Feasibility Studies

Please see link below for a Sample Hotel Feasibility Study

RK Consulting Services, Inc. can prepare in-depth studies for all types of hospitality developments or hotel purchases, with particular expertise in hotels, resorts, condo hotels and boutique hotels. Hotel Feasibility Studies have gained increased importance due to the highly capital intensive nature of the hospitality projects as well as associated risks and rewards.  The Feasibility Study is used to support the decision making process, i.e. in the planning phase of the project’s development cycle. It is an analytical tool that includes recommendations and limitations, which are utilized to assist the decision-makers when determining if the business concept is viable.

The Feasibility Study’s main goal is to assess the economic viability of the proposed hotel or resort project. The Hotel Feasibility Study needs to answer the question: “Does the idea make economic sense?”  Our Feasibility Studies provide a thorough analysis of the proposed hotel business opportunity, including a look at all the possible roadblocks that may stand in the way of the successful realization of the project.

Market Analysis Capabilities

Market analysis the first part and economic feasibility is the second part of a complete report that is necessary prior to seeking equity partners or requesting a loan to buy or build a hotel.   Typically, the hotel developer has already selected a market, a neighborhood and a site where he wants to build a hotel. If not, we will back up and assist the developer in evaluating alternative markets and sites.  Whatever the starting point, we describe the nature of the assignment at the beginning of the report, so the client’s objectives will be achieved.  We have analyzed markets from major metro areas to small cities and towns in almost every state and a few foreign countries.  Whether it is a 60-room limited service hotel or a 500-room full service destination resort, we approach every market with the same set of questions, checklists and tools.  We review the general market characteristics and trends and determine how these factors will impact the project.

Economic Feasibility

After analysis of the general market, competitive supply and demand generators are established; we will provide a Supply & Demand Trends Analysis for market and competitive set.  The proposed hotel will be positioned among the competition in terms of type, size, customer mix, occupancy, room rates and revenues. From here, we make recommendations to the developer regarding product design, facility configuration, ownership issues, management issues and possible franchise affiliations.  All this is necessary to understand the market situation and determine how the proposed hotel will perform.  The purpose of the Hotel Market Analysis & Economic Feasibility Study is to reduce the developer’s risk.   We advise the client on size, type and product features, ownership issues, management options and franchises.  In the final analysis, we determine customer mix, average room rates, revenues and the expense ratios for the type of hotel proposed.

Our Feasibility Study will include the following

  • Supply & Demand Study
  • 5 to 10 Year Construction Pipeline Analysis
  • Growth Rate Analysis
  • Financial Analysis with Cash Flow and 10 year Performance
  • Leveraged Internal Rate Return (IRR) Analysis
  • Demographic Study and Market Mix
  • Projected ADR, Occupancy, REVPAR vs. Comp Set

Sample Study to Review

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