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and Market Feasibility CANADIAN LODGING OUTLOOK
The Canadian Lodging Outlook is a joint monthly publication of Smith Travel Research and HVS International, Vancouver and Toronto, Canada . |
By: Kathleen Conroy, MAI - HVS Timeshare Consulting
Services - Miami
A timeshare market-feasibility study and cash-flow projection serves as the cornerstone for timeshare valuations of proposed developments. HVS Timeshare Consulting Services (a division of HVS International) built a new, state-of-the-art timeshare cash-flow financial model to help developers create realistic monthly cash-flow projections. Since timeshare revenues and expenses are incurred on a monthly basis, all calculations should be done on a monthly basis for a cash-flow projection to reflect a realistic scenario. The model also needs to be flexible to assess all real world variables and a wide variety of development scenarios. Cash-flow modeling is an important part of a timeshare project's initial planning stages. On a front-end basis, projected cash-flow information serves a decision making tool and will help a developer create an adequate business plan. If the developer is familiar with the timeshare market where a resort is proposed and has performed basic due diligence on a reasonable timeshare interval pricing and expense expectations, he can request a preliminary financial projection even before conducting a detailed market-feasibility study. Critical Information Because of the number inter-related variables affecting a project's cash flows, professional cash-flow modeling will provide a timeshare developer with critical business decision making information. A sample list of information that a developer can obtain from the HVS timeshare cash-flow model follows:
Cash-flow modeling also is a major component of a timeshare financial feasibility study, often used as marketing tool to attract equity investment. A timeshare financial feasibility study requires a number of sequential steps, including fieldwork and analysis to complete a market feasibility analysis, prior to generating financial projections. Based on the market feasibility conclusions, a complex financial cash-flow projection can be prepared. The scope of a market feasibility study typically includes:
Kathleen Conroy, MAI
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CANADIAN LODGING OUTLOOK
HVS INTERNATIONAL - CANADA
March 2005
Selina Lai HVS International � Canada 2120 Queen St. East, Suite 202 Toronto, ON M42 1E2 (416) 686-2260, ext 21 (416) 686-2264 FAX [email protected] www.hvsinternational.com |