Feasibility Study

Leisure Business Advisors LLC specializes in conducting feasibility studies for a variety of leisure attractions. An independent expert typically prepares this planning report, which is generally required by potential lenders and investors. 

The feasibility study is the first step of the development process and provides critical guidance for design, construction, and operations. It evaluates potential market support and forecasts usage. It determines potential financial performance and maximum warranted development costs. It provides detailed physical planning parameters. It recommends the attraction mix and includes images for use in initial presentations. 

The following paragraphs outline the major tasks typically involved in conducting a feasibility study.
Task 1: Orientation Meeting
An initial meeting would be held to discuss the project in more detail and to see the prospective site if one has been chosen.

Task 2: Site and Area Evaluation

The site and local area would be evaluated to determine its effect on potential usage. Factors include:

  • Market proximity
  • Physical limitations or constraints
  • Access routes
  • Traffic patterns
  • Surrounding development
  • Potential complementary and competitive facilities

Task 3: Concept Description and Industry Trends

The type of leisure business being studied would be described and industry trends discussed. Readers of the feasibility study may be unfamiliar with the concept and this section of the report provides an introduction before specific project-related issues are examined.

Task 4: Market Analysis

The market areas would be defined based on distance from the site. Demographic characteristics for the resident market would be analyzed to provide an indication of support. This would typically include:

  • Population growth
  • Age distribution
  • Income distribution 

The tourist market would be defined and analyzed. Based on available information, this analysis would likely examine:

  • Current size
  • Historic growth
  • Other characteristics 

Task 5: Evaluation of Comparable Facilities

Selected comparable facilities would be examined. Available reported information would be provided on individual characteristics, including:

  • Name and location
  • Physical description
  • Financial performance
  • Development costs 

Task 6: Annual Usage

Potential annual usage for the proposed facility would be estimated for the first five years of operation based on a number of factors, including:

  • Planned components
  • Size of the available markets
  • Qualitative market characteristics
  • Market penetration rates achieved by comparable facilities
  • Location and possible competition 

Task 7: Physical Planning and Concept Development

LBA would make physical planning recommendations needed to service expected market demand. The specific parameters vary from one leisure attraction to another. For larger projects, LBA can also provide master planning and schematic design services. Physical planning parameters may include: 

  • Estimated design capacity
  • Recommended types of activities
  • Recommended activity mix and sizing
  • Recommended visitor service space
  • Recommended parking sizing
  • Minimum land area needed
Initial conceptual efforts may also be provided. These could include: 
  • Functional layout diagram for the new leisure attraction
  • Narrative description of a typical visit from the perspective of a typical family
  • 3D computer graphics images of selected activities
The final report could also include a video presenting the results of the feasibility study with a "fly-through" or "walk through" computer animation of part of the new leisure attraction. 

Task 8: Financial Analysis

The financial analysis for the proposed facility would be based on the selected concept and potential usage. Financial estimates for the first five years of operations would include:

  • Revenues by category
  • Operating expenses
  • Operating profit
  • Return-on-investment for equity investors 

Task 9: Warranted and Typical Development Cost 

LBA would determine the warranted development cost or investment based on potential profitability. This is the recommended maximum amount that should be spent to effectively develop the project and return a reasonable return-on-investment to equity investors. 

This warranted amount would be compared to the actual development costs for other comparable facilities. Relative size would be taken into consideration. This comparison would provide guidance as to whether the proposed project could be developed for its warranted investment. If it can be, the project is considered financially feasible.

Master Planning & Schematic Design Services

As part of an expanded planning effort, LBA can also provide conceptual design services. Click here for details.
                 
                     
Project Types

The types of leisure projects that LBA serves include the following, listed alphabetically:         
     
     
            
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