A feasibility study is an essentials analytical data to know the viability projects. Feasibility study will answer two main questions: visible or not visible. If the answer is feasible, you can continue the project but if not feasible, you can stop it there
Feasibility Study (FS )is a process of assessing business prospect in a certain location as proposed location. 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
Feasibility study analyze the proposed location for your hotel or resort for the success of your hotel project. with FS you will identify how, where, and to whom. This will also assess your competition and figure out how strategic the site.
2. Costs calculation
With feasibility study we will calculate the further cost to develop the hotel and cost estimates total amount needed untul the projects completed. Cost calculation includes all cost for licence, taxes, insurance, human resources, equipment, furniture, inventories, electricity, water and more, etc.
3. Local supply and demand analyze
Local supply and demand analyze is using to investigate all hotels in the local area. All information with tourist boards, tour operators and travel research groups. By getting as much as information for local hotel supply and demand, that will helps you to make projection for your hotel.
4. Room rates and yearly occupancy levels
After analyzing all 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. Projecting hotel revenue and sources
The main cash flow for your hotel is the cash in and normally coming from rooms, 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. Return On Investment
ROI and internal rate of return (IRR), net present value (NPV) is the core functions for ROI projections. They help to show if the investment return is enough to proceed and if you will need to find financing from elsewhere.
Components of a Feasibility Study:
Market Feasibility: This identify the industry, the current market, anticipated future market and potential market, Market competition, sales clients.
Technical Feasibility: This is to identify the product or service, issues, labor, and business will be located as well as technology needed.
Financial Feasibility: This is to identify the project startup capital needed and potential sources of capital and returns on investment.
Organizational Feasibility: This will identify the legal and corporate structure of the business and founder professional background skills.
Conclusions: This is will conclude the business can succeed.
Feasibility studies contain comprehensive and detailed information of the business structure, products and services, market, logistics and the resources you need to make the business run efficiently.