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Azerbaijan : Feasibility Study

GVA RGA have recently been involved with a scoping exercise for a resort and hotel development on the coast of the Caspian Sea in an, as yet, undeveloped part some miles from Baku. An unusual location but an area where there is a strong oil and gas sector; this results in business travelers plus an ex-pat community looking for somewhere to spend their weekends. Local tourist information indicated an increase of almost 40% in visitors over the last three years and the area has familiar brand names in the major cities such as Ramada, Holiday Inn and Park Hyatt. Our client wanted an initial assessment of whether the site and the area was a possibility for an hotel and for us to consider its likely performance.

We did a lot of research into the economy; looked at similar areas that were driven by the energy sector; considered pollution and environmental factors; as well having an awareness of political issues. Our findings were not positive. It is not good to have to tell a client that the project they were optimistic about is not financially feasible, but when they are in the early stages of thinking about the possibilities for a site, it is better to have facts and be able to make judgments accordingly. The economics were demonstrated to our client, who accepted our recommendations not to proceed.

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