Before committing capital to a hotel project, you need to know whether the numbers work. A feasibility study answers that question with data, not assumptions. Here's what a thorough hotel feasibility study includes and what it typically costs in the Cyprus and Mediterranean market.
When Do You Need a Feasibility Study?
A feasibility study is essential in three scenarios: before purchasing a property for hotel conversion, before developing a new-build hotel, and before approaching investors or banks for funding. Lenders in Cyprus increasingly require independent feasibility analysis as part of their due diligence.
What a Good Feasibility Study Includes
A comprehensive hotel feasibility study covers six core areas:
- Market analysis — Tourism trends, source markets, seasonality patterns, and demand projections for your specific location.
- Competitive analysis — Detailed comp set profiling including ADR, occupancy, RevPAR, and guest segment mix for 6–10 comparable properties.
- Site evaluation — Location advantages and disadvantages, accessibility, visibility, surrounding amenities and attractions.
- Concept recommendations — Optimal room count, room types, F&B concept, amenities, and positioning based on market gaps.
- Financial projections — 10-year P&L with revenue by department, operating expenses, capital reserves, and debt service.
- Investment analysis — Total project cost, funding structure, IRR, NPV, payback period, and sensitivity scenarios.
Typical Costs in the Mediterranean Market
For a boutique hotel project (10–50 rooms) in Cyprus or Greece, expect to invest between €5,000 and €12,000 in a professional feasibility study. The cost depends on the complexity of the project, the depth of market research required, and whether site visits are included.
For larger projects (50+ rooms) or those requiring extensive primary research, costs can reach €15,000–€25,000. While this may seem significant, it's a fraction of the total project cost and can prevent costly mistakes.
The ROI of Getting It Right
The purpose of a feasibility study isn't to validate your idea — it's to pressure-test it. The most valuable studies are the ones that identify problems before you've committed capital. A €7,000 study that prevents a €500,000 mistake is the best investment you'll ever make.
A feasibility study isn't an expense — it's insurance against building the wrong product in the wrong market.