Feasibility Study Framework for an Integrated Tourism Project
A comprehensive methodology combining market, technical, financial and economic analysis to reach a clear investment recommendation for a tourism project.
Note. This is a methodological framework illustrating how the analysis and its outputs work. It is not a report on a specific client engagement. No client names or actual project figures are presented here.
Tourism projects are among the hardest to appraise, because their revenue rests on two highly volatile variables: occupancy rate and average spend per visitor. An error of two percentage points in occupancy can turn a viable project into a loss-making one.
The framework therefore rests on a single principle: no figure without its basis, and no result without a sensitivity test. Demand estimates are built bottom-up, the result is tested across three scenarios, and the variables that actually decide the outcome are identified explicitly — so verification effort concentrates on them before capital is committed.
Question or problem
Under what conditions does an integrated tourism project become economically viable, and below which thresholds does it fail?
Methodology
- Bottom-up demand estimation: potential visitors x occupancy rate x average spend
- Competitor analysis and market positioning
- A multi-year financial model with projected statements and cash flows
- Sensitivity analysis on the governing variables: occupancy, pricing, construction cost
- Conservative, base and optimistic scenario testing
Scope of analysis
- Market size, visitor segments and seasonality
- Location, capacity and project components
- Capital and operating costs and working capital
- Funding structure and its effect on returns
- Feasibility indicators and break-even
- Operational and market risks and their mitigation
Deliverables
- A complete feasibility report
- An updatable financial model
- An executive summary and investment recommendation
Tools used
- Excel for financial modelling
- STATA for statistical analysis
- GIS for site and catchment analysis