Feasibility Studies for Dummies

Here are a few of the questions that get asked – with straight faces – when developers seek feasibility studies;

  • “Can you make this poorly-defined project financially feasible?”
  • “Can you give me proof that this 4 Star 250 room hotel with a 3 Star budget will work?”
  • “Can you do a ‘quickie’ study for half-price by changing the name on the last study you did here?”
  • “Can you produce a fictional study that will convince my banker to finance my project?”

Feasibility studies can be tough animals to nail down correctly depending on the mitigating factors at hand for the specific project. Alternate uses, tax implications, labor availability, unions, and environmental, geological, cultural or religious implications as might be involved in such locations like the Middle East, Greece, Israel or Peru, must be addressed as necessary.

Here are some of the contents of a well-prepared feasibility study which may change depending on the location and other mitigating factors as discussed above;

  1. Executive Summary.
  2. Proposed Project Outline (size, category, financing, facilities etc).
  3. Regional Data & Comments.
  4. Markets/Growth Drivers/Access.
  5. Situation Analysis/Competition (local and/or global).
  6. Historical Trends (occupancy, rate, market mix).
  7. Supply changes (past & future).
  8. Demand changes.
  9. Brand Analysis and Options/Recommendation.
  10. Management and Branding Cost Assumptions
  11. Development and Construction/Renovation Cost estimates.
  12. Projections (10 Years).
  13. Projected Market Segments & Pricing.
  14. Risk Analysis.
  15. Conclusion & Rationale.
  16. Conditions for Conclusions.

For more information on Feasibility Studies and who should or should not do them, contact davidmcmillangroup@gmail.com