What is Feasibility Study? why you need Feasibility Study before you start building your hotel business? Feasibility Study (FS )is a process of assessing business prospect in a certain location as proposed location. Feasibility Study is the most important aspect of developing a hotel business and you have to do this to collect all information and factors that will be taken. The hotel concept should be based on Feasibility Study so that the planning and design of the hotel including number of rooms, facilities, project cost etc are in the right direction. What we do for Feasibility Study?
1. Location analysis
Studying the proposed location for your hotel or resort is a big difficult answer a critical questions to the success of your hotel project. What makes the location a best and an attractive site? What are potential risks and advantages associated with the local area? Is there a sufficient for supply in number and quality? Is the hotel supported by easy transport links? What human resource costs can be expected?
2. Costs calculation
Cost calculation includes the development and architectural costs prior to opening the hotel. The operating costs which the hotel will incur, including licences, taxes, insurance, human resources, equipment, furniture, inventories, electricity, water and more.
3. Local supply and demand investigation
Local supply and demand investigation involves analyzing all hotels in the local area, chiefly their competitiveness. All information with tourist boards, tour operators and travel research groups. By knowing more information for local hotel supply and demand will helps in projecting occupancy levels and rates for your hotel, one of the key elements in establishing its economic feasibility.
4. Room rates and yearly occupancy levels
After analyzing all your hotel forecasting and establishing hotel supply and demand, hotel’s competitiveness, projected operating costs, desired ROI, benchmarking, competitor, and also room rates. Full Year projections (Year on Year) for demand will go a long way to informing your pricing decisions.
5. Establishing and projecting hotel revenue sources
The main sources of revenue for your hotel will come from room stays, food and beverage, events, conferences and meetings. We can manage a full view of projections for average yearly room rates and occupancy levels, you can project sales from different revenue sources, including food and beverage, leisure and events.
6. Projected Return On Investment
One of the most important parts of your hotel feasibility study is the projected Return On Investment (ROI). ROI work by using a number of metrics and calculation including internal rate of return (IRR), net present value (NPV), debt coverage ratios and discounted cash flow (DCF), as well as others. They help to show if the investment return is enough to proceed and if you will need to find financing from elsewhere.