Hotel feasibility study: Examples and costs

What is a hotel feasibility study?

A feasibility study of the hotel is a financial report which assesses the potential success of a hotel or development project. The objective is to understand if the hotel will be a solid investment from the point of view of profitability.

A feasibility study examines factors such as the market, the location, the cost and the potential revenues of the hotel offered and is generally undertaken by a third -party business or consultant.

In this blog, we will cover everything you need to know about the hotel’s feasibility studies, including how to create one.

Why is a feasibility study so useful for a hotel?

A feasibility study can be crucial to decide whether or not you need to move forward with your project or not. Without the analysis that a feasibility study brings, you will not have the level of detail necessary to precisely assess the financial viability of the hotel.

The neglect of the study could mean that you are investing in a company that leaves you in debt or that you are missing a part of profit that changes your life.

Essentially, the feasibility study will give you a roadmap of how your hotel offered will be or could be established once. Sometimes you may have Adjust your business plan Based on the results or even look for another opportunity elsewhere if the results are not positive.

It will give you key details such as risks, development costs, potential income, favorite target markets, competitors’ analysis and more.

How to obtain a hotel feasibility study report

When it comes to preparing a feasibility study for a hotel, can be difficult to do for yourself, as you need a special skills set and access to key data for analysis.

As a rule, you will need to initiate professional businesses or consultants to prepare for the study and report on your behalf. This is a long process and can often take weeks or months.

Are there models and samples for hotel feasibility studies?

Although you can certainly find models and examples of documents on websites like ProjectManager.comIt is important to remember that hotel feasibility studies are complex relationships that require a high degree of specialization. In this regard, this is a better option to initiate a company dedicated to the hotel industry and experienced in the preparation of feasibility studies.

Feasibility hotels for companies and study costs

Carefully sought -after companies and costs will help you get the best feasibility study for your hotel. However, you must approach the exercise knowing that it is an investment.

The exact amount of cost depends on the proposed scale of your hotel project, the size of the local market, the amount of data and analyzes required and how much appreciated and experienced your consultant. However, you can expect to pay a few thousand dollars up to $ 50,000.

So what companies can the service provide? Here are some examples of known consultants you can contact:

• HVS (hospitality assessment services): A global company highly respected specializing in feasibility studies, assessments and market studies.
• PKF Hospital Group: An international company with vast experience covering the hotel, tourism and leisure sectors.
• CBRE hotels: Offer of complete hotel consulting services with access to a large network of data resources.
• Jll Hotels & Hospitality: Similar to CBRE, JLL offers a wide range of real estate services, including the hotel council.
• Hotel and leisure Advisors (H & la): A specialized hotel consulting company known for detailed analysis and expertise.
• Xotels: Provides hotel management and advice services, including feasibility studies.

Although it is some of the best known companies around the world that can facilitate a feasibility study, it is very likely that you can find a local supplier in your region – with intimate knowledge of your specific market.

Example of the hotel feasibility study

For example, let’s say that you think you have found the ideal location to build a hotel, or discovered an existing building which, in your opinion, could make an incredible hotel.

Instead of diving first after your customary market studies, you decide that it is prudent to conduct a feasibility study to determine if a hotel business can really be a successful investment.

After having contacted and agreed to hire a consultant, they will spend time compiling the following:

• Define the project: Before any more in -depth analysis, the type and style of the hotel must be confirmed, including its size and target market offered.
• Site examination: You will have to know how accessible property will be, what are the amenities nearby and what the headquarters look like.
• Competitors’ analysis: It is essential to understand the number of competitors of the new hotel and which are their unique sales arguments. What are their strengths and weaknesses and how are they currently underway?
• Demand analysis: A hotel needs customers, so the study will have to discover how popular the destination is and how seasonal travel is.
• Segmentation: What types of customers are the most likely to book a hotel on the site? Is the city / city generally focused on business travelers or leisure tourists? And how does that concern you with whom you, as owner of the project, do you want to attract?
• Costs: You will understand how the hotel will cost to develop, as well as the continuous costs to manage the property, market the hotel, maintain the structure, pay the staff, etc.
• Projections: An estimate will be given in terms of income that the hotel can generate – this may include measures such as the average daily rate or occupancy.
• Risks: What challenges and risks are present that could derail the project in the short or long -term? This may include risks such as being in a flood zone, for example.

At the end of all this, the feasibility study will assess the hotel’s overall return on investment and will reach an ultimate conclusion to find out whether the project is recommended or not.