Hotel Market and Feasibility Studies

Hotel Market and Feasibility Studies

Most of financial institutions need an independent market and financial feasibility study for the development of a new hotel. Even though  usually conduct some research of their own and it is normal for them to go in the same depth as a feasibility study because of they wanted to gain by a project going ahead. It is not easy to examine its viability with the same degree of independency and objectivity as third party professional consultants.

Hotel Equity Management are devoted exclusively to the real estate and hospitality industry. Our experience team offers expertise in market and feasibility studies. With comprehensive reports allow the potential investors and land owner of a hotel property to gain the opportunity to preview the potential operating results that a proposed accommodation scheme could achieve. The shape of the assignments are tailored with care to meet the client’s needs. The typical the product is a comprehensive economic study and appraisal term that includes a full market analysis for any region in Indonesia designated by the respective client.

Market Study

The first step that the developer of a new hotel is to prepare a market study and financial projections. Equity Hotel Management team will create a deep market studies and emphasize two key aspects. The first key is they assess present and future demand for hotel business and such other hotel facilities, function and syndicate rooms, F&B (food and beverage) outlets and leisure facilities. Second is the estimation of the operating income and expenses for the next five or ten years after the hotel opens.

Market study supply and demand analysis for rooms competition designated enhancement area. The room supply consists of properties that would form the primary competition for the proposed facility. The supply must be adjusted for future supply and new properties expected to come on the market in the near future year and also for existing competitive properties that will be less competitive in the future in market orientation. Demand for rooms availability reflected the expected number of room nights sold per year by the primary and secondary competitive set of hotel properties.

Within the scope of each commissioned study, Equity Hotel Management apply particular care in assessing the project site. The site analysis includes a detailed description-size, boundaries, topography, visibility, accessibility, and suitability to hotel use.

Feasibility Study

The relevancy of Equity Hotel Management market and feasibility study focus not only on the independency and objectivity of its consultants, but also on the accuracy of the data used in the analysis. There is a focus of information concerning the hotel market in Indonesia, only very few reports actually can be use accurately and reliable data. Other factors for hotel project in Indonesia market is the ownership issues, local or national government interests, and financing. To support a proposed and existing hotel complex, Equity Hotel Management undertake market studies in various regions in Indonesia consistently applying the following method of approach:

  • Pre-fieldwork
  • Fieldwork
  • Market data analysis and conclusions
  • Financial projections
  • Report writing, review and revision
  • Presentation to the client
  • Pertinent amendment and final draft submission to the client
  • Equity Hotel Management conducts a comprehensive hotel feasibility study using a detailed work program that provides a step-by-step approach. We  design this programs to keep the engagement flowing smoothly within the time and cost budget. The accountancy system in the hospitality industry allows a comparison with other hotels and restaurants using this system and therefore enables a much higher cost transparency of the examined hotel businesses.

Equity Hotel Management feasibility studies typically consist of the following key elements:

  • background of the country and location for the proposed including economic and demographic information;
  • an examination of the existing, and likely future trends in the area;
  • trading analysis and performance of potentially competitive hotels;
  • a market analysis, including existing and future supply of and demand for hotel accommodation in the area;
  • proposed location in the market area and projection of average room rate and occupancy;
  • estimated profit and loss including all other revenues and expenses to gross operating profit level;
  • cash flow projections plan for the proposed project on preliminary estimation of costs and method of financing.

A feasibility study is a detailed risk analysis of a project and evaluate a project on the basis of operational income and expenses. In some area, the appreciation of land value of the property is an important consideration and not usually addressed although it can be in the context of a feasibility study.

Indonesian banking system with improving still has much land to cover a hotel and real estate financing. Banks will extend loans for verified clients up to five years at annual compounded interest rates exceeding 20%.  Our thorough market and feasibility studies offer a professional service of financial transparency and integrity with the viability of the commissioned project to both lenders and investors. In addition to make sure the level of qualitative and financial reliability for the research of our market and feasibility studies in accordance with guidelines set forth by financial and lending institutions.