The following article is a case study of a recently completed hotel feasibility study.
Background: A local restaurant and banquet facility recently partnered with Research & Marketing Strategies Inc. (RMS) to conduct a feasibility study to support its business plan in order to receive financial support to construct and operate an adjacent hotel on its property. The hotel would be parallel to the business and restaurant allowing for easy access between the two facilities. Key objectives of this study included:
- Conducting an assessment to determine how the hotel will fulfill unmet needs.
- Determining estimate daily occupancy and average rates.
- Competitive analysis of hotels in the market area of similar type and size.
- Demographic data.
Here are 5 key components to a quality feasibility study from a market research firm.
Approach: Due to budgetary and timeframe constraints, three components of market research were conducted to test the viability of the adjacent hotel: (1) in-depth interviews (IDIs), (2) competitive and demographic analysis, and (3) a 3 year pro-forma financial forecast. RMS conducted 12 IDIs with economic leaders, hospitality groups, and large businesses in the area that use hotels in the area on a regular basis for various reasons to understand market opinions related to the demand and value of building the hotel. Interviews were conducted with key decision-makers for travel in the area. The competitive and secondary research assessed the defined primary market area (PMA) demographics. The overview detailed the scope of surrounding competitive and non-competitive businesses, population growth, travel trends, occupancy rates, average daily rates, consumer expenditures, income, and other key demographic trends in the region. The third and final component created an estimated operational budget prepared by RMS.
Results: At the conclusion of the study, the RMS Analytics team prepared a PowerPoint report which included a summary of key findings, recommendations, and action items derived from both stages of the market research. There was regular interaction with the designated representatives and the RMS team throughout the project engagement. The report was an extensive breakdown of feedback from the IDIs and statistics from the analysis to predict the feasibility of the hotel. Ultimately, the feasibility study arrived at a conclusion for a green light for the hotel with several factors that would influence the success of the venture.
Research & Marketing Strategies (RMS) is a hotel feasibility firm located outside of Syracuse, NY. We specialize in feasibility studies for a variety of industries. If you’d like to know more about RMS and our capabilities please contact our Business Development Director Sandy Baker at SandyB@RMSresults.com or by calling 1-866-567-5422.