LLC (LBA) specializes in conducting feasibility studies for a variety
leisure businesses, including aquariums. An independent industry
expert usually prepares
this detailed study, which is generally required by financing
begin the development process and provide
critical guidance for design, construction, and operations. The study
evaluates potential market support and forecasts usage.
It determines potential financial performance
warranted development costs. It provides
physical planning parameters, such as total land size needed and
building space required. It recommends the attraction mix and
include a walk-through description and artist conception images for use
in initial presentations.
The following paragraphs outline the major tasks typically involved in
conducting feasibility studies.
Task 1: Orientation Meeting
would be held to discuss the project in more detail and to see the
prospective site if one has been chosen.
Site and Area Evaluation
The site and local area would be evaluated to determine its effect on
potential usage. Factors include:
limitations or constraints
complementary and competitive facilities
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.
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:
tourist market would be defined and analyzed. Based on available
information, this analysis would likely examine:
Evaluation of Comparable Facilities
Selected comparable facilities would be examined. Available reported
information would be provided on individual characteristics, including:
Potential annual usage for the proposed facility would be estimated for
the first five years of operation based on a number of factors,
of the available markets
penetration rates achieved by comparable facilities
and possible competition
LBA would make physical planning recommendations needed to service
expected market demand. The specific parameters vary from one leisure
business to another. For larger projects, LBA can also provide a
walk-through description and color artist conceptual images as
seen through the eyes of a typical visitor. These would preliminarily
suggest the general "look and feel" and could be used in
presentations. Physical planning parameters may
types of activities
food service and merchandise space
number of parking spaces
The financial analysis for the proposed facility would be based on the
selected concept and potential usage. Financial estimates for
first five years of operations would include:
for equity investors
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.
John Gerner, our managing director, has conducted many feasibility
studies. Click here
for more details on his background.