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Feasibility Studies


Feasibility Studies Itinerary Understand the terminology relevant to feasibility studies in the tourism and hospitality industry View a Feasibility Study Case Study ... – PowerPoint PPT presentation

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Title: Feasibility Studies

Feasibility Studies
  • Understand the terminology relevant to
    feasibility studies in the tourism and
    hospitality industry
  • View a Feasibility Study Case Study and apply
    concepts learned in this course to the situation

  • IRR Internal Rate of Return
  • ROI Return On Investment
  • ADR Average Daily Rate
  • RevPAR Revenue Per Available Room
  • Food Cost - paid / charged
  • LTV Loan to Value Ratio
  • Amortization
  • The rate at which a new purchase loses value
  • Contingency Plan a back-up plan in case
    something goes wrong
  • Indicators SMART

What is a Feasibility Study?
  • When you have an idea and you want to know
    whether it is possible you complete a
    feasibility study.
  • Do you want to own a hotel? Restaurant? Market
    and invention?

Is a Hotel in your Future
  • Whether you said yes or no, you did a feasibility
    study in your mind!
  • Situations are oft-times more complicated though
  • If you have an idea and it MIGHT be feasible then
    you should complete a full Feasibility Study
  • Feasibility Studies support detailed planning and
    reduce research time.
  • They will also serve as the first forecasting
    tool at your new business

Aspects of a Feasibility Study
  1. Technology and System Feasibility
  2. Operational Feasibility
  3. Market and Real Estate Feasibility
  4. Resource Feasibility
  5. Schedule Feasibility
  6. Economic Feasibility
  7. Legal Feasibility
  8. Cultural Feasibility

Technology and System Feasibility
  • Will the system perform adequately?
  • Complete a Logic Model

Resources Activities Outputs Outcomes Goals
TEAM (100 full-time staff) Identify possible clients Once weekly updates Better understanding in Gov't personnel paying
Social work, tracking, Advise clients from the governor's and gov't of homeless/poverty attention to 100 of stake-
advising, assisting clients, Manage clients mayor's office will be and better understanding holders in the community
and office duties Support post job offer retrieved in WIA of gov't direction. during decision-making.
TEAM Correspondent(s) Weekly contact Short-term housing Homeless and poverty- Make the WIA office
Market, contact w/ org. reporting for gov't offered for all homeless stricken clients have tools indispensible for gov't
such as schools and poss. supporting institutions clients who are enrolled necessary to break down budget
employers, volunteers, Political coalition of mayor in attending courses barriers to employment 25 less homelessness in
and maintain contact w/ and governor offices w/ Five classes take place water, housing, skills, city and 100 less home-
gov't entities. equity agenda. weekly (occupat. Training) training, counseling, etc. lessness for clients of the
TEAM Teacher(s) Develop curriculum 100 of clients receive   office.
Teach clients in various Daily teaching sessions workplace training Homeless reduction.  
school to work occupational Develop indicators to track No. of jobs clients have Higher job acquisition. 75 of clients get jobs
training programs. learning objectives increases 25/month Better trained workforce. and feel comfortable in
TEAM Director(s)   Patricipating clients have   their jobs.
Manage programs and Manage people, programs, more knowledge of work-    
personnel par levels as necessary place skills and envir.    
TEAM Researcher(s)   as tested founded in exit    
Track, maintain, indicate Develop track indicators interviews with clients.    
program and possibilities. for program success 100 of clients receive    
Materials/Office Supplies   school-work occupational    
paper, pen, printer, fax, Mgt will maintain par training.    
pencil, computers, etc. levels Poverty for clients clients make more money 25 poverty reduction in
Clients   decreases 25 and move off of welfare city
Clients to partake in the Attempt to use program to Child care services are programs (poverty  
WIA programs improve their situations. used by 75 of client reduction).  
Building(s)   mothers who state it as a Higher quality of life for all An overall goal of WIA is
A place for work to occur, Locations for program barrier. stakeholders/community the betterment and life
clients to visit, school to events to take place Psychological counseling members. improvement of 100 of
work to occur, etc.   services are used by 50   residents of community.
Financing   of clients   Goals and actions leading
Money to keep programs Money to keep program Clients make 25 higher   to goals must take this to
functioning at proper level on-going. wages than non-clients   account (all stakeholders).
Operational Feasibility
  • A set of indicators used to measure how well a
    proposed system solves the problems, and takes
    advantages of the opportunities identified during
    scope definition and how it satisfies the
    requirements identified in the requirements
    analysis phase of system development.

