Feasibility Study for a hotel in Granada

Feasibility Study and Market Research for the conversion of an existing office building in a boutique hotel

The Challenge

2018, Granada (España)

The client is a family office that owns a representative building in the city of Granada, that is not currently being used. They desired to explore the viability of converting the building into a hotel, which would require a complete remodel. The client is exploring other scenarios as well, to possibly use the building in other ways.

GRUPO ACERTA, the referent company in Project Management and construction, contacted The Innova Room to collaborate in preparing an action proposal for this client, drawing on the teams and complementary capacities of both companies.

How We Did It

The building was found to be out of use and with limited information with respect to its current state, but with sufficient information to carry out a viability estimate and preliminary business model. The project was developed in the following phases:

A) Local Market Study

First, a preliminary tourist-environment study was carried out, adequate given the scope of the project. The destination (Granada) was studied in terms of: the composition of the actual touristic offering, the evolution of the demand, the point of departure of the travelers, the average stay, the presence of tourist accommodations, the profitability indices, the economic situation, transportation and communication, etc.

With this information in mind, conclusions were drawn regarding existing opportunities in this destination as well as possible threats. The Innova Room also identified the top 42 competitors for this future hotel, and of those 45, selected the 15 most relevant based on their similarity to the future product.

This group of competitors was analyzed both quantitatively and qualitatively. The quantitative parameters identified were infrastructure, average prices, position in the market, presence on social media, and reputation.

And finally, The Innova Room assisted in defining the product and positioning objective that would be most likely to generate the highest return in this destination.

B) Infrastructure and Business Potential Analysis

Through an analysis of the touristic context of the area, the potential of the building to be converted into a hotel was evaluated. Two other alternatives were studied: one that would require the complete demolition and emptying of the interior of the building (preserving of the facades), and the more conservative option with partial demolitions only in zones with the optimal potential.

For both scenarios, a preliminary architectural distribution of the rooms was made, in order to evaluate the number and type that could be constructed (and in this way objective prices were also assigned).

Finally, a more in-depth study was conducted of this scenario, including the distribution of all of the rooms with furniture.

C) Product References

In conclusion, for some conceptual inspiration, a preliminary study was carried out of similar products in other destinations.

Results

With the conclusions of this study, the client decided to transform the building into a hotel. They will manage the development of the project with their internal team, and once it will be opened, it will be operated by a company belonging to the corporation.

Source of the images: The Innova Room, with data from the INE, Granada City Council and AirDNA

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