What is a hotel market study?
A hotel market study measures whether there is enough demand for a hotel at a specific location, and under what conditions. It analyzes the destination, the travelers who come to it and the hotels you will compete with, to estimate the occupancy, average daily rate (ADR) and RevPAR your project can achieve in its first years.
The result is not an opinion: it is a recommendation based on data and fieldwork about what type of hotel makes sense, what size, for which segment and at what rate.
What questions does it answer?
- Is there enough demand in this destination for a new hotel, or to expand an existing one?
- Who would stay: business travelers, leisure guests, groups, events?
- Which hotels make up the competitive set and how are they performing?
- What occupancy and rate are realistic over the first five years?
- How many rooms, what category and which facilities should you offer?
- Should the hotel operate independently or under a brand?
Market study vs. feasibility study
The market study is the foundation: it tells you how much and at what price the hotel can sell. The hotel feasibility study takes those figures and adds investment, operating costs and financing to determine whether the project is profitable. Many projects start with the market study and, if the numbers justify it, continue with the financial feasibility.