Feasibility and Market Demand Study

A Large International Hotel Corporation

Situation

A large international hotel corporation was interested in building a casino resort in Las Vegas, NV and needed to determine the financial feasibility of the project. Specifically, they needed projections for all aspects of the casino resort including the casino, hotel, food and beverage, retail, spa and nightlife. They also needed to understand the current and future market to determine which customer segments offered the most opportunity.

Approach

WhiteSand collected published reports, surveys and articles, reviewed published research and analyzed key characteristics of visitors to develop several scenarios of potential revenues and cash flows for the first five years of operation from the major components of the proposed property. WhiteSand also conducted research (qualitative and quantitative) to determine customer preferences, profiles and identify influential factors affecting casino choice and patronage.

WhiteSand identified similar sized properties in similar jurisdictions, including Las Vegas and non-Las Vegas casinos, to create an accurate peer group. This peer group was used to gauge current and future earning potential as well as amenity selection and diversification. This information was used in conjunction with other data gathered to develop very accurate financial projections at a detailed level, depicting slot and table win, associated costs, food & beverage revenue, retail rental rates, hotel occupancy and ADR, and other amenity revenues.

Results

The final report included an estimation of the property’s market potential, which included a breakdown of the target population into segments based on distance and ease of travel to the property. The financial projections provided insight into the potential revenue the property would generate, along with the costs associated to the major operating departments. The hotel corporation used this information, along with economic indicators of the general economy to make a decision to not move forward with an investment of over $1 Billion in the Las Vegas market.