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Hotel Feasibility Studies

You are in a situation where you need an independent study for an hotel project that will examine the viability, operation, scale, brand, suitability of the site for development and detailed performance projections.

Our Feasibility Study is a detailed look at the market, the position of the hotel, a detailed projection of its operation and performance to ten year stable trading, the scale/positioning of the product and the economic business case to justify the investment.

The studies have been developed for multiple audiences, they are used to prove the sustainable viability of a business, for funding purposes, either senior debt, funds or individuals. Our reports are excepted by all the major funders operating in the market today, to secure/negotiate with an operator for the hotel if you decide to not to manage it yourself and for valuation purposes. It is the central document required to enable to you evaluate the hotel opportunity.

Each project is different but in general terms the Feasibility Study will include:
  • GVA RGA’s Sensitivity Scenario Model : this looks at the impact of a range of scenarios – performance, financing, variable costs etc – and the impact (with full detailed P&L sheets) this will have on your scheme. This has been exceptionally well received from the Funding community and developers. A key parameter we explore in this exercise includes Interest Cover on the development debt. This is a key assessment of the scheme’s viability from a banking perspective and speeds up the time credit committees take to evaluate a project for funding.

  • A detailed mystery shopper, market research exercise to scope demand from key user groups (local corporate set, conference and events organisers, hotel booking agents and coach and tour operators) for all components of the operation. Each aspect of the hotel is considered and placed in a micro and macro context.

  • The market area is examined in detail in terms of current economic and tourism figures through examination of key trends and statistics.

  • Interviews are held with key regeneration, tourism and planning personnel to determine other developments in the area including regeneration schemes and future hotels planned.

  • Audit of hotels within a specific radius of the site to determine the type, price and quality of competitor facilities. We undertake a mystery shopper exercise with the competitor hotels in the market – ‘manager interviews’ always give biased results.

  • A visit to the site to audit for access, visibility and relationship to major demand generators.

  • An examination and profiling of the performance of the competitor hotel market – GVA RGA subscribe to STR – the leading global benchmarking data provider.

  • Detailed operating projections for all aspects of the hotel facility over a ten year period to EBITDA with operational assumption.

GVA RGA’s studies are accepted by key operating companies in the UK for management agreement/operational purposes. Our relationship with them means we are able to get a rapid response from Development Teams reducing the time between submission and LoI if you decide to progress the opportunity. We are able to advise on the best development options thereby maximising future return. Indeed we are able to support you at every stage of the hotel development cycle from initial feasibility through planning to development and operation.

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