Market and Real Estate Feasibility
  • involves testing geographic locations for a real
    estate development project.
  • Developers conduct market studies to determine
    the best location within, and to test alternative
    land uses for a given parcels.
  • Jurisdictions often require developers to
    complete feasibility studies before they will
    approve a permit application for hospitality
  • Market Feasibility takes into account the
    importance of the business in the selected area.

Resource Feasibility
  • This involves questions such as how much time is
    available to build the organization,
  • This would include whether it interferes with
    normal business operations, type and amount of
    resources required, dependencies, etc.
  • Contingency and mitigation plans should also be
    stated here.

Schedule Feasibility
  • A project/hotel will fail if it takes too long to
    be completed before it is useful.
  • Typically this means estimating how long the
    system/hotel will take to develop, and if it can
    be completed in a given time period using some
    methods like payback period.
  • Schedule feasibility is a measure of how
    reasonable the project timetable is.
  • Given our technical expertise, are the project
    deadlines reasonable? You need to determine
    whether the deadlines are mandatory or desirable.

Economic Feasibility
  • Economic analysis is the most frequently used
    method for evaluating the effectiveness of a new
  • Most commonly utilized in feasibility studies
    is the cost/benefit analysis,
  • The procedure is to determine the benefits and
    savings that are expected from a project and
    compare them with costs. If benefits outweigh
    costs, then the decision is made to design and
    implement the system.

Legal Feasibility
  • Determines whether the proposed system conflicts
    with legal requirements.
  • Ex. - a Data Processing system must comply with
    the local Data Protection Acts.

Cultural Feasibility
  • In this stage, the project's alternatives are
    evaluated for their impact on the local and
    general culture.
  • For example, environmental factors need to be
    considered and these factors are to be well
    known. Further an enterprise's own culture can
    clash with the results of the project.
  • In tourism this is often referred to as a PEST
    Analysis and more recently as a PESCE Analysis.

The Case Study
  • I have worked on teams coordinating Feasibility
    Studies for five different properties
  • The Sheraton Suites Houston Galleria
  • Intern, The Wedge Group (ownership group)
  • Marriott Waterway The Woodlands, TX
  • Intern, Housekeeping Accountant, pre-opening
  • Best Western/Hilton Garden Inn Houston Uptown,
  • Finance Director, Cougar Corporation
  • Hilton Houston Post Oak Houston Uptown, TX
  • Front Office Manager
  • Hilton Homewood Suites Galleria Houston
    Uptown, TX

The Hand-Outs, Pt. 1
  • YEAH! In depth financial statements!
  • Executive Summary
  • Cost Breakdown
  • Financing Selections
  • Licensing
  • Budgeting

The Hand-Outs, Pt. 2
  • Total Cost and Financing (5 yr)
  • Length of time due to balloon loan from bank
  • Renovation Costs
  • Salaries and Wages (not included)
  • Income and Expenses
  • Development Analysis
  • Misc. Expenses (you only have p. 1)
  • Loan Calculator (you only have p. 1)

Would you like to do feasibility studies?
  • PKF (link) and Smith Travel and Research (link)
  • Focus your efforts on finance (in lieu of
  • Be outgoing, esp. concerning networking
  • Be willing to work for free (intern) to get
  • Be willing to gauge success on others terms
    rather than your own pre-dispositions
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