The purpose of the Hotel Feasibility Study is to reduce the developer’s risk
We prepare in-depth studies for all types of hospitality developments or hotel purchases. 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. 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.
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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. 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.
After analysis of general market, competitive supply & demand generators are established; we will provide a Supply & Demand Trends Analysis for market competitive set. The proposed hotel will be positioned among the competition in terms of type, size, customer mix, occupancy, room rates & 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 & determine how the proposed hotel will perform.
You are in a situation where you need an independent Feasibility Study for an hotel project that will examine the viability, operation, scale, brand, suitability of the site for development and detailed performance projections. Our Hotel Feasibility Studies are a detailed look at the market, the position of the hotel, a detailed projection of its operation and performance to ten year operation projections, the scale/positioning of the product and the economic business case to justify the investment.
Our studies have been developed for multiple audiences, they are used to prove the sustainable viability of a business, for funding purposes, either senior debt, funds or individuals. Our studies are accepted by all the major funders and lenders operating in the hotel market today, used to secure/negotiate with an operator for the hotel if you decide to not to manage it yourself and for valuation purposes.
Our Feasibility Study Includes
- Inspecting the site location and its surrounding areas.
- Visiting each hotel that might be in competition with your hotel development.
- Economic and Demographic Indicators of the local area
- Choosing the most competitive hotel set from Smith Travel Research.
- Analyzing data provided by Smith Travel Research.
- Projected ADR, Occupancy, REVPAR vs. Comp Set
- Investigating brand possibilities and offering suggestions.
- Suggesting optimal room count, amenities, retail, food & beverage, banquet space.
- Determining how the repositioned or proposed hotel would fit within the existing hotel supply in its market.
- Identifying potential demand generators.
- Reporting on any proposed hotel additions in the market.
- Financial Projections with Cash Flow Usage and 10 Year Operating Performance
- Leveraged Internal Rate Return (IRR) Analysis
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.
Download sample study report to review.