The purpose of this study is to examine the accuracy of hotel feasibility study projections closely and help investors to make the right decision in investing a hotel. To do so, three factors were used to compare the projected 5-year P/L statement wit...
The purpose of this study is to examine the accuracy of hotel feasibility study projections closely and help investors to make the right decision in investing a hotel. To do so, three factors were used to compare the projected 5-year P/L statement with actual results for two luxurious hotels. Three factors are average room rate, average occupancy rate and net profit. As a result, it was discovered that there was a big difference between the projections and actual results due to the incorrect estimation about the price fluctuation, demand and competition etc. Feasibility studies were carried by investors who had already planned to build hotels and wished to use them for the purpose of loans from banks. It was an another reason that causes a big difference between the projections and actual results. The accurate feasibility study is very important for investors because it reduces the risk when they plan to build hotels. Therefore feasibility study must be conducted with great considerations.