Chapter 6 Feasibility studies, business plans and predicting returns for new lodging facilities
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The chapter unpacks how to test proposed new lodging facilities for feasibility across various technical, legal, environmental, social and economic dimensions. It provides clear guidelines for practitioners to assess and answer each of these questions in turn and to evaluate project risks using a standardized risk assessment tool. For projects that meet minimum feasibility criteria with acceptable levels of risk, the chapter then provides step-by-step guidance on the preparation of business plans that function as detailed road maps for project implementation. At the heart of the business plan, is the assessment of demand and likely levels of financial return. Predicting returns, involves financial analysis via a project financial model that checks cash flows, returns and financial robustness. The chapter provides instructions on the preparation of models that cover income statements, cash flows and balance sheets as well as key indicators of project bankability. The guidelines are illustrated with examples and case studies.

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Editor: Anna Spenceley