Financing Guidance

Leisure Business Advisors LLC (LBA) conducts feasibility studies for new leisure attractions, which is the typically the first step of the development process.

Investors and financing institutions generally require that this study be prepared by an independent industry expert with no financial interest in the project beyond its initial planning. We are therefore not directly involved in finding investors or lenders, since this would be a conflict of interest. 

After the feasibility study is completed, LBA does assist our clients with identifying potential funding sources based on our extensive experience. John Gerner, our managing director and leisure industry expert, personally responds to questions involving our planning efforts from financing sources.

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 performance achieved by comparable facilities
  • Location and potential 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:

  • Recommended types of activities
  • Recommended mix and sizing
  • Recommended visitor service space
  • Minimum land area or building space 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 visualizations 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 or surplus
  • Return-on-investment for equity investors, if applicable

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.

Types of Attractions

The types of leisure attractions that LBA serves include the following. Click on one of these types for selected past projects:

More Information

Click on one of these links for additional information. We are pleased to present Leisure Development Pulse to help inform prospective developers. It showcases selected new attractions worldwide. Details includes name, location, year opened, size, and cost.  Onsite videos are shown, if available.

Contact Information

Email Address for Initial Inquiries:
info@leisure-business.com
 
Office Address:
Leisure Business Advisors LLC
2010 Princess Anne Avenue
Richmond, VA  23223  USA

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