hotel experts provides for a solid decision basis on a hotel development project, financing arrangement, and operating expectations of hotels, resorts, and combinations of condo-hotels and residential-resorts.
- Subject site and market analysis.
- Screening assessment of the project location and market suitability.
- Detailed presentation of the economic viability of a hotel or resort project.
- Facilitation of internal meetings for owner or partners contemplation of the project.
- Facilitation of external meetings for financing, investor, and operator selection.
- Investment analysis to validate the estimated development costs, financing conditions, operating cashflows, and return-on-investment calculation.
- Credibility reviews of analyses and forecasts generated internally by the developer or provided by other third parties.
- Mixed-use residential resorts or condo-hotel studies with golf clubs, snow skiing components, marina, beach resorts, luxury farming, and retail.
Purpose of the Hotel Feasibility Study
The feasibility study includes a variety of work steps to evaluate historic trends and project the future competitive supply of and demand for lodging accommodations in the area. The scope of the work includes, but is not necessarily limited to, the following:
- Analysis and economic evaluation of the market area based on interviews with area hotel management, business and government officials, compilation of pertinent market data, and a review of those economic indices which would be most relevant to the success of the proposed project
- Inspection of the site and surrounding area to determine the suitability for the proposed hotel, taking into consideration such factors as quality of neighborhood, accessibility, visibility, and proximity to demand generators
- Investigate the hotels in market area that would provide the primary competition to the proposed hotel. Our census of the competitive facilities included both existing hotels as well as those under construction, planned, or rumored.
- A determination of the current overall market demand and rooms in the subject area and the share of market demand that is generated by tourists, commercial travelers, and group meetings/ convention delegates.
- A projection of growth rates for the various market segments based on the factors that should impact the future demand for hotel rooms.
- An evaluation of the projected hotel supply and demand relationship in the market area to reach conclusions regarding the market support for the proposed hotel.
- Comment on the proposed facilities in terms of style, size, number, mix, and type of guest rooms and recreational amenities.
- Projections of occupancy, average room rate, and additional revenues for the proposed hotel, including projected market mix of guests.
- Projections of cash flow from operations before fixed charges for the first ten years of operations.
- Feasibility Test for the cost of the hotel project against the likely revenues and profits to support the business model.