Title: Evaluating hotel feasibility studies: lender perspective

Authors: A.J. Singh; James W. Damitio; Raymond S. Schmidgall

Addresses: The School of Hospitality Business, 232 Eppley Center, Michigan State University, East Lansing, MI 48824, USA ' Accounting, Central Michigan University, Mount Pleasant, MI 48859, USA ' The School of Hospitality Business, 232 Eppley Center, Michigan State University, East Lansing, MI 48824, USA

Abstract: Feasibility studies are prepared to receive financing for lodging properties. Financial lenders require a feasibility study from independent professional experts. This study explores the importance and satisfaction to the financial lenders of the various sections of a feasibility study. In general, financial lenders place considerable importance on these studies but are less satisfied with the results. The greatest differences between the degree of importance and the degree of satisfaction are noted for sections they consider most important. Based on an identification of gaps in the preparation of feasibility studies, the research proposes specific steps to make structural changes in the preparation of these studies. This research is a continuation of the issue raised in 1982 by Paul Beals and David A. Troy in their seminal paper titled ‘Hotel feasibility analysis’, which made some recommendations to improve feasibility studies. Since that time, there have been no major improvements in their preparation. This study begins by highlighting the specific shortcomings and attempts to begin a dialogue to establish minimum standards for the preparation of feasibility studies.

Keywords: feasibility studies; lodging market studies; lodging investments; market segmentation; financial lenders; satisfaction; importance; consultants; hotels; hotel feasibility.

DOI: 10.1504/IJBEAM.2011.044130

International Journal of the Built Environment and Asset Management, 2011 Vol.1 No.1, pp.74 - 93

Published online: 09 Dec 2011 *