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Anna Schneider
Jul 4, 2025

Feasibility Study

Do you dream of opening your own hotel? Great! Before you can start your new project, you should first conduct a feasibility study. In this blog post, we will show you what this involves and what steps you should take.

What is a feasibility study?

A feasibility study assesses whether a hotel project is economically viable and practically feasible. It provides a sound basis for decision-making, for example for investors, owners, operators or developers, and is usually carried out by specialist hotel consultants. The study is typically divided into three consecutive phases:

Phase 1: Location, market and competition analysis

The first question is: Is the planned hotel suitable for this location? The location analysis provides initial answers at both the macro and micro levels.

In the macro environment, the general attractiveness of the region and the prevailing conditions are examined: What is the economic situation? Are there relevant demand generators for business, leisure, or MICE tourism? And how easily accessible is the location by car, train, or plane? How is the future of tourism in the location assessed? Will the flight schedule change, for example? Are climate-related changes to be expected? What about entry and residence regulations?

The next step is to take a close look at the specific project location: What demand generators are in the immediate vicinity? Which target groups can be reached here, and how well does the project fit their needs? What development potential does the project location have?

Based on these findings, a market analysis is carried out, comparing supply and demand in the hotel market. The main questions here are: How many hotels are there already? What sizes and concepts dominate? How high is bed occupancy, where do the guests come from, and how long do they stay?

In addition, a look is taken at the so-called ‘pipeline’: Which hotel projects are currently in planning or implementation? This information is central to realistically assessing the future competitive situation.

Finally, relevant competitors, the so-called competitive set, are identified. These hotels are similar to the planned project in terms of category, range of services, target group and location. By comparing their performance, conclusions can be drawn about one's own market opportunities, including the question of how new competitors may affect the intensity of competition in the future.

But don't worry, these analysis steps do not all have to be done manually. Companies such as Hotellistat can provide optimal support during this phase thanks to their granular rate shopper. It doesn't matter whether the project is still in its infancy or already at a more advanced stage.

Do you already have a clear picture of the type of business and hotel product you want to create, have you identified potential competitors? Then these can be set up and provide data to examine the competition and check the feasibility of your project. No competitive set yet? Then we take a step back and first carry out a comprehensive market analysis. By processing a large amount of data, market potential and challenges are identified, forming the perfect basis for the next step.

Phase 2: Positioning and conceptualisation

Once the location, market and competition have been analysed, the next step is to determine the strategic direction of the hotel project. Based on the identified market opportunities, unique selling points and target groups, the appropriate hotel concept is defined: How can the hotel stand out from the competition? Which services and prices match the expectations and preferences of the target group?

This phase also includes the development of a clear company profile, including guiding principles, mission and vision. These form the foundation for defining processes and operational decisions and enable targeted positioning in the market.

Phase 3: Profitability forecast and profitability calculation

Now it's time to crunch the numbers: in the final phase, sales, cost and profit forecasts are prepared based on the expected department-specific income and expenses. This results in an assessment of the investors' future return expectations and the payback period for the total investment upon conclusion of a lease, management or franchise agreement.

Since the study has a clearly defined period of consideration, decisions regarding implementation should be made promptly. In the long term, the so-called strategic fit remains a decisive guide, evaluating the harmonious interaction between location, concept, operator and property owner.

Conclusion

A well-founded feasibility study is not a bureaucratic requirement, but a crucial step on the way to a successful hotel project. It creates clarity, minimises risks and provides the security to make strategically sound decisions. Those who do their homework here lay the foundation for a hotel that can not only be built, but also operated successfully in the long term.

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