Feasibility Study in Tourism and Hospitality

Definition and Importance of Feasibility Study

• A feasibility study is a study that examines the viability of an idea, identifying potential problems and answering the question: Will the idea work and should you proceed with it?
• The study helps identify business-related problems and solutions, and serves as a solid foundation for developing a business plan.
• It provides valuable information for the "go/no go" decision and increases the probability of business success by identifying weaknesses early.

Purpose of Feasibility Study

• To identify how, where, and to whom to sell a service or product.
• To assess competition and determine the necessary startup and running costs.

Comparison with Business Plan

• A feasibility study is conducted before deciding to proceed with a business idea (go/no go).
• A business plan is prepared after deciding to proceed with the idea.
• A feasibility study provides an investigative function, while a business plan provides a planning function.

Feasibility Study Outline (5 Modules)

Module 1: Description of the Process

• Identification and exploration of business scenarios.
• Definition of the project and alternative scenarios.
• Relationship to the surrounding geographical area.

Module 2: Technical Feasibility

• Determination of facility needs.
• Suitability of production technology.
• Availability and suitability of site.
• Availability of raw materials and other inputs.

Module 3: Organizational/Managerial Feasibility

• Business structure.
• Business founders.

Module 4: Market Feasibility

• Industry description.
• Industry competitiveness.
• Market potential.
• Access to market outlets.
• Sales projection.

Module 5: Financial/Economic Feasibility

• Estimation of total capital requirements.
• Estimation of equity and credit needs.
• Budgeting of expected costs and returns.

Feasibility Study for Tourism and Hospitality Projects

• A feasibility study helps answer the question of whether to go forward with a business idea.
• It is valuable for starting a new business, expanding an existing business, adding an enterprise to an existing business, or purchasing an existing business.

Reasons to Conduct a Feasibility Study

• Gives focus to the project.
• Narrows the business alternatives.
• Identifies new opportunities.
• Identifies reasons not to proceed.
• Provides valuable information for the "go/no go" decision.
• Increases the probability of business success by identifying weaknesses early.
• Provides documentation that the idea was thoroughly investigated.
• Helps attract funding from lenders, grant providers, etc.
• Helps attract equity investment